Dominguez wants investment banks to fund hybrid PPPs

Dominguez wants investment banks to fund hybrid PPPs

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Finance Secretary Carlos Dominguez III said investments banks such as Nomura may explore opportunities in the Philippines’ planned P8.4 trillion infrastructure buildup by taking part in the country’s new “hybrid” Public Private Partnership (PPP) program.

In his meeting with top officials of the Nomura Group in Yokohama, Japan, Dominguez said the Duterte administration is adopting the hybrid PPP formula because it “wants to get things done quickly” in rolling out its massive infrastructure program.

“The [traditional] PPP method takes too long to negotiate the terms of the agreement. We will initiate the project and decide at a certain point when to make it a PPP, perhaps towards the middle or towards the end. Investment banks like Nomura which are active in the capital markets may be able to help,” Dominguez said.

Under this hybrid PPP formula, the government selects, finances and builds big-ticket projects through competitive public bidding and, upon completion, auctions off their operation and maintenance (O&M) to the private sector.

The meeting with Toshiyasu Iiyama, Senior Managing Director of Nomura Holdings, Inc. and Executive Chairman, Asia ex-Japan and other Japanese executives–Masahiro Goto, Senior Managing Director, Global Head of Capital Markets of Nomura Securities Co., Ltd; and Makoto Totsuka, President/Country Head of Nomura Securities Philippines, Inc.–was held on the sidelines of the recent 50th Annual Meeting of the Asian Development Bank in Yokohama.

Dominguez and other Philippine officials had attended the 50th Annual Meeting of the ADB Board of Governors and other related meetings.

The finance secretary assumed the chairmanship of the ADB Board of Governors ahead of this financial institution’s 51st Annual Meeting in 2018 that will be held in the Philippines.

The Nomura officials informed Dominguez of the bank’s new infrastructure team set up in Singapore, which will be tasked “to contribute to the region’s infrastructure projects.”

They said Nomura’s strategies to tap the capital markets for fund raising and consolidating assets will ease the burden on banks and enable investors to meet the demands for funds for infrastructure projects.

The officials also updated Dominguez about BDO Nomura Securities Inc., Nomura’s joint venture deal in the Philippines with BDO Unibank, and said Nomura wants to further contribute to the expansion of the Philippine stock market.

Dominguez told them the Philippine government intends to kick off its infra buildup by developing the Clark international airport in Pampanga, and possibly the Davao airport.

He said two of the largest projects under the Philippines’ P8.4 trillion “Build, Build, Build” program—the Manila-Clark Railway and the Mega Manila Subway will be funded with assistance from Japan.

“Accelerating the implementation of the projects by having the government start them will be the strategy,” Dominguez said.

Earlier, Dominguez said two projects implemented using the “hybrid” PPP scheme were started in less than nine months since President Duterte took over last year, a significant improvement from the usual 29 months that it takes for a traditional PPP project to get going.

These two projects are the Plaridel Bypass Road, which will link the North Luzon Expressway (NLEX) in Balagtas, Bulacan with the Maharlika Highway in San Rafael, Bulacan; and the Central Luzon Link Expressway (CLEx), which will connect Cabanatuan City in Nueva Ecija to Tarlac, according to Public Works Secretary Mark Villar.

Dominguez explained the concept of the hybrid PPP at a recent “DuterteNomics” Forum held in Manila, in which some of the Philippines’ biggest names in the business sector were present, among them, Jaime Zobel de Ayala of the Ayala Group and Tessie Sy Coson of SM Investments Corp.


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