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New public private partnerships

Article - July 20, 2011
A longstanding lack of funds has hindered crucial investment in the Philippines, holding back economic development. Now the government believes it has found a way around the problem
The government plans to engage in public private partnerships (PPPs) as a means of funding the public works and public services projects needed to boost the economy.

“We cannot rely on public funds alone to spur the country’s growth,” says President Aquino. “We need additional investments from our partners in the private sector. As so many others before us have found, and as many others after us must discover for themselves, working together works.”

The country needs to modernize its roads, bridges, airports, transportation and communications systems for the efficient movement of goods and people, as well as to build the competitiveness of the tourism industry. The Philippines must also invest in other critical infrastructure, such as water supply projects and more efficient irrigation systems to increase farm productivity. The President says PPPs will provide thousands of jobs, growth in the economy and long-term mutually beneficial partnerships with large corporations.

Grants totaling $8.5 million are being provided by the Manila-based Asian Development Bank (ADB) and the Australian government to get the PPP program underway, with the Philippine government providing a further $8 million. A newly established PPP Center, attached to the National Economic and Development Authority (NEDA), the country’s independent economic development and planning agency, will provide technical assistance and help facilitate the development of proposals, ensuring that the approval process will be completed within just six months.

Cayetano Paderanga, director general of NEDA, says, “PPPs are one way we can leverage public resources with private financing as well as expertise. One of the reasons why we want private sector participation is because of management expertise and efficiency in terms of project implementation as well as maintenance.”

He appeals to potential investors to come and look at the Philippines. “We have several approaches, including the solicited proposals approach. We prefer these, but we will still welcome unsolicited proposals. We are looking at joint ventures as a variation to the BOT (build-operate-transfer) process. There are several ways where people can get involved when it comes to infrastructure and other kinds of investments.”

The first batch of PPP projects was lined up for bidding in March, with an estimated private investment of more than $1 billion. Most of the projects come under the aegis of the Department of Transportation and Communications and the Department of Public Works and Highways.

Rogelio Singson, Secretary of Public Works and Highways, says, “We need to make the Philippines more globally competitive, and the lack of infrastructure in the country is holding us back. There are a lot of opportunities for the private sector to develop more infrastructure, whether it is roads, airports, seaports, or telecommunications. Energy and water utilities are also in demand.”

The national highways network is substandard and poorly maintained, and the focus is on upgrading the national roads to international standards.

“We are way behind Malay-sia, Thailand and Indonesia in terms of road infrastructure and international standards,” says Mr. Singson. “We are looking at long stretches of toll roads and expressways being pushed towards the private sector, long-term road maintenance contracts and at passing on bridge construction and maintenance.”

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