PhilEXIM extends P5.7-B in guarantees, direct loans

The Philippine Export-Import Credit Agency (PhilEXIM) has provided P5.69 billion in guarantees and another P65.75 million in loans last year.

PhilEXIM is a government financial institution (GFI) directly under the Department of Finance (DOF), and its primary purpose is to extend sovereign guarantees to SMEs as well as selected sectors of the business society for foreign or domestic loans.

The direct loans are under the agency’s direct lending program primarily to business groups, exporters, small and medium enterprises (SMEs), traders and importers.

It can extend guarantees up to 15 times its subscribed capital stock of P10 billion. And its guarantee ceiling is not tied up to the sovereign guarantees of the national government.

Foreign investment banks and official development agencies often require sovereign guarantees when Philippine business apply for huge loans.

"We are a sovereign guarantee shop," Joel C. Valdes, PhilEXIM president and chief executive officer said.

It has already issued some P1 billion in direct loans over a number of years, which the small and medium exporters (SMEs) and other business sectors had tapped. PhilEXIM was formerly known as the Philippine Export and Foreign Loan Guarantee Corp. or PHILGUARANTEE in the late ’70s. In February 1998, it was renamed Trade and Investment Development Corporation of the Philippines (TIDCORP) and in March this year, it was again renamed PhilEXIM under Republic Act (RA 8494).

After incurring a net income loss of P332 million and a mere P1.1 billion in guarantees in 1994, PhilEXIM rose from the ashes to registered a positive net earnings of P77.4 million and guarantees of up to P6 billion by the end of 2000. From a mere 80 individual clients at the start of the ’90s, it expanded to 616 SMEs and other vital sectors in 2000. Export sales supported by its various facilities hit P1.194 billion in the same period.

Valdes explained that among the reasons for the net gains in the past few years came from earnings guarantee fees, disposal of assets, and other recurring and non-recurring earnings. PhilEXIM earns from two to three percent in guarantee fees. "Business picked up as our guarantee base expanded."

In just a few years, the export-import credit agency developed a whole range of products for SMEs including pre-shipment and post-shipment guarantees, export loan guarantees, term loan guarantees, short-term trade-related loan guarantees, trade fair financing guarantees, and a P1-billion guarantee facility for garment exporters.

It also has direct lending programs for exporters and a special credit facility for small-scale exporters.

Aside from the SMEs, PhilEXIM also extends guarantees to selected sectors like infrastructure, tourism-related, information and communications technology, and agri-modernization projects.

Recently, it signed an agreement with the Overseas Private Investment Corp. (OPIC), a United States government agency that promotes trade and facilitates the investment of US capital in developing and emerging markets.

OPIC has supported $138-billion worth of US investments overseas. Presently, it offers up to $500 million in total project support for any one project, up to $250 million in project finance, and up to $250 million in political risk insurance.