Joint Foreign Chambers of the Philippines

American Chamber of Commerce of the Phils., Inc. Australian-New Zealand Chamber of Commerce (Phils.), Inc. Canadian Chamber of Commerce of the Phils., Inc. European Chamber of Commerce of the Phils., Inc. Japanese Chamber of Commerce & Industry of the Phils., Inc. Korean Chamber of Commerce of the Phils., Inc. Philippine Association of Multinational Companies Regional Headquarters, Inc.

March 17, 2014

Statement on Amendments to Foreign Banks Liberalization Act The Joint Foreign Chambers has sent letters to Senate Banks Committee Chairperson Sergio Osmena III and House of Representatives Banks Committee Chairperson Sonny Collantes to express support for bills seeking to amend Republic Act 7721, further liberalizing the entry and scope of operations of foreign banks (Senate bill 2159 and House Bill 3984). When RA 7721 was promulgated in 1994 it was intended to create a liberalized and more competitive banking system. It allowed the entry of foreign banks either through ownership of up to sixty percent (60%) of the voting stock of an existing domestic bank or of a new banking subsidiary or establishment of branches with full banking authority. Amending the 20-year law to increase foreign ownership to up to one hundred percent (100%) can pave the way for more competition and capital that ultimately benefits the public. Increased participation by foreign banks will help sustain the growth of the Philippine economy. Moreover, the amendment is consistent with the policy direction of the Bangko Sentral ng Pilipinas to introduce reforms to make the banking industry responsive to the needs of stakeholders and market conditions. Lastly, the passage of HB 3984 would prepare the Philippines for ASEAN financial integration. It is consistent with the ASEAN Banking Integration Framework under which so-called Qualified ASEAN Banks can operate within ASEAN jurisdictions on equal terms as domestic banks of that jurisdiction subject to certain prudential and governance standards. Arangkada Philippines 2010, published by the Joint Foreign Chambers, containing 471 recommendations from Filipino and foreign business persons for building a more competitive economy, reform-by-reform, leading to high growth and millions of new jobs, includes as one of its recommendation for Macro-economic Policy to allow more foreign banks to operate and ease restrictions on foreign bank operations.

Committee approval on March 5 of HB 3984 and the filing of the counterpart SB 2159 is a good start towards the completion of this recommendation.