The government financial institution (GFI), Development Bank of the Philippines (DBP) has allocated a fund of 50 billion pesos to support the “effective implementation” of the ten-year maritime industry development plan (MIDP) drawn up by the Maritime Industry Authority (Marina).
DBP and Marina formalized their partnership in the implementation of some of the MIDP programs with the signing of the Memorandum of Understanding (MOA) during the opening day of the 7th Philmarine 2022 held at the SMX Convention Center June 21, 2022.
Under the memorandum of understanding, signed by DBP President and CEO Emmanuel G. Herbosa and Deputy Marina Administrator for Operations Nannette Dinopol, the GFI will provide an “attractive financing program, training and consultancy that will ultimately foster a progressive and sustainable maritime industry”. .”
Dinopol recalled that, even at the height of the pandemic, Marina continued to overcome “hurdles such as the aging of the fleet and the lack of attractive incentives and funding programs for industry players”.
She said “the marina has forged this memorandum of understanding to work with DBP to develop and implement comprehensive financing programs to assist shipyards, shipping companies and cooperatives on marine investments as well as to provide necessary loan funding and credit facilities, including other bank products and services in line with MIDP’s strategic programs.
More specifically, Dinopol falls under Program No. 1 of the MIDP which deals with the modernization of the national fleet; Program No. 2 which concerns the development of maritime services for maritime tourism; and Program No. 5 which concerns the development of the maritime hub which includes shipbuilding and repair activities and logistics.
Herbosa for his part recalled DBP’s many years of experience in lending to local shipyards, port developers as well as shipowners in their acquisition of ro-ro passenger ships to be deployed in the inter-island trade, in particular for missionary routes.
Thus, the public bank is already quite familiar with some of the MIDP programs.
In an interview after the signing of the MoU, Herbosa revealed that the GFI had set aside loan facilities of some 50 billion pesos to alleviate the financial challenges faced by local shipbuilding and ship repair players. , logistics and shipowners who wish to modernize their fleet in domestic trade. .
The loans, he said, would be offered at very low interest rates. While current commercial rates hover around 8% and above, the annual interest rate under the Marine Industry Loan Facility is set at just 5.5% for the first years of the loan.
“It’s five and a half percent, you can’t go below that level,” said Herbosa, who has a wealth of banking experience spanning four decades.
Moreover, he added, these loans are offered on preferential terms with a significantly longer payment period. Instead of the usual seven years, DBP can extend these repayable loans to 15 years.
Loans may include expenses for pre-feasibility studies, detailed engineering design, consultancy services, civil works, acquisition of equipment and machinery, and initial working capital, among others.
Herbosa, without naming names, revealed that DBP had experience in providing a 7 billion peso loan to a single borrower in the shipping industry.