Announcement of Philippines Continues Economic-Recovery Drive by Developing Small and Medium Industries on April 27, 1989

FOR IMMEDIATE REI FASf vWorld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 89/50 Contact: P.B. Sison (202) 477-4347 Leandro V. Coronel (202) 477-3641 PHILIPPINES CONTINUES ECONOMIC-RECOVERY DRIVE BY DEVELOPING SMALL AND MEDIUM INDUSTRIES WASHINGTON, April 27, 1989 -- The Philippines will further boost its drive toward economic recovery with a project that will help develop small and medium industries (SMIs), which are catalysts for increased exports and overall growth. The World Bank is providing a loan of $60 million to support the project, which is expected to generate about 60,000 jobs, improve income distribution and promote regional development. The project is designed to ensure that resources are available to meet the long-term financing needs of SMIs and that these industries have improved access to imported supplies and materials, and technical assistance. The project is expected to finance about 3,000 investments. The project has three key components: credit (99 percent of the project cost) to finance SMIs' investment and export-financing needs during 1989-1991; technical assistance and training to improve SMIs' access to import-duty exemptions, export finance and guarantees, product design, marketing and technology assistance, and trade information; and training and equipment to strengthen regional offices of the Department of Trade and Industry. Credit will be channeled through the Industrial Guarantee and Loan Fund (IGLF), a government-owned fund administered by the Central Bank. SMIs are firms with less than 20 million pesos (less than $1 million) in assets and fewer than 200 employees. These industries contribute to a wide range of manufacturing subsectors, including food processing, machinery and equipment, chemicals, rubber, printing, plastic products, furniture and wood products, and clothing. SMIs account for about 21 percent of value-added and 43 percent of employment in the manufacturing sector. External cofinanciers, Philippine financial institutions (including IGLF) and the participating SMIs will provide the balance of the project cost of $358.7 million. External cofinanciers include the Asian Development Bank, the ASEAN Japan Development Fund, and the Japan Grant Facility. The World Bank loan is for 20 years, including five years' grace, with a variable interest rate, currently 7.65 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balance. NOTE: Money figures are expressed in U.S. dollar equivalents.