The government’s economic team has put in place two facilities that would ensure that big-ticket infrastructure projects under the Duterte administration’s “Build, Build, Build” program meet international standards, according to the Department of Finance (DOF).
DOF Undersecretary Grace Karen Singson said one of them is the $164-million Infrastructure Preparation and Innovation Facility (IPIF), which would provide infrastructure implementing agencies such as the Departments of Transportation (DOTr) and Public Works and Highways (DPWH) the services of both national and international experts in project preparation and implementation.
This funding facility was set up in partnership with the Asian Development Bank (ADB).
The DPWH, Department of Budget and Management, National Economic and Development Authority (NEDA), DOF, DOTr, and the Office of the Cabinet Secretary, meanwhile, comprise the Project Facilitation, Monitoring, and Innovation Task Force to monitor the progress of the “Build, Build, Build” program and take action against bottlenecks and other delays to ensure projects are delivered on time, Singson said.
Under this NEDA-chaired task force, Singson said implementing agencies are required to submit monthly progress reports, which then encourages accountability and a sense of urgency.
“The administration’s economic managers recently initiated these two policies to immediately address bottlenecks in implementation and ensure that each project is studied comprehensively and delivered on time,” Singson said at a recent forum. “We don’t want projects that are half-baked or inappropriate for commuters.”
The IPIF is just one of the projects being undertaken by the Duterte administration with ADB support.
Last Jan. 10, the Philippines and ADB signed a loan agreement that aims to improve Mindanao’s links to international trade corridors and formalized the exchange of documents on sustaining reforms in the country’s capital markets, in support of President Duterte’s high—and inclusive—growth agenda.
These are the $380 million loan agreement for the Improving Growth Corridors in Mindanao Road Sector Project (IGCMRSP) and the official exchange of documents on the $300 million Encouraging Investment Through Capital Market Reforms (EICMR) Program-Subprogram 2.
According to the DOF, the ADB is also set to provide funding for the $70-million Davao Public Transport Modernization Project, which is designed to improve public transport infrastructure and services in Davao City.
The ADB Board of Governors, chaired this year by Finance Secretary Carlos Domingues III, is holding its 51st Annual Meeting here in Manila in May.
Earlier, Singson said time and cost factors top the Duterte administration’s concerns in its rollout of the ambitious “Build, Build, Build” infrastructure program, prompting the economic managers to veer away from the standard Public-Private Partnership (PPP) mode to ensure that projects are done via the fastest and cheapest route.
Singson said the traditional PPP, as implemented by the previous administration, consumed too much time renegotiating contracts, deciding on cost recovery issues and resolving legal disputes among contesting private bidders.
Echoing Dominguez, Singson said PPP should add a fourth “P’” so that it becomes a Public-Private Partnership for the People. The last “P,” she said, should remind the government that the people should benefit the most from the projects implemented via PPP.
Another factor—cost—has also dissuaded the government from implementing projects through the usual PPP, which often leads to excessive user fees charged to the public to ensure that the private sector partners recoup their respective investments quickly and at wider profit margins, Singson said. Moreover, the government usually imposes front-end charges to meet its own needs, further driving up expenses for PPP projects.
Singson said a more viable alternative is for the government to finance infrastructure projects through the national budget and Official Development Assistance (ODA) provided by the Philippines’ development partners and country-allies, such as China and Japan, which have committed financing for infra projects at below-market rates and “favorable” or longer grace periods.
The Philippines’ large fiscal space and access to favorable ODAs are the main reasons the government generally prefers to finance infrastructure plans now through the national budget or ODA, Singson said. “We finally have the money to be able to do it now, as well as tap low-cost financing abroad when needed. This is in contrast to PPPs wherein past experiences have shown terrible delays and unforeseen expenditures.”
She stressed, however, that PPPs have not been ruled out by the DOF, which continues to recognize the potential values of such partnerships, especially in terms of innovations and efficiency offered by the private sector that will result in better value for money and quality infrastructure.
With the government adopting a fresh approach to financing projects, Singson said that on the Duterte watch, it only took seven months from the approval by the National Economic and Development Authority (NEDA) and the Investment Coordination Committee (ICC) to start construction on the Clark International Airport. Its Operations and Maintenance component, a PPP project, is also underway, she noted.
Singson said unsolicited proposals from the private sector that require no direct government guarantees and include new technologies or concepts are welcome.