By Imee Charlee C. Delavin, Reporter

PHL financial literacy score, ranking decline

Posted on June 23, 2016

THE PHILIPPINES’ score and ranking in a financial literacy index declined for last year following a large drop in basic money management, a MasterCard survey released yesterday showed.

The Philippines was ranked 11th among 17 countries in the Asia-Pacific region, although fifth in the list considering other economies landing on the same spots, according to the payment firm’s latest Financial Literacy Index.

The MasterCard index measures skills in basic money management, financial planning and investment.

“Overall, the developed economies show largely unchanged scores while the emerging markets show the biggest decline in scores,” MasterCard said in its report.

Out of a possible 100, the Philippines scored 62 in overall financial literacy, down four points from the previous score and also lower than the regional mark of 64. Singapore, Taiwan and New Zealand however, led the pack with 71, followed by Hong Kong (69), Australia (68) and Malaysia, China, Thailand and Sri Lanka with 67 points.

The countries below the regional score for overall financial literacy were Indonesia -- which was tied with the Philippines with a score of 62 -- Korea with 61, followed by India, Myanmar and Bangladesh which all received 60 points. Vietnam scored 58, while Japan trailed the list with 56.

“The fact that we have hit a record low in financial literacy scores across the region is a huge concern and must be immediately looked into. As far as emerging markets are concerned, while the reduced gender gap is certainly laudable, this year’s Financial Literacy Index shows that these countries are evidently struggling the most here. Generally, the young and the unemployed across all markets require special focus to boost the overall financial literacy in the region,” Georgette Tan, Group Head, Communications, Asia Pacific, MasterCard was quoted as saying.

Filipinos were ranked 10th in terms of basic money management, which includes budgeting, saving and responsible credit usage, down seven places from its previous rank.

It ranked 11th in the Asia Pacific based on financial planning, or knowledge of financial products and services, and ability to make long-term plans for financial needs. The country was at number 12 when it came to investment knowledge, which measures basic understanding of investment risks, investment products and the necessary investment skills.

“The increasingly complex and interconnected financial markets along with mounting uncertainties surrounding the global economy have made it even more paramount for greater financial knowledge among consumers, and this is especially vital when it comes to making sound investment decisions,” Ms. Tan said.

“What is evident from this year’s outcome is that mere individual initiative is not going to be enough to counter this problem. The resolution of this issue lies in a collective endeavor comprising government reforms, community initiatives, education and financial services combined with individual effort,” she added.

The MasterCard survey noted that Asia Pacific women made progress towards closing the gender gap, with the regional average score increasing by two points to 100 with “women in emerging markets are more at par with their male counterparts compared to women in developed economies.”

In terms of age, the payment firm said the people under 30 are less financially literate than those over 30 in all markets.

“With regards to employment status, generally working professionals are found to be more financially proficient than those who are not working. While Indonesia, Philippines and Bangladesh exhibit no difference between the two groups,” it added.

The survey was conducted between May and June 2015 among 8,718 respondents in the following countries: Australia, New Zealand, China, Hong Kong, Taiwan, Japan, Korea, Malaysia, Philippines, Thailand, Indonesia, Singapore, Vietnam, India, Bangladesh, and Myanmar, Sri Lanka.