The Bangko Sentral ng Pilipinas (BSP) will further ease documentary requirements for the sale and transactions of foreign exchange (FX) for borrowing, other financing and investments.
A draft circular which amends FX regulations covering operational relief measures for FX transactions, is currently circulating among banks. It has a feedback deadline of Aug. 4 to allow banks enough time to submit suggestions and recommendations to the BSP.
The BSP is revising the minimum documentary requirements for the registration with BSP of inward invesments as well as FX inwardly remitted to fund investments.
The central bank is also amending the rules on non-residents’ peso deposit accounts such as foreign banks to allow them to open and maintain peso deposit accounts in the Philippines subject to the submission of necessary documents.
The revisions will include the minimum documentary requirements for the following: the sale of FX relating to resident to resident FX transactions and resident to non-resident’s non-trade current account transactions; sale of FX to foreign loans/borrowings, guarantees and other financing schemes or arrangements; and the sale of FX to inward and outward investments. Residents include local banks while non-residents include foreign banks.
The draft circular also included proposed guidelines for inward investments, the supporting documents for the registration of inward investments and the processing fees on FX transactions.
For most of the FX transactions identified in the proposed circular, the BSP has relaxed the documentary requirements and in some, will only require prior BSP approval. For other transactions, the requirement is trimmed to merely asking banks to register with the BSP, proof of reporting and the payment of fees.
Last May, the BSP has also approved changes to a more streamlined rules and regulations on the cross-border transfer of foreign currencies.
The central bank has been reviewing its policy on the cross-border transfer of local and foreign currencies as well as amendments to other FX regulations such as reporting guidelines, among others.
BSP Circular No. 1146 was issued last May 26 and it simplified the non-trade current account transactions, peso deposit accounts on non-residents and cross-border transfers.
At the moment, the BSP allows a person to “freely bring into or take out” of the country or electronically transfer, up to P50,000.
The BSP also allows a person to carry up to $10,000 or its equivalent in other foreign currencies as travelers’ checks, other checks, drafts, notes, money orders, or bonds.
In excess of the P50,000 limit, an individual will have to get the BSP’s written authorization first to bring into or take out cash or other forms of cash out of the country.
Meantime, foreign currencies more than $10,000 are allowed but it requires a foreign currency declaration form from the Bureau of Customs desks in all of the international airports and seaports.
If a person has to have an amount that is more than P50,000, it should only be because of these reasons: testing/calibration of money counting/sorting machines; numismatics or collectors of currency; and educational purposes.
Amending the FX rules from time to time ensure that it remains appropriate to the needs of a dynamic and expanding local economy. Updating FX rules will also support regional integration with regional and global markets, and enhance data capture on FX transactions.
The BSP since 2007 has approved and completed 12 rounds of FX policy liberalization.
The BSP is currently focused on streamlining the rules on banks’ foreign currency deposit units to make it more flexible. It is the second phase of amendments for its FX policy. The first phase of reforms was done before the pandemic which covered banks’ management of FX exposures.