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Summary of Project Information (SPI)

This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
Project number11712
Project nameLARES
SectorComputer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)
Environmental categoryC
Date SPI disclosedApril 14, 2003
Projected board dateMay 26, 2003
Previous EventsSigned: April 1, 2004
Approved: November 6, 2003

Description of company and purpose of project
The project covers the first 3 years of a 10 year Build-Own-Operate (BOO) contract involving the computerization and operation of the Philippine land records management system. The project includes the following components:
- the design, development and construction of a computer-based land titling system;
- the conversion and digitalization of the existing land database;
- the development and build-out of the networking infrastructure for 162 Land Registration Authority (LRA) offices; and
- the operation and maintenance of the physical and software based systems that are installed.

The project will significantly increase the security, reliability, and accessibility of land title information, as well as improve the business process of issuing land records.

Project sponsor and major shareholders of project company
The project company that will undertake the computerization is Land Registration Systems, Inc. (LARES). LARES is composed of four companies:
- Strategic Alliance Development Corporation (Stradec- 65 percent),
- Unisys Australia Limited – Philippines Branch (15 percent),
- F. F. Cruz & Co., Inc. (10 percent), and
- The Comfac Group (10 percent).

Stradec is a Philippine investment and development company founded in 1994. Stradec’s focus is in the infrastructure and information technology sectors and has been associated with the Metro Manila Skyway and the Metro Manila Tollway projects. Unisys is a leading worldwide supplier of total system solutions involving advanced computer based, networked information management systems, hardware, software and customer services. FF Cruz & Co. is a Philippine engineering firm providing construction, marine and surveying services. It has provided a range of services including establishment of GIS systems, surveying, aerial photography and topographic mapping for numerous Philippines based clients. The Comfac Group started as a power protection company in the Philippines in 1981 and currently develops and provides workplace solutions through its expertise in the areas of office space design, office furniture systems manufacture, integrated voice and data network systems and building automation systems. The technical partner for the project is LG Systems from Korea. LG is responsible for the Systems Development and Systems Integration efforts for the project.

Stradec and Comfac, through Stradcom Corporation (Stradcom) also undertook the computerization project of the Land Transportation Office (LTO).

Total project cost and proposed IFC investment
The total project costs are estimated at approximately $89.9 million. The proposed IFC investment is a $22 million A loan for IFC’s own account.

Location of project and description of site
The project will be implemented at the Land Registration Authority’s (LRA) Central Office in Quezon City and 162 Registry of Deeds (RDs) spread throughout the Philippines.

Project Development Impact and IFC's Role
Development Impact
Property rights play a critical role in economic growth and development. For a well functioning system of property rights to develop, the ownership of land rights has to be formalized through an effective land titling and registration system. This is particularly important for the poor in developing countries who in fact, often have many assets - shacks, informal businesses - but lack formal property rights to these assets. This prevents the poor from unlocking the true potential of their assets and constrains their ability to raise capital (for example, through using the assets as collateral for debt) for small, productive enterprises. In many instances, it also precludes the poor from connecting to the formal economy, making it difficult for utilities such as gas, water and electricity to be legally provided to them.

Thus, while land registration and titling is only one component of the land market, it is a significant one. Property with valid titles becomes a “capital good” that is tradable. The LARES project by providing a secure and trustworthy record of land ownership as well as a more efficient retrieval and record management system will greatly facilitate the use of titled land as collateral for borrowing by individuals (landowners) and businesses and help develop the overall mortgage market. The project will help improve the fiscal situation of the government through increased tax revenues as more registration and titling for residences and businesses moves to the formal sector. The improved business processes and automation will also help in reducing petty corruption that exists in the current system.

IFC Role

There have been a limited number of successful privatizations in the area of government services in emerging markets. IFC would be supporting a concessionaire, in an emerging market, that in an existing project – the Land Transportation Office-Information Technology (LTO-IT) project, has begun to demonstrate the efficiencies and client responsiveness that a private sector provider can introduce to the provision of public services and is endeavoring to extend this expertise to other government services. By supporting the project, IFC will send a positive signal to the market and to other governments considering privatization of government services and further demonstrate the viability of service concessions. The project also complements broader institutional reforms being undertaken through a World Bank supported Land Administration Management Project (LAMP).

IFC’s support for the project is seen by potential equity and debt providers as a strong indication of both the intrinsic merits as well as the long term viability of the project. The importance of this “signaling” has been stressed several times by the sponsors and was also confirmed in meetings with several potential investors.

Environmental and social issues - Category C
This project is a category C project according to IFC’s Procedure for Environmental and Social Review of Projects. There are minimal environmental or social impacts associated with this project.

To contact the project company, please write to:
Mr. Cezar T. Quiambao, Chairman
Land Registration Systems, Inc
Information Management Center
LRA Compound
East Avenue, Diliman
Quezon City
Philippines 1100
Phone: (632) 926 5956
Fax: (632) 925 2531

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