Banks want PPP alternative to agri-agra law compliance

Local banks are urging the government to consider their participation in the public private partnership (PPP) program as part of the banking industry’s compliance to the loans for the agriculture and agrarian reform sectors.

Cesar Virtusio, managing director of the Bankers Association of the Philippines ( BAP), said the banking industry has grown so much that it can offer more services to the farmers beyond RA 10000 or the Agri-Agra Reform Credit Act of 2009.

“We believe the banks can help the farmers in more ways than one,” Virtusio said.

While the government remains to be the driving force in the development of the agriculture sector, Virtusio explained the BAP believes the private sector could come in to provide supplementary service and support.

This may include compliance in the form of the banking industry’s participation in the government’s PPP projects for infrastructure development that would surely benefit the agri-agra sector.

With a more developed Philippine capital market, he pointed out banks could help the agriculture sector by purchasing government bonds issued by the Land Bank of the Philippines and Development Bank of the Philippines (DBP) to sustain that national government’s funding requirements.

“In addition to the government securities, the banks can assist the agriculture sector by buying bonds issued by LandBank and DBP to ensure that these institutions remain economically viable to carry out their mandate,” he said.

According to Virtusio, the agriculture landscape has drastically changed over time. “With this change, the sector may not have enough capacity to absorb the amount of funds that the banks are mandated to lend to the farmers,” he said.