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Philippines: Amendments to the FX Regulations

The Bangko Sentral ng Pilipinas (BSP), the central monetary authority of the Philippines, has issued circulars amending the country's foreign exchange regulations, to provide greater ease in transacting foreign exchange, among other purposes.

One of the amendments is an increase to the amount of foreign exchange that Philippine residents can purchase from the banking system to $500,000 for individuals and $1 million for corporates/other entities without need for prior BSP approval and without supporting documents (other than the application to purchase). Prior to the amendments, residents could only purchase up to $120,000 for non-trade current account transactions with non-residents (such as salaries of foreign expatriates), unless certain documents are presented. The amendments also make clear that the new thresholds apply to import trade transactions of residents.

The new regulations also added in the list of loans not requiring prior BSP approval those foreign currency loans of non-residents from banks operating in the Philippines that will not be serviced using foreign exchange to be purchased from the banking system.

The amendments also expanded the list of allowable outward investments by residents not requiring prior BSP approval to include foreign currency-denominated investment instruments issued onshore by non-residents. However, the condition remains that such outward investments must be funded from the resident's foreign currency deposit account/s (whether offshore or onshore) and/or foreign exchange purchased from the banking system of up to $60 million or its equivalent in other foreign currency per investor per year, or per fund per year for qualified investors. As regards the issuance itself, the rule that non-residents' issuance of notes/bonds or similar instruments in the domestic market requires BSP approval before execution thereof is still applicable.

Notably, the relaxation by the BSP of the foreign exchange regulations facilitated what appears to be the first ever public offering of US dollar-denominated securities in the Philippines by a foreign corporation for listing with the Philippine Stock Exchange. Del Monte Pacific, a British Virgin Island company whose ordinary shares are listed on the Singapore Stock Exchange and the Philippine Stock Exchange (PSE), recently issued US dollar-denominated preference shares in the domestic market. The preference shares have been listed with the PSE pursuant to the latter's newly issued rules on dollar-denominated securities.

Melyjane G. Bertillo-Ancheta

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