BY LAILANY P. GOMEZ REPORTER

THE Japan International Cooperation Agency (JICA) will extend close to half a billion dollars of aid to the Philippines earmarked for improving the country’s agricultural productivity and infrastructure.

Manila and JICA will sign today the loan agreement covering official development assistance (ODA) worth P23 billion, with the Land Bank of the Philippines and Development Bank of the Philippines (DBP) as fund conduits.

The LandBank will get up to P7.76 billion for the Agricultural Credit Support Project (ACSP), while the DBP will get up to P23 billion for the Logistics Infrastructure Development Project (LIDP).

The ACSP creates employment and improves agricultural productivity in rural areas, JICA said.

In the Philippines, about 75 percent of those living in the rural areas are engaged in micro-business or are small farmers and fisherfolk.

However, their limited access to financing and technology lead to low agricultural productivity, JICA said, adding that medium- and long-term loans for the agricultural sector are also inadequate. It said that about seven out of 10 farmers in need of loans rely on informal financing agencies with high interest rates, making access to institutional financing a critical issue.

This Japanese ODA loan will provide financing to small farmers and fisherfolk as well as to qualified agrarian reform beneficiaries, small and medium enterprises (SMEs) and large agribusiness enterprises nationwide, the lender said.

JICA said the project is expected to increase investments, create job opportunities, improve agricultural productivity and contribute to the government’s poverty reduction goal.

ACSP funds will be channeled to eligible sub-projects such as farm/agribusiness production activities, working capital funds, and fixed asset acquisition requirements of the project’s target clientele.

The LIDP, meanwhile, promotes national distribution infrastructures for economic growth.

The lender said achieving sustained growth is important for creating employment in the Philippines, and expanding the distribution infrastructure is indispensible to promoting private investment from within the country as well as from abroad.

“Current transportation infrastructures of the Philippines, such as ports and roads, are still inadequate and infrastructures for processing, storing and conveying crops and livestock products are insufficient as well, placing the Philippines at a level lower than other Asean nations,” JICA said.

Under the LIDP, medium- and long-term financing will be provided to build distribution infrastructures for local communities and the private sector throughout the Philippines.

“With the carefully designed assistance modes provided through the DBP, it is expected that the distribution infrastructures will expand dynamically to meet the various local needs such that a distribution network will develop that provides an optional mix of marine and intra-island transportation,” JICA said.

Eligible projects for LIDP financing include facilities for roll-on, roll-off (roro) terminal system including roro vessels; toll roads, local roads and maintenance equipment; packaging, transport and distribution facilities.

In addition, JICA said these projects are expected to contribute to the country’s disaster recovery and rehabilitation efforts in the agriculture and infrastructure sectors.

“Moreover, in view of the global economic downturn, JICA is hopeful that ACSP and LIDP will provide financing to stimulate the Philippine economy,” the lender said.