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Philippines’ PPP ranked 2nd in The Economist’s Asia Infrascope Index

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NIGHT OWL

By ANNA MAE Y. LAMENTILLO

Anna Mae Lamentillo

Anna Mae Lamentillo

In The Economist Intelligence Unit (EIU) 2018 Infrascope Report, the Philippines ranked second in the Asia Infrascope Index, “a benchmarking tool that evaluates the capacity of countries to implement sustainable and efficient public-private partnerships (PPPs).” Apart from Thailand, the Philippines was the only country in Asia that was considered “mature” as far as the regulatory environment is concerned.

The concept of Public-Private Partnerships (PPP) in the Philippines date back as early as 1986, when Proclamation No. 50 created the Asset Privatization Trust (APT) and the Committee on Privatization and has evolved since with the enactment of several laws, including RA 6957, the Build-Operate-Transfer Law in 1991, RA 7718, and Memorandum Order No. 166 in 1993, Administrative Order 103 in 2000, Executive Order 144 in 2002, Executive Order No. 8 in 2010, and Executive Order No. 136 in 2013.

The current structure of PPP in the Philippines has been improved to streamline and clarify processes, including procedures for managing unsolicited proposals, joint-venture agreements, and appointment of probity advisors for PPP procurement.

According to the Public Private Partnership Center, there are at least 17 PPP projects in the Philippines under implementation — 15 of which are solicited and two are unsolicited. The total project cost is pegged at P328.67 billion.

These include Skyway Stage 3, an 18.68-kilometer elevated expressway stretched over Metro Manila from Buendia, Makati City, to Balintawak, Quezon City,  C5 South Link Expressway, a 7.7-kilometer expressway stretching from R-1 Expressway to SLEX/C5, and NLEX Harbor Spur Link, a 2.6-km expressway connecting the existing 5.58-km NLEX Harbor Link to Port Area in Manila.

Moreover, there are at least 41 projects in the pipeline, with unsolicited projects outnumbering solicited types. The 27 unsolicited projects currently cost over P3 trillion in comparison to the 14 solicited projects which are currently at development stage.

During the administration of President Rodrigo Duterte, the government supported another  type of modality — the hybrid PPP to complement the traditional PPP structure in the government’s “Build, Build, Build” program. In this modality, the government builds and finances infrastructure projects and later on bids out the operation and maintenance aspects to the private sector.

So far, the government has two hybrid PPP projects – the Clark International Airport and the New Bohol Airport.

In December, 2018, Bases Conversion and Development Authority (BCDA), in partnership with the Department of Transportation (DOTR), awarded the Clark International Airport’s Operation and Maintenance contract to the four-member North Luzon Airport Consortium (NLAC). According to Socioeconomic Planning Secretary Ernesto Pernia, NLAC’s financial bid offer of 18.25% annual gross revenue percentage share is almost twice the minimum rate of 10% as approved by the NEDA Board. According to the Public-Private Partnership Center, the bid offer is more than 80 percent better than the minimum rate set.

The supplemental loan pact for the New Bohol Airport expansion project was signed last October 2018 — only four months after the NEDA Board approved it on June 19, 2018.

Today, the economy of the Philippines is the world’s 28th largest economy by GDP (Purchasing Power Parity), according to the 2018 estimate of the International Monetary Fund (IMF). In 2019, the Philippines breached the trillion mark after it recorded a GDP in purchasing power parity  of $1.03 trillion. This is the first time that the tiger cub economy reached the trillion mark, alongside countries like United States, China, India, Japan, Germany, Russia, Indonesia, Brazil, United Kingdom, France, Mexico, Italy, Turkey, Korea, Spain, Saudi Arabia, and Canada.

 

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