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.