THE AMERICAN Chamber of Commerce of the Philippines (AmCham) has urged
lawmakers to remove the cap on foreign equity in rural banks, the Joint
Foreign Chambers of the Philippines (JFC) posted on its business
advocacy website on Wednesday.
The recommendation came as the American business group expressed, in a
letter dated Aug. 19, its support for the House banks and financial
intermediaries committee' efforts to amend Republic Act 7353 or the
Rural Banks Act of 1992 through three proposals, House Bills (HB) 4805,
4854, and 4519.
In its original form, the act provides that a rural bank's capital stock
be fully owned and held directly or indirectly by Filipino citizens and
other legal entities, such as corporations and cooperatives.
HB 4805 and 4854 propose to allow rural banks to have foreign equity of
as much as 40%, while HB 4519 wants 60%.
"We recommend that the limits on foreign equity be deleted altogether.
Allowing foreign capital to come in would certainly maximize the
investments in rural banks," Jeffrey C. Woodruff, AmCham executive
director, said in a letter to Leyte Rep. Sergio F. Apostol, chairman of
the House banks and financial intermediaries committee.
"If limits were set, exceptions should be allowed in case of the
acquisition of a distressed bank with a reasonable grace period to turn
around and recoup the investment," he added.
Mr. Woodruff explained the reform would infuse capital into rural banks,
thus allowing them to expand services, improve lending capacity, invest
in modern technology, and reach remote areas of the country where
commercial banks are absent.
The relaxation of foreign equity limits in the country is one of JFC's
business competitiveness advocacies under its Arangkada (Accelerate)
Philippines campaign. -- E. J. Diaz
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