Blueprint for a Filipino infra bank

One of the speakers during the recent Financial Executives Institute of the Philippines’s (Finex) Week 2020 Annual Conference was Australian banker Chris Box, senior investment officer of the Asian Infrastructure Investment Bank (AIIB).

Headquartered in Beijing, the multilateral financial institution started operation in 2016 and now has 103 member-countries, including the Philippines.

Box said the mandate of the AIIB is to invest in sustainable infrastructure and other productive sectors aimed at improving social and economic outcomes in Asia. His technical session dwelt on the current state of digital infrastructure and cross-border connectivity in emerging Asian markets.

Coincidentally after the conference, I met a Filipino entrepreneur who plans to establish the Philippine Infrastructure and Transportation Bank (PITBank). Francis Yuseco Jr. is the CEO of Philtrak Inc. and the Philippine Trackway Consortium that includes a Swiss-based private equity group and an international bank.

In 2018, Philtrak entered into a strategic alliance with the Deparment of Science and Technology to convert the decommissioned Panay Railways into a “digital green trackway” patented and copyrighted by Yuseco. Thereafter he submitted to the National Economic and Development Authority an unsolicited proposal for the Panay trackway project to be underwritten by the consortium under the build-operate-transfer (BOT) scheme. He also proposed another BOT project to the Department of Transportation known as the “Philippine Rapid Trackway System” along the Edsa corridor.

Yuseco believes the country should not be dependent forever on imported technologies that are obtained through loans at predatory interest rates.

“These dollar- and yen-denominated debt will bury future generations of Filipinos in perpetuity while millions of taxpayers from Mindanao, Visayas, and other parts of Luzon shell out approximately P21 billion per year to subsidize only a few hundred thousand commuters using these imported mass transit systems in Metro Manila,” he lamented.

As envisioned by Yuseco, the proposed PITBank will be the vehicle for the implementation of his BOT projects. He claimed there is enough residual capital to reopen the Unitrust Development Bank (UDB), a thrift bank that his group previously controlled, and transform it into PITBank.

The UDB was initially placed under receivership by the Bangko Sentral ng Pilipinas (BSP) in 2002, and subsequently under liquidation by the Philippine Deposit Insurance Corp. (PDIC). But according to Yuseco, then PDIC presidents Michael A. Osmeña and Valentin A. Araneta had already started discussions with his group to explore the reopening of the UDB prior to their untimely demise one after the other.

Amid ongoing litigation in the courts that has gone on for almost two decades, Yuseco is hoping that the BSP Monetary Board will reinstate UDB’s trust banking, foreign currency deposit unit, and branch banking licenses. He sees an urgent need for an infra-focused bank that will support the development of a national logistics backbone to efficiently transport people, agricultural products, and other types of cargo.

“Without this backbone, the countryside will never progress. Our farmers and fisher[men] will always be poor and marginalized. Our cities will remain congested with informal settlers that spawn the proliferation of drugs, crime, health and sanitation problems,” he told me, emphasizing that his proposed projects can be done without the need for sovereign guarantees and taxpayer subsidies.

Such affordable, common-sense solutions would empower the citizenry and ensure food security as the Philippines grapples with the pandemic-induced crisis in the coming years.

Joseph Gamboa is the co-chairman of the Finex Week 2020 Annual Conference, chairman of the Finex Business Columns Subcommittee, and director of Noble Asia Industrial Corp. The views expressed herein do not necessarily reflect the opinion of these institutions and the BusinessMirror.


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