BSP to further relax forex rules

Lawrence Agcaoili - The Philippine Star
BSP to further relax forex rules
A draft circular on the proposed amendments to foreign exchange regulations covering foreign investments is being circulated.
Photo from BusinessWorld

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) may further relax its rules and regulations governing foreign exchange transactions in a bid to attract more foreign investments into the country.

A draft circular on the proposed amendments to foreign exchange regulations covering foreign investments is being circulated.

For one, the BSP plans to waive the charge on the registration of foreign, foreign currency loans, inward investments, and other foreign exchange transactions.

On the sale of foreign exchange for non-trade current account transactions of residents with non-residents, the BSP may allow the sale of foreign exchange by authorized agent banks without need for prior central bank approval to cover payments for non-trade current account transactions.

Furthermore, authorized agent banks can now sell foreign exchange to non-resident tourists and balikbayans to the extent of the amount of FX shown to have been sold for pesos by the non-residents to banks.

According to the BSP, departing non-resident tourists and balikbayans may reconvert at airports or other ports of exit unspent pesos up to a maximum of $10,000 or its equivalent in other foreign currency, calculated at prevailing exchange rates, without showing proof of previous sale of foreign exchange for pesos.

The regulator is also streamlining the documentary requirements for financial account transactions, including public sector loans or borrowings, as long as the proceeds are deposited with the BSP pending utilization as mandated under Republic Act 7653 or the New Central Bank Act.

For inward remittances, the BSP has expanded the list of investment instruments that may fall under the category of foreign direct investments or foreign portfolio investments, depending on the degree of control or influence of the investor in the investee firm.

The central bank is looking at including debt securities, such as notes, bonds and non-participating preferred shares, both not listed or listed in the Philippine Stock Exchange (PSE) and Philippine Dealing & Exchange Corp. (PDEX), issued by private sector residents in the list that needs registration with the BSP.

Furthermore debt securities issued onshore by the national government and other public sector entities, equities and debt securities issued onshore by residents that are listed on the PSE, as well as exchange traded funds issued or created onshore by residents need to be registered upon reporting by authorized agent banks.

In line with the central bank’s thrust to promote a policy environment that is market-oriented and supportive of the Philippine economy’s sustained expansion, the BSP ensures that the country’s foreign exchange regulatory framework remains appropriate for the needs of a dynamic and expanding economy.

Over the years, it has undertaken various liberalization measures to ease rules to facilitate the foreign exchange transactions by banks, public and private corporates/entities, small and medium enterprises, overseas Filipinos and the public in general.

Further relaxation of the rules and regulations is aligned with the BSP’s thrust to further deepen and develop a robust capital market through a more liberal policy environment, taking into consideration adherence to international practices and standards.

By further streamlining and simplifying procedures and documentary requirements for foreign exchange transactions, investors have greater flexibility to manage their investments and cash flows.

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