By Ashley Erika O. Jose, Reporter
THE Securities and Exchange Commission (SEC) has started work on a plan to bring government-owned and -controlled corporations (GOCCs) to the stock market after securing approval from the Department of Finance, with the goal of deepening investor participation and boosting the capital market, its chairman said.
“We are still in the initial stages. Of course, we have to do the rounds of inventory of GOCCs. We already (secured) the go signal from Secretary of Finance [Ralph G.] Recto to look at the GOCCs that are listable,” SEC Chairman Francisco Ed. Lim told BusinessWorld on the sidelines of the Philippine Investment Conference 2025 last week.
For China Bank Capital Corp. Managing Director Juan Paolo E. Colet, the absence of GOCCs in the Philippine Stock Exchange (PSE) is why the stock market capitalization-to-gross domestic product (GDP) ratio remains low compared with most of the country’s Southeast Asian peers.
“Listing our country’s most eligible GOCCs can definitely beef up our stock market. Among key Southeast Asian economies, the Philippines is the only one without a publicly listed GOCC,” Mr. Colet said in a Viber message.
Mr. Colet said bringing GOCCs to the equity market is a good way for the government to raise funds as well as make these companies more efficient and competitive.
“The goal should not be to do an IPO (initial public offering) just for the sake of it, but to get a valuation that makes sense for both the state and investors,” he said.
Unicapital Securities Equity Research Analyst Peter Louise D.C. Garnace said the public listing of GOCCs will be a significant catalyst for the development of the local bourse.
“It would increase market depth and liquidity, widen the country’s investor base, and prove that the equity market is a viable source of financing,” Mr. Garnace said.
Although GOCCs are often deemed less efficient and profitable given weaker incentives for better performance and limited accountability for results, listing GOCCs can help mitigate these challenges by subjecting them to greater market discipline and stricter disclosure requirements, Mr. Garnace said.
“From a fiscal standpoint, IPOs of GOCCs can generate revenues for the government that can be used for critical public investments such as education, health, and infrastructure. If we take a look at other countries, the listing of GOCCs has driven the growth of investments in their capital markets,” he said.
In June, the SEC said it hoped to encourage GOCCs to list on the stock exchange to spur investor activity, citing similar initiatives in neighboring countries like Vietnam.
In its Capital Market Review of the Philippines last year, the Organisation for Economic Co-operation and Development (OECD) said many Philippine state-owned enterprises (SOEs) are candidates for public listing, such as Land Bank of the Philippines and Development Bank of the Philippines.
The OECD also said the Philippines could grow its capital markets by listing minority stakes in financially significant SOEs.
SOEs occupy a significant share of market capitalization in other ASEAN countries such as Singapore, Indonesia, Malaysia, and Vietnam.
“SEC is working to future-proof the Philippine capital market. We are also working on listing for grantees of legislative franchises and exploring the listing of commercially viable state-owned enterprises, which will bring new scale and diversity into our market,” Mr. Lim said.
Further, stock market analysts said the success of GOCC listings will require a broad investor base and adequate market infrastructure, while also depending on timing and business fundamentals.
“The key challenges are readiness and timing. The focus should be on GOCCs with strong business fundamentals and prospects. Apart from the usual listing requirements, a GOCC should be considered IPO-ready if it has high-quality corporate governance structures, independent private auditors, a commitment to delivering shareholder value, and robust protections for minority investors,” Mr. Colet said, noting that if all these elements fell into place and market conditions are conducive, GOCC IPOs could be doable as soon as next year.
“We note, however, that successful GOCC listings require a broad investor base, solid market infrastructure, and a stable macroeconomic backdrop,” Mr. Garnace said.