IFC willing to invest in AMCs

The International Finance Corp. (IFC), the investment arm of the World Bank, is prepared to directly participate or help finance an asset management company (AMC) that will buy bad debts or assets of Philippine banks.

However, IFC country manager Sergio Pimenta expressed concern over the slow passage of the proposed special purpose asset vehicle (SPAV) bill.

"The IFC is willing to directly participate in the formation of an AMC, or to offer funding for the initial package for acquisition by an AMC," Pimenta said during a press briefing held late Monday.

The IFC manager said they have been approached by certain local institutions for funding or for participation in an AMC. He refused to identify the institutions. "We have been listening."

However, they expressed concern over the manner by which the SPAV and the securitization bill had been moving in Congress.

The House of Representatives recently passed its versions of the bills but the Senate version may be delayed. Last Monday, the minority group in the Senate staged a coup resulting in reorganization of committee memberships, a few days after the body goes into a recess.

The Senate will mostly likely resume regular session in July when President Arroyo deliver her State of the Nation Address (SONA).

Farida Khambata, IFC vice president for portfolio and risk management, described the two bills as a "moving target."

"It is important that a regulatory framework must be in place," Khambata said. "And it should be doable for all interested parties."

The IFC said AMCs in the Asia Pacific region constitute a growing investment sector. Billions of dollars have already exchanged between AMCs and financial institutions in different countries in the region, notably South Korea, Thailand, Malaysia and the People’s Republic of China.

Meanwhile, the IFC expressed satisfaction over the privatization efforts of the Arroyo government. The World Bank and the IMF were involved in the initial steps leading to privatizing the water sector in Metro Manila. This resulted in the award of concessions for two water districts – one for the Lopez-led Maynilad Water Corp. and the Ayala-led Manila Water Services Inc.

IFC officials said they are generally satisfied with the regulatory mechanism and the rate-setting mechanism for the water sector despite problems arising from the present operators of the water districts.

"So far, we are comfortable with the privatization of the water sector in Metro Manila especially when you look at the improved water services especially in areas which were otherwise unserviced," they said.

The IFC said infrastructure investments have been enormous requiring direct participation of the private sector.