RP eyes $1-B Japanese loan to develop maritime industry

Department of Trade and Industry (DTI) Secretary Peter B. Favila said the government will enter into an agreement with the Japanese government for a $1-billion loan package for the development of the country’s maritime industry.

In an interview, Favila said they are talking to international funder Japan Bank for International Cooperation (JBIC) for the modernization of the shipping industry. "We are trying to negotiate a $1-billion loan," Favila said.

In a separate interview, a JBIC representative said the loan is still under negotiations and they are not sure when the money will be released. When asked if there is a chance the talks will be completed within the first half of the year, the representative said it is "unlikely."

For his part, National Economic Development Authority (NEDA) Director General Romulo L. Neri said they are asking for the $1- billion additional funding from Japan in order to make the Philippines a maritime power in the region.

Earlier, the Development Bank of the Philippines (DBP) has obtained a P16-billion loan from JBIC for the local maritime industry. Unfortunately, Neri said DBP has been slow in releasing the fund. "DBP being a bank requires real estate collateral," Neri explained.

While waiting for the JBIC funding, Neri said they will try to borrow money from the DBP first. He said DBP only managed to release half of the P16 billion. Once they exhausted all the funds from the state-run bank, Neri said they might do a bond offering.

"We will try first the DBP and then we will find out how much money is needed," Neri said.

"The first tranche will come from DBP, (the unused portion of the) P16 billion. They only lent out I think half of that …   then we could float another bond from NDC to finance if there is greater demand then the final tranche, the big one will come from JBIC," he said.

Neri stressed the importance of developing the maritime industry, as there is already a P6 billion pending worth of leasing just waiting for the market to open. "In other words there is a big market for it," he said

"The Philippines should be a maritime power," he said. "I think this will be our next boom area," he added

Neri explained that the government is looking out leasing six year old ships from Japan. "We are doing the leasing route. The beauty of leasing is that anytime the lessee skips one or two months payment the lessor can always get back the ship, no more court case or anything because the ship is yours you are just renting it out."