WB seeks supplies from developing states
JAKARTA (JP): The World Bank Group is seeking more participation of companies in developing countries to benefit from the group-generated procurement opportunities worth US$25 billion a year, an executive said here yesterday.
Moina Varkie, an adviser on the World Bank Group's private sector development, acknowledged that most group-generated procurement opportunities go to what she called "part-one countries" in the Organization for Economic Cooperation and Development.
"That's why we are putting up these (World Bank) publications because a lot of part-two countries can also benefit from these opportunities," Varkie told journalists after speaking at a forum organized by the Islamic Chamber of Commerce and Industry.
She noted that the World Bank Group lends roughly $5 billion a year directly to the private sector, not to governments, through affiliated financial institutions and other financial intermediaries.
"That's not a large amount of money, but that leverages $25 billion worth of projects investment as our share in most projects is usually very small," Varkie said.
She noted that the World Bank Group encourages local companies within the loan-receiving countries to participate in the procurement bidding as there are no restrictions whatsoever placed on participation.
"It is just a question of who applies. You see, you have to bid for contracts, and local firms in Indonesia can bid for the contracts as just U.S. or Australian firms," Varkie said.
She revealed that the World Bank Group awards some 40,000 contracts annually, and they are awarded to the lowest evaluated responsible bidder, regardless of nationality.
"However, to promote the development of local industry within the borrowing country, the bank permits the borrower to give a margin of preference to locally-manufactured goods, plants and civil-work contractors when they are competing against foreign competitors," Varkie noted.
The World Bank Group consists of the International Bank for Reconstruction and Development (IBRD), which is very often referred to as the world bank, the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
IBRD is the single largest provider of development loans to middle-income developing member countries and a major catalyst of similar financing from other sources. Its operations are financed primarily through borrowing in international capital markets, and its lending is backed by government guarantees.
IDA provides financing on highly concessional terms for the world's poorest countries. It relies mostly on contributions from its wealthier member countries to fund its loans.
IFC is the largest source of financing for private sector projects in developing countries. It invests in commercial enterprises by means of loans and equity financing in collaboration with other investors. Unlike IBRD and IDA, IFC does not receive government guarantees of repayment.
MIGA is totally different from other World Bank institutions. It encourages the flow of foreign investments to developing countries by providing private investors with guarantees against political risk. It also offers investment marketing services and advise to developing countries on how to better attract foreign investment.
Daniel Wagner, MIGA's guarantee officer for Asia, said that MIGA -- the youngest organization in the World Bank Group -- has grown to become the third largest private political risk insurer in the world, with total a turnover of $2.5 billion (since 1990) covering over 200 contracts in 40 countries, including Indonesia.
MIGA is the underwriter of the Paiton I power plant project in East Java for $50 million, and is currently working to underwrite two more power plant projects here, with underwriting value ranging from $30 million to $50 million.
"Indonesia has become one of the most active for insured projects today because it is open foreign investment and investors want to come in and invest," Wagner said. (rid)