ASEAN KEY DESTINATIONS
Philippine central bank to ease loan rules
The Philippine central bank said on Friday its Monetary Board has approved the easing of some rules on foreign borrowings of private banks and portfolio investment inflows, easing the private sector's access to dollars, reported Reuters.
The new measures form part of the third phase of the central bank's foreign exchange liberalisation, a reform started in 2007.
The steps came as the Philippine peso leads the region's currencies with a 0.5 percent gain so far this year, after ending 2008 as one of Asia's laggards.
A successful $1.5 billion sovereign bond offer last week and forecasts of continued economic growth, albeit slower than in 2008 and 2007, have supported the peso.
The central bank has scrapped the prior approval requirement for foreign loans of more than one year intended for relending by private banks, it said in a statement.
It also gave banks more time, or 10 days from loan drawdown against the previous 3 days, to register short-term foreign exchange loans with the monetary authority.
Banks must register medium- to long-term loans within three months from the time they utilised the loan proceeds. Previous rules were silent on the registration of these loans.
The central bank also widened the list of bank activities eligible for foreign financing to include bank purchases of state assets and acquisition of non-performing assets of banks.
The monetary authority is relaxing foreign exchange restrictions after Philippine banks beefed up their risk management systems following the Asian financial crisis.
The move also supports freer flow of foreign exchange to attract more investors and boost the local economy.
In December 2007, the central bank relaxed derivative trading rules, allowing banks to use more sophisticated financial products, such as interest rate swaps and forwards without a licence.
It also raised in 2007 local banks' foreign exchange trading limits to pre-Asian 1997/98 financial crisis levels and doubled the maximum amount local firms could invest abroad without prior approval to $12 million.