PH banks can support infra projects, Maynilad executive declares with optimism

WITH the government allotting some P9 trillion for infrastructure development in the next six years, a key executive of one of the country’s biggest water concessionaires has expressed confidence the local banking industry has enough liquidity to finance the lined-up infrastructure undertakings.

In a forum titled “Build, Build, Build—Achieving Sustainable & Inclusive Growth” held recently by BDO Private Bank (BDOPB) for select high net worth clients, Maynilad president and chief executive officer Ramoncito S. Fernandez said as long as the government can maintain a stable economy and the sanctity of contracts are guaranteed and honored, private companies will be motivated to invest in these infrastructure projects.

At the same time, he urged local businesses to keep their investments within the confines of the domestic economy to boost the Philippine banking industry and also positively impact the infrastructure initiatives of the government.

“Continue believing in the Philippine banking industry. Don’t bring your money outside. Our banks have enough liquidity to support these projects,” he told the forum’s attendees. BDOPB is a wholly owned subsidiary of BDO Unibank serving the affluent market. As of end-June 2017, its assets under management reached P371.28 billion.

BDOPB has built an onshore model that serves the market’s emerging wealthy to the ultra-high net worth segment, comparable to that of its bigger global counterparts. While private banking is still a developing market in the Philippines, BDOPB has already developed a niche segment to meet key objectives such as growing personal investments, establishing a stable family wealth plan, and estate planning.

Aside from Fernandez, other invited panelists in the event include former Finance Sec. Margarito “Gary” Teves, International Finance Corp. Senior Investment Officer Lulu Baclagon, and Marie Christine Tang, an economist and local partner in the Philippines of New York-based think tank Global Source. Meanwhile, CNN Philippines president and Emmy Awards winner Armie Jarin-Bennett served as the Forum’s moderator.

Teves, for his part, said the government should encourage more private sector participation in projects that are commercially viable other than just relying on a hybrid Public-Private Partnerships (PPP). Under a hybrid PPP, government will build the infrastructure projects and later bid out the operations and maintenance to the private sector.

“I would not advise the setup wherein it’s the government first that spends for the project and then the private sector comes in later on for the maintenance. The private sector should be fully involved with the project implementation at the onset,” he said. “Another problem with big-ticket mass transport projects is they will surely entail huge user fees to recover the costs. The government needs to subsidize it if the rates have to be kept manageable.”

Baclagon, on one hand, said there should be long-term planning in the development of projects. “We can’t stop with the subway project. We’ve always been piecemeal with our planning and project implementation. Metro Manila would need 700 kilometers in mass transport system to sufficiently address the needs of people living and working in Metro Manila,” she said.

One of the highlights of the government’s ambitious infrastructure initiative is the P227-billion Mega Manila Subway project, a 25-km underground transportation system connecting major business districts and government centers. In its first year, it is expected to serve 370,000 passengers per day. It will be funded through Official Development Assistance.

Meanwhile, Tang said that the government should be clear on how projects would be funded, whether through taxes or user fees.

The government plans to appropriate P847.2 billion in the 2017 national budget for infrastructure projects, or approximately 5.3 percent of the country’s gross domestic product (GDP), the highest allotment of a portion of GDP for infrastructure spending in 30 years.

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