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DBP PCEO Emmanuel G. Herbosa tal ks about effective
risk management and pandemic recovery plans.


In his sterling four-decades long career, Development Bank of the Philippines (DBP) President and Chief Executive Officer (CEO) Emmanuel G. Herbosa has led organizations with a keen sense of responsibility. He has held leadership roles in corporate banking, consumer banking, branch banking, and overseas banking in various financial institutions such as the Bank of the Philippine Islands and Bank of Commerce. Previously, he was also COO of Ayala Insurance and President and CEO of Philippine Guarantee Corporation (PGC).

Here he shares his insights on the country’s economic recovery and the role DBP plays in this effort.

1. As the current President and CEO of DBP, what are the challenges you’ve encountered during this pandemic? How did DBP address these?

We experienced a large increase in the volume of loan applications as most universal and commercial banks imposed stringent credit standards due to the pandemic. Consequently, the DBP Board of Directors and the Bank’s credit committees and lending units continued to meet regularly, either online or face-toface, while strictly adhering to the prescribed health protocols to discuss how the Bank could respond to the funding requirements of the business industry.

2. NEDA Acting Secretary Karl Chua reiterated that he is hopeful that due to the reopening of the economy (along with safety protocols), our economy will bounce back. This is despite an 11% drop in our country’s GDP during 2020’s third quarter. What is your take on this?

As a government financial institution, DBP has aligned its economic assumptions with that provided by national government agencies, such as NEDA. May I add that despite the 11% GDP drop in the third quarter of last year, this is still an improvement over the second quarter contraction, and this likewise demonstrates the gradual recovery of the economy. There have also been significant improvements in the employment situation compared to the peak of community quarantine restrictions.

The country’s GDP contraction is estimated by NEDA to settle at 8.5% for 2020. While the economy is expected to swing back to a robust 6.5% growth in 2021, we continue to strike a delicate balance between opening the economy some more and ensuring the observance of health protocols to avert the risk of a second or third wave of COVID-19 infections that has forced some countries to reimpose stricter lockdowns, as is now happening in developed countries.

3. More realistically, when do you think the economy will go back to the “normal/pre-pandemic” state? What is needed to achieve that level of economic virility?

DBP will be operating under the common assumption that the business environment will not be in a “normal/ pre-pandemic” state at least for the first half of 2021. Even with the vaccine for COVID-19 already available, mass inoculation for at least 60 million Filipinos would take some time in order to significantly impact our economy.

Critical to the recovery effort is a sustained containment of COVID-19, improved consumer confidence, a positive business outlook, and government support for key industries and businesses that create jobs. The “Build, Build, Build” program of the government is an example of an infrastructure program that will help propel the economy towards long-term growth.

4. What are DBP’s future plans in helping to rebuild our economy? Can you break down the plan into key steps/phases and your expected timeline for these?

The passage of the Financial Institution Strategic Transfer Act (FIST) will let banks offload souring loans and assets, allowing these banks to extend more credit to pandemic-hit sectors in need of assistance.

DBP will continue to support the national government in its continued implementation of the “Build, Build, Build” infrastructure program. DBP will continue to support and even step-up its efforts to support and revitalize MSMEs and critical industries and the services sector. DBP will also be increasing its focus on growing its loan portfolio in environmental and sustainability projects. DBP likewise hopes to be more responsive in providing its products and services to all clients through the improvement of its digital banking capabilities and its customer experience strategies.

5. What are some of the key hurdles you think the Philippines will have to face in the coming months or years? What should people prepare for?

The most immediate challenge is to continue to be vigilant so that the rate of COVID-19 infection does not worsen and relapses the economy. The other short-term challenge is to ensure that the vaccine for COVID-19 arrives in the country as soon as possible and that we are able to inoculate a large portion of our population soon. However, timing is uncertain.

In the short- to medium-term, there should be sustained efforts to revive the economy by ensuring the following:

• Timely completion of major infrastructure projects already started. • Digitalization of major industries and economy depending on our ability to quickly harness technology and promote innovation.

• Support for vital industries, i.e. manufacturing, transportation, MSMEs, and the like.

Support for systemically-important companies such as airlines and mass transport systems.

• Help for critically-affected tourism-related businesses such as hotels/accommodations and restaurants.

• Support for the health sector to boost capability to deal with the pandemic without neglecting Sustainable Development Goals (SDGs).

Setting up of information technology and digital infrastructure, including implementation of digital education and the use of alternative learning modalities.

• Improvement in supply chain efficiency.

• Provision of financing assistance to LGUs, such as the DBP ASENSO lending program, to support infrastructure projects and socio-economic programs consistent with the goals of the Philippine Development Plan and the attainment of the SDGs.

• Improvement of the capacity of local contractors to complete their contracts and finance their own investments, such as the DBP Infrastructure Contractors Support (ICONS) program.

6. In a previous interview, you had mentioned that DBP is “ready to provide needed resources to enable industry players to institute mechanisms that would rebuild trust in travel.” Could you share the ways you’re planning to help in rebuilding tourism?

Under Republic Act No. 11494 (Bayanihan 2), DBP was allotted P6 billion for low-interest loans for businesses including tourism-related enterprises. The Bank is now targeting to provide credit for working capital of MSMEs.

Moreover, under Bayanihan 2, airlines will get around P700 million from the P9.5-Billion recovery program of the transportation sector. I understand that the Department of Finance (DOF) is awaiting the final loan plan of local airlines to determine the participation of the government financial institutions, including DBP.

The Bank stands ready to extend financing or credit to micro, small and medium enterprises in the tourism value-chain, in addition to industries vital to tourism such as land, air, and water transport facilities.

DBP is also working closely with the Department of Tourism (DOT) in formulating long-term solutions and interventions to help the tourism industry rebound, and for guidance on which critical investments need to be supported to build resilience and restore trust in the industry.

7. Aside from tourism, DBP previously helped a poultry farm and a cancer facility. Why did you decide to pursue this direction; why these particular projects?

One of the priority sectors that DBP supports is the MSME sector as it has an important role in developing the economy. MSMEs serve as partners to large enterprises as suppliers and providers of support services. MSMEs help reduce poverty by creating jobs for the growing labor force.

Poultry is a major source of protein for most Filipinos. The industry is a key contributor to growth in the agriculture sector and creates employment in the countryside. Supporting the poultry industry is part of the Bank’s broader support for agri-business development in the country.

On the other hand, cancer is a growing and serious public health concern. It is said that there are 11 new cancer cases every day in the country. For decades now, the Bank has continued to support the build-up of the country’s health capacity through its financing program for the healthcare industry.

8. Are there any other sectors you plan to help or are currently aiding? Could you share the ways you’re helping these sectors?

As a government-owned financial institution, our priority development thrusts are Infrastructure and Logistics, Social Services, Environment & Climate Change, and Micro, Small and Medium Enterprises. We offer our loans products and other banking services to companies in these areas, while ensuring that our financing activities are aligned with the priorities of the national government.

We recently launched two programs specifically to aid in post-pandemic economic recovery. These are the: a. Rehabilitation Support Program on Severe Events (DBP RESPONSE), which extends financing support for the rehabilitation efforts of both public and private institutions adversely affected by the pandemic. DBP RESPONSE is also available for DBP and non-DBP borrowers stricken by calamities and/or force majeure events, including typhoons, floods, drought, pest and disease infestations, earthquakes, peace and order problems, and other similar events resulting to significant socio-economic damage.

b. DBP ASENSO for LGUs Financing Program, on the other hand, aims to provide financing assistance to all levels of LGUs in the accomplishment of projects to accelerate infrastructure and socio-economic development consistent with the Philippine Development Plan. Under the program and pursuant to Bayanihan 2, an amount of P1-Billion is also available to subsidize loan interest payments on new and existing loans of LGUs as they implement their respective COVID-19 response and recovery efforts. The program is available on a first-come, first-served basis to LGUs that meet a set criteria.

DBP will also continue to support the agriculture sector especially as the ongoing pandemic has reinforced the importance of the sector. The Bank is one of the implementing agencies of the ERCA-RCEF Program of the Department of Agriculture in which the P1 billion credit fund is equally shared by Land Bank of the Philippines and DBP, at P500-Million each, from 2019 to 2024. The financing assistance to small palay farmers come with a minimal interest rate and minimum collateral requirements.

In addition, DBP intends to expand its portfolio in the agriculture sector through its Sustainable Agribusiness Financing Program (SAFP), which provides funding for agribusiness projects engaged in the production, harvest, processing, and marketing of crops, poultry, livestock, and fishery. Likewise, DBP supports agricultural projects with post-harvest and infrastructure facilities that add value to agricultural projects.

9. You have mentioned that DBP has a Peso Bond program for development projects in priority sectors. What are these sectors and why are these critical in getting aid/assistance first?

Aligned with its sustainable development goals and to allow the Bank to reach a wider network of stakeholders especially in the countryside, DBP raised P21-Billion from its second issuance of Peso-denominated Bonds from its P50-Billion Bond Program. Proceeds from this fundraising activity have been earmarked for renewable energy projects, green buildings, clean transportation, energy efficiency, pollution prevention and control, and climate change adaption projects, among others, under the Bank’s Sustainable Financing Framework, as well as for other projects in line with the Bank’s mandate. Other eligible projects include affordable basic infrastructure and houses, initiatives that promote access to essential services, employment generation, food security, and socio-economic advancement and empowerment.

10. Many countrymen are afraid of debt and of ballooning government loans, what is your take on this?

The country’s debt at about 51% of GDP as of end-October 2020 remains manageable and well-below the average of the ASEAN economies. The large debt incurred since the pandemic began in March 2020 is necessary in order to fight the pandemic and to help revive the economy. To give us a perspective on our debt levels, in 2004, the country’s debt level reached 71.6% of GDP. In 2019, our debt declined to 39.6%. Our economic managers continue to ensure that government debt is used and managed wisely and strategically. I would like to encourage our fellow citizens to engage with our government on this issue and other matters as we work together to emerge stronger from the crisis.

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