The Department of Finance (DoF) is looking at the possibility of repurposing state-owned Development Bank of the Philippines (DBP) to an infrastructure bank in support of the Duterte administration’s ambitious infrastructure program.
Finance Secretary Carlos Dominguez 3rd briefly mentioned the plan to officials of Daiwa Securities Group Inc., led by its President and Chief Executive Officer Seiji Nakata.
In that meeting, Nakata told Dominguez of the collaboration between Daiwa and the DBP on investment banking advisory services, the DoF said in a statement over the weekend.
“We are very happy about your good experience with the DBP. We want to improve the DBP. Our plan is to make it the Philippines’ infrastructure bank,” Dominguez was quoted as having told Nakata and other Daiwa executives during a meeting on May 5 in Yokohama, Japan on the sidelines of the 50th annual meeting of the Asian Development Bank (ADB).
“The DBP, in my view, lost its way for a few years so we want to redirect it like the Development Bank of Japan (DBJ Inc.),” he added.
DBJ Inc. pioneered project financing in Japan, specifically in the sectors of energy and infrastructure, according to the DoF.
Under its new charter, the DBP is classified as a development bank that may perform all other functions of a thrift bank. Its primary objective is servicing the medium and long-term needs of agricultural and industrial enterprises, particularly micro, small and medium enterprises.
The DBP now supports the infrastructure program by assisting public-private partnership (PPP) projects at the national and local government levels.
The bank’s priority lending areas include infrastructure and logistics, social services and environmental protection.
It recently granted a P550-million term loan to the Camarines Sur provincial government to finance various infrastructure programs and has advised the Department of Transportation on structuring, tendering and awarding the PPP contract for the P65 billion LRT 1 Extension, Operations and Maintenance Project.
Dominguez told the Daiwa officials that the government on the Duterte watch will invest heavily in infrastructure, within and outside Metro Manila, not only to strengthen the infrastructure backbone but also to create jobs and connect communities in the countryside.
“As we progress especially in the area of infrastructure, we will make more people financially inclusive,” said Dominguez. He pointed out that 85 percent of Filipinos are currently unbanked.
Dominguez also discussed with Daiwa the modified hybrid PPP formula to help implement the P8.4 trillion infrastructure agenda dubbed the “Build, Build, Build” program.
Under the hybrid PPP mode, the government will build the infrastructure projects and then bid out the operation and maintenance to the private sector.
This system, Dominguez said, will speed up project implementation, as a traditional PPP usually takes 29 months on average before it can take off.
Dominguez said that the DBP as an infrastructure bank can help its clients raise funds for projects by tapping the capital markets “and that’s where Daiwa can help, in the capital market side.”
Nakata welcomed Dominguez’s proposal, saying that “we are more than happy to help you through the DBP,” the DoF said.