3 big banks offer substantial contributions to infrastructure fund

Three big local banks are looking at providing a big chunk of the P50-billion private sector contribution in the P100-billion infrastructure fund, the Philippine Chamber of Commerce and Industry (PCCI) said.

“We are in the final stages of the negotiations with these three banks. Others are expected to follow once we secure this,” Edgardo Lacson, PCCI president told The Star in a telephone interview.

According to Lacson, they have already chosen three projects that will be financed by the infrastructure fund. These are the LRT-MRT connection, the extension of the North Luzon Expressway (NLEX) to Diosdado Macapagal Airport and the extension of the South Luzon Expressway.

Lacson said the combined value of the three projects can be more than the private sector part.

He said local banks are enthusiastic about the project especially since the government has agreed to issue a sovereign guarantee.

“They (banks) are looking at this as a good investment especially at this time of economic crisis. Government guarantee is the best because it is highly unlikely that the government will default and not pay them,” Lacson explained.

“This (infrastructure fund) is a safe haven for their money. Actually, we are expecting to get more than the promised P50 billion,” he added.

Lacson said the infrastructure fund will be able to bankroll its first project by June. Initially, the target was to get the fund running by first quarter. The delays, Lacson said, was due to some of the questions raised regarding the funds.

“This is an unprecedented idea. We have to be careful because we do not want to make a mistake. That will be bad for the country,” he said

Lacson stressed the importance of the infrastructure fund because he said this will take the place of the overseas development assistance (ODA) funds. The ODA received by the Philippines slowed down as a result of the slowdown in the global economy as most nations focus on their own pump priming measures.

Besides, Lacson said the infrastructure fund is better than ODA. In ODA, there are conditions in place. For example, if the ODA is from China, the agreement requires the Philippines to probably use Chinese contractors.

Because the fund is locally sourced, Lacson said Filipino contractors will be given the chance to participate in the projects not to mention the thousands of jobs expected to be generated.

“The multiplier effect of this infrastructure project is big. It will really help the country,” he noted.