Business World

BSP regulation­s to support post-pandemic economy

- — L.W.T.Noble

THE BANGKO SENTRAL ng Pilipinas (BSP) said it will continue supporting the postpandem­ic 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 UNO bank which both have Singapore-headquarte­red parent units, and

Go-Tyme 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 end2021. This was done in a move to diversify credit exposures specifical­ly for funding bigticket 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.

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