RECENT reports said that one of World Bank’s funding agency, the International Finance Corp. (IFC), plans to invest in key Philippine banks that need to increase their core capital to meet stricter global capital adequacy requirements.
Jesse Ang, representative of IFC to the Philippines, said in an interview that the need of the local banks to hike core or tier 1 capital to prepare for Basel 3 capital adequacy requirements is seen as a good opportunity by the international firm to hike up its stake in the Philippine financial sector.
Considering Henry Sy’s Banco de Oro Unibank—the country’s largest bank—and the leading player in Small and Medium Enterprise (SME) lending—the Tambuntings’ Planters Development Bank, as “key role players” in the local economy, Ang said that the IFC has chosen to invest in these institutions because they believe that it will serve as an “access to finance” which will further motivate the local bank’s employees to do their job well and extend their assistance to borrowers—especially the poor ones, as a result.
Paying much importance to access to finance, Ang continued that a part of IFC’s aim is to buy enough shares for it to be entitled at least a board seat in a company.
The IFC’s most recent investment amounted to $150 million with Banco De Oro (BDO) via a private placement deal which granted IFC a board seat. To date, the deal was also the biggest transaction done by IFC apart from the single transactions made in other jurisdictions that totaled to $300 million.
During the previous years, IFC managed to invest $564 million in 2008 alone. It also invested about $300 million annually in the succeeding years.
IFC expressed optimism that it will be able to hike its stake this year as the country continues to project a positive outlook on investors; thus, creating more room for additional investments in the country which is expected to generate more jobs for the Filipinos.
While IFC’s spokesperson is being optimistic, WB’s senior economist for the Philippines, Eric Le Borgne stated the contrary in a report from the Business Mirror last Jan. 13.
Because the local government fell short of last year’s target of 7-percent GDP rate to reduce poverty, Le Borgne said that a lower growth rate is expected as stated in the 2011 Global Economic Prospects (GEP).
Le Borgne said that because business sectors that grow the economy focuses on hiring the skilled and highly-skilled workers that apparently, does not benefit the poor “who, more often than not, are not skilled,” the country still fails to address the issue on poverty.
Meanwhile, Le Borgne, who based his growth forecast from WB’s 2006 poverty incidence data, said the WB could not yet present the estimate of poverty incidence for 2011 because the 2009 poverty statistics have not yet been released
As long as there are people who still believe that the Philippines is capable of improvement, then development is still possible. No matter how many the skeptics, the impossible becomes attainable should one decide to put his or her unwavering faith upon a person–better yet, a whole country. To express confidence in a country’s potential requires risk and taking risk requires audacity.
To have faith in the great things a nation could achieve and see it succeed as expected will not only make the adherent proud, it will also generate a sense of accomplishment to the people of the country that he chose to believe in.
(www.asianjournal.com)
(NYNJ Jan 21-27, 2011 Sec A pg. 6)
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