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Korean state-owned bank signs deal with DBP

Co-financing of PPP projects, growth initiatives
/ 11:44 PM December 02, 2012

The government-owned Korea Development Bank has signed a deal with state-run Development Bank of the Philippines to engage in the co-financing of infrastructure projects under the Public-Private Partnership (PPP) program and other growth initiatives for the Philippines.

The memorandum of understanding between the two government-controlled banks followed the Korean financial institution’s search for business opportunities in the Philippines, which has started to get more significant attention from the international investment community.

“Under the MOU, both banks will cooperate on matters relating to the identification of projects in the Philippines for possible co-financing and exchange of information, resources and expertise,” DBP said in a statement.


Under the deal, KDB may also provide financial advisory and other investment banking services to DBP.

Prior to its partnership with DBP, the Korean bank had engaged in various public infrastructure projects in other countries through the extension of loans to private-sector investors.

One of the things KDB wanted to engage in under its partnership with DBP was the financing of coal-fed power projects.

The Philippine government, which runs on a budget deficit, is pushing for infrastructure development through PPP investments. The objective is to make the country’s business climate attractive and thus attracts more job-generating foreign direct investments.

Earlier, the Korean financial institution said it was willing to offer preferential interest rate to the Philippines in the extension of development loans.

Given the prolonged crisis in Europe that could adversely affect the ability of European governments to extend official development assistance (ODA) to countries like the Philippines, KDB said it believed that it could help fill in the gap.

KDB also said that it wanted to do business in the Philippines given the substantial growth opportunity that usually came with improving macroeconomic fundamentals.

In the third quarter, the Philippine economy grew by a higher-than-expected 7.1 percent, the fastest pace in Southeast Asia during the period.


Despite the economy’s substantial growth, the country remains confronted with a serious problem on income inequality, with more than 25 percent of its population living below the poverty line.

Economists said the country needed more initiatives aimed at cornering more investments and creating more jobs, especially among the low-income groups.

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TAGS: Banking, Development Bank of the Philippines, infrastructure projects, Korea Development Bank, memorandum of understanding, public-private partnership (PPP)
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