BSP further eases forex rules for foreigners

The Bangko Sentral ng Pilipinas (BSP) has further relaxed foreign exchange regulations to allow more nonresidents to participate in the local stock market.

The new memorandum circular approved by the Monetary Board (MB), the BSP’s policymaking body, would facilitate the entry and exit of foreign investors in the country ahead of the Southeast Asian region’s economic integration in 2015.

“The new FX liberalization policy aims to facilitate cross-border investment transactions consistent with our commitments under the Asean Economic Blueprint 2015,” BSP Deputy Governor Diwa C. Guinigundo said Tuesday.

Under the new set of rules, custodian banks of foreign investments may register in shares of foreign companies to be listed on the Philippine Stock Exchange (PSE).

The BSP also approved the conversion to foreign currencies of money made by foreign investors from the sale of locally listed shares.

These changes will pave the way for foreign investors to invest in foreign companies that are listed on the PSE.

“The listing and trading of nonresident securities in the domestic market can promote greater confidence in the economy and its capital market,” Guinigundo said.

The BSP said these investments by foreigners in foreign companies listed on the PSE would have to be registered with the central bank, which tracks the movement of foreign capital in the country.

Registering these investments will allow foreign investors to buy dollars or other currencies from local banks, allowing them to remit their profits from investments in the Philippines to their respective home countries.

Last July, the BSP said it would allow the prepayment of BSP-registered short-term loans.

“This will facilitate access to the banking system for the legitimate transactions requiring payment in foreign exchange,” the BSP said.

Prepayment of short-term loans, or those that mature one year or less, was previously not allowed.

The new rules also simplify and reduce the reporting burden on banks. This is through the waiver of reportorial requirements for import transactions, provided that banks maintain adequate records that the BSP can verify if needed.