WASHINGTON, DC, August 11, 2000—
In a model investment that is designed to be replicated in many developing countries, the International Finance Corporation is financing the first long-term concession for privatized government services in the Philippines. The US$80 million project will computerize the national motor vehicle agency of the Philippines, which issues driver's licenses and registers motor vehicles, and will inject private sector efficiency into its operations.
Computerization of the Land Transportation Office (LTO) will streamline license and registration processing, improve revenue collection, and eliminate informal intermediaries in the system. It will connect the LTO with other government agencies, which will improve law enforcement and insurance verification, in turn improving road safety.
The project will build local expertise in information management, and provide computer-based training to approximately 3,000 LTO employees. IFC believes that the LTO computerization will foster private sector efficiency in the motor vehicle authority as well as other government agencies.
IFC has approved a $20 million financing package for the project, including a $12 million loan for IFC's own account and a quasi-equity investment of $8 million. AIG's Asian Opportunity Fund will provide an additional $12 million in quasi-equity.
Declan Duff, Director of IFC's Infrastructure Department said that this project establishes a new model for private provision of what have been government services.
In 1997, the Stradcom consortium was awarded a ten-year concession to design and maintain a new management information system that would computerize, automate, and interconnect LTO's 247 offices nationwide. The Stradcom consortium is comprised of two Philippine companies: Strategic Alliance Development Corporation, which provides project management and financial consultancy for infrastructure and industrial development companies, and Comfac, which provides information technology workplace solutions.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in emerging markets, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
