Korea bank offers to cut rates to clinch PPP deals
The Korean government, through state-owned Korean Eximbank, is keenly interested in financing public infrastructure projects being pushed by the Philippine government under its Public-Private Partnership (PPP) program.
Tae-ik Park, Korean Eximbank’s chief representative to the Philippines, said that should the Philippine government decide to seek official development assistance (ODA) to fund the PPP projects, the Korean institution would be willing to offer it preferential interest rate.
Most ODAs to the Philippines carry an interest rate of 0.15 percent per annum payable in 40 years. Park said Korean Eximbank would be willing to cut the interest rate by half, or only 0.075 percent per annum, to fund the PPP projects.
“We are very interested in PPP projects,” Park said. “Demand for financing is huge, but because of the European debt crisis, many commercial banks worldwide are reluctant to extend loans for big projects. Korean Eximbank wants to fill in this gap in the Philippines.”
Under the PPP program, the Philippine government has invited private firms to invest in vital public infrastructure projects by assuming the costs in full or in part.
Park said Korean Eximbank proposed the establishment of a “PPP Consultative Group” to key economic officials of the Philippine government. The Korean agency said the group could be made up by representatives from the PPP Center of the Philippine government, the National Economic and Development Authority and the Korean Eximbank.
The group will be responsible for studying and deciding on PPP projects that the Korean government may help finance, Park explained.
Dong-hun Lee, another representative of Korean Eximbank, said the agency could help the government in meeting its share in project costs through ODAs.
Korean Eximbank may also help private sector investors in PPP projects by extending them non-ODA type of credit, he added.
“We are, therefore, offering a one-stop solution for the Philippine government’s PPP projects,” Lee said.
Korean Eximbank is one of the Philippines’ ODA sources.
From 2011 to 2013, the agency has allocated $500 million for the Philippines, and may extend much more should the government decide to seek further assistance, Lee said.
