Finance Secretary Jose Isidro Camacho revealed yesterday that the guarantee facility was approved by the state-controlled PhilEximbank, carrying the full faith and credit of the sovereign.
The expansion project, according to Camacho, was expected to create between 500 to 1,000 new jobs in the call center which provides backroom services for overseas companies.
The call center is operated by Cyber City Teleservices out of a seven-acre IT part in Pampanga and currently employs around 1,000 employees. The company specializes in customer relations management, including inbound call management such as order entry, billing inquiries and product payments.
The company also provides data management services such as manual data entry, voice transcription, optical scanning data conversion and outbound telemarketing.
The company said it has designed and implemented a scaleable dedicated private network comprised of multi-service, IP/ATM switches, compression and conversion equipment and leased and owned transmission facilities from tier-one providers such as WorldCom and AT&T.
According to Camacho, PhilEximbank was also in the process of preparing several other projects for the Overseas Private Investment Corp. of the US which has already agreed to finance some $1-billion worth of big-ticket and high-risk projects of government-owned corporations.
Camacho said the OPIC decision came as a surprise to Philippine officials who were expecting the proposals to be rejected due to internal policy questions within OPIC.
"This is the biggest surprise during the Bush administration’s state visit because we thought that OPIC funding was improbable," Camacho said. "But we were told that PhilEximbank could now pursue its proposals and a substantial amount was available for the Philippines."
According to Camacho, OPIC approval was initially considered improbable because the US agency had "internal policy issues" that were not immediately resolved.
"It’s a new facility and in fact OPIC’s participation in the borrowing of the National Power Corp. was the first activity it undertook since its creation," Camacho explained. "Now that they have resolved their internal policy questions, the facility is open to us."
PhilEximbank had initially proposed a $350-million Global Medium Term Note facility to be funded by the OPIC for big-ticket projects of government-owned corporations and private companies.
Camacho said the total amount available was around $1 billion. "This is the biggest thing that came out of the bilateral meetings between the US and the Philippines," he said.
The funds would come from the US capital market with a guarantee from OPIC which would shoulder the risk of its Philippine investment. The PhilEximbank, in turn, would shoulder the credit risk of the individual borrowers of the fund.
PhilEximbank said the OPIC-supported facility would provide long-tenor funding for investment-grade (triple-A) projects and investments with no commitment fees to the borrowers and the tenor stretched over a 10-to 15-year period.
The PhilEximbank facility would be used to guarantee $200-million worth of loans for the $300-million solar wafer cells manufacturing project of the SunPower Philippines Manufacturing Ltd., an affiliate of the US-based SunPower Corp.
Also approved was the $120-million project of the Gokongwei-owned Digitel Corp. for the capital expenditure requirement of its cellular telephone project, Sun Cellular.
Also lined up was a guarantee facility for a big-ticket agribusiness venture of the Davao-based AJMR Holdings which exports bananas to Japan and China.
Another $30 million would go to the Bureau of Customs (BOC) which had lined up the purchase of six X-ray machines for its customs examination facilities in key points-of-entry.
The government itself is not allowed to extend any more sovereign guarantees on private projects, but PhilEximbank‘s loan guarantee facility also carries the full faith and credit of the sovereign.
If the proponent defaults on its loan and PhilEximbank is itself unable to meet its guarantee obligations, the government would assume the guarantee and shoulder the consequences of loan default.