SEC chair links flood control scandal to P1.7-trillion wipeout in PH stock market

Securities and Exchange Commission (SEC) chairperson Francis Lim on Wednesday flagged the impact of corruption issues on Philippine investments, saying that “weak integrity” has caused investors to flee and wipe out P1.7 trillion in market value in just three weeks.

HoweverLim on Thursday apologized for saying that P1.7-trillion worth of market value was wiped out from publicly listed companies, saying he based his remark on what he believed to be a “credible” industry report.

“I have since learned that the report was fictitious. I deeply regret any confusion or concern that my statement may have caused,” Lim said.

“My sole intent was to underscore the vital importance of integrity in our markets and the devastating impact corruption can have on investor confidence,” he added.

Speaking before the Financial Executives Institute of the Philippines (FINEX) on Wednesday, Lim cited the need to innovate without losing the public’s trust, given the recent spotlight on corruption, specifically in flood control projects, which have now been the subject of investigation by both chambers of Congress and an independent commission.

“We are reminded of that challenge in very real terms today. The flood control project scandal has shaken public confidence, wiping out an extraordinary P1.7 trillion in market value of our publicly listed companies in just three weeks, despite rising corporate earnings,” he said.

“Investors aren’t fleeing because of weak fundamentals; they’re fleeing because of weak integrity. It’s a stark reminder that corruption is a weapon of mass wealth destruction,” he added.

Several investigations are currently being made on government infrastructure projects, particularly on flood control, as President Ferdinand “Bongbong” Marcos Jr. earlier bared that 20% of the total P545-billion budget for such projects went to only 15 contractors, which he described as a “disturbing assessment.”

The PSEi closed Tuesday, October 7, at 6,083.83, up by 1.39% or 83.51 points from the previous close. This compares with the the close of 6,149.13 a month before on September 5. The broader All Shares index climbed by 0.8% or 29.27 points to 3,673.22 at the closing bell.

“Let’s face the hard truth. Our stock market is a laggard. Sadly, this reflects something deeper—a crisis of confidence. Too many firms still hesitate to go public, while others who have chosen to go public are leaving the stock market,” Lim said.

“This is not just a market issue. It’s a trust issue. And rebuilding that trust is one of the SEC’s most urgent missions,” he added.

GMA News Online has reached out to the Philippine Stock Exchange for comment on the matter. A statement was not immediately available.

Moving forward, Lim said the SEC is working on its Strategic Plan, which seeks to widen access to capital, deepen investor trust through stronger protection, modernize regulation through digital innovation, and strengthen the agency’s institutional muscle.

For his part, Marcos last month ordered a sweeping review of the proposed budget of the Department of Public Works and Highways (DPWH) under the National Expenditure Program (NEP), the agency tasked to implement the flood control projects.

He also earlier launched a website where citizens could report flood control project issues through the platform.

The administration has also established the Independent Commission for Infrastructure (ICI), in response to public calls for greater transparency and accountability in infrastructure spending. It is tasked to conduct an in-depth investigation into the alleged irregularities and misuse of funds in flood control, and other infrastructure projects.

“When trust breaks down, capital dries up, and everyone—government, business, and the public—pays the price,” Lim said.

“That is why, at the SEC, we see compliance not as a bureaucratic hurdle, but as a leadership advantage, a way to strengthen the very foundation of markets and enterprise. Because when markets are trusted, capital flows. And when capital flows, the economy grows,” he added.

Meanwhile, the Management Association of the Philippines (MAP) said that while it is a concern that the Philippines lags behind other countries in the region when it comes to equities, investors are still looking at the country even as reputational risks remain.

“When I talk to investors directly, there are people who want to come in from a capital market point of view. Not in equities, but more in investments with companies, so you see a lot of those engagements,” MAP president Al Panlilio told reporters in Taguig City.

“I think people are expecting that certain actions are done to prove that really, the government means change and means to sort of clean up itself. It’s getting back the confidence in government because there are projects, good projects, infrastructure projects that need to happen. And that needs to happen for any developing country,” he added. — BM, GMA Integrated News