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Editorial

‘Build, build, build’ woes

/ 04:08 AM July 13, 2020

The breakdown of negotiations between the government and the private sector on the P102-billion rehabilitation of the country’s congested premier airport has again highlighted the limits of the hugely ambitious task the Duterte administration set for itself when it promised a “golden age of infrastructure” in the country.

Since the government launched in 2017 its ambitious P8-trillion “Build, build, build” (BBB) program, which seeks to stimulate economic activity and generate jobs to cut poverty and decongest the metropolis, it has been met with skepticism not just because of its gigantic size, but also because of the government’s track record to undertake such projects on its own.

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Prior to BBB was the PPP, or the public-private partnership, where the government tried to implement key infrastructure using the financial muscle of the private sector. This scheme was dropped by the Duterte economic team, which insisted that past experience with PPP had been disadvantageous to the government, aside from projects taking too long to finish.

Instead, it chose to undertake many of its infrastructure projects using agencies such as the departments of Public Works and Highways and of Transportation, and tapping multilateral lenders such as the Asian Development Bank and the World Bank, and foreign governments for low-cost financing called official development assistance.

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The initial euphoria that greeted BBB eventually turned to dismay due to delays in the selection and final approval of projects, negotiations with lenders, and the usual bureaucratic red tape. This prompted the government to review the BBB program midway into President Duterte’s term. The result was the cancellation of huge projects such as bridges that would have linked major islands in the Visayas but would have cost tons of money.

In their place were reinstated PPP projects. In this new list of 100 projects now worth a lower P4 trillion was the unsolicited Ninoy Aquino International Airport (Naia) rehabilitation project proposed by a consortium of seven of the country’s biggest conglomerates — Ayala Corp., Aboitiz Equity Ventures, Alliance Global Group Inc., Asia’s Emerging Dragon, Filinvest Development Corp., Metro Pacific Investments Corp., and JG Summit Holdings Inc. The Naia Consortium eventually went down to six when the Manuel V. Pangilinan-led Metro Pacific exited the group in March this year.

Enter the pandemic early this year that caused a standstill in air travel, making investors take a second hard look at the viability of airport projects in general. The Naia proponents sought a revision to their original proposal to take into account the risks arising from a slack in air travel in the coming years.

“The far-reaching and long-lasting consequences of the coronavirus pandemic on airline travel, airline operations and airport passenger traffic necessitated a review of the assumptions and plans to ensure that the Naia project will be viable in the ‘new normal’,” the group said in a statement.

The government, however, rejected the proposed revisions, claiming it had other investors willing to rehabilitate Naia. But the last that’s been heard on that claim is that other airport proposals are now on hold as well, because of the uncertainty caused by the global health crisis.

With only two years left, the Duterte administration is again scrambling to revise the BBB list, this time to include more health care infrastructure projects after the COVID-19 pandemic exposed the country’s severe lack of such facilities.

Thus far, the record of BBB is below passing grade when gauged against the original pronouncement in 2017. The government now expects only half of the 100 projects in the revised list to be finished when Mr. Duterte steps down in 2022. The rest are expected to begin construction within the year or early next year, but with completion seen in the succeeding administration.

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While the number of projects started or to be completed during the Duterte era is now far off from what had been originally envisioned, the BBB’s output remains substantial enough in scale and impact. Examples are the new airport terminals in Cebu and Clark, the first phase of the country’s first subway system, and the Cavite-Laguna Expressway. The infrastructure program has also created an estimated five million jobs between 2017 and 2019, with more than a million jobs expected to be generated this year.

The next administration should pursue all the carryover projects it will inherit, but it should learn a lesson or two from this administration’s experience. First and foremost is that the government cannot — and should not — do it all alone.

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TAGS: BBB, Editorial, infrastructure projects, NAIA rehabilitation, PPP, Public-private partnership, Rodrigo Duterte
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