Gov’t to convert DBP into infra bank

The Department of Finance (DOF) wants to convert state-run Development Bank of the Philippines (DBP) into a lender focused on the infrastructure sector to support the Duterte administration’s “build, build, build” thrust.

The DOF said Finance Secretary Carlos G. Dominguez III had told Daiwa Securities Group Inc. president and chief executive Seiji Nakata and other top executives of the Japanese investment bank of the plan to “make over” DBP into an infrastructure bank.

On the sidelines of the Asian Development Bank’s 50th annual meeting in Yokohama, Japan earlier this month, Nakata told Dominguez of Daiwa and the DBP’s collaboration on investment banking advisory services.

In 1995, the DBP and Daiwa established a joint venture—DBP Daiwa Capital Markets Philippines—the success of which spurred their investment banking advisory services collaboration.

“We are very happy about your good experience with DBP. We want to improve DBP. Our plan is to make it the Philippines’ infrastructure bank,” Dominguez told Nakata.

“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 added.

The DOF noted that DBJ pioneered project financing in Japan, specifically in the sectors of energy and infrastructure.

For its part, DBP currently supports the government’s infrastructure program by assisting public-private partnership (PPP) projects at the national and local government levels, the DOF said.

DBP’s priority lending areas, aside from micro, small and medium enterprises, include infrastructure and logistics, social services and protection of the environment, the DOF added.

The bank recently granted a P550-million term loan to the Camarines Sur provincial government to finance the province’s various infrastructure programs and has 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, the DOF noted.

“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,” Dominguez said.

For his part, Nakata told Dominguez that Daiwa was more than happy to help the DOF convert DBP into an infrastructure bank.

The DOF added that Dominguez told Daiwa officials that the government during the Duterte term would invest heavily in infrastructure, within and outside Metro Manila, not only to strengthen the Philippines’ poor 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,” Dominguez said, citing that 85 percent of the population remained unbanked.

Last month, economic managers unveiled the administration’s “Dutertenomics” thrust of “build, build, build” that they claimed would usher in a “golden age of infrastructure.”

The government plans to spend more than P3.6 trillion on public infrastructure projects from 2018 until 2020 while also jacking up to 75 from 55 previously the number of so-called flagship, “game-changing” projects that the administration aimed to start and complete before 2022.

A total of P9 trillion will be spent by the Duterte administration in the next six years to build vital infrastructure such that the share of infrastructure spending to GDP will rise from 5.3 percent this year to 7.4 percent in 2022.