Shipping loan program largely untapped

Substantial amounts are available for the domestic shipping industry but it seems loan availment has been low. Observers said the economy has slowed down to a point where shipowners no longer see the need to acquire new bottoms.

Records show that out of an available ¥20 billion under the domestic shipping modernization program (DSMP) part II administered by the Development Bank of the Philippines (DBP), nearly P7 billion remains untapped.

For this year, local shipping firms had borrowed only P576.93 million as of August, a mere eight percent of the total credit available under phase II of DSMP which is being funded by the Japan Bank for International Cooperation.

Phase II covers the period 1999 to 2005 while phase I covered the years 1995 to 2000 and had a total credit facility of ¥15 billion. DBP officials said total availment of loans under phase I amounted to only 87 percent.

Under DSMP II, some P1.018 billion worth of various projects had been approved while another P1.038 billion had been endorsed for lending, according to DBP assistant vice president Simplicio B. Apolinar. The DBP official said nearly P7 billion remains untapped from DSMP II.

Apolinar said some P3.596 billion worth of projects are in the pipeline although these projects still have to fulfill a lot of requirements including a review of the product proponents’ ability to repay the loan.

Repayment periods range from a minimum of three years to a maximum of 15 years.

The loan facility is available either through the DBP or participating financial institutions accredited by the DBP.

All loan applications must go through rigid screening and review by a project team composed mainly of DBP personnel assisted by representatives from the Shipping Development Corp. (Shipdeco) of Norway and the Overseas Shipping Cooperation Center (OSCC) of Japan. Both agencies are also available for techincal assistance.

Of the loans already released, P220 million went to a shipyard while another P120 million went to a maritime school.

DSMP is a policy-lending program focused on the domestic shipping industry and shipping-related industries such as shipbuilding, ship repair, cargo handling, terminal operations and port operations.