New legislation allowing the entry of more foreign banks in the country is expected to help facilitate increased investments in labor-intensive sectors, which should result in higher incomes across the country.
Financial services are also expected to improve as new technologies and talent flood the industry, the Bangko Sentral ng Pilipinas (BSP) said on Monday.
This follows Malacañang’s announcement on Sunday of President Aquino’s signing of Republic Act 10641, which lifts most restrictions on foreign groups owning banks in the country.
“The economic benefits that can be derived from a further opening of the Philippine banking system to foreign banks are clear,” BSP Governor Amando M. Tetangco Jr. told reporters.
“The liberalized system is also expected to generate increased foreign direct investments in the Philippines, including in the manufacturing sector that will create more jobs and raise output,” he added.
In pushing for more liberalized banking services earlier this year, BSP officials have said foreign banks usually serve as facilitators for the entry of companies from their home countries into the Philippines.
Foreign firms, officials said, are more comfortable dealing with institutions they are familiar with.
Technology transfer and fresh talent should likewise further invigorate the industry, Tetangco said.
More liberalized rules on banking comes ahead of the implementation of the Association of Southeast Asian Nations’ (Asean) planned economic integration, which moves up to a higher gear starting next year.
Part of this integration is the Asean Banking Integration Framework (ABIF), which would pave the way for the region’s lenders to tap new markets that were previously closed off by protectionist policies.
Foreign banks have been wanting to open units in the Philippines for some years now, but have been stymied by regulatory restrictions. Paolo G. Montecillo