The Market Monitor Minding the Nation's Business
The government-owned Land Bank of the Philippines (LandBank) and the Japanese government have signed a loan agreement to fund a five-year project that aims to jumpstart agribusiness investments in the Autonomous Region in Muslim Mindanao (ARMM) and other conflict-affected areas in the South as part of the recent state visit of Japanese Prime Minister Shinzo Abe.
The loan worth ¥4.93 billion (about P1.76 billion) intended for the Harnessing Agribusiness Opportunities through Robust and Vibrant Entrepreneurship Supportive of Peaceful Transformation (Harvest) Project were signed by LandBank President and CEO Alex Buenaventura and Japan International Cooperation Agency (Jica) chief representative to the Philippines Susumu Ito.
President Duterte and Prime Minister Abe witnessed the signing of the loan agreement as well as the guarantee letter for the deal inked by Finance Secretary Carlos Dominguez III on behalf of the Philippine government.
“The Harvest project is seen to help create an enabling investment environment in the ARMM and other conflict-affected areas in Southern Philippines to help rev up the economy and raise incomes in these communities,” Dominguez said.
The loan deal was among the agreements signed between Manila and Tokyo during Abe’s two-day state visit to the Philippines.
The Jica loan has a 25-year maturity, inclusive of a seven-year grace period with an interest rate of 1.4 percent, the Department of Finance (DOF) said.
On top of the proposed loan, Jica intends to provide a technical grant of $6 million (P290 million) to support the capacity building of eligible Harvest beneficiaries and LandBank’s project management.
The exchange of notes for Harvest was earlier signed by Japanese Ambassador Kazuhide Ishikawa and Foreign Secretary Perfecto Yasay, Jr. last Oct. 26 during President Duterte’s official visit to Tokyo.
Harvest, which will be implemented by LandBank from 2017 to 2022, aims to open a lending window for agribusiness ventures and other related investments in ARMM and other conflict-affected areas in Mindanao.
Loans funded under the Harvest project will be made available to large agribusiness enterprises, farmers’ organizations or cooperatives, micro, small and medium enterprises (MSMEs) as well as “corporatives” or corporation-managed farms supported by the LandBank in ARMM and other conflict-affected areas.
Projects that source or obtain products or goods from the ARMM and other covered areas as part of a value chain are also qualified to borrow from this Harvest facility.
During Mr. Duterte’s official visit to Japan last year, the two governments formalized several agreements that would help improve the Philippines’ maritime safety capability, including a deal for a ¥16.5-billion concessional loan covered by Tokyo’s Official Development Assistance (ODA) for the acquisition of two large-scale patrol vessels for the Philippine Coast Guard (PCG).
The agreement for the ¥16.5-billion loan signed by Dominguez and Jica President Shinichi Kitaoka is part of Tokyo’s continuing assistance to the PCG’s Maritime Safety Capability Improvement Project (MSCIP).
According to the DOF, the Jica loan, equivalent to P6.8 billion, would be extended at an interest rate of between 0.01 and 0.10 percent with a maturity period of 40 years, inclusive of a 10-year grace period.
The acquisition of two 94-meter large-scale patrol ships under Phase Two of the MSCIP is on top of the ongoing ODA from Japan for the first phase of the project, which involves the procurement of 10 40-meter PCG patrol vessels.
The targeted completion of the delivery of all the 10 vessels is on August 2018.
Besides the loan agreement, Japan had also announced the provision of additional vessels for the PCG through a ¥600-million grant (about P280 million) for the procurement of high-speed boats and other equipment to boost the Philippines’ anti-terrorism and security activities.
This includes the acquisition of one 20-meter high-speed vessel and 14 units of 11-meter high speed boats.