LEGAZPI CITY, Aug. 6 (PNA) — Low investment and interest rates offered by banks, stock market and other financial institutions are driving people with high savings and liquid assets to engage in “double your money” investment scheme, according to Albay Governor Joey Salceda.
Salceda, one of the country’s top economists and investment advisers, believes that high saving rates and low investment yields combine to create a huge pool of idle funds estimated at Php3 trillion, thus, the market for mischief is open to exploitation.
“The high savings coming from private and government pensioners and overseas Filipino workers (OFW) contribute 42 percent of our gross domestic product (GDP) while low investment rates is 22 percent of GDP,” he noted.
In his Facebook wall, Salceda said Treasury Bill rates and bank deposit rates are unattractive because of their being low rates, forcing investors to seek higher returns from other means.
In spite of the 316.7-percent rise of the stock market shares from 2,400 to 7,600 shares, retail participation remains low at Php8.2 trillion or about 55 percent of GDP compared to neighboring country’s posting of a 100-percent increase.
Another cash generator that adds more to the savings are the national agencies, local government units and government-owned and -controlled corporations, he said.
These agencies’ savings create so much fiscal space which, according to Salceda, becomes productive expenditures or becomes idle savings that must be redeployed.
The Department of Budget and Management statistics indicates that about Php303-billion funds were unspent this year and these have been declared savings due to underspending of the various agencies of the government.
Of the unspent budget coming from the Php2.2-trillion fund released in 2014, only P1.9 trillion was spent by various government agencies.
The Philippines has so much idle savings, about Php3 trillion or Php3,000 billion, enough to wipe out poverty — both cyclical and structural and vulnerable.
From 2010 to 2014, the economy produced only 1.4 million incremental jobs although there has been a qualitative shift, with salaried workers rising by 3.7 million.
OFW remittances have similarly added to the high savings rate but they invest in condominium and housing and local mall consumption.
Salceda said OFWs are good savers and investors but they must be nurtured to level up towards business formation as they may fall victims of property scams, especially surrounding pre-sales.
As for the ordinary family-savers, especially retirees who choose lump sum benefits with lower annuities, are the most affected and persistently “at-risk”.
Retirees need special attention since they rely mainly on passive investments, of which these investments scammers partake. “Retirees are not greedy for returns, they are just simply unprotected,” Salceda said.
To protect people from this high-yielding investment scams, Salceda strongly recommended that the government formulate policies that would educate and improve further investment promotion for domestic business formation through deepening red tape reduction, improving costs of doing business, particularly infrastructure.
Decongesting the overcrowded NCR-Clark-Calabarzon axis is a must so countryside markets could grow, he said.
The Financial Sector Forum (Bangko Sentral ng Pilipinas, Securities and Exchange Commission and Insurance Commission) should engage the local government units as first line of defense in protecting small savers, he said.
The entire justice system should be trained in documenting and prosecuting scam sponsors, Salceda urged.
He also called for the amendment of the Magna Carta for Senior Citizens and “retirees” that will include measures for protection against marketing and financial predators.(PNA)