ING Bank urges Phl to speed up PPP

MANILA, Philippines - Dutch financial giant ING Bank NV is encourging the Aquino administration to accelerate the Public-Private Partnersip (PPP) scheme to take advantage of the strong interest of foreign investors in major infrastructure projects in the country amid uncertainties in advanced economies led by the US and the debt crisis in Europe.

Manuel Salak III, managing director and head of ING’s clients and corporate finance in Asia, said in an interview with reporters that large companies in Japan, Singapore, Korea, China, among others, are looking at infusing capital to bankroll major infrastructure projects in the Philippines.

“A lot of foreign investors including Koreans, Japanese, Singaporeans and Chinese are looking at the Philippines relative to other countries. The challenge for us is to get it out because the longer you wait, interest will wane and some companies will take a look at other countries,” he stressed.

Salak pointed out that Korean companies have expressed strong interest in the country’s water, power and transport sectors, while Japanese firms are looking at major infrastructure projects.

He added that Singaporean investors are looking at power and water, while Chinese companies have expressed interest in transport and other infrastructure undertakings.

He said the Philippines used to compete only with Thailand and Malaysia but is now also competing with Vietnam and Cambodia.

“We really need to double the effort and to double step up and get our acts together,” Salak explained.

According to him, the problem of the Philippine government in attracting foreign investors is the execution of policies as well as the lack of major infrastructure projects.

“The policies are quite good but the problem is more on execution. We just need to execute. Investors want certainty,” he said.

For one, he said that the National Government should release more funds or to spend more to boost the country’s economic activity after domestic output, as measured by the gross domestic product (GDP) growth, slackened to four percent in the first half of the year from 8.7 percent in the same period last year.

The 10 PPP infrastructure projects earlier lined up by the government this year include the P70-billion south extension of the Light Railway Transit Line 1; P11.3-billion east extension of LRT 2; P7.7-billion privatization of LRT 1; P6.3-billion privatization of the Metro Rail Transit Line 3; P11.8-billion Cavite-Laguna Expressway; P10.6-billion second phase of the Ninoy Aquino International Airport P7.6-billion New Bohol Airport; P7.5-billion Puerto Princesa Airport; P3.2-billion new Legaspi (Daraga) Airport; and the P1.5-billion privatization of the Laguindingan Airport.

Salak said Philippine companies need to take in foreign partners for the transfer of technology and best practice as well as the infusion of much needed capital

“Philippine companies have strong balance sheets but they would be able to welcome foreign partners too,” he added.

The ING official said delay in the launching of major infrastructure project is not unique to the Philippines as delays were also experienced in India and Indonesia.

“We should realize that infrastructure projects is not easy. It is not easy to have a huge infrastructure rollout. Execution is the problem,” he said.

Meanwhile, Salak also urged Philippine companies, particularly banks and financial institutions, to expand in the Asia Pacific to take advantage of the strong growth prospects of the region.

“Our banks are still smaller and these banks have not looked out of the Philippines,” he added.

He said a lot of banks in the region are looking for capital infusion from foreign investors.

“There are still some potential pick ups here and there but they (banks) have to look outside like Indonesia, Thailand, and Vietnam. There are a lot of banks there looking for capital infusion,” he said.

Salak said there are more buyers than sellers in the country’s financial services sector.

However, he pointed out that major banks in the Philippines are owned by conglomerates such as Banco de Oro of retail magnate Henry Sy, Metrobank Group of taipan George SK Ty, Rizal Commercial Banking Corp. of tycoon Alfonso Yuchengco, the Ayala-controlled Bank of the Philippine Islands, East West Bank of businessman Andrew Gotianun and Bank of Commerce of diversified conglomerate San Miguel Corp.

“The Philippine banking sector is a little bit unique because they form part of bigger conglomerates that have very strong shareholders to back them up so capital is not an issue,” he said.

Aside from banks, Salak said other companies in the Philippines should think like San Miguel and International Container Terminal Services Inc. of the Razon family and go global.

“We need to step up and we need to go outbound. Asia is the place to go,” he added.