THE BANGKO SENTRAL ng Pilipinas (BSP) said it will continue supporting the post-pandemic economy through enabling regulations that will encourage investments and infrastructure projects.
“On the part of the BSP, we support investment promotion through a regulatory environment that is welcoming to foreign investors and technological innovation,” BSP Governor Benjamin E. Diokno said in a speech for an event organized by London-based think tank Official Monetary and Financial Institutions Forum.
Central bank officials have said their sandbox approach to regulating digital financial firms allows them to be more flexible and open, rather than stifling potential players.
This is reflected in the BSP’s approval of three digital bank licenses to foreign entities — including Tonik Digital Bank, Inc. (Philippines) and UNObank which both have Singapore-headquartered parent units, and GoTyme which jointly is owned by the Gokongwei Group and Singapore fintech firm Tyme.
Mr. Diokno said government policies that will further liberalize the economy will also be key to making the Philippines “more investor-friendly” in a post-pandemic world.
These include the country’s participation in the Regional Comprehensive Economic Partnership (RCEP) among select Asia-Pacific economies and tax reforms like the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
The Philippines signed the RCEP in November together with 14 other economies in the Asia-Pacific. The deal builds on existing bilateral and multilateral agreements in the region and also simplifies the rules related to identifying products that are “made” in a particular country.
Meanwhile, Republic Act 11534 or the CREATE law took effect this year. It streamlines tax incentives for businesses and immediately slashed the corporate income tax to 25% from 30%.
Mr. Diokno said the BSP will also back the infrastructure push that is seen to help the post-pandemic economy.
“The BSP is contributing to infrastructure development through regulatory measures such as by increasing the single borrower’s limit (SBL) as well as deepening of the capital market that makes it easier for infrastructure companies to finance projects,” he said.
In December last year, the BSP said it will waive sanctions for foreign bank branches that will breach the SBL until end-2021. This was done in a move to diversify credit exposures specifically for funding big-ticket projects.
The Monetary Board in 2018 also approved a separate SBL for special purpose entities that take part in implementing major infrastructure projects of the government.
The central bank chief said regulations and programs that provide accessible credit for small businesses are also expected to support recovery. This is complemented by financial literacy programs done related to savings and investments, he added.
The BSP is developing a credit risk database together with the Japan International Cooperation Agency that is aimed to help financial institutions for their lending decisions to micro-, small-, and medium-sized enterprises.
“Looking ahead, we do not aim to simply regain the economic losses from the pandemic. We aspire for a ‘post-COVID-19 Philippine economy’ that is stronger and more resilient, more technologically advanced, and more inclusive than ever before,” Mr. Diokno said. — L.W.T.Noble