MANILA – – Philippine monetary officials are considering another foreign exchange liberalization measure for implementation by year end, this time on easing of registration for foreign direct investments (FDIs).
Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said FDIs are required to be registered with the central bank starting in the 1970s since the country was then experiencing lack of dollar supply.
“Today is a very different economy. There’s a lot of foreign exchange available to the country,” he said.
The central bank chief said what BSP officials want is for FDI transactions to be reported “to the BSP but not as a screening mechanism of what should come in or out.”
“We are reforming the system such that if it’s possible, to do an electronic report, so you don’t have to even submit documents to the BSP. We’re going to do that not just for inward investments but also for foreign borrowings by private sector,” he said.
Espenilla said the BSP is now in talks with the banking industry for this purpose and draft regulations are now being drafted.
“I hope to see that before the end of the year,” he said.
Espenilla said they see no need to register FDIs anymore because there is already a “highly regulated formal foreign exchange market and a very liberal parallel market that passes through the FCDU (foreign currency deposit unit) system.”
He explained that this environment has created “a formal foreign exchange market that is shrinking as opposed to a growing parallel market which is strategically counterintuitive from what BSP wants to see.”
He said what monetary officials aim is “to see transactions move into the regulated market where it is visible, and where we can apply clear standards including AML (anti-money laundering) standards.”
“The approach is dual – we are tightening the requirements on the non-banks that are currently dominant in the parallel market, as well as liberalizing requirements on the banks operating in the formal market,” he said.
“That is part of reform process of doing away with the registration requirements except only for those to report what transaction has transpired so we can compile our balance of payments,” he added. (PNA)
