Infra to boost IFC exposure in Philippines

MANILA, Philippines – The International Finance Corp. (IFC) could hike its investments in the Philippines up to $1 billion yearly as it becomes more involved in infrastructure projects.

IFC principal investment officer for PPP Asia Jesse Ang said they have been investing between $500 million to $700 million in various investment opportunities in the Philippines, most of which go to the power sector.

“We can go up to $1 billion if it involves infrastructure projects under public-private partnership (PPP) projects,” Ang said during the IFC forum on PPP in the Philippines.

Ang said they remain interested in financial institutions as it has already invested million of dollars in the past five years.

“We are now looking at major thrift banks which have greater exposures to the small and medium enterprises (SME) sector,” he added.

In a separate press briefing, IFC director for East Asia Pacific Vivek Pathak expressed dissatisfaction over the extent of their investments in Philippine projects.

“We are far below in Philippine investing,” Pathak said.

The IFC director urged the next government to institutionalize the PPP Center and set policies that would encourage more investments in the Philippines.

“New government should build on the gains already achieved, although it is still faced with many challenges,” he told reporters.

Pathak described the Philippines as a model on how to use PPPs to leverage the extensive expertise and resources of the private sector to meet the country’s growing infrastructure needs.

 “Philippines has been a leader in PPPs in Asia due to its high level of private sector participation and very effective tapping of private funding for infrastructure,” he pointed out.

The IFC director said institutionalizing the country’s PPP Center as a permanent institution, along with ensuring fairness and transparency in PPP projects - from planning, procurement, and award to implementation - would provide significant long-term benefits for the government, private sector partners, and the public.

“Fairness and transparency attracts more private sector firms to participate in PPP projects”, said Pathak. “More participation leads to competition and helps achieve better bids and more equitable terms for the government and the public.”

IFC acted as transaction adviser on two PPP projects awarded under the Aquino administration.

The NAIA Expressway (Phase II) project for the Department of Public Works and Highways is nearing completion, while the concessionaire of the LRT 1 Cavite Extension and Operations and Maintenance (O&M) project signed a P24 billion ($505-million) loan agreement early this month.

PPP projects require a significant amount of long-term funding and the domestic banks and investors alone won’t be able to solely finance all the projects in a sustainable way.

“Multilateral institutions such as IFC can play a key role in bridging the gap, sharing the risk with domestic financiers, and mobilizing funding from international financers,” Pathak said.