For months, DBP has been in the receiving end of criticisms, with Japan International Cooperation Agency (JICA) writing a letter to the bank to urge it to move the loan faster.
DBP, however, denied they are not lending out the money. In fact, the bank said as of December, they have disbursed 98 percent of the fund.
Socioeconomic Planning Secretary and National Economic Development Authority (NEDA) Director General Romulo L. Neri has been the most vocal critic of DBP, saying that JICA is very disappointed with the state-run financial institution.
"The loans are not moving," Neri said, referring to the money loaned through the Domestic Shipping Modernization Program I which DBP handled.
However, Neri cleared that this was not entirely the fault of the state-run bank.
"It’s in the law and DBP is constrained by it," he explained.
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). Instead of DBP handling the shipping modernization program, the NMLC will now be in charge of financing acquisition of modern vessels to be leased to qualified operators under the finance lease program.
In turn, the Japanese government, through JICA, will coordinate with NMLC to conduct technical assistance to construct brand-new vessels in Philippine shipyards which will create a healthy, robust, shipbuilding sector of the local maritime industry.
The Japanese government earlier said it is considering to lend an additional $1 billion to the Philippines for the modernization of its maritime industry.
"It is very clear for JICA to recommend to the Japan Bank for International Cooperation a loan through a program assistance of $1 billion to be granted to the Philippine government through NMLC," JICA said.