Pivot to PPP
Sen. Franklin Drilon may have been exaggerating when he described the Duterte administration’s ambitious “Build, Build, Build” (BBB) as a dismal failure. For one, numbers don’t lie. The infrastructure push since this administration took over a little more than three years ago is evident in the P1 trillion spent from 2016 to 2018 on projects of such agencies as the departments of Public Works and Highways and of Transportation. This is a level of infrastructure spending unheard of in past administrations.
From 2016 to 2018, the construction sector also expanded at an average rate of nearly 13 percent, reflecting the pump-priming effect of road works and other infrastructure activities on the economy.
But the government did realize recently the impossibility of achieving the entire slate of its BBB program, and so it revised the original list and came up with more infrastructure projects that are smaller in scope but are deemed to be more feasible. The original list included projects that presented herculean technical and financial challenges, such as long bridges that would connect, for instance, Samar to Sorsogon and Leyte to Surigao.
The revised list now includes 100 so-called flagship infrastructure projects after the National Economic and Development Authority took out what it judged as unfeasible undertakings and replaced these with smaller but doable ones. The government has also clarified that these flagship projects are just part of the BBB program, which covers some 40,000 infrastructure undertakings. These include small projects such as farm- to-market roads and public school rooms and health centers.
What is noteworthy in the revision is that the list now includes more public-private partnership (PPP) projects, which President Duterte’s economic team previously avoided in favor of financing key projects from the national budget and official development assistance from multilateral agencies and foreign governments.
While there was some reluctance toward PPP projects before, Socioeconomic Planning Secretary Ernesto Pernia noted that over time, “the minds tend to adjust to reality and that’s what’s happening,” admitting the important role the private sector plays in the economy.
Among the PPP projects upgraded to the government’s flagship list are the P735-billion New Manila International Airport to be implemented by San Miguel Corp., and the rehabilitation of Ninoy Aquino International Airport (Naia) proposed by a consortium of seven local conglomerates. The Aboitiz Group’s unsolicited proposal to operate and maintain the New Panglao Bohol International Airport is also among the 26 PPP projects included in the longer BBB list.
The government is relying on the Bulacan airport and Naia upgrade—both private sector-led projects—to address the worsening congestion at the country’s premier airport. Naia, which served about 14 million passengers more than its 31 million annual design capacity last year, has very limited expansion options. Its last major upgrade was the opening of Naia Terminal 3, a project that got delayed for years due to corruption allegations. The New Manila International Airport in Bulacan, on the other hand, is projected to serve at least 100 million passengers a year with its four runways, eight taxiways and three passenger terminals once it begins operations in five years.
While the overall infrastructure picture has definitely improved because of the Duterte administration’s BBB program, much clearly remains to be done, and this is where the government should let the private sector do more to help expand and upgrade the country’s infrastructure network. With many of these proposed PPP projects designed to be at no cost and risk to the government, it seems foolish to continue to ignore or sideline such private sector-led initiatives, considering the urgency of the need to upgrade and modernize the country’s facilities and bring relief to millions of Filipinos.
The only caveat, of course, is that such PPP agreements should not end up burdening the government and taxpayers with onerous, lopsided provisions and duplicitous fine print. Then again, this is supposed to be a strong-willed, no-nonsense government; it should have no problem being eagle-eyed and stringent if it wants to.
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