BSP Registration of Foreign Investments in the Philippines

For a foreign investor in the Philippines intending to do business in the Philippines, one common question is:

Is a foreign investment required to be registered with the Bangko Sentral ng Pilipinas ( BSP or Central Bank of the Philippines)?

By foreign investments, it shall mean an equity investment made by non-Philippine national in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Central Bank which shall assess and appraise the value of such assets other than foreign exchange (Section 3(c), RA No. 7042 – Foreign Investments Act or FIA). Under the Manual of Regulations for Foreign Transactions of the BSP, inward foreign investments may be in any of the following forms:

• foreign direct investments in Philippine firms or enterprises either in cash or in kind  (e.g. machinery and equipment; raw materials, supplies, spare parts, and other items including intangible assets necessary for the operations of the investee firm);
• investments in peso-denominated government securities;
• investments in securities listed in Philippine Stock Exchange (PSE);
• investment in peso-denominated money market instruments;
• investments in peso time deposits with authorized agent banks (AAB) with minimum maturity of ninety (90) days

As a rule under FIA (Section 5), a qualified non-Filipino national  may do business in the Philippines upon registration with the Securities and Exchange Commission (SEC) or invest in a domestic enterprise to the extent allowed by law, without need of prior approval. This would mean that inward foreign investment need not be registered with the BSP unless the foreign exchange needed to service the repatriation of capital and remittance of dividends, profits and earnings which accrue thereon shall be purchased from AABs or AAB-forex corporations.

Registration of inward foreign investments are made directly with the BSP, who will issue a Bangko Sentral Registration Document (BSRD) to evidence such registration. Inward foreign investment in peso-denominated government securities, PSE-listed securities, and peso time deposits shall be registered with an investor’s designated custodian bank in behalf of the BSP. Registering such foreign investments would entail the following repatriation and remittance privileges:

• 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;
• Foreign exchange may be purchased from AAB and AAB-forex corps for outward remittance in an amount equivalent to the peso sales/divestments proceeds of registered foreign investments;
• Registering banks for 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