Salceda eyes PHL as hub for fintechs fleeing HK, saturated Asian markets

Aleader of the House of Representatives is pushing for the development of a thriving financial technology sector in the country as the lawmaker said more fintech firms are fleeing Hong Kong’s regulatory jitters and saturated Asian markets.

House Committee on Ways and Means Chairman Joey Sarte Salceda said he filed the proposed Financial Technology Industry Development Act or House Bill 7760 as the country’s bid for “asylum-seeking” fintech companies.

“Make no mistake: We are in the game for fintech investments. We have 74 million smartphone users who spend 10 hours a day on the Internet. That is one of the biggest consumer markets for digital products in the world,” Salceda said. “For market-seeking firms, we are probably one of the most attractive.”

The lawmaker said fintech firms are firms that use technology and innovation that aims to compete with or complement traditional financial methods in the delivery of financial services. Some examples include virtual banks, online lending facilities and cryptocurrencies and blockchain.

Salceda has already filed HB 5913 or the Virtual Banking Act to develop virtual banking.

Moreover, the lawmaker said fintech firms have been relocating from Hong Kong due to the imposition of laws that some perceive to be too stringent on data management. Other major centers of finance, such as Shanghai, are now saturated with other fintech companies.

“Fintech is the future of money. I want the Philippines to be a leader in the area,” Salceda added. “If we are going to dream the future up, let’s dream big.”

The fintech bill proposed by Salceda mandates the creation of a Financial Technology Office (FTO) in the Bangko Sentral ng Pilipinas (BSP) to promote the financial technology industry. The bill gives the office the mandate to form a Financial Technology Industry Roadmap.

The bill also extends the eligibility for a Special Investors Resident Visa (SIRV) to financial technology investors and management staff, regardless of investment size, provided that they are given a recommendation by the BSP Governor.

The measure also includes the financial technology industry in the Investment Priorities Plan, for 10 years. This would make it qualified for tax incentives on offer by the Board of Investments.

It mandates an annual review of policies and infrastructure for data management and security, to ensure that the country’s infrastructure and policies are compatible with basic standards for the development of a sophisticated financial technology sector.

“The bill is comprehensive enough to cover all the major concerns of the fintech sector. At the same time, there is enough regulatory leverage for the BSP,” Salceda added. Earlier this month, the central bank also welcomed Salceda’s proposed regime for virtual-only banks.

Salceda said the measure allows the proposed FTO to recommend regulatory sandboxing, or the practice of allowing fintech firms to pilot their innovations within a small but largely deregulated market. Salceda says this will allow fintech firms to fix glitches in their system with little risk, before they launch their services in the larger market. The bill also encourages financial inclusion initiatives among fintech firms.

“Covid-19 shattered our imagined barriers about what we can aim for. Digital workplaces used to be stuff of the future,” he said. “The digital economy, while emerging, seemed to be still distant before Covid-19. Now, the digital economy is upon us.”

Salceda believes the Philippines would be left behind “if we will not aim for things that are as big as the changes that are taking place.”

“This opportunity to have big national ambitions is too significant, and has been too costly, to waste on small dreams,” the lawmaker added.