MANILA, Philippines – President Benigno Aquino III has signed into law a bill allowing the “full entry of foreign banks into the Philippines” in time for the 2015 ASEAN regional economic integration.
The new law, Republic Act (RA) 10641 or “An Act Allowing the Full Entry of Foreign Banks in the Philippines,” amends RA 7721, “An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines.”
The 20-year-old RA 7721 allowed the entry of foreign banks either through ownership of up to 60% of the voting stock of an existing domestic bank or of a new banking subsidiary or establishment of branches with full banking authority.
RA 10641 now allows foreigners to own up to 100% of domestic banks and facilitate the entry of established, reputable and financially sound foreign banks in the Philippines. It also granted locally-incorporated subsidiaries of foreign banks the same banking privileges as domestic banks of the same category.
RA 10641 is expected to give the Philippines advantage in the economic integration of the Association of Southeast Asian Nations (ASEAN), where a common banking framework will be implemented.
The ASEAN Banking Integration Framework, to be implemented by 2020, will allow qualified ASEAN banks (QABs) to operate within ASEAN jurisdictions on equal terms as domestic banks, subject to certain prudential and governance standards.
A product of careful study
RA 10641 was a product of careful study, Presidential Communications Operations Office (PCOO) Secretary Herminio “Sonny” Coloma said.
“Let’s think about the reality that we’re moving toward an ASEAN integration, and that includes financial integration,” he said in Filipino over Radyo ng Bayan.
Under the integration, member countries will have “a single market and production base, a highly competitive economic region, a region of equitable economic development and a region fully integrated into the global economy.”
Coloma said many businessmen who want to invest in the country were asking if their banks could be allowed to operate here.
The Bangko Sentral ng Pilipinas (BSP) welcomes the signing of RA 10641.
“The economic benefits that can be derived from a further opening of the Philippine banking system to foreign banks are clear augmentation of financial resources [through increased foreign direct investments] that will be available to the domestic banking market, transfer of technology, enhancement of human resource skills,” BSP Governor Amando Tetangco Jr. said in a text message to reporters.
Senator Sergio Osmeña III, the proponent of the Senate bill allowing full entry of banks, said: “Greater foreign participation in the banking and financial sectors is expected to augment the financial resources to which the Philippine economy may have access, thus supporting the initiatives of the present administration in implementing various infrastructure projects and rehabilitation programs.” – Rappler.com