The DBP said the Domestic Shipping Modernization Program (DMSP) Phase I was highly successful and the ensuing DMSP II is well on track to meeting its goals. The bank made the statement in the wake of news that lending agency Japan International Cooperation Agency (JICA) is disappointed with the way DBP is running the project.
"We take serious exception at these recent statements about DBP. In our opinion, these have been largely inaccurate and promoted to cater to certain interest groups," DBP senior vice president Corazon D. Conde told JICA resident representative Shozo Matsuura in a letter.
Conde was referring to an earlier statement made by JICA expert on maritime administration Nobutaka Kimura that a ¥20-billion loan to the DBP was "unable to achieve its objectives" due to the bank’s stringent lending rules that required an 80- percent loan value and 50-percent chattel mortgage collateral value of the vessel.
"The slow disbursement of DSMP II does not mean the failure of the program," Conde said.
"JBIC as a creditor has remained quietly supportive of our strategic efforts to fully disburse the DSMP II funds by closing date of Jan. 7, 2007," the DBP official further stated.
DSMP II focused on rural area development which means water transport in missionary routes served only by pump boats. "Logically, private investors would be averse to taking on investments particularly in missionary routes owing to the project’s highly developmental nature and long payback period," Conde said.
Also, the DBP said it was them who proposed the creation of the National Maritime Leasing Corp. (NMLC) to serve as the investment vehicle of the government to encourage and promote private sector investment.
However, it added there were policy differences between DBP and NMLC when the latter chose to broaden the scope of its leasing operations to include more lucrative activities such as tanker operations. The DBP stressed that the financing of tanker operations are already being serviced by commercial banks.
"The availability of commercial bank financing for tankers and other profitable shipping projects underscore the need for ODA (official development assistance) funds to be directed to highly developmental projects in need of low cost funds," the DBP official said.