The Bangko Sentral ng Pilipinas plans to liberalize further the foreign exchange rules on investments in a bid to attract more foreign investor and help spur economic growth.
“... It is about further liberalization of investment rules. So let us just wait a little bit until that becomes a mature policy... We also want the industry to comment on this,” Bangko Sentral Governor Nestor Espenilla Jr. said in an interview over the weekend.
“Basically it is similar to what we did for external debt. We want to make it easy for investments to come in... So this one is [regarding] investments,” he said.
The regulator in May further liberalized the foreign exchange regulations in which certain transactions will no longer require prior approval from the Bangko Sentral.
Bangko Sentral Deputy Governor Diwa Guinigundo said it included the conversion of foreign currency loans granted by banks to peso loans, transfer of such loans, as well as real and other properties acquired from banks’ foreign currency deposit unit books to the regular banking unit books.
“These transactions no longer require prior BSP approval under certain conditions which seek to ensure that banks fully understand the nature and extent of the risks involved...,” Guinigundo said in an earlier statement.
He said banks must have put appropriate business policies and risk management systems in place to manage these transactions.
“The new policy is in line with the BSP’s thrust to further liberalize foreign exchange rules while maintaining a safe and sound financial system, a stable FX market, and an appropriate monetary policy,” Guinigundo said.
The Bangko Sentral in December announced new foreign exchange rules in line with the thrust of opening up the economy through a more liberal policy environment.
Under the new rules, the prior Bangko Sentral approval requirement for purely private sector loans [that is, those without guarantee from/exposure of any public sector entity] was lifted, such that these loans now only need to be registered with the regulator to allow use of banking system resources for loan payments.