Government creates P25-billion infrastructure fund

MANILA, Philippines - The Aquino administration has announced the creation of a P25-billion infrastructure fund, the largest ever assembled in the country, with the Government Service Insurance System (GSIS) as the lead investor.

President Aquino made the announcement yesterday at the 75th anniversary of GSIS, the state-owned pension fund for state workers.

GSIS would pour in half of the P25 billion or roughly $300 million for the fund which may be used for public-private partnership (PPP) for infrastructure projects, GSIS president and general manager Robert Vergara said.

The pension fund is the lead investor in the so-called Philippine Investment Alliance for Infrastructure or (PInAI) which will be managed by Maquarie Infrastructure and Real Assets, a division of the Macquarie Group.

Vergara said there are still two other foreign institutions.

“Along with GSIS and MIRA, two other foreign institutions will participate as anchor investors in the fund,” Vergara told reporters.

MIRA, for its part, said the company is pleased with its partnership with GSIS.

“We are pleased to partner with GSIS, the largest pension fund in the Philippines, particularly at a time of strong economic growth in the country,” said MIRA senior managing director Frank Kwok.

The investment horizon of the fund is 10 years, Vergara said.

Areas of investments under the PInAI include transportation, energy, power, water, environment, communications sectors as well as other PPP investment opportunities.

The overall goal is to generate returns of at least nine percent to 15 percent a year for GSIS to make the investments worthwhile for its members.

The Aquino administration launched in 2010 its PPP program, aimed at attracting private sector participation to fund infrastructure projects such as airports and roads.

Aside from the PPP projects, GSIS is also eyeing to pour more funds in the local equities market, particularly in power and infrastructure stocks.

Vergara said the GSIS would likely double their equity exposure over the course of the next 12 months from where they are at present.

Last year, the pension fund decided to unwind the entire $670 million it has invested abroad.

Meanwhile, the President was also mentioned the significant changes or reforms that were introduced in GSIS, saying it is “now more pro-member, more attuned to the needs and welfare of its stakeholders.”

Aquino said the new management provides more responsive and accessible service for its 1.7 million members in the entire government workforce and pensioners in nearly two years, or since he assumed office in June 2010.

He disclosed that the GSIS will be forging a memorandum of agreement with the Department of Education (DepEd) and the Department of Budget and Management (DBM) to settle government share in premium arrearages of nearly 800,000 teachers.

GSIS chairman Daniel Lacson said that as a result of their reform measures, “our stakeholders are beginning to feel the difference. It’s now more fun in the Philippines with GSIS.”

GSIS reforms include the revocation of personal appearance requirement for pensioners or the Annual Renewal of Active Status; deployment of additional 500 GWAPS kiosks nationwide; renewed partnership with the LandBank as additional service bank.

The management also restored the survivorship benefit of deceased members’ qualified survivors, even if they are employed or have other sources of income.