THE Philippines is the last country in the world to have a restrictive bank secrecy law, according to 26 business organizations led by the Financial Executives Institute of the Philippines (Finex). Thus, they have banded together to push for the amendment of Republic Act (RA) 1405, otherwise known as the “Secrecy of Bank Deposits” law.
In a joint statement last month, the business groups said RA 1405 weakens the Bangko Sentral ng Pilipinas (BSP) in the exercise of its mandate to maintain a sound and stable banking system while constraining BSP’s supervisory activities especially in cases involving unsafe and unsound banking practices.
BSP Governor Benjamin E. Diokno also called for urgent reforms in bank deposit secrecy measures. He said that the Philippines needs to change its current framework in order to keep up with international standards on transparency as well as to help combat both global and local tax evasion, money laundering and other financial crimes.
At the House of Representatives, the BSP’s version of the amended bank secrecy law has been filed as House Bill 8991, which was passed on second reading at the plenary before Congress went on recess this month.
Businessmen are concerned that RA 1405 “allows politicians and other government officials to hide unexplained wealth, constraining citizens’ ability to exercise their public duty to elect honest officials.” As a result, the Philippines scores low on the Economic Freedom Index, they lamented.
Another law that needs to be revised is the archaic Public Service Act (PSA) of 1936, which was enacted as Commonwealth Act 146 during the American colonial period. Finex and a dozen major business organizations are strongly supporting the proposed Senate Bill 2094 that seeks to open the public services sector of the domestic economy to majority foreign equity ownership.
This amendatory bill aims to differentiate some public utilities from other forms of public services that are currently commingled under the 85-year-old PSA. They believe “it has adversely impacted on our country’s ability to attract foreign investments” and resulted in the Philippines paling in comparison with our Asean neighbors.
However, they are also calling on the senators to review two provisions in SB 2094: the reciprocity clause, “which requires a similar treatment by the home country of the foreign investor before it can be allowed to own more than 40 percent of the capital of public services engaged in critical infrastructure” and the provision governing investments by foreign state-owned enterprises, which “can be interpreted as prohibiting sovereign wealth funds from investing in public services classified as critical infrastructure.”
SB 2094 is one of three economic bills certified urgent by President Rodrigo Duterte. The other two are proposing amendments to the Retail Trade Liberalization Act and the Foreign Investments Act. The joint statement of the business institutions describes SB 2094 as “a low-hanging fruit in the legislative tree to attract foreign investments instead of amending the Constitution, which is highly controversial and ill-timed under the present circumstances.”
When the 18th Congress resumes its sessions after Duterte’s sixth and final State of the Nation Address on July 26, the two legislative chambers should prioritize the passage of these crucial bills that will make our economy at par with its peers in the community of nations.
Joseph Gamboa is the co-chairman of the Finex Annual Conferences for 2020-2021, chairman of the Finex Business Columns Subcommittee, and director of Noble Asia Industrial Corp. The views expressed herein do not necessarily reflect the opinion of these institutions and the BusinessMirror.