MANILA, Philippines - Foreign investors may be more drawn to the Philippines due to the recently enacted legislation liberalizing the banking sector, as the presence of more foreign banks will ease the servicing requirements of foreign investors looking to transact with banks from their own countries, a trade official said.
“It is important that banks are able to establish their retail activities in the country. Most of the banks that we’ve talked to have big clients. Naturally, they need to have that ability to push [their clients’] investments in the Philippines and sell their services to the industry,” Undersecretary for Trade and Investment Promotion Ponciano Manalo Jr. told reporters in a chance interview, when asked on the sectors that are now attracting foreign interest.
Most foreign investors, according to Manalo, are more comfortable availing themselves of the services of banks from their own country, an option not readily available before due to foreign-ownership limitations, as well as the cap on the number of foreign-owned banks in the country to only 10.
Republic Act (RA) 10641, signed by President Aquino, amended RA 7721, “An Act Liberalizing the Entry and Scope of Operations of Foreign Banks,” by way of fully lifting restrictions for them to buy local banks.
The law allows the entry of reputable and financially established lenders who are granted the same privileges and opportunities as the locals. The financial integration anticipated to happen should help stimulate the economy further, according to the framers of the legislation.
Most top banks in countries that may be large investor partners, like Japan and Germany, have limited presence in the country, according to Manalo.
“Many of our top foreign investors are not served by their subsidiary banks in the Philippines, so that’s the big advantage that I see with the liberalization. [The banks’] principals will be encouraged to inquire and invest, especially in a situation where the economy is very positive. For me, that is a big factor for the investors to take another look,” Manalo added.
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