Foreign Investment Registration with BSP – Why and How?
Any investment, including foreign currency entering the Philippines on behalf of non-residents should be registered as foreign investment with the Bangko Sentral ng Pilipinas.
BSP supports the country’s policy to encourage inward foreign investment. According to the Manual of Foreign Exchange Transactions (Manual) issued by BSP, registration of foreign investments with BSP is not mandatory unless the foreign exchange needed to service the repatriation of capital and the remittance of dividends, profits and earnings which accrue thereon shall be purchased from Authorized Agent Banks (“AAB”) or subsidiary/affiliate foreign exchange corporations of AABs (“AAB-forex corps”)
Forms of Investment
Under Sections 35 and 36 of the Manual, inward foreign investment maybe in any of the following forms:
1. Cash or in kind (machinery and equipment, raw materials, supplies, spare parts and other items including intangible assets necessary for the operations of the investee firm).
2. Peso-denominated securities issued onshore by the National Government and other public sector entities.
3. Securities of resident enterprises listed at the Philippine Stock Exchange (PSE).
4. Peso time deposits with an AAB with a maturity of at least ninety (90) days.
5. Other peso-denominated debt instruments issued onshore by private resident firms (such as bonds/notes, bills payables, non-participating preferred shares) and those loans requiring prior BSP approval.
Three Incentives to Register Foreign Investment
Under Section 40 of the Manual, the registration of the foreign investment enables the foreign investor to certain repatriation privileges and advantages that otherwise hr/she will not have access to, such as:
1. Inward foreign investments duly registered with the BSP or with a custodian bank duly designated by the foreign investor, shall be entitled to full and immediate repatriation of capital and remittance of dividends, profits and earnings using foreign exchange to be purchased from AABs and AAB-forex corps.
2. Foreign exchange may be purchased from AABs/AAB-forex corps in an amount equivalent to the peso sales/divestments proceeds (including dividends, profits or earnings thereon) of BSP-registered foreign investments.
3. Registering banks for foreign investments may sell for outward remittance the equivalent foreign exchange of excess pesos funded with inward remittance for foreign exchange under certain conditions.
If the company or individual has not registered its foreign investment with the BSP, the foreign investor will have a hard time in sourcing foreign currencies for the purpose of getting back his/her investment in the Philippines.
The foreign investor may reinvest peso divestment/sales proceeds or remittable dividends/profits or earnings of duly registered investments. The reinvestments shall be registered with the BSP or the investors’ designated custodian banks (Section 42 of the Manual).
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