Philippines

Overview

Official name : Republic of the Philippines

Government : Republic

Head of State : Rodrugo Duterte

Capital City : Manila

Main towns : Manila , Quezon City , Kalookan , Makati , Pasig , and Valenzuela

Land area : 300,176 sq. km

Population : 106.7m (2004 est.), average annual growth of 2.2% (1995-2004 est.))

Climate : Topical

Currency : Peso (ISO currency code:PHP)

Exchange rate : Philippines peso, PHP48.65/USD1 (August 2020)

Measures : Metric system, also some local units.

Language : Tagalog, English and Spanish

Time : 8 hours ahead of GMT

Regulatory Scheme

The Philippine government aims to enforce microeconomic reforms derived from the executive and legislative branches to strengthen the country's economy. Reforms emerged from the Plan 747, the Medium-Term Philippine Development Plan, the President's 8-Point Agenda, and the Cabinet Workshop's Agenda. Sectors of the economy targeted are airline transport, ports, agriculture, infrastructure, mining, and the grains sector. The goals of the reforms are to lower the cost of doing business while increasing productivity, reduce risks, and boost growth possibility. To maximize reform potential the government is committed to consistency in regulations and strengthening of institutions.

Banking

In May 1994 the financial sector was liberalized as the government lifted the 44-year bar on establishment of foreign banks, and allowed foreign insurance companies to obtain operating licenses, the later in response to WTO commitments. In 1997 the government promulgated legislation to allow easier foreign investment in investment houses and finance companies. The Asian financial crisis in 1997 prompted mergers and consolidations in the banking sector. 2000 saw the largest merger when the Bank of the Philippine Islands merged with the Far East Bank & Trust. The Bangko Sentral ng Pilipinas (BSP, the central bank) prefers consolidation of domestic commercial banks before foreign banks may enter but with the passing of the General Banking Law of 2000, foreign bank entrance saw liberalization. This introduced a seven-year window that foreign banks may own 100% of a domestic bank. In 2004 the foreign banks' share in the assets of the Philippine banking system was 13.9%, virtually unchanged from the previous year which saw foreign banks' share at 13.7%. Rural banking is completely closed to foreigners.

Stock Exchange

The Philippines Stock Exchange (PSE) is regulated by the Securities and Exchange Commission (SEC). With the passing of the Securities Act in 2000 regulation of the markets was improved. A tighter definition of insider trading was introduced, listed companies now must yield to full disclosure, and the SEC was given heightened regulatory powers. Entrance into the PSE is open to foreign-controlled stock brokerages that are incorporated under Philippine law. Securities underwriting companies that are not incorporated under Philippine law may only underwrite Philippine issues for foreign markets; they are prohibited from the domestic market. No foreign ownership restrictions apply to acquisition of mutual funds shares though only Philippines citizens may hold membership on the board of directors. Concerning foreign equity participation in securities firms, applications for foreign equity will only gain approval where Philippine companies enjoy similar rights in the foreign investor's domestic country.

Insurance

The Philippine insurance sector is regulated by the Insurance Commission of the Department of Finance, the SEC, the central bank, and the Bureau of Internal Revenue (BIR). The Philippines has a state insurer, the Government Service Insurance System (GSIS), that writes both non-life and life insurance business. As of 2002 the Philippine insurance market was also comprised of 145 insurers, of which 106 wrote non-life business, and 39 wrote life business. Both non-life and life insurance is sold either by direct sale, or through insurance brokers or registered agents. In 2003 the major non-life insurance lines were: motor (50.4%); fire (20.7%); casualty (15.0%); and marine (8.8%). The Republic Act of No. 8179 was passed in March, 1996 and allows 100% of foreign ownership of both insurance and reinsurance companies. Also that year the Uniform Currency Law was passed to permit insurance policies to be written in foreign currencies. All insurance companies operating in the Philippines must be incorporated under the Philippine Corporation Law and have at least five shareholders. Those foreign companies incorporated outside the Philippines who seek insurance licenses from the Philippines must follow a series of steps regulated by the SEC. In compliance with the Insurance Code, all insurance companies operating in the Philippines must contributed to the Security Fund. This fund is used for payment of claims of insurance companies, to reinsure an insolvent insurer's policy in a solvent insurer, and to pay insured claims in the case of a national emergency. Compulsory insurance includes workman's compensation, personal accident for abroad workers, and third party motor liability. Additionally national health insurance is handled by the Philippine Health Insurance Corporation.