Sources of export financing - U.S. government assistance for business feasibility studies in the Philippines thru the Philippine Pre-Investment Facility

Business America, July 15, 1991

To encourage and facilitate investment in the Philippines, the Philippine Assistance Program (PAP) was established during President Corazon Aquino's 1989 visit to the United States. PAP's goal is to attract foreign assistance to help stimulate the economy and improve the standard of living in the Philippines, particularly the less developed areas outside Metro Manila.

As part of PAP's scheme to encourage private sector involvement, the Philippine Pre-Investment Facility (PIF) was created. The PIF helps U.S. companies finance feasibility studies with the hopes that such studies will lead to further investment. The Philippine government believes that investment will generate employment, disperse industries, improve foreign exchange, and stimulate conservation efforts. The $5 million fund is administered by the U.S. Agency for International Development (AID). Cooperating institutions include the Philippine Chamber of Commerce and Industry, American Chamber of Commerce of the Philippines, and Coordinating Council of the Philippine Assistance Program.

The PIF provides assistance to potential investors by arranging reimbursement programs for feasibility studies. Eligible investors can receive a 50 percent reimbursement of up to $250,000.

Reimbursement is dispersed in a two-step process. Twenty-five percent of the study cost is paid at the end of the study and the remaining 25 percent is paid when the investment has actually been made.

Eligibility:

1. Funds are limited to only Filipino or U.S. individuals or companies registered in the Philippines or the United States.

2. Companies must be privately owned and managed. Minority government interest is allowed on the condition that the government does not have controlling powers.

3. The area of investment must be outside the Metro Manila area, preferably in special PAP development zones.

4. Projects must contribute to Philippine economic development.

5. The total cost of the project must be at least $1 million. Exceptions may be considered on an individual basis.

Asset appraisals, pilot studies and productivity improvement studies are not eligible.

Prospective studies are evaluated by a Board of Review composed of representatives of the cooperating institutions listed above, with USAID acting as a non-voting observer and advisor. PIF applications are judged on two levels. The first level addresses the prima facie feasibility and potential economic benefits of the proposal. The applicant's organization, resources, business record, and overall ability to complete the project are also considered. In the second stage, the organization, scope and cost of the actual pre-investment study are reviewed to determine the probability of successful implementation.

The deadline to submit applications is Aug. 31, 1991, but may be extended. Studies should be completed by the end of June 1992 in order to facilitate actual investment by the December 1992 deadline.

For more information contact:

John Callebaut U.S.-Philippine Business Committee U.S. Chamber of Commerce 1615 H St., NW. Washington, D.C. 20062 (202) 463-5668

* U.S.-ASEAN Council for Business and Technology 1400 L St., NW. Suite 650 Washington, D.C. 20005 (202) 289-1911

* Economic Development Foundation, Inc. Private Sector Pre-Investment Facility 5th Floor, Eurasia Bldg. Ayala Ave. Makati 1200, Metro Manila, Philippines (632) 810-0833 and 35

* Philippine Chamber of Commerce and Industry c/o Benigno N. Ricafort 7th Floor, ODC International Plaza 219 Salcedo St., Legaspi Village Makati, Metro Manila, Philippines (632) 817-6981 to 84

* American Chamber of Commerce of the Philippines c/o Philip J. Gielczyk 2nd Floor, Corinthian Plaza Paseo de Roxas Makati, Metro Manila, Philippines (632) 818-7911

* Department of Trade and Industry c/o Director Lucita P. Reyes Industry and Investments Building 385 Sen. Gil J. Puyat Ave. Makati, Metro Manila, Philippines 632) 818-1831 to 39

Coordinating Council of the Philippine Assistance

Program c/o Undersecretary Ramon K. Katigbak Rm. 306, 5-story Building, Central Bank Complex A. Mabini St., Ernita 1000, Manila, Philippines (632) 521-8572 and 74