Advance Import Payments

koSentral n ina.

OFFICE OF THE DEPUTY GOVERNOR

Monetary Stability Sector

CIRCULAR-LETTER No. CL 2008 -003.

To Ali Authorized Agent Banks (AABs)

Subject : Advance Import Payments

In iine with Circular No. 590 dated 27 December 2007, all AABs may sell foreign exchange to importers for full or partial payment of their imports in advance of the presentation of original shipping documents, without Bangko Sentral ng Pilipinas (BSP) approval subject to the following conditions:

: The advance payment shall not exceed Us$100,000.00 or its equivalent; exceeding amounts shall be referred to the BsP-International Department for approvat;

2. Presentation to the AAB concerned prior to the sale of foreign exchange of the original purchase order (PO) and sales contract (SC) or proforma invoice (PI) signed by the resident importer and foreign supplier requiring payment of the importation in advance and indicating the intended delivery period of the imported goods; and submission of the importer to said AAB of a notarized Letter of Undertaking (LOU) to the effect that if the importation is cancelled, the importer shall inform the AAB of the cancellatior and shall inwardiy remit the foreign exchange refunded by the foreign supplier and sell same for pesos to the foreign exchange selling and remitting bank on the same date:

3. The foreign exchange sale and remittance shall be transacted on the same date and shall involve only one AAB. The foreign exchange remittance shall be made directly to the foreign supplier and serviced at the exchange rate prevailing at the time of remittance, subject to the applicable tax provisions of the National Internal Revenue Code, as amended;

4. The importer shall present to the foreign exchange selling and remitting AAB the original shipping documents (import invoice and bill of Iading (B/L) or air waybill (AWB)) where the date and amount of foreign exchange sold shall be stamped and duly signed by the AAB's authorized signatory and the Bureau of Customs import Released Documents, within three (3) banking days after receipt thereof;

5. The importation shall comply with Circular No. 1389 dated 13 April 1993, as amended, as' well as all other applicable reguirements/regulations of other governmental agencies/entities;

6. Submission by the foreign exchange selling and remitting AAB to the BSP-international Department of the following reports:

PANANALAPING MATATAG, BANSANG PANATAG

A. Mabini St., Malate 1004, Manila, Philippines Trunkline (632) 524-70-11 URL:www.bsp.gov.ph e-mail: [email protected]

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a. Within the first five (5) banking days of the month succeeding the Currency for Advance Payment of Importations up to Us$100,000.00 using the prescribed format (Annex A); and date of foreign exchange sale -- Monthly Report on Sale of Foreign

b. Within the first five (5) banking days of the month succeeding the receipt of the refund -- Monthly Report on Purchase of Foreign Currency from Refund of Advance Payment of Importations up to US$100.000.00 using the prescribed format (Annex B); and

following transactions: under FX Form 1 (Consolidated Report on FX Assets and Liabilities) the 7. The foreign exchange selling and remitting AAB shall report to BSP

a. The sale of foreign exchange by the AAB to the importer for (Code No. 040) under Schedule 4 (FX Dispositioni for Loans): advance payment of imports as "Import Advances/Down Payments'

b. The purchase of foreign exchange by the AAB from the importer under Schedule 3 (FX Acquisition from Loans); and arising from a refund of advance payment on cancelled imports as "Refund of Import Advances/Down Payments" (Code No. 040)

c. In case of a partial advance payment, the balance shall be reported

as letter of credit, documents against acceptance or open account Form 1. arrangement under Schedule 10 [Import Letters of Credit (L/Cs) Opened and DA-OA Import Availments and Extensions] of FX

documents against acceptance or open account arrangements. as applicable, under any of the following modes of payments: letters of credit. 8. The foregoing rules shall apply to partial or full advance payments,

provisions under R.A. 7653 (The New Central Bank Act) and other existing banking laws and regulations. Any violation of this Circular-Letter shall be subiect to the penalty

amended. All BSP issuances inconsistent with this Circular-Letter are deemed

This Circular-Letter shall take effect upon effectivity of Circular No. 590 dated 27 December 2007, i.e., 21 January 2008

S DIWA C. GUINIGUNDO Deputy Governor

January 2008