BSP introduces 6th forex liberalization

April 18, 2013 10:19 pm 

MANILA, April 18 — The Bangko Sentral ng Pilipinas (BSP) on Thursday announced the sixth wave of its foreign exchange liberalization aimed to address residents’ rising needs for dollars and possibly the strengthening of the peso.

“The new rules aim to further simplify foreign exchange transactions of the general public,” BSP Deputy Governor and officer-in-charge Nestor Espenilla Jr. said in a briefing Thursday.

The central bank will issue a circular either Friday this week or Monday next week, he said.

One of the changes in the current foreign exchange rule is the increase to US$ 120,000 from US$ 60,000 the amount that a resident can buy per transaction over-the-counter (OTC) from banks without any documents and for non-trade purposes.

“The public can now buy higher amount of foreign exchange to meet their rising costs of education and medical bills, foreign travel, and other services,” he said.

Similarly, BSP International Operations Department Director Patria Angeles, during the same briefing, said it has been observed that although the limit for non-trade transactions is only US$ 60,000 big companies particularly the airline and the credit card companies are requiring more than that.

She admits that the measure will partly impact on the current strength of the local currency but stressed that “this is not the main goal.”

Also, BSP International sub-sector Managing Director Wilhelmina c. Manalac, during the same briefing, said the review on the country’s foreign exchange rules is being made to “create a responsive and appropriate regulatory environment” and to “maintain over-all stability in the foreign exchange market.”

Aside from increasing the limit on dollars that residents can buy for non-trade purposes, the central bank also increased to US$ 10,000 from US$ 5,000 the amount of foreign exchange that non-residents or Filipino immigrants can buy using unspent Philippine peso without the need to show proof of previous sale of pesos at prevailing exchange rate.

Monetary officials will also allow foreigners, with work contracts of less than one year, to open peso-denominated bank accounts using the peso they earned here.

Foreigners who are also enrolled as students in the Philippines will be allowed to open local currency-denominated bank accounts.

The new regulation also expanded the list of foreign investments that Filipinos can place their money using dollars sourced from domestic banks.

Existing regulation allows residents to invest US$ 60 million in equities and bonds issued by the government overseas.

The new investment options include off-shore foreign-denominated global funds or mutual funds and unit investment trust funds (UITFs), foreign exchange intercompany loans of local enterprise to their parent companies or subsidiaries with a tenor of at least one year, real property overseas including condominium units, debt papers issued overseas by local entities, and equities by Philippine corporations listed overseas .

Foreign investors who were not able to use their targeted investment in the Philippines will be allowed to exchange their peso to foreign exchange at prevailing exchange rate provided that at least 50 percent of the targeted investment was really invested in the country.

BSP will also extend by two years, from December 28, 2014 to December 28, 2016, the window for loans secured by private companies for public-private partnership (PPP) projects without prior BSP approval.

These loans, on the other hand, shall continue to be subject to BSP registration to qualify for servicing using foreign exchange of banks and their foreign exchange corporations, the central bank said.

The central bank has also shortened to one year from five years the deadline for the registration of foreign direct investment (FDIs) although there will be a two-year grace period.

Relatively, the central bank opened a temporary window for unregistered foreign loans outstanding as of September 30, 2012 and due from May to December 2013.

Manalac said the window was opened for the central bank “to better capture unregistered loans.”

“This is also a way of addressing gaps,” she said explaining that although the BSP gets information on these loans they do not have all the figures. (PNA)

DSP/JS/SSC

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