Regulations Governing Foreign Borrowings and Investments and Transfer of Emigrants' Assets

February 21, 1970 CBP MEMORANDUM TO : Authorized Agent Banks REGULATIONS GOVERNING FOREIGN BORROWINGS AND INVESTMENTS AND TRANSFER OF EMIGRANTS' ASSETS Pursuant to Section 7 of Central Bank Circular No. 289 dated February 21, 1970, the following regulations on foreign borrowings and investments and transfer of emigrants' assets are hereby promulgated for the guidance and compliance of all concerned: 1. No new foreign borrowing and no new inward foreign investment (in kind or in cash) shall be made without prior approval by the Central Bank. LibLex 2. No foreign exchange shall be sold for outward lending or investment without prior approval by the Central Bank. 3. Applications for approval of foreign borrowings or foreign investments shall be coursed to the Central Bank through agent banks. In evaluating the desirability of new borrowings and investments, preference shall be given to: (a) Export-oriented industries (as defined in MAAB dated February 21, 1970) (b) BOI-approved industries (c) Non-export-oriented industries not utilizing domestic credit resources (d) Firms using relatively labor-intensive methods (e) Firms implementing geographic dispersal (i.e., location outside metropolitan Manila) No application for new foreign investment shall be entertained in fields certified by the BOI to have excess capacity. 4. Amortization of loans shall be made in accordance with the terms of loan contracts approved by the Central Bank. Application for foreign exchange to meet such amortizations should be made through agent banks. 5. In forwarding to the Central Bank applications for repatriation of foreign investments, agent banks should give due regard to the following guidelines: (a) Investments in export-oriented industries (as defined in MAAB dated February 21, 1970) may be repatriated starting one year after the commencement of export operations, in annual installments not exceeding the net dollar earnings (as defined in the above-mentioned MAAB dated February 21, 1970) of the applicant firm. (b) Investments in BOI-approved industries not falling under (a) above may be repatriated in five equal yearly installments starting two years after the commencement of production. (c) Investments in non-export-oriented industries that have not utilized domestic credit resources may be repatriated in five equal yearly installments starting two years after the commencement of production. (d) Investments in other industries, when previously approved by and registered with the Central Bank, may be repatriated in ten equal annual installments starting two years after the commencement of production. 6. Emigrants may remit up to a maximum of $5,000 of their assets (savings and proceeds from sale of capital assets) to their new country of domicile, subject to verification by the Central Bank. The remaining liquid capital assets may be withdrawn starting one year after emigration on a staggered basis not exceeding five years. 7. Authorized agent banks shall not incur additional foreign obligations except those arising from normal international trade transactions. Resident firms may, subject to Central Bank approval, obtain suppliers credits and loans from abroad provided that their maturity is not less than five years and preferably exceeding eight years. 8. Authorized agent banks may, without specific approval of the Central Bank, sell foreign exchange for the payment of all existing foreign loan obligations of residents registered with the Central Bank prior to November 26, 1969, in accordance with the terms of their loan contracts. For those not registered before November 26, 1969, prior approval of the Central Bank is required. 9. Memorandum to All Authorized Agent Banks, stock brokers and Dealers and Stock Transfer Agents and Registrars dated December 26, 1969 on securities transactions shall remain in force. 10. The provisions of existing memoranda and other regulations of the Central Bank not consistent with the foregoing are hereby repealed. 11. This Memorandum shall take effect immediately. (SGD.) G. S. LICAROS Governor