BBB via PPP to reboot the economy
Amid the COVID-19 pandemic, the country’s economic managers assert that the Duterte administration’s centerpiece infrastructure Build, build, build (BBB) program will be the country’s “fuel” for an economic “bounce-back.”
In turn, the affirmation of the Philippines’ “BBB” rating by Fitch Ratings reflects the country’s “fiscal and external buffers, including its lower government debt/GDP ratio compared with peer medians and net external creditor position, as well as its still-strong medium-term growth prospects.”
Oxford Economics, however, estimates that the implementation rate of the country’s infrastructure projects is only about 30 percent due to low absorptive capacity.
Moreover, recent accounts manifest a disconnect between the national budget, the BBB program, and the pronouncements of the Inter-Agency Task Force regarding the direction of the whole infrastructure undertaking.
The BBB program needs to adapt to three pressing concerns: the need for more investments, the implementation of a sensible strategy, and having to cater to the COVID-19 response.
The first option is to look into the reality of our official development assistance and ascertain all the reliable and trustworthy partners in order to cooperatively work with them and solicit for more assistance.
Second, and a more viable option, is to strengthen the role of the private sector using the public-private partnership (PPP) framework.
At present, there are eight ongoing PPP projects under the BBB and they all fall under the transport and mobility sector, with target completion between 2020 and 2022.
These are the Manila Metro Line 1 Cavite Extension (Baclaran-Niog, Bacoor, also known as the LRT 1 Cavite Extension Project), MRT 7, Clark International Airport Expansion Project Phase 1, Southeast Metro Manila Expressway Project, Metro Manila Skyway Stage 3, NLEx-SLEx Connector Road, C5 Southlink Expressway Project, and the Southern Luzon Expressway Toll Road 4.
The completion of these projects blends well with the Philippine Program for Recovery with Equity and Solidarity (PH-Progreso), where restarting the BBB is part and parcel of the projected recovery phase from the health crisis.
Transport and mobility are very critical to facilitate the movement of people and goods and in stimulating demand. Further, the resiliency stage after recovery will focus on building health and economic resilience.
It is here where, according to Neda chief Karl Chua in a recent talk on PH-Progreso, the BBB program will have “strongest impact on growth, jobs, poverty, (create) multiplier effect on economy, and promote confidence in the economy.”
On the third concern—making BBB cater to the health sector—The Philippine Economic Recovery Bill, authored by Albay Rep. Joey Salceda and Marikina Rep. Stella Quimbo, proposes to expand the infrastructure programs and appropriate P650 billion over the next three years on top of the existing flagship programs, and to include the following: construction and development of modern health facilities that will complement the Universal Health Care Law and anticipate surges in demand in cases of pandemics, upgrade public school facilities with the aim of creating “schools for the future,” and build infrastructure to support creative industries such as the arts.
Since the outbreak of COVID-19 in the country, there has been overwhelming support from the private sector, from providing food products, protective gear, and other supplies to frontliners to putting up treatment and quarantine facilities and swabbing centers. It has also helped substantially improve the capacity of testing centers nationwide.
By harnessing private sector support to invest in public infrastructure across the country, our government can appropriately revise and sustain the BBB program with due consideration for public health, education, and social services.
But, to foster strong collaboration between government and the private sector, there must first be a competitive and stable regulatory environment that respects the sanctity of contracts and the rule of law.
Good governance is vital in attracting investments that would strengthen economic resilience, improve transportation and connectivity, and create jobs that provide income security. Only through the private sector’s uninterrupted and robust participation can we survive the pandemic, and move on to the new normal way of life and work.
Dindo Manhit is the founder and managing director of Stratbase Group.
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