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DBP earmarks P50-B loan facility for the maritime industry

DBP earmarks P50-B loan facility for the maritime industry
Carmela I. Huelar June 22, 2022

The government financial institution (GFI), Development Bank of the Philippines (DBP) has allocated a P50-billion fund in support for the "effective implementation" of the 10-Year Maritime Industry Development Plan (MIDP) developed by the Maritime Industry Authority (Marina).

DBP and Marina formalized their partnership in implementing some of the programs under the MIDP with the signing of the Memorandum of Agreement (MOA) during the opening day of the 7th Philmarine 2022 held at the SMX Convention Center on June 21, 2022.

Under the MOA, signed by DBP President and Chief Executive Officer Emmanuel G. Herbosa and Marina Deputy Administrator for Operations Nannette Dinopol, the GFI will provide an "attractive financing program, training, and consultancy services that will eventually promote a progressive and sustainable maritime industry."

Dinopol recalled that, even during the height of the pandemic, Marina continued to address "the hurdles such as the aging fleet and the lack of incentives and attractive financing schemes for industry stakeholders."

She said, " the Marina forged this MOA to collaborate with DBP in order to develop and implement comprehensive financing programs to assist shipyards, shipping companies, and cooperatives on maritime-related investments as well as to provide necessary loan financing and credit facilities including other bank products and services in line with the strategic programs of the MIDP."

Specifically, Dinopol is pertaining to the MIDP's Program No. 1 which deals with the modernization of the domestic fleet; Program No. 2 which focuses on the development of shipping services for maritime tourism; and Program No. 5 which covers the development of the maritime hub which includes shipbuilding and ship repair business and logistics.

Herbosa meanwhile, recalled DBP's many years of experience in lending to local shipyards, port developers as well as shipowners in their acquisition of roll-on roll-off passenger ships to be deployed in the inter-island trade, especially for missionary routes.

Thus, the government-owned bank is already quite familiar with some of the programs of the MIDP.

In an interview after the MOA signing, Herbosa disclosed that the GFI had earmarked some P50 billion loan facilities to ease the financial challenges confronting local players in the shipbuilding and ship repair business, logistics, and shipowners who want to upgrade their fleet in the domestic trade.

The loans, he said, would be offered at very low-interest rates. While present commercials rates hiver around 8 percent and above, the annual interest rate under the loan facility for the maritime industry is pegged at only 5.5 percent for the first few years of the loan.

"That's five and a half percent, you cannot go down below that kasi mataas na ang rates ngayon," Herbosa, who has had extensive experience in the banking sector for four decades, said.

Moreover, he added, these loans are offered on concessional terms with a significantly longer paying period. Instead of the usual seven years, DBP can extend these loans payable in 15 years.

Loans may include expenses for pre-feasibility studies, detailed engineering design, consulting services, civil works, acquisition of equipment and machinery, and initial working capital, among others.

Herbosa, without naming names, revealed that DBP had experience in extending a P7 billion loan to a single borrower in the maritime industry.