A bill that aims to develop a thriving financial technology or fintech sector in the country to attract, among others, fintech firms fleeing Hong Kong’s regulatory jitters and saturated Asian markets, now pends in Congress. The bill offers better package of benefits and special investor’s visa.
Crafted by Albay 2nd district Rep. Chair Joey Sarte Salceda, House Ways and Means Committee chairman, the measure, Financial Technology Industry Development Act (House Bill 7760) mandates the creation of a Financial Technology Office (FTO) in the Bangko Sentral ng Pilipinas (BSP) to draw up a Financial Technology Industry Roadmap and promote the country’s financial technology industry.
HB 7760 seeks to extend the eligibility for a Special Investors Resident Visa (SIRV) to financial technology investors and management staff, regardless of investment size, provided that they are given a recommendation by the BSP Governor.
“Make no mistake about this. We are in the game for fintech investments. We have 74 million smartphone users who spend about 10 hours a day on the internet. That is one of the biggest consumer markets for digital products in the world. For market-seeking firms, we are probably one of the most attractive,” Salceda said.
Fintech firms use technology and innovation to compete with or complement traditional financial methods in the delivery of financial services. Some examples include virtual banks, online lending facilities, and crypto-currencies and blockchain. Salceda also authored HB 5913 or the Virtual Banking Act that aims to develop virtual banks.
Fintech firms have been relocating from Hong Kong due to the imposition of laws perceived to be too stringent on data management. Other major centers of finance, like Shanghai, are now saturated with other fintech companies.
“Fintech is the future of money. I want the Philippines to be a leader in the area. If we are going to dream the future up, let’s dream big,” Salceda added.
HB 7760 also includes the financial technology industry in the Investment Priorities Plan (IPP), for ten years. This would make it qualified for tax incentives on offer by the Board of Investments (BOI). The bill likewise mandates an annual review of policies and infrastructure for data security and management, to ensure that the country’s infrastructure and policies are compatible with basic standards for the development of a sophisticated financial technology sector.
“The measure is comprehensive enough to cover all the major concerns of the fintech sector. At the same time, there is enough regulatory leverage for the BSP,” Salceda added. Earlier this month, the central bank also welcomed his proposed regime for virtual-only banks.
Salceda’s bill allows the proposed FTO to recommend regulatory sandboxing, the practice of allowing fintech firms to pilot their innovations within a small but largely deregulated market. He said this will allow fintech firms to fix glitches in their system with little risk, before they launch their services in the larger market. The bill bill likewise encourages financial inclusion initiatives among fintech firms.
“COVID-19 shattered our imagined barriers about what we can aim for. Digital workplaces used to be stuff of the future. The digital economy, while emerging, seemed to be still distant before the COVID-19 struck. Now, the digital economy is upon us. If we will not aim for things that are as big as the changes now taking place, we will get left behind. This opportunity to have big national ambitions is too significant, and has been too costly, to waste on small dreams,” Salceda, a noted economist pointed out.