Comes now the Securities and Exchange Commission (SEC) with a laudable financial program for the overseas Filipino workers (OFWs) to educate them on financial products available in the capital market. This plan could result in the increase in the savings rate, a key to the promotion of a vibrant economy.
The SEC program aims to tap other government entities, as well as the private sector, in pushing for the success of this program that seeks to encourage an awareness of the different financial products available to the OFWs.
Under the SEC plan, the principal financial regulators and the operators of key institutions would be tapped to intensify the program to educate the citizens on the benefits of savings and long-term investment in enterprises that are active in the Philippines. A vital component of this program is to alert citizens on the "red flags" that indicate pyramid-type schemes and to urge that they promptly report suspicious schemes to law enforcement agencies. Pyramid-type schemes still continue proliferating as long as the element of greed is present for every type of financial product that is offered.
The absence of a meaningful education program on financial products for Filipinos is the root cause of the continued success of Ponzi-type schemes that victimize even the OFWs. The rule of thumb is that a financial product that is too good to be true (like in the offer of high interest rates) is not good for the pockets of the OFWs.
Also, the OFWs should be wary of companies that offer huge returns for being members of supposed multilevel networks that actually operate as pyramids. The key to knowing the pyramid type is to determine whether the recruitment fees are what drive the earnings of the entrants.
The SEC move then is a whiff of fresh air especially for the newfound wealth of OFW families that continue to receive the remittances of their beloved family member toiling out there. It is these remittances that reach more than $10 billion a year that is behind the surge in the peso's rate vis-à-vis the dollar. The consumption-driven growth for the country is also believed attributable to the OFW remittances. But this growth could give way to an investment-driven growth that could be provided by this SEC program.
The recent bull run in the stock market has provided fresh insights on wealth creation that is available to thousands of OFWs, especially with the surge in the share price of PNOC-EDC's IPO (initial public offering). The stock has gone past P5 a share from its P3.20 offering price and this rewarding kind of savings for the OFWs is part of the SEC program of educating the OFWs.
From this, the SEC can then come up with other financial products that could be offered to the OFWs that would have the net effect of allowing for sophistication in the investment know-how of the OFWs.
This is laudable that even the Philippine Stock Exchange should support given the emphasis it places on the capital market development. The government should work closely with the private sector in working out a plan to educate the families of OFWs on the investment products available to them. The prospective savers should be well informed on the other investment/savings products available and the degree of risk that they are comfortable with.
SEC's program is the carrot approach to promoting capital market development. Public and private sectors should experiment with novel programs in disseminating basic knowledge about the financial markets and the virtues of savings/investing such as through radio programs. We are sure that radio stations would not mind being part of a great undertaking aimed at educating the big number of OFW families who have to depend on the earnings stream that could be provided by savings/investment products when they reach retirement age.
At a time of the emerging resurgence of the dollar inflows from millions of OFWs working in North America, Europe and Asia, the SEC plan is made more laudable by what it could provide. With it, OFW families would be able to squirrel away part of the remittances they receive and contribute toward capital formation. This, in turn, leads to the funding of the expansion plans of business or new small and medium enterprises that lead to heightened growth. With that, even the SEC benefits by way of increased fees from the incorporation of new companies or the capital increase of existing ones. SEC's plan, then comes full circle, and for the good of the economy.
E-mail: hugagni@yahoo.com.
http://www.businessmirror.com.ph/01172007/opinion05.html
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