CLOSING AND SYNTHESIS AUSTRALIAN - NEW ZEALAND CHAMBER OF COMMERCE - - PowerPoint PPT Presentation

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

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Conciliation and arbitration of investment disputes Guarantees of foreign direct investment’s non- commercial risks Interest-free loans and grants to governments

• f poorest

countries Loans to middle-income and credit-worthy low-income country governments Solutions in private sector development

IBRD

International Bank for Reconstruction and Development

IDA

International Development Association

IFC

International Finance Corporation

MIGA

Multilateral Investment Guarantee Agency

ICSID

International Centre for Settlement of Investment Disputes

WORLD BANK GROUP COMMITMENTS, FY17

19.3% 31.6% 7.8% 36.6% 4.7%

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Loans, grants, equity investments, guarantees, and advice to support development *Excluding mobilizations ($7.4 bn) TOTAL COMMITMENTS: $61.8 BN IFC* – $11.9 MIGA – $4.8 IDA $19.5 IBRD $22.6

All dollar figures are in US$ bn

Recipient- Executed Trust Funds – $3.0

DEVELOPMENT FINANCE TODAY

Major opportunities for mobilizing private capital to:

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End Poverty Boost Shared Prosperity Tackle Climate Change Advance Gender Equality

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▪ In mobilizing private capital for development ▪ More than $265 billion invested since

• ur founding in 1956

IFC: SIX DECADES OF EXPERIENCE

▪ 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

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2.4 million jobs Health services to 34 million patients Education to 4.9 million students Improved opportunities for 3.0 million farmers

THE REACH OF IFC’S PROJECTS – CALENDAR YEAR 2016

Colombia

62 million microfinance and SME loans, totalling $411.8 billion $270 billion trade finance portfolio

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THE REACH OF IFC’S PROJECTS – CALENDAR YEAR 2016

Power generated for 79.4 million people Water distribution to 14.3 million people 345.3 million customers receiving phone connections

Georgia

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$19.3 billion in long-term investment:

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$11.9 billion for IFC’s own account

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$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.

FISCAL YEAR 2017 HIGHLIGHTS

India

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Total investments to date: USD 3 BILLION

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Job Creation

Poor low level service jobs – Need for higher quality jobs and better alignment between vocational / educational training and hiring industries. Infrastructure is key to job creation.

What Are We Solving For?

SCOPE FOR PRIVATE SECTOR DEV’T IMPACT & CONTRIBUTION IN INFRA

Infra Build-up

Infrastructure is a great equalizer due to accessibility regardless of income to support Job Creation and Poverty Reduction

Urbanization and Demand for Basic Services

The Philippines is one of the most rapidly urbanized countries in Southeast Asia – issues

• f mobility,

competitiveness, adequate housing, resiliency need to be dealt with.

Poverty Reduction

The Duterte Administration’s target is to decline poverty rate from 21.6% to 14%, and poverty incidence in rural areas to decrease from 30% in 2015 to 20% in 2022.

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

2015 KEY DEVELOPMENT IMPACT

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Number Of People Receiving Access To Improved Services (Real/Non-Financial Sectors)

GHG Emissions Expected To Be Reduced (Metric Tons/Year)

100,000 1.1 MMT/Year

Direct Employment (#

• f Jobs)

Patients Served (#) Students Reached (#)

Total

14,551

Women

5,623 200,520

Total

3,047

Women 1,784

Payments to Government Power Generation Water Distribution

US$212 Million 10.12 Million Customers 6.8 Million Customers

Micro Borrowers Housing

1.38M Micro Borrowers US$326.9 Million 22,837 Agribusinesses/Farmers US$37.5 Million US$723.6 Million

Mortgage Loans to

20,010 Home Buyers

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IFC’S INVESTMENT PORTFOLIO IN THE PHILIPPINES

For IFC's Account – US$613.9 million Philippine Committed Portfolio as of December 2016 US$435.9 million Philippine Outstanding Portfolio as of December 2016 Top 5 Clients

(by Outstanding $)

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INFRA MARKET CONTEXT OVERVIEW

INFRA

Power Water Transport Solid Waste

• This sector is most developed in terms of regulatory aspects

(EPIRA), still need to fulfill open access and establish competitive selection process for power purchase agreements; also instill competitive selection process for future RE

• Without RE/clean energy intervention- country to be 70% coal by

2030 – Is that ok??

• Need to introduce LNG in the power mix, this will entail building

an LNG terminal. Who will do this, gov’t. private sector, joint

• Focus on renewable energy and assist government to establish

next generation of FITs via competitive selection process

• Need for a Water Sector Reform Act to promote greater private

sector involvement

• Highly-fragmented market (this is in all aspects, in regulation with

different agencies involved, and also in the proliferation of numerous small service areas under different local providers), need to consolidate to get to optimal scale for investment and rationalize regulation of the sector.

• Need for tariff regulation that will allow for cost recovery and

adequate return to attract more private sector participation.

• Wastewater and Sewage largely ignored- need for river basin

inventory and conservation/management plan

• Huge investment gap particularly in urban areas
• There is a need to prepare a rational sector plan that promotes

intermodal/network development, and prioritize development against a limited resource

• Capacity building to come up with a comprehensive intermodal

transport plan

• Issues on Rights of way, and NG and LGU coordination
• Emergence of bilateral thrusts (China/ Japan) and where will

private fit in (note that bilateral can be a good source for the public component of a PPP)- Will Hybrid PPP work?

• Lack of capacity and highly politicized/ graft prone sector
• LGU and Subnational are key clients - fragmented market and

need to engage with consolidators (MMDA/ LLDA/CEBU). Financing is dominated by GFIs.

• Not in my backyard (Nimby mentality) for hosting final disposal

site

• Required clarity on provisions of RA 9003 related to WTE

(incineration) and organizing municipalities to meet scale required to employ WtE technology.

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.

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THE PROMISE AND CHALLENGES AHEAD

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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

• House Bill

4334, Traffic Crisis Act of 2016

• Rationalization
• f PPP laws

Policy and regulatory framework

Fiscal space

Willing ODA / Foreign partners

High trust rating – supportive public

Liquid financial system

Infra spend / GDP increase to 7% by 2022

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CHALLENGES AHEAD

Minimize political predation (Barangay, LGUs, National) Judicial overreach (RoW, TROs, etc.) Bureaucratic paralysis (COA, RA 9184)

Watch out and monitor spending Hybrid PPP need not be a Zero-sum game Line agency implementation capacity needs support

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Annex: Recent transactions

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
• ther 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. 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.

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Annex: Recent transactions

Jordan’s airport

• QAIA, a vital aviation hub, opened in 1983 and soon accounted for 97

percent of the country’s air traffic.

• To improve and expand QAIA, in 2007 IFC committed $120 million in

financing and helped mobilize $200 million in commercial lending to structure Jordan’s first airport public-private partnership (PPP).

• IFC also arranged swaps to eliminate interest rate risk for the whole

package.

• In 2016, the airport set a new record for annual passenger traffic, and has

been key to supporting the tourism industry, which contributes about 10 percent of Jordan’s GDP.

• The upgrade is expected to indirectly create 23,000 jobs in Jordan,

generating more than $1 billion in foreign direct investment. Bangladesh LNG terminal

• Today, 78 percent of Bangladesh citizens can use electricity at work, at

home, and throughout the country.

• But power outages are still common because poor operational practices

and inadequate maintenance limit the supply of energy.

• There is also shortage of natural gas, which accounts for about 70 percent
• f Bangladesh’s power.
• To restore depleting gas supplies, IFC has partnered with US-based

Excelerate Energy to co-develop and then secure debt financing for the Moheshkhali Floating Liquefied Natural Gas (LNG) project—Bangladesh’s first LNG import terminal.

• The floating terminal will provide crucial infrastructure required to access

natural gas from global markets.

• As lead arranger for the project, IFC helped arrange the debt financing

package of $125.7 million for the project, including IFC’s loan of $32.8 million from its own account and the balance from the UK’s CDC Group; DEG, Germany’s Development Bank; FMO, the Dutch Development Bank; and Japan International Cooperation Agency (JICA).

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Annex: Recent transactions

Colombia’s Fourth Generation (4G) road program

• As a typical emerging market, Colombia has an annual infrastructure

financing gap of as much as $1.5 trillion.

• IFC invested about $48 million in an infrastructure debt fund that is

designed to mobilize financing from pension funds and other large

• investors. The fund supported the roll out of Colombia’s Fourth Generation

(4G) road program, one of the most ambitious infrastructure packages under a public-private partnership framework in the world. The fund raised $400 million.

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Annex

Source: NEDA, ODA Portfolio Review Report 2014 and 2015

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Annex

Source: Department of Budget and Management

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Annex

A Tale of Two Airports

Source: BusinessWorld – Oplas (June 8, 2017)

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Annex

Source: The Philippine Star

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Annex

Source: 2015 Global PPI Update of the World Bank

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Annex

Source: 2015 Global PPI Update of the World Bank

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Annex

Source: 2015 Global PPI Update of the World Bank

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Manila is the 10th most stressful city in the world

• based on a study by UK-based dry-cleaning and laundry service n

company ZipJet

• 500 locations around the world were assessed based on data

regarding infrastructure, finance, pollution levels, etc.

10th most stressful