Rules on Borrowings
Source:
"How to Invest in the Philippines" by PricewaterhouseCoopers Philippines (printed with permission from author)

Foreign and Domestic Credit

1) Can we finance our project through foreign borrowings?

The government prefers foreign equity investments to foreign borrowings. In general, foreign borrowings require prior approval of and/or registration with the Bangko Sentral ng Pilipinas in order that repayment of principal and remittance of interest may be serviced using foreign exchange purchased from the Philippine banking system.

Under present rules, loans that may qualify for prior Bangko Sentral approval/ registration are those intended to finance the following types of projects:

a. Export oriented projects;

b. BOI-registered projects;

c. Projects listed in the Investments Priorities Plan;

d. Projects listed in the Medium-Term Public Investment Program; and other projects that may be declared priority under the country's socio-economic development plan by the National Economic Development Authority or by Congress.

All the above loans, regardless of maturity, shall exclusively finance foreign exchange requirements of eligible projects, provided that loans of direct and indirect exporters and public sector borrowers may finance both foreign exchange costs and local costs of their respective projects.

2) Are we subject to certain debt-to-equity ratio requirements?

All enterprises registered with the BOI, PEZA and the other economic zone authorities are required to maintain a debt-to-equity ratio of at least 75:25 during the entire duration of their registration with the concerned government agency.

3) Can a foreign company borrow from a private individual or private non-financial institution?

Yes. A foreign company can borrow from a private individual or private non-financial institution.