Disposition of Foreign Exchange Receipts
- Foreign exchange can be freely sold and purchased outside the banking system.
- Receipts/earnings may be deposited in foreign currency accounts locally or abroad or taken out of the country.
- Proceeds from foreign loans and investments must continue to be sold to Authorized Agent Banks (AABs) for pesos to allow servicing these obligations.
Sales of Foreign Exchange by Authorized Agent Banks (AABs)
- All banks licensed by Central Bank except Offshore Banking Units (OBUs) are Authorized Agent Banks.
- AABs can sell foreign exchange without prior Central Bank approval for specified foreign exchange transactions including travel, education, medical expenses, support of dependents, port disbursements, membership dues, royalties, reinsurance, lease payments, and others.
- Payments related to foreign loans remain subject to existing Central Bank regulations.
Responsibility of AABs
- AABs must ensure that foreign exchange purchases are duly documented to prove legitimacy.
- Taxes must be paid where required before foreign exchange remittance abroad.
Purchase of Foreign Exchange by Tourists
- Tourists may purchase foreign exchange from AABs up to the amount they had sold for pesos.
- Unspent pesos up to US$200 equivalent may be reconverted upon departure without showing prior purchase proof.
Foreign Exchange Reporting Requirements
- All AABs to report foreign exchange purchases and sales to the Central Bank: daily for commercial banks and monthly for thrift and rural banks.
- Certain resident non-trade foreign exchange earners (such as recruitment agencies, insurance companies, tourism-related businesses, airline operators, contractors, and others) must submit monthly reports of foreign exchange activity to Central Bank.
Import and Export of Philippine Currency
- No person may bring in or out of the country Philippine currency or peso-denominated instruments exceeding P5,000 without Central Bank authorization.
Inward Foreign Investments
- Foreign equity investments must be registered with Central Bank; banking investments require Monetary Board approval.
- Investments in government securities and listed stocks require registration via stock broker/dealer or custodian bank.
- Registered foreign investments entitled to full capital repatriation and dividend/interest remittance privileges without prior Central Bank approval.
- Import/export of stock certificates to foreign investors requires no prior Central Bank authorization.
- Remitting AABs must furnish Central Bank with relevant documentation for monitoring.
Outward Investments by Philippine Residents
- Residents can invest abroad without prior Central Bank approval if funded from foreign currency deposit units, non-AAB sources, or AAB amounts under $1 million per year.
- Foreign exchange purchase applications for outward investments require feasibility studies and supporting project documents.
- Dividends and proceeds from such investments shall be inwardly remitted within 15 days and sold to AABs within 3 business days.
Offshore Banking System
- OBUs may maintain peso deposit accounts with domestic banks for operational expenses and payment of foreign exchange sold from eligible inward remittances.
- Peso deposit accounts shall be funded by foreign exchange eligible for Philippine international reserves.
Foreign Currency Deposit System
- Thrift and commercial banks authorized to operate Foreign Currency Deposit Units (FCDUs) may engage in foreign currency transactions including deposits, loans, investments, and swaps, subject to Central Bank regulations.
- FCDUs must maintain 100% foreign currency cover composed of various specified assets.
- Deposits under FCDS are eligible as collateral for peso or foreign currency loans.
Fiscal Agency Service
- Central Bank to provide fiscal agency services to the government including direct servicing of foreign exchange needs and administration of government funds.
- Transactions settled between Central Bank, AABs, and government agencies require specific authorizations and procedures.
Gold Transactions
- Small-scale miners must sell gold to Central Bank; primary and secondary gold may be sold at option to Central Bank.
- Central Bank may sell gold grains/pellets to manufacturers at cost plus fees.
- Private sector may freely buy and sell gold domestically without Central Bank approval.
- Export/import and gold hedging provisions of prior Circular are repealed.
Foreign Trade Transactions
- Commodity exports are generally unrestricted except where national interest requires regulation.
- Payment modes for exports include Letter of Credit, Documents Against Payment/Acceptance, Open Account, Cash Against Documents, Prepayment/Export Advances, Intercompany Offset, and Consignment.
- Exporters may retain 100% of foreign exchange earnings freely.
- Export financing and rediscounting facilities are available subject to existing rules.
- Export of gold allowed except for small-scale mining gold which must be sold to Central Bank.
Amendments and Repeals to Prior Circulars
- Several specific sections of prior Circular No. 1348 on foreign trade transactions are repealed to align with liberalized regulations.
- Commodities with specified classification codes are deleted from restricted lists.
Foreign Investments Registration Procedures
- Foreign investments must be registered with Central Bank or designated custodian banks and will be issued Central Bank Registration Documents (CBRD).
- Registration procedures and required supporting documents vary based on type of investment: cash or in-kind equity investments, financial institutions, government and listed securities.
- Registration documents are replaced with standardized CBRDs, which facilitate repatriation and remittance of dividends and proceeds.
Capital Repatriation and Dividend Remittance
- Duly registered foreign investments enjoy full repatriation and remittance privileges without prior Central Bank approval upon presentation of CBRD.
- Special documentary requirements protect compliance and tax obligations.
- Investments prior to March 15, 1973 enjoy repatriation privileges through AABs.
Temporary Deposit Procedures for Divestment Proceeds and Dividends
- Broker/applicant must notify Central Bank within two banking days of deposit along with supporting sales and deposit documents.
- Applications for repatriation or reinvestment require submission of Central Bank acknowledgement and supporting documentation.
- Custodian banks submit CBRDs and documents to Central Bank for post audit within two banking days.
Final and Miscellaneous Provisions
- Existing provisions not inconsistent with this circular remain effective.
- Pending violations of repealed or amended regulations are governed by regulations effective at the time of the cause of action.
This comprehensive outline covers key provisions, regulatory scope, defined terms, procedural requirements, reporting obligations, and enforcement mechanisms essential for compliance with the liberalized foreign exchange regulations under BSP Circular No. 1353, as amended.