DBP supports development projects

State-owned depository Development Bank of the Philippines (DBP) is extending its services to help develop the country and Cebu is one of the recipients having established separate partnerships with the Metropolitan Cebu Water District (MCWD) and the Cebu State College of Science and Technology Systems (CSCSTS).

"Our charter is all developmental support that we can give - the financing of development projects for the country. Our main thrust revolves around social, human, production and distribution infrastructures as well as environmental management," said DBP President and Chief Executive Officer Reynaldo David.

DBP's two concrete projects for the province includes the establishment of a Business Assistance Center (BAC) as part of the Bank's Sustainable Partnership for Energizing Entrepreneurship Program (SPEED) which is at the CSCSTS and the refinancing of MCWD's P1.2 billion loan balance with the Local Water Utilities Administration (LWUA).

"We are proud to undertake these initiatives with the CSCSTS and MCWD especially since these programs are expected to play a significant role towards the continued development of Cebu City and the nearby cities and municipalities," David stressed signifying his positive outlook of optimizing the development prospects of the province.

SPEED through the BAC at the state college he said aims to assist the entrepreneurial poor, who are at the bottom end of the micro-enterprise category, empower them, increase their competitiveness and enable them to grow their business.

"The government is counting on the micro-small medium enterprise (mSME) sector to boost the economy and at the same time address poverty in the rural areas. P10 billion has been earmarked to fund the business activities of about three million mSMEs, with the objective of creating new jobs," David said adding that efforts are also being done to triple the efficiency of those government and private institutions engaged in enterprise development in extending technical assistance and other support services to the mSMEs.

CSCSTS, with campuses that reach as far as Daanbantayan in the north and Moalboal in the south makes it a perfect choice for DBP to install its BAC at.

The second project on the other hand, intends to address the basic need of water in the metropolis, which is currently provided by MCWD.

DBP inters into an escrow agreement with MCWD to finance the latter's loan balance with LWUA having DBP-Trust Services as the escrow agent.

"This project with MCWD is actually part of a refinancing scheme under a Memorandum of Agreement between DBP and the Local Water Utilities Administration (LWUA) whereby DBP has committed to provide a credit facility to finance creditworthy water districts such as the MCWD. The scheme allows LWUA to have necessary funds to support the financing needs of smaller water districts," David said.

The deal between DBP and MCWD is more like a "balance transfer" transaction where DBP will pay off MCWD's indebtedness to LWUA and in turn, MCWD will now pay to DBP in lower interest rate in period of 15 years.

This development according to MCWD General Manager Armando Paredes entails savings for the water district.

"Our loans with LWUA are with 12.5 and 14 percent interest rates and are payable in 25 years. Now that DBP financed us for the payment of the whole loan amount, we are going to pay DBP at 9.5 percent interest annually and the payment term is shortened to 15 years."

Over a 15-year period and with only 9.5 percent interest rate anually, MCWD estimates to save about P 400 to 600 million. All the savings will go to their escrow account with DBP Trust.

Should MCWD want to use the savings for some projects, "We have to submit a proposal to DBP. As long as the projects are for the improvement of our services then they will most likely approve it," Paredes said.