RP seeks $1-B loan for shipping sector

The National Economic and Development Authority (NEDA) will ask for an additional $1 billion funding from the Japan Bank for International Cooperation (JBIC) for the modernization of the domestic shipping industry, a top economic official said.

"We are trying to see how committed JBIC is," Socioeconomic Planning Secretary and NEDA director general Romulo Neri said yesterday in an interview.

He explained that the proposed funding is over and above the 27th yen loan package extended by JBIC to the Philippines.

The country has the potential to become a maritime power in the Southern Asian region provided government going mileage in its efforts to modernize the industry.

Neri said the countrycould be a major player in the industry due to the presence of big shipyards in Cebu and Subic.

The NEDA head had proposed jumpstarting the industry by buying ships in Japan and then leasing them to local players.

The Japanese government is supposed to lend a separate $1-billion package to the Philippines for the modernization of its maritime industry. However, the Japanese benefactors were reportedly displeased with the way the initial loan tranche for the improvement of the nautical highway were being disbursed.

Neri said the Japan International Cooperation Agency (JICA) was disappointed with the way the Development Bank of the Philippines (DBP) handled the initial P10-billion loan released in 1999.

"The loans are not moving," Neri said referring to the money loaned through the Domestic Shipping Modernization Program I that DBP handled.

JICA said the term loan under DBP required an 80-percent loan value and 50-percent chattel mortgage collateral value of the vessel which became a big burden for private shipping companies to avail.

"The program was unable to achieve its objectives," JICA said.

To address this problem, JICA had proposed that the local government create the National Maritime Leasing Corp. (NMLC). Now, instead of DBP handling the shipping modernization program, the NMLC will be in charge of financing acquisition of modern vessels to be leased to qualified operators under the Finance Lease Program.