CLOSING AND SYNTHESIS AUSTRALIAN - NEW ZEALAND CHAMBER OF COMMERCE PHILIPPINES 19 SEPTEMBER 2017
▪ A member of the World Bank Group ▪ Provides investment, advice, resource mobilization ▪ AAA credit rating; owned by 184 countries ▪ Present in nearly 100 countries IFC is the largest global development institution focused on the private sector in emerging markets.
IFC: A MEMBER OF THE WORLD BANK GROUP IFC IBRD MIGA ICSID IDA International International Multilateral International International Bank for Investment Centre for Finance Development Reconstruction Guarantee Settlement of Association Corporation and Agency Investment Development Disputes Loans to Interest-free loans Guarantees of Conciliation Solutions in middle-income and grants to foreign direct and arbitration of private sector and credit-worthy governments investment’s non- investment development low-income country of poorest commercial risks disputes governments countries 3
WORLD BANK GROUP COMMITMENTS, FY17 TOTAL COMMITMENTS: $61.8 BN Recipient- IFC* – $11.9 Executed Trust 19.3% Funds – $3.0 Loans, grants, equity 4.7% investments, guarantees, and advice to support development 31.6% *Excluding mobilizations ($7.4 bn) 36.6% IDA IBRD $19.5 $22.6 All dollar figures are in US$ bn 7.8% MIGA – $4.8 4
DEVELOPMENT FINANCE TODAY Major opportunities for mobilizing private capital to: End Poverty Boost Shared Prosperity Tackle Climate Change Advance Gender Equality 5
IFC: SIX DECADES OF EXPERIENCE ▪ In mobilizing private capital for development ▪ More than $265 billion invested since our founding in 1956 ▪ The world’s largest development finance institution focused on the private sector ▪ Leveraging the full range of World Bank Group capabilities EXPERIENCE MATTERS United Arab Emirates 6
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THE REACH OF IFC’S PROJECTS – CALENDAR YEAR 2016 2.4 million jobs Health services to 34 million patients Education to 4.9 million students Improved opportunities for 3.0 million farmers Colombia 8
THE REACH OF IFC’S PROJECTS – CALENDAR YEAR 2016 62 million microfinance and SME loans , totalling $411.8 billion $270 billion trade finance portfolio Power generated for 79.4 million people Water distribution to 14.3 million people 345.3 million customers receiving phone connections Georgia 9
FISCAL YEAR 2017 HIGHLIGHTS $ 19.3 billion in long-term investment : $11.9 billion for IFC’s own account ▪ $7.4 billion mobilized ▪ $55 billion committed portfolio $4.6 billion invested in IDA countries Advice : 63% of program in IDA countries, 20% in fragile and conflict-affected areas, 33% in sub-Saharan Africa, 26% climate-related. India 10
Total investments to date: USD 3 BILLION 11
SCOPE FOR PRIVATE SECTOR DEV’T IMPACT & CONTRIBUTION IN INFRA What Are We Solving For? Job Creation Infra Build-up Urbanization and Poverty Reduction The Duterte Poor low level service jobs – Infrastructure is a Demand for Basic Administration’s target is to Need for higher quality jobs great equalizer due Services decline poverty rate from and better alignment to accessibility The Philippines is one of 21.6% to 14%, and poverty between vocational / regardless of the most rapidly incidence in rural areas to educational training and income urbanized countries in decrease from 30% in 2015 hiring industries. to support Job Southeast Asia – issues to 20% in 2022. Infrastructure is key to job Creation and of mobility, creation. Poverty Reduction competitiveness, adequate housing, resiliency need to be dealt with. Private Sector Participation Only in the power and telecoms subsectors; all other subsectors are dominated by the public sector with conflicting roles as owner, regulator and operator; Poor capacity of the public sector in infra sector planning and program/project implementation 12
2015 KEY DEVELOPMENT IMPACT Payments to Government Direct Employment (# of Jobs) Total 22,837 14,551 Agribusinesses/Farmers Women US$212 Million US$37.5 Million 5,623 Number Of People Receiving Micro Borrowers Access To Improved Services (Real/Non-Financial Sectors) Patients Served (#) Power Generation 1.38M Micro Borrowers 100,000 200,520 10.12 Million Customers US$326.9 Million GHG Emissions Expected To Students Reached (#) Housing Water Distribution Be Reduced (Metric Tons/Year) Total US$723.6 Million 3,047 Mortgage Loans to Women 1,784 6.8 Million Customers 20,010 Home Buyers 1.1 MMT/Year 13
IFC’S INVESTMENT PORTFOLIO IN THE PHILIPPINES Philippine Committed Portfolio as of December 2016 Top 5 Clients (by Outstanding $) For IFC's Account – US$613.9 million Philippine Outstanding Portfolio as of December 2016 US$435.9 million 14
INFRA MARKET CONTEXT OVERVIEW The Gov’t has spent on average 2% of GDP from 1986-2016 – need to be significantly increased to 5.4-7.3% and maximize private sector involvement. Infrastructure once built is a great equalizer. Governmentappears to havethe will but implementationcapacity remains. Power Transport • This sector is most developed in terms of regulatory aspects • Huge investment gap particularly in urban areas (EPIRA), still need to fulfill open access and establish competitive • There is a need to prepare a rational sector plan that promotes selection process for power purchase agreements; also instill intermodal/network development, and prioritize development competitive selection process for future RE against a limited resource • Without RE/clean energy intervention- country to be 70% coal by • Capacity building to come up with a comprehensive intermodal 2030 – Is that ok?? transport plan • Need to introduce LNG in the power mix, this will entail building • Issues on Rights of way, and NG and LGU coordination an LNG terminal. Who will do this, gov’t. private sector, joint • Emergence of bilateral thrusts (China/ Japan) and where will • Focus on renewable energy and assist government to establish private fit in (note that bilateral can be a good source for the public next generation of FITs via competitive selection process component of a PPP)- Will Hybrid PPP work? INFRA Water Solid Waste • Need for a Water Sector Reform Act to promote greater private • Lack of capacity and highly politicized/ graft prone sector sector involvement • LGU and Subnational are key clients - fragmented market and • Highly-fragmented market (this is in all aspects, in regulation with need to engage with consolidators (MMDA/ LLDA/CEBU). different agencies involved, and also in the proliferation of Financing is dominated by GFIs. numerous small service areas under different local providers), • Not in my backyard (Nimby mentality) for hosting final disposal need to consolidate to get to optimal scale for investment and site rationalize regulation of the sector. • Required clarity on provisions of RA 9003 related to WTE • Need for tariff regulation that will allow for cost recovery and (incineration) and organizing municipalities to meet scale required adequate return to attract more private sector participation. to employ WtE technology. • Wastewater and Sewage largely ignored- need for river basin inventory and conservation/management plan 15
THE PROMISE AND CHALLENGES AHEAD 16
THE PROMISE AND CHALLENGES AHEAD Php 8 Trillion ($US 170B) BUILD BUILD BUILD ! Program 2017- 2022 Highly determined government with political will - Public Service Act Policy and - House Bill regulatory 4334, Traffic Crisis Act of 2016 framework - Rationalization of PPP laws Willing Infra spend / Fiscal ODA / GDP increase to 7% by space Foreign 2022 partners High trust Liquid rating – financial supportive system public 17
CHALLENGES AHEAD Watch out and monitor spending Minimize political predation Judicial overreach Bureaucratic paralysis (Barangay, LGUs, National) (RoW, TROs, etc.) (COA, RA 9184) Hybrid PPP need not be a Zero-sum game Line agency implementation capacity needs support 18
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Annex: Recent transactions Istanbul metro line (Turkey) • Istanbul is home to the world’s second-oldest underground urban rail line, built in 1875 • Istanbul is notorious as one of the world’s most congested urban centers • To ease urban congestion, IFC is providing $120 million in financing for a new metro line between two densely populated Istanbul districts, Kabatas and Mecidiyekoy • When it opens in 2023, it will add about 450,000 daily passengers to Istanbul’s metro system and help to speed travel times. Izmir light rail transit (Turkey) • IFC and the municipality began a strategic relationship in 2011 to help Izmir unlock new sources of international financing to meet the city’s expanding infrastructure needs. • IFC has provided $500 million—including funds mobilized from other investors—in financing for nine infrastructure projects, mainly in public transportation. • IFC’s work includes financing the new tram lines, a smart traffic-management system that is reducing congestion by 25 percent, and the purchase of 85 new subway cars. 20
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