Local banks have liquidity to lend up to $1 billion for PPP projects

A syndicate of local commercial banks can lend up to $1 billion or P42.3 billion to a group of companies bidding for infrastructure projects under the Public-Private Partnership Program (PPP), Teresita Sy-Coson, BDO chairperson, said Wednesday. In a seminar on PPP as a catalyst for transformation at the 45th annual meeting of Asian Development Bank (ADB) in Manila, Coson said the banking industry has so much liquidity. She added that BDO could talk with other banks on the terms of the loan. “Perhaps, we could finance a project for 15 years,” she said. “After 15 years, the government could finance it through Official Development Assistance (ODA) from multilateral institutions.” ODA comes from multilateral institutions like the ADB and the World Bank. Coson added that banks could agree on a longer loan term of 20 to 25 years with prevailing interest rates. BDO is the country's largest bank in total revenues, loans and deposits. In the past, the government's big-ticket infrastructure projects are financed through ODA. “Now, the government has three options – funding from the national government, ODA or the PPP,” Rogelio Singson, secretary of the Department of Public Works and Highways, said  in the same seminar. Singson said the government is pushing for private sector participation in the construction of roads, bridges, airports, seaports and water supply. Meanwhile, a 100-percent private sector financing has been done in a railway project in Malaysia. Dato Azhar Abdul Hamid, chief executive officer of MRT Corporation Sdn Bhd, said the 51-kilometer rapid transit system in Malaysia was able to get 100-percent financing from the private sector. Hamid said the rapid transit system runs from west to southeast of Malaysia and costs 20 billion ringgit for civil works alone. It is expected to be completed in July 2017. Hamid added that most infrastructure projects in Malaysia are under the office of the Prime Minister. But he said the Malaysian government has an executive council to decide on projects. The council is composed of ministers of relevant agencies. “That cuts the bureaucratic process. Decisions are made on the spot without any letters,” added Hamid. In the Philippines, projects are approved by the agencies, the National Economic Development Authority and the President, said Singson. "We have good intentions (to start and complete the projects as soon as possible), but they are not good enough. We have to follow rules," he added. The government has lined up 20 infrastructure projects under PPP. It bid only one project last year. This year, bidding for two projects are ongoing. -- OMD, GMA News