ADB eyes private capital for Philippine rebuilding

Ramesh Subramaniam, deputy director-general, Southeast Asia, for the Asian Development Bank, tells FinanceAsia that the Philippine government will need help to pay for reconstruction in the wake of Typhoon Haiyan.

The Philippines could be set for a wave of entrepreneurism as a need for infrastructure and innovation following Typhoon Haiyan attracts fresh private capital, according to the person leading the Asian Development Bank’s response to the crisis.

Ramesh Subramaniam, the ADB's deputy director-general for Southeast Asia, took over the bank’s response to the crisis on Tuesday, having coordinated its reaction in Aceh to the Indian Ocean tsunami of 2004.

On his first day at the reins, he told FinanceAsia there is already evidence that new opportunities are likely to emerge as the affected areas’ economies begin to build. 

“We are talking with some of the affected communities. Someone mentioned ‘Our water is the best in the world but we don’t bottle [it] because we don’t have any infrastructure due to lack of investment’," he said. “So we are now trying to see if we can patch them up with somebody who can do this, assuming logistics and other considerations can be addressed.”

The ADB has so far given a $23 million grant to the Philippine government for immediate relief and has made available a $500 million emergency loan for reconstruction.

It has also sent four staff members to compile a disaster report that is set to be published on December 10, from which a decision will be made on whether and how to proceed with further financing for reconstruction.

Subramaniam said the ADB was happy with the disaster response of the national government and that the organisation would work with it to determine the funding priorities.

This, he added, would inevitably lead to public private partnerships as domestic and foreign private equity groups take part in the rebuilding work.

“We are working out now how to bring in the private sector. We have a private sector operations department, which is currently talking to possible sources to see how they can work together with sponsors,” he said.

Subramaniam said the public sector could only do so much in the aftermath of a disaster, providing a crucial role for the private sector. “Typically, what we see when we are looking at private asset renewal and reconstruction, it has to be public-private partnerships," he said.


A natural focus for private money will be infrastructure, including roads, bridges and power towers, which in some cases were probably already inadequate even before Typhoon Haiyan struck.

“What we do know is that many of these areas have not been performing well in terms of some of the social indicators. For example, access to hospitals, schooling and so on. That points to a lack of adequate infrastructure," he said.

So the reconstruction challenge facing the Philippines is more than just simply putting things back as they were before the disaster.

“If you’re going to build it, you really need to build it back better. The bottom line is, what would be the scale of the investment requirements? We do not have any estimates yet.”

“We will work with the government and see what kind of prioritisation they will come up with. We do need to be flexible. They have to ensure that the public goods are restored; ie roads, power, health and education infrastructure," he said. 


Subramaniam also said that the ADB is engaging with potential private investors and governments to develop a system to insure poorer communities, not just in the Philippines but across the region.

With insurance penetration very low, he said there was a need for group insurance schemes - for industries such as fishing - or, broadly, a disaster-risk scheme.

“Whether we are talking about small private businesses or households, we suspect they [in the areas hit by the typhoon] had very little insurance coverage prior to the disaster.”

He said that the key to this was the continued push for industrialization generally but, specifically, in Eastern Visayas, a predominantly agricultural region. For this to happen, adequate infrastructure needs to be in place.

“If that happens, more insurance will follow,” he said.

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