Plans to create a new infrastructure vehicle by the Government Service Insurance System, Philippines' largest pension fund, have stalled amid a management rejig following the country's May presidential elections.
Earlier in April, GSIS president and general manager Robert Vergara told the local press that he would make “a recommendation” to the pension's board to establish a follow-on $400 million infrastructure fund. GSIS' debut vehicle, founded four years ago, is now fully deployed.
However, sources with knowledge of the matter told Infrastructure Investor that no discussions would take place during the handover period between the two administrations. Rodrigo Duterte, Philippines' new president, took office last Thursday.
“They have to wait for guidelines from the incoming Duterte administration,” said one source, noting that a leadership reshuffle within state-run GSIS was imminent. The institution's new board is to be appointed by the Duterte administration in the coming months.
The Philippines infrastructure fund, dubbed the Philippines Investment Alliance for Infrastructure (PINAI), reached its first and final close in July 2012 on $625 million.
GSIS has allocated $400 million to the fund while ADB pledged $25 million. APG and MIRA provided the remaining $200 million. The fund has a mandate to invest equity in infrastructure businesses and projects in the Philippines.
MIRA and APG declined to comment. GSIS and ADB hadn't responded to email queries by press time.
The incoming administration has plans to increase infrastructure spending to up to five percent of GDP in 2017, amounting to about PHP1 trillion ($21.3 billion; €19 billion). This would more than double the money spent on infrastructure during Aquino’s term, which averaged 2.2 percent of GDP a year, a DBS research paper said.
Duterte has identified traffic congestion relief as a top priority, with transport a key plank of his infrastructure programme. According to reports, he has outlined plans for new rail networks and aims to further integrate major seaports. He also says he will make a decision on the location of a new airport in Manila, the capital, in the near future.
Easing restrictions on foreign ownership and cutting red tape are said to be part of his plans to fuel economic growth. The administration is also looking to join the Asian Infrastructure Investment Bank to help widen its infrastructure financing options.