Source: The Manila Times, 16 November 2011

 

GOVERNMENT Service Insurance System has pledged $250 million or about P10.75 billion to a fund that multilateral agencies will establish for the Philippines’ public-private partnership (PPP) program.

“We are formalizing the structure of GSIS’ participation in infrastructure projects in the country. We are working with multilaterals on a structure that would suit us,” Robert Vergara, president of the state-run pension fund, said.

He said the $250 million would be on top of the proposed PPP bonds that GSIS has committed.
“We’re looking at a quarter of a billion dollars,” he said.

GSIS, along with Social Security System, Land Bank of the Philippines and the Development Bank of the
Philippines, committed P50 billion each for the proposed PPP bonds that would provide funding for proponents of infrastructure projects.

“For this infrastructure fund, we would have to choose a fund manager that would recommend which infrastructure to finance. Considering the long nature of these projects, it would be a relationship that could span 10 to 20 years,” Vergara said.

“The infrastructure class is an investment we could go into considering the long nature of our fund requirements. The longest that you could go into are government bonds of 25 years, which only give returns of 7.1 percent, which is not enough since we needed a yield of at least 9 percent for our actuarial requirements,” he said.

“Infra assets have potential yields in the double digits, like the mid-teens and when you’re lucky, could be in the 20s,” the executive said.

“The multilaterals approached us just last month. For the infrastructure fund, we’re looking at half a billion dollars to $750 million. That is a significant contribution to the fund for infrastructure,” he said.

GSIS registered a net income of P56 billion at end-October, or 27 percent higher than the P44 billion last year.
“This year, we are on track. There are few one-off items that could bring in about P60 billion in net income for the whole year from only P46 billion last year. These one-offs have unduly flattered this year’s income figures. The recurring income should be about P55 billion for the whole year,” Vergara said.

The single non-recurring income pertained to the P5-billion gain from the global investment program.
At end-October, GSIS’ asset base reached P600 billion, up from P571 billion in the same period from a year ago.

Vergara said the pension fund’s asset base would likely hit P630 billion to P640 billion by the end of the year.