Announcement of IFC Support to Philippine Overseas Contractors December 9, 1985

ULP@ International Finance Corporation W433, USA FOR RELEASE:Monday, December 9, 1985 CONTACT: Don Roessner Press Release No. 86/18 (202) 676-0394 IFC SUPPORTS PHILIPPINE OVERSEAS CONTRACTORS The International Finance Corporation (IFC) is providing a $38 million guarantee facility to four Philippine contractors so that they can secure bonding in order to obtain overseas construction work. IFC is an affiliate of the World Bank and the world's leading multinational institution that supports economic growth by assisting the private sectors of developing countries. The facility provided will help Atlantic, Gulf and Pacific Company of Manila Inc.; Engineering Equipment, Inc.; Hydro Resources Contractors Corporation; and D.M. Consunji, Inc. to obtain bid, performance, advance payment and retention bonds for their overseas construction contracts. The first two companies are large, diversified, heavy industrial contractors which have extensive in-house fabrication and engineering operations and have been operating overseas -- largely as subcontractors -- for a decade. The latter two contractors are well-established companies, have worked mainly as prime contractors and specialize, respectively, in heavy civil works projects mainly related to dam construction, and in building construction. The Philippine contractors have been active in overseas construction, especially in Asia and the Middle East. Overseas construction business has been an important source of foreign exchange earnings and employment for the Philippines. - 2 - In recent years, the sector has contributed annually $200-$300 million in foreign exchange remittances to the Philippines and provided employment for more than 50,000 Philippine workers. Due to the present economic conditions in the country, Philippine contractors have found increasing difficulties in arranging acceptable bonding requirement to support their overseas activities. The IFC facility will help to alleviate this situation by intermediating the country exposure risk element. Under the facility, IFC will extend directly its guarantee to the foreign banks issuing the bonds. IFC, in turn, is to be counter-guaranteed by one or several Philippine banks which have agreed to support the facility. The banks are the Bank of the Philippine Islands, Far East Bank and Trust Co., Citytrust Banking Corporation, Philippines Commercial International Bank and the International Corporate Bank. The IFC facility will support in excess of $200 million in overseas construction contracts. The direct impact of this volume of work is expected to generate about $150 million in foreign exchange resources for the Philippines through earnings, remittances from about 5,000 workers, and the export of supporting services.