The Finance Department plans to transform state-run Development Bank of the Philippines into an infrastructure bank to help the Duterte administration in closing the country’s decades-old infrastructure gap.
Finance Secretary Carlos Dominguez III mentioned the plan to high-ranking officials of Daiwa Securities Group Inc. led by president and chief executive Seiji Nakata, after the latter informed him of Daiwa’s collaboration with DBP on investment banking advisory services.
“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 said.
“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.],” Dominguez said.
DBJ pioneered project financing in Japan, specifically in the sectors of energy and infrastructure.
The meeting with Nakata and other Daiwa executives was held recently in Yokohama, Japan on the sidelines of the 50th annual meeting of the Asian Development Bank.
Among those who joined Dominguez’s meeting with Nakata were Keio Tashiro, deputy head, International Operations; Hironori Oka, chairman and regional head of Daiwa Capital Markets Hong Kong Ltd.; and Kenji Nakanishi, president and chief executive of DBP-Daiwa Capital Markets Phils. Inc.
Daiwa and DBP established a joint venture―the DBP Daiwa Capital Markets Philippines in 1995. As a result of the teamup, DBP and Daiwa later on expanded the collaboration to include investment banking advisory services.
DBP currently supports the government’s infra program by assisting public-private partnership projects at the national and local government levels.
The bank’s priority lending areas, aside from micro, small and medium enterprises, include infrastructure and logistics, social services and protection of the environment.
It recently granted a P550-million term loan to the Camarines Sur provincial government to finance the province’s various infrastructure programs and advised the Department of Transportation in the structuring, tendering and eventual award of the PPP contract for the P65-billion LRT 1 Extension, Operations and Maintenance Project.
Dominguez said DBP as an infra bank could help 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.”
DBP was the country’s seventh-largest bank with total assets of P492.453 billion as of end-2016.
Dominguez told Daiwa officials that the government would invest heavily in infrastructure, within and outside Metro Manila, not only to strengthen the Philippines’ poor infra backbone, but also to create jobs and connect communities in the countryside.
Dominguez also discussed with Daiwa the government’s modified hybrid PPP formula to help implement the Duterte administration’s P8.4-trillion infra agenda dubbed the “Build, Build, Build” program.
Under the hybrid PPP mode, the government would build the infrastructure projects and later bid out the operation and maintenance to the private sector.
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