Formal Exchange of Loan Documents for
Expanding Private Participation in Infrastructure Program
Sub-Program 2 (EPPIP2) and Inclusive Finance Development Program
Sub-Program 1 (IFDP1)
December 10, 2018
Asian Development Bank (ADB) President Takehiko Nakao; ADB Executive Director Mr. Shahid Mahmood; ADB Alternate Executive Director Mr. Paul Dominguez; ADB Philippines Country Director Kelly Bird; Finance Undersecretary Mark Joven; Philippine Chamber of Commerce and Industry Chairman George Barcelon; fellow workers in government, distinguished guests, ladies and gentlemen:
Let me first thank the ADB for its strong support for the Philippines over the past five decades. The ADB’s financing support has consistently been strategic and vital to the realization of our development goals.
Between this year and 2022, we expect infrastructure spending under the Build, Build, Build Program to reach about 8 trillion pesos. This ambitious program aims to increase public investments in infrastructure to 7 percent of GDP by the end of this administration.
The Philippines today has among the highest logistics costs in the region. We expect the infrastructure modernization program to bring this down significantly. This will help make our enterprises more competitive, food prices to be moderated, and our stranded island economies better engaged in building a strong national economy.
On top of modernizing our logistics backbone, we also need to invest in our human capital and make financial services within the reach of every Filipino. An ADB-commissioned study showed that as of 2017, only 34 percent of Filipino adults had a bank account, compared with 82 percent in Thailand and 49 percent in Indonesia. A 2017 Financial Inclusion Survey released by the Bangko Sentral ng Pilipinas also showed that last year, only 14 percent of Filipino adults borrowed from a bank or any formal financial institution. We have a lot of work to do in improving the access of unbanked Filipinos to financial services and products that would encourage them to save andmake investments.
We have embarked on a path of rapid and inclusive growth. This path should bring us to high middle-income status in the medium term as well as dramatically bring down poverty incidence from 21.6 percent in 2015 to 14 percent by the end of President Duterte’s term. The infrastructure modernization program as well as attaining our goal of financial inclusion are among the key drivers propelling the economy along this path.
The two loan packages we formally exchanged today – the Expanding Private Participation in Infrastructure Program Subprogram 2 and Inclusive Finance Development Program Subprogram 1 will help us sustain the reforms accomplished so far on increasing private sector participation in the government’s infrastructure development program, and the government’s efforts in expanding financial services to small entrepreneurs.
The ADB’s support through the Expanding Private Participation in Infrastructure Program has gone a long way in helping us advance policy reforms and improve the capacity of the agencies at the forefront of the infrastructure program.
We have accomplished much with the budgetary support ADB has extended for this program. A total of 12 national and 2 local government-level public-private partnership or PPP Center-assisted project contracts were awarded; the government has adopted a forward-looking National Transport Policy; a handbook on standard PPP contract provisions was published in collaboration with the University of the Philippines College of Law; and we have completed the Implementing Rules and Regulations for Executive Order 78 allowing the use of alternative dispute resolution mechanisms in all contracts involving PPP projects.
The 300 million US dollar-budget support loan for Subprogram 2 will help us in sustaining the reforms started under the program and instituting new ones to help improve our capacity to better involve the private sector in infrastructure investments as well as improve the ability of our public agencies to process, finance, design and eventually, efficiently execute large-scale strategic projects.
Building on the accomplishments completed under the first program, we commit to completing other policy and administrative reforms that will improve even further the government’s ability to work more closely with the private sector in modernizing our infrastructure base.
Meanwhile, the first stage of the Inclusive Finance Development Program helped us build a more inclusive financial sector that opens opportunities for our people.
With the resources from this program, we designed a national identification system that has now been signed into law and is in the process of implementation. The Bangko Sentral ng Pilipinas was able to develop a policy framework for a safe, efficient and interoperable National Retail Payments System. We proposed legislation on a modern secured transactions system and that has also been recently signed into law as the Personal Property Security Act. The BSP approved an innovative pilot for a rural bank to migrate to a cloud-based system in order to demonstrate how digital innovation can improve bank operations and better serve clients.
With the 300 million US Dollar-budget support loan for this program, the government will continue and upgrade these reforms by allocating enough funds for the national ID system. We will also enhance our economic and financial learning programs and initiatives to increase the share of digital payments. We also commit to issue regulations to promote and enable the use of cloud-based core banking technology.
Attaining financial inclusion and modernizing our infrastructure backbone are two main tasks the Duterte administration seeks to accomplish over the next four years. These two loan packages fall squarely into the national priorities we have identified. They will surely help us in achieving rapid, investments-led economic expansion.
We thank the ADB for the confidence in our ability to implement these programs and the dedication we have in pushing our economy to be at par with our most competitive neighbors. We look forward to more areas of cooperation in the coming years as the Philippines emerges to meet the challenges of development.
Thank you very much.