THE CENTRAL BANK has announced fresh easing of foreign exchange (FX) transaction rules, which include simpler documentary requirements for investments involving currency trades.
The Bangko Sentral ng Pilipinas (BSP) unveiled new changes to rules covering inbound and outbound funds. The central bank explained in a statement that these are expected to improve access to foreign currency in the local banking system and make it easier for investors to bring in or take out their money.
Major changes include broader coverage of inbound investment transactions as well as derivative instruments, allowing registration of fund inflows beyond the prescriptive period, and allowing the sale of foreign currency “relating to investments.”
Rules on outbound investments are also being updated by lifting the need for BSP approval before parties can purchase foreign currency to invest overseas or repatriate foreign funds. Instead, investors need only inform the BSP prior to such transactions.
The BSP is also allowing financial firms to submit supporting documents to register foreign loans incurred by private firms without public sector guarantee, as well as registration of inbound flows and the sale of foreign currencies through electronic means. Banks usually require documents like printed dollar loan agreements for corporate buyers or travel papers for individual clients before they can buy foreign currency.
A one-year grace period is also being given to file applications to register investments, regardless of date of funding.
“The reforms intend to facilitate access to the banking system’s FX resources for legitimate transactions, and further streamline and simplify procedures and documentary requirements for FX transactions,” the BSP said. “The reforms will give the investors greater flexibility to manage their investments and cash flows.”
The central bank has been liberalizing its foreign exchange rules since 2007 as monetary authorities seek to improve the ease of doing business in the Philippines. Such changes are also meant to encourage the public to transact with banks rather than the informal market.
BSP Deputy Governor Chuchi G. Fonacier had said that the central bank may hold off further relaxation of these standards amid a highly-volatile FX market, and would instead prioritize reducing the paperwork required for currency transactions. — Melissa Luz T. Lopez