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DBP tapped as financial advisor for projects endorsed by MinDA

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DBP
PHILSTAR

By Carmelito Q. Francisco
Correspondent

DAVAO CITY — The Mindanao Development Authority (MinDA) has tapped the Development Bank of the Philippines (DBP) as financial advisor for 12 major projects and as a possible loan provider for other proposed ventures in the southern islands.

At the signing of the memorandum of understanding Friday, MinDA chair Abul Khayr D. Alonto said the partnership with the government-run bank is expected to improve access to funding support for projects that “will improve Mindanao and create jobs, particularly in the Bangsamoro areas.”

The 12 projects described as “catalytic” are: the P735 billion Mindanao Railway System, whose first segment — Tagum-Davao-Digos — is set to started construction this year; a P16 billion portion of Marawi City’s rehabilitation, including livelihood and business components, land resource management and social services; P42 billion agro-economic zones in Zamboanga del Norte, Zamboanga del Sur, Zamboanga Sibugay, Agusan del Sur, Maguindanao, Lanao del Sur, and Basilan; a P15-billion Tawi-Tawi Integrated Development Project; the P25 billion Picong FreePort and Ecozone in Picong, Lanao del Sur; the P39.2 billion Mindanao River Basin integrated flood control projects; the P300 million Mindanao Executive Leadership Academy in Maramag, Bukidnon; P75-billion Mindanao Development Corridors Interregional Connectivity projects for roads and bridges; the P100 million Tourism Assistance Center projects in 20 strategic areas; the P9.8 billion New Zamboanga Airport in Mercedes, Zamboanga City; the P100 million Polloc Freeport and Ecozone in Maguindanao; and the P9.8 billion General Santos Aerotropolis, whose feasibility study has yet to be started.

DBP President Cecilia C. Borromeo said the bank is ready to provide financial support to MinDA, particularly for projects in “infrastructure that will make transportation of goods easier, also infrastructure that will cater to social services like hospitals.”

On the provision of loans for other projects that will be put forward, MinDA and DBP will be discussing how to proceed.

Ms. Borromeo said among the ventures that DBP is prioritizing for funding support are those in power, and bulk water supply and distribution.

“We are, after all, designated by the national government as the infrastructure bank of the Philippines,” she added.

Assistant Secretary Romeo M. Montenegro, deputy executive director of MinDA, told BusinessWorld after the agreement signing that he is hoping that “small renewable energy projects in Mindanao will get funded by the bank.”

“We need financiers for these (about 270 green energy projects) so that we can eventually balance our (power) mix,” he said, noting that power generation in Mindanao has been dominated by fossil fuel with the entry of new coal-fired plants in recent years.

ISLAMIC BANKING
Meanwhile, Ms. Borromeo also noted the urgent need to establish an Islamic financial framework, especially now after the ratification and impending implementation of the Bangsamoro Organic Law.

“We hope the legislators in this part of the country (Mindanao) will pursue an Islamic banking framework of the Philippines so that we can optimize the opportunities that are made available to Al-Amanah,” said Ms. Borromeo, referring to Al-Amanah Islamic Investment in the Philippines, a wholly-owned subsidiary of DBP.

The House of Representatives approved on final reading Bill 8281, An Act Providing for the Regulation and Organization of Islamic Banks, while the counterpart Senate Bill No. 668, the Philippine Islamic Financing Act, is pending. Senator Sherwin T. Gatchalian also filed on Nov. 21 Senate Bill No. 2105, which seeks to establish a regulatory framework for the development of Islamic banks.

The DBP head said “the entire board (of directors)” of the bank, if given authority by the Department of Finance, “is willing to offer the Al-Amanah Bank as its contribution to the Bangsamoro.”

Al-Amanah was established in 1973 to help fund projects in conflict-affected areas in Mindanao that were predominantly Moro-populated. In 2008, DBP acquired 99.9% of its shares by taking over the shares of the national government, Social Security System, and the Government Service Insurance System.

MinDA has been pushing for an Islamic framework, which is seen to open windows for international Islamic financing institutions and foreign Islamic nations.

“We have been pushing for the establishment of Sukuk fund mechanism as this will allow to come and fund key projects in the Bangsamoro Autonomous Region in Muslim Mindanao,” Mr. Montenegro said.

DBP itself has started lending using the Islamic system, although only for micro loans, said bank Director Maria Lourdes A. Arcenas.

One of these involved a P5 million loan to Mothers for Peace, a group of women advocating peace and helping women in Marawi City to recover from the destruction brought about by the 2017 siege.

At present, the Islamic funding portfolio has about 300 borrowers, Ms. Arcenas said.