RESTRICTED
WORLD TRADE S/FIN/W/12/Add.31/Rev.1
11December 1997
ORGANIZATION(97-5566)
Original: English Committee onTrade inFinancial Services
COMMUNICATION FROM THE PHILIPPINES
Revised Offer onFinancial Services
Revision
Thefollowing communication iscirculated attherequest ofthePhilippines toMembers of
theCommittee onTrade inFinancial Services.
_______________
Further totheinitial offercontained inS/FIN/W/12/Add.31, thePhilippines hereby submits
itsdraft Schedule ofSpecific Commitments andListofArticle II(MFN) Exemptions inFinancial
Services.
Thisdraftscheduleisconditionaluponsatisfactoryconclusionofthenegotiations.thePhilippines
reserves theright tomodify, reduce orwithdraw thisoffer atanytimeprior toconclusion ofthe
negotiations andtomake anytechnical changes, correct omissions, errors andinaccuracies.S/FIN/W/12/Add.31/Rev.1
Page2PHILIPPINES
SCHEDULE OFSPECIFIC COMMITMENTS
Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
FINANCIAL SERVICES
Thecommitments infinancial services areinaccordance withtheGeneral Agreement onTrade inServices anditsAnnex onFinancial Services.
Allsub-sectors (3) Theappropriate regulatory authority in
thePhilippines shall determine whether
public interest andeconomic conditions
justify authorization forthe
establishment ofcommercial presence or
expansion ofexisting operations in
banking andother financial services in
thePhilippines. Forforeign financial
institutions withinternationally
recognized standing, such determination
shall include ademonstrated capacity to
contribute totheattainment ofPhilippine
development objectives particularly inthe
promotion oftrade, investments and
appropriate technology transfer; andthe
country ofincorporation hasstrategic
trade andinvestment relations withthe
Philippines.
Inbanking, theMonetary Board shall
ensure thatatalltimes seventy percent
(70%) oftheresources orassets ofthe
Philippine banking system isheldby
domestic banks which areatleast
majority-owned byFilipinos.
(3),(4) Limitations listed inthehorizontal
section shall alsoapply.S/FIN/W/12/Add.31/Rev.1
Page3Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Banking andother financial
services (excluding Insurance)
Commercial banking
- Acceptance ofdeposits
andother repayable
funds from thepublic
- Lending ofalltypes,
including consumer
credit, mortgage credit,
andfinancing of
commercial transaction(1) Commercial presence isrequired.
(2) None
Forms ofcommercial presence
(3) Aforeign bank, widely-owned and
publicly listed, mayavail itself onlyof
oneform ofcommercial presence ata
time. However, thisshall notpreclude
secondary investment intheequity ofa
locally incorporated bank notexceeding
thirty percent(30%) ofvoting stock or
forty percent(40%) upon approval by
thePresident ofthePhilippines.
(a) Establishment offoreign bank branches.
Bound forten(10)newlicences forthe
period 1995-2000. Fullbanking
authority tonewandexisting foreign
bank branches.(1) None
(2) None
(3) NoneS/FIN/W/12/Add.31/Rev.1
Page4Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
- Allpayment andmoney
transmission services,
including credit, charge
anddebit cards,
travellers cheques and
bankers drafts
- Guarantees and
commitments
- Trading forownaccount
orforaccount of
customers, whether on
anexchange, inanover-
the-counter market or
otherwise, thefollowing:
-money market
instruments (bank 's
ownpromissory notes,
repurchase agreements,
andcertificates of
assignment/
participation with
recourse);
-foreign exchange;Each foreign bank shall beallowed to
establish amaximum ofsix(6)branches,
withthefirstthree (3)ofthese branches
atlocations ofitschoice andthe
remaining three (3)branches atlocations
designated bytheMonetary Board.
Theprescribed capital ratio shall consist
ofthepermanently assigned capital and
"netdueto"account notexceeding the
equivalent offour(4)times theamount
ofpermanently assigned capital. The
permanently assigned capital andfifteen
percent(15%) oftherequired "netdue
to"account shall beinwardly remitted
andconverted intoPhilippine currency.
(b)Acquisition ofuptofifty-one percent
(51%) ofthevoting stock ofanexisting
domestic bank. Existing foreign banks
owning voting stock beyond thefifty-one
percent (51%) level willbemaintained at
their current levels.
(c)Investing inuptofifty-one percent (51%)
ofthevoting stock ofanewlocally
incorporated banking subsidiary. Existing
investments offoreign banks beyond the
fifty-one percent (51%) willbemaintained
attheir existing levels.S/FIN/W/12/Add.31/Rev.1
Page5Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
-derivative products
including, butnot
limited to,futures and
options;
-exchange rateand
interest rate
instruments, including
products such asswaps,
forward rate
agreements; and
-other allowable
negotiable instruments
andfinancial assets.Themajority ofthemembers oftheBoard
ofDirectors ofalocally incorporated bank
shall becitizens ofthePhilippines.
Forforeign service suppliers other than
banks, aggregate share inthevoting stock
ofalocally incorporated bank shall be
limited tothirty percent(30%) orupto
forty percent(40%) upon approval bythe
President ofthePhilippines.
Shareholding inalocally incorporated
bank must notexceed twenty percent
(20%) foranindividual andthirty percent
(30%) foracorporation.S/FIN/W/12/Add.31/Rev.1
Page6Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
-Participation inissues of
allkinds ofsecurities,
including underwriting and
placement asagent
(whether publicly or
privately) andprovision of
services related tosuch
issues
-Asset management, such
ascashorportfolio
management, allforms of
collective investment
management, custodial,
depository andtrust
servicesII.Scope ofoperations
Prior authority isrequired forthe
following:
- acceptance ofdeposit substitutes and
other repayable funds from the
public;
- guarantees andcommitments;
-performance oftrust, investment
management andother fiduciary
functions;
- foreign currency deposit unit
operations;
- derivatives activities.
Underwriting (firm andbestefforts basis)
maybeperformed onlybycommercial
banks withexpanded commercial banking
authority.
(4)Unbound ,except asprovided inthe
horizontal section.(4)Anon-Filipino citizen employed as
officer orassigned todotechnical
functions shall have twoFilipino
understudies.S/FIN/W/12/Add.31/Rev.1
Page7Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Investment houses:
-Purchase andsell,
distribute orarrange to
distribute onaguaranteed
basis securities ofother
corporations
-Participate assoliciting
dealer orselling group
member intender offers,
block sales, orexchange
offering ofsecurities
-Deal inoptions, rights or
warrants relating to
securities
-Actasfinancial
consultant, investment
adviser orbroker
-Actasportfolio
manager/financial agent
-Design pension, profit-
sharing andother
employee benefits plans(1)Commercial presence isrequired.
(2)None
(3)Must beorganized asastock corporation.
Subject toforeign equity limitation of
fifty-one percent(51%).
Themajority ofthemembers oftheBoard
ofDirectors shall becitizens ofthe
Philippines.
Aninvestment house isnotallowed to
engage inbanking operations.
Prior authority isrequired forthe
performance ofquasi-banking functions.
(4)Unbound, except asprovided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Unbound, except asprovided inthe
horizontal section.S/FIN/W/12/Add.31/Rev.1
Page8Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Financial advisory services as
follows:
-credit reference and
analysis
-investment andportfolio
research andadvice(1)None
(2)None
(3)Required tobeorganized asacommercial
bank, oraninvestment house, ora
non-bank financial intermediary.
Forcommercial banks, alllimitations
mentioned under mode 3above for
commercial banks shall apply.
Forinvestment houses, alllimitations
mentioned under mode 3above for
investment houses shall apply.
Foreign equity participation isbound at
forty percent(40%) fornon-bank
financial intermediary.
(4)Unbound, except asprovided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Anon-Filipino citizen employed as
officer orassigned todotechnical
functions shall have twoFilipino
understudies.S/FIN/W/12/Add.31/Rev.1
Page9Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Factoring (1)Commercial presence isrequired.
(2)None
(3)Must beperformed byafinancing
company only, organized either asa
corporation orgeneral partnership.
Subject toforeign equity limitation of
forty percent(40%).
Membership ofnon-Filipino citizens inthe
Board ofDirectors islimited toone-third
oftheBoard 'stotal membership inthe
caseofacorporation; noforeign
managing partners inthecaseofageneral
partnership.
(4)Unbound, except asprovided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Anon-Filipino citizen employed as
officer orassigned todotechnical
functions shall have twoFilipino
understudies.S/FIN/W/12/Add.31/Rev.1
Page10Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Financial leasing (1)Commercial presence isrequired.
(2)None
(3)Must beperformed byafinancing
company only, organized either asa
corporation orgeneral partnership.
Subject toforeign equity limitation of
forty percent(40%).
Membership ofnon-Filipino citizens inthe
Board ofDirectors islimited toonethird
oftheBoard 'stotal membership inthe
caseofacorporation; noforeign
managing partners inthecaseofageneral
partnership.
(4)Unbound, except asprovided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Anon-Filipino citizen employed as
officer orassigned todotechnical
functions shall have twoFilipino
understudies.S/FIN/W/12/Add.31/Rev.1
Page11Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Money broking and
foreign exchange broking(1)Commercial presence isrequired.
(2)None
(3)Required tobeorganized asacommercial
bank oranon-bank financial intermediary.
Forcommercial banks, allother
limitations mentioned inmode 3above for
commercial banks shall apply.
Foreign equity participation isbound at
forty percent(40%) fornon-bank
financial intermediary.
(4)Unbound, except asprovided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Anon-Filipino citizen employed as
officer orassigned todotechnical
functions shall have twoFilipino
understudies.S/FIN/W/12/Add.31/Rev.1
Page12Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Credit cardservices (1)Commercial presence isrequired.
(2)None
(3)Required tobeorganized asacommercial
bank oranon-bank financial intermediary.
Forcommercial banks, allother
limitations mentioned under mode 3above
forcommercial banks shall apply.
Foreign equity participation isbound at
forty percent(40%) fornon-bank
financial intermediary .
(4)Unbound, except asthose provided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Anon-Filipino citizen employed as
officer orassigned todotechnical
functions shall have twoFilipino
understudies.
Promotion andprovision of
information byarepresentative
office about theservices or
products offered byaforeign
bank(1)Commercial presence isrequired.
(2)None
(3)None
(4)Unbound ,except asthose provided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Unbound, except asthose provided inthe
horizontal section.S/FIN/W/12/Add.31/Rev.1
Page13Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Securities dealership/brokerage
-Trading forownaccount
orforaccount of
customers, whether inan
exchange, inanover-the-
counter market or
otherwise, thefollowing:
-Equities anditsderivative
products such aswarrants
andoptions
-Transferable securities(1)Commercial presence isrequired.
(2)None
(3)Required tobeorganized asaninvestment
house orasasecurities broker/dealer
corporation orpartnership.
Forinvestment houses, allother
limitations mentioned under mode (3)
above forinvestment houses shall apply.
Forsecurities broker/dealer -must bea
member ofthestock exchange.
Membership islimited to200.
Underwriting isallowed onlyon
best-efforts basis.
(4)Unbound, except asthose provided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Unbound, except asthose provided inthe
horizontal section.S/FIN/W/12/Add.31/Rev.1
Page14Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Participation inissues of
allkinds ofsecurities,
including underwriting and
placement asagent
(whether publicly or
privately) andprovision of
services related tosuch
issues(1)Commercial presence isrequired.
(2)None
(3)Required tobeorganized asanInvestment
House orasasecurities broker/dealer
corporation orpartnership.
Forinvestment houses, allother
limitations mentioned under mode 3above
forinvestment houses shall apply.
Forsecurities broker/dealer -must bea
member ofthestock exchange.
Membership islimited to200.
Underwriting isallowed onlyonbest-
effort basis.
(4)Unbound, except asthose provided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Unbound, except asthose provided inthe
horizontal section.
Performance ofthe
functions ofstock transfer
agent such asbutnot
limited tomonitoring the
issuance andtransfer of
stock certificates(1)Commercial presence isrequired.
(2)None
(3)Must beorganized either asacorporation
orpartnership withatleast onecertified
public accountant dulylicensed inthe
Philippines.
(4)Unbound, except asthose provided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Unbound, except asthose provided inthe
horizontal section.S/FIN/W/12/Add.31/Rev.1
Page15Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Transactions ofanissuer
primarily engaged inthe
business ofinvesting,
reinvesting ortrading in
securities(1)Commercial presence isrequired.
(2)None
(3)Must beperformed byaninvestment
company.
Foreign equity participation isbound at
forty percent(40%).
Allmembers oftheBoard ofDirectors
must becitizens ofthePhilippines.
(4)Unbound, except asthose provided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Unbound, except asthose provided inthe
horizontal section.
Saleofcontracts forthe
payment ofbenefits or
performance offuture
services such aslife,
education, pension and
internment plans(1)Commercial presence isrequired.
(2)None
(3)Foreign equity participation isbound at
forty percent(40%).
(4)Unbound, except asthose provided inthe
horizontal section.(1)None
(2)None
(3)None
(4)Unbound, except asthose provided inthe
horizontal section.S/FIN/W/12/Add.31/Rev.1
Page16Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Insurance
Allsub-sectors(3),(4) Limitations listed intheall-sector
horizontal section andallfinancial
services section shall apply.
(3) Limitations inmarket access listed in
thespecific sub-sectors below shall
notapply toexisting wholly or
majority foreign-owned authorized
insurance/reinsurance companies as
oftheentry intoforce ofthisWTO
Financial Services agreement.
(4) Qualified Non-Filipino citizens may
beemployed fortechnical positions
onlywithin thefirstfive(5)years of
operation oftheenterprise, their stay
nottoexceed five(5)years upon
entry.
Each employed non-Filipino citizen
shall have atleast two(2)Filipino
understudies.S/FIN/W/12/Add.31/Rev.1
Page17Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Lifeinsurance asfollows:
- Ordinary
- Group
- Industrial
- Health and
accident
- Annuities(1) Risks located inthePhilippines shall be
insured withthecompanies authorized*to
transact business inthePhilippines.
(2) Same as(1)above
(3) Market access islimited to:
a. Acquisition ofuptofiftyone
percent (51%) ofthevoting
stock ofanexisting domestic
insurance company.
b. Investing inuptofiftyone
percent (51%) ofthevoting
stock ofanewlocally
incorporated insurance
company.
Participation ofnon-Filipino citizens in
theBoard ofDirectors ofalocally
incorporated insurance company is
limited toone-third oftheBoard 'stotal
membership.
(4) Unbound, except asthose provided inthe
horizontal section.(1) Unbound
(2) Unbound
(3) None
(4) Unbound
*Thecompany which hadbeen issued alicence oracertificate ofauthority bytheInsurance Commission totransact business inthePhilippines prior to
1October 1994.S/FIN/W/12/Add.31/Rev.1
Page18Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
General non-life, asfollows:
-fireand
allied risks/
earthquakes/
shock/typhoons/
floods/tidal wave
-marine
ocean marine/
inland marine/
marine hull/
aviation
-casualty
motor car/health
andaccident/
burglary/
engineering
miscellaneous
-suretyship
fidelity/surety
bonds(1) Except formarine hullandmarine cargo
insurance, risks located inthePhilippines
shall beinsured withthecompanies
authorized*totransact business inthe
Philippines.
(2) Same as(1)above
(3) Market access islimited to:
(a) Acquisition ofuptofiftyone
percent(51%) ofthevoting
stock ofanexisting domestic
insurance company.
(b) Investing inuptofiftyoneper
cent(51%) ofthevoting stock
ofanewlocally incorporated
insurance company.
Participation ofnon-Filipino citizens in
theBoard ofDirectors ofalocally
incorporated insurance company is
limited toonethird oftheBoard 'stotal
membership.
(4) Unbound, except asthose provided inthe
horizontal section.(1) Unbound
(2) Unbound
(3) None
(4) Unbound
*Thecompany which hadbeen issued alicence oracertificate ofauthority bytheInsurance Commission totransact business inthePhilippines prior to
1October 1994.S/FIN/W/12/Add.31/Rev.1
Page19Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
Insurance auxiliary services, as
follows:
-actuarial
consultancies
-average adjustors(1) Commercial presence isrequired.
(2) None
(3) Subject toforeign equity limitation of
forty percent(40%).
Participation ofnon-Filipino citizens in
theBoard ofDirectors ofdomestic
companies islimited toonethird ofthe
Board 'stotalmembership.
(4) Unbound, except asthose provided inthe
horizontal section.(1) Unbound
(2) None
(3) None
(4) Unbound
Reinsurance/
retrocession(1) Priority cessions toauthorized
insurance/reinsurance companies.
Foreign unauthorized reinsurers should
berepresented byresident agents duly
registered withtheInsurance
Commission.
Tenpercent(10%) oftotal insurance
cessions toforeign unauthorized
reinsurers should beceded tothe
National Reinsurance Corporation ofthe
Philippines.(1) NoneS/FIN/W/12/Add.31/Rev.1
Page20Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4)Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(2) Same as(1)above
(3) Market access islimited to:
(a)Acquisition ofuptoforty percent
(40%) ofthevoting stock ofan
existing domestic reinsurance
company.
(b)Investing inuptoforty percent
(40%) ofthevoting stock ofanew
locally incorporated reinsurance
company.
Participation ofnon-Filipino citizens in
theBoard ofDirectors ofalocally
incorporated reinsurance company is
limited toonthird oftheBoard 'stotal
membership.
(4)Unbound, except asthose provided inthe
horizontal section.(2) None
(3) None
(4) UnboundS/FIN/W/12/Add.31/Rev.1
Page21PHILIPPINES -LIST OFARTICLE II(MFN) EXEMPTIONS INFINANCIAL SERVICES
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Countries towhich the
measure appliesIntended duration Conditions creating
theneed forthe
exemption
Commercial banking Authorization forfinancial service suppliers of
another Member toestablish commercial
presence incommercial banking shall besubject
toareciprocity test.Allcountries Indefinite Toensure Philippines
financial service
suppliers areaccorded
fullmarket access and
national treatment in
thefinancial service
market ofanother
member.
Investment Houses Inapproving foreign equity applications in
Investment Houses, theappropriate regulatory
authority shall approve such applications onlyif
thesame orsimilar rights areenjoyed by
Philippine nationals intheapplicant 'scountry.