BSP assures investors on 90-day period

The Bangko Sentral ng Pilipinas (BSP) assured yesterday that its new ruling imposing a 90-day holding period for foreign investments placed in peso time deposits is "not intended to restrict legitimate investments."

In another clarification, following adverse reactions to the new circular, the BSP assured that "the registration of a foreign investment is not mandatory."

According to the BSP, registration is "only required if the foreign exchange to be used for servicing of capital repatriation and the remittance of dividends, profits and earnings thereon will be obtained from the banking system."

The BSP insists that the amendments are aimed primarily at plugging loopholes in the existing registration procedures that may have allowed speculative activities in the foreign exchange market and contributed to the volatility in the exchange rate.

The BSP said the amendments, would improve the monitoring of foreign investment transactions, even as it reiterated that the 90-day minimum holding period is only for investment in peso time deposits.

The BSP stressed that there is no minimum period for all other types of eligible investments such as equities, government securities and commercial papers.

Pre-termination of a time deposit prior to the minimum holding period of 90 days will result in the cancellation of the Bangko Sentral Registration Document (BSRD) earlier issued by the BSP.

The peso proceeds from the pre-terminated peso time deposit, the BSP clarified, may be invested in other eligible instruments and a new BSRD may be issued for such investment to enable the investor to remit out its proceeds at any time, using foreign exchange from the banking system.

The BSP also explained that divestment or sales proceeds of registered foreign investment, other than peso time deposits pre-terminated before 90 days, may be deposited temporarily with any bank, in any deposit account, with full repatriation privileges, in accordance with existing rules.

The BSP added that foreign investment in listed securities may continue to be registered with custodian banks. The registration of all other investment shall be handled by the BSP through the International Operations Department (IOD).

The BSP has assured the issuance of a BSRD within 24 hours from receipt of an application for registration, provided all required supporting documents are complete and in order.

The BSP said that all existing rules on foreign exchange swaps and forwards not inconsistent with the provisions of the new circular, will remain in force and effect.