One-year grace period set for FDI remittance

MANILA, Philippines – Foreign investors have been given a one-year grace period by the Bangko Sentral ng Pilipinas (BSP) to register their inward remittance of funds.

BSP Governor Amando Tetangco Jr. said the grace period would cover all foreign direct investments (FDI) that are existing and already recorded in the books of the investee firm, regardless of the date when funding for the investment was made via inward remittance of foreign exchange or transfer of assets to the Philippines.

“The new measure is part of the BSP’s continuing efforts to facilitate the use of foreign exchange resources of the banking system for legitimate purposes, including outward remittance in the foreign exchange equivalent of peso divestment proceeds from, and income on, registered FDIs,” he added.

In 2013, the BSP approved the adoption of a one-year prescriptive period within which applications for FDI registration must be filed with the BSP to allow the timely capture by the central bank of more current information on foreign investments flowing into the economy.

The one-year period is reckoned from date of inward remittance of foreign exchange or transfer of assets to the Philippines. A two-year transition period was also provided to allow registration of old but unregistered FDIs already recognized in the books of the investee firm, regardless of when the funding for the investments came in. The period ended in April last year.

In response to numerous applications for registration that were received and to further widen the coverage of BSP’s database on FDIs, the BSP chief said an additional one-year grace period for filing such requests was approved by the Monetary Board subject to compliance with registration requirements under the Manual of Regulations on Foreign Exchange Transactions and payment of a processing fee of P10,000 per Bangko Sentral Registration Document (BSRD) to be issued.

BSP Deputy Governor Diwa Guinigundo said the additional one-year period is the final chance given for existing FDIs to be registered with the central bank.

“There were instances in the past an FDI which came in 10 or 15 years ago did not bother to register with us. If they wish to take out some of the earnings by converting to foreign exchange they should have registered with us,” he said.

Guinigundo said obtaining BSRD from the central bank would give investors the flexibility in sourcing foreign exchange for outward remittance of capital withdrawn from investments in the country and related income from same.

Notwithstanding the prescriptive period, the BSP said the registration of foreign investments remains optional on the part of the investor.

It added the divestment proceeds from unregistered investments and income could still be remitted out provided the foreign exchange is not obtained from the banking system.