THE Development Bank of the Philippines (DBP) has been granted exemption from remitting dividends to the government in order to step up lending to infrastructure projects.
“While the bank’s financial ratios remain strong and stable, dividend relief has been requested to ensure DBP’s capability to support the priority programs of the National Government under the ‘Build, Build, Build’ initiative,” DBP said in a statement Thursday.
Government owned- and controlled corporations (GOCCs) are required by law to remit at least 50% of their annual net profit as dividends to the national government.
In a separate statement, Finance Secretary Carlos G. Dominguez III said he agreed to DBP President CEO Emmanuel G. Herbosa’s request and ordered the bank to boost its funding to big-ticket infrastructure projects, with the full implementation of the Real Estate Investment Trust (REIT) Act expected to inject more capital into the market.
“I want you to be experts in dealing with big construction companies, in dealing with large road toll projects; that should be your expertise,” Mr. Dominguez told DBP’s Mr. Herbosa and Edgar Richard Trono, the head of the Bank’s Strategic Planning Group, during a recent meeting.
With the DBP focusing on major infrastructure works, he said he does not expect the bank “to be lending to anything that’s worth less than P100 million in capital.”
Pressed for details, the DBP and DoF had not responded at deadline time.
“DBP continues to boost its lending activities, in support of the National Government’s goal of increasing investments in the infrastructure sector, so as to further build up the economy and promote inclusive growth especially in areas outside of traditional urban centers,” the bank said.
Mr. Dominguez said the “capital boom” by REIT Act will be felt next year with the formation of more REITS that will serve as a “potential market for the DBP.”
“This will create for the REIT sponsor (fresh) capital, which I’m sure they will start reinvesting. Those are your clients now, we have expanded your market,” Mr. Dominguez told the DBP.
Republic Act No. 9856 or the REIT Act was signed into law in 2009 but its final implementing rules and regulations were only signed last month.
The law enables real estate companies to fold their assets into stock corporations that will allow the public to invest and purchase shares, which can also be traded on the Philippine Stock Exchange (PSE). — Beatrice M. Laforga