delay and dissatisfaction in the aquino administration's ppp program: recommendations for future...

7/26/2019 Delay and Dissatisfaction in the Aquino Administration's PPP Program: Recommendations for Future Partnerships in Infrastructure

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MAR

DELAY AND DISSATISFACTION

IN THEAQUINO ADMINISTRATIONSPPP PROGRAM:

RECOMMENDATIONSFOR FUTUREPARTNERSHIPS ININFRASTRUCTURE

9.3VOLUME

PAPEROCCASIONAL


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The Public Private Partnership (PPP) program, claimed as a

pillar of this administrations economic and infrastructure

development plan, is under greater pressure this 2016

as President Aquino has only three months left in oce. The

emphasis President Aquino placed on the importance of

infrastructure development back in 2010 should have been

a good measure of the administrations consistent

support for the PPP program.

However, delay in the progress of the PPP scheme has been

evident since its launch in 2010. The minimal number of PPPprojects that have been awarded since Aquino assumed of-

ce12 out of the 53 projects in the pipeline is

dissatisfying. Moreover, the President must realize that the

number of awarded PPP projects should not be the sole

basis of measuring success; the completion and successful

operation of the infrastructure should also be made the basis.

Nonetheless, the Aquino administration can use the remaining

time in oce to fast track the PPP scheme without

sacricing transparency and legitimacy in the process.

This paper aims to identify the reasons why the PPP program

could have been a good avenue to improve our countrys

infrastructure industry but has thus far failed to fully deliver.The rst part tackles the Philippines overall competitiveness

and the importance of infrastructure in this regard,

* The views and opinions expressed in this Paper are those of the author and do not necessa

comparing Philippine performance vis--vis neighboring

Southeast Asian countries. It then turns to the chokepoints in the

PPP scheme: the insucient technical capacity within some

government agencies, the under-empowered PPP center,

an improperly implemented bidding process,

and barriers to foreign capital investment.

In concluding, the paper provides recommendations to be

considered for the next administration. In the time remaining, the

Aquino administration should focus on maintaining the

transparency and legitimacy of the PPP process as it seeks tofast-track the awarding of projects. Doing so in this manner will

help it leave a legacy of enduring public-private partnerships.

DELAY AND DISSATISFACTION

IN THEAQUINO ADMINISTRATIONS

PPP PROGRAM:RECOMMENDATIONSFOR FUTURE PARTNERSHIPS

IN INFRASTRUCTURE

C 2016ADRiNSTITUTEfor Strategic and International Studies. All rights reserved.

OCCASIONAL PAPER MARCH 2016

02

PPP PROGRAM

could have been a good avenue to improve our country's infrastructure industry buthas thus far failed to fully deliver. The Aquino administration can use the

remaining time in office to fast track the PPP scheme withoutsacrificing transparency and legitimacy in the process.


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The Public-Private Partnership Program

PPP was rst introduced in the Philippines in 1990,

through the passage of Republic Act (RA) No. 6957,

known as the Build, Operate and Transfer Law (BOT

Law), signed by then President Corazon Aquino. The

BOT Law authorizes private entities to construct, nance,

operate and maintain a public infrastructure facility.

Four years later, RA 6957 was amended by RA 7718 to

provide nancial incentives and to minimize government

regulations so that the private sector will be more

encouraged to participate in the PPP program. RA 7718

governs the procurement of infrastructure or development

projects by the private sector. Under this law,

infrastructure or development projects may be

undertaken through any of the contractual arrangements

provided* therein for which pertinent incentives will be

given to stimulate private resources for the purpose of

nancing the construction, operation and maintenance of

infrastructure and development projects normally

undertaken by the government.

Recognizing the importance of infrastructure in building

the foundations of a strong economy, past administra-

tions consistently focused on improving infrastructure,

certain that investments in this area would bring benets

across sectors and create more opportunities for the

fast-growing population. Conversely, poor infrastructure

is widely accepted to be a signicant barrier to

trade and discourages investment.

Projects through PPP are expected to boost the countrys

growth rate to 7-8%.1 This means intensied infrastruc-

ture spending, increased private investment and

eventually higher tourism receipts, which will only

be possible by increasing investor condence in the

countrys ability to nance and complete these PPP

projects. The resurgence of the PPP program in

this Aquino administration shows its commitment to

accelerating public infrastructure development that

would likely attract more foreign investment

and boost tourism, thereby increasing

job opportunities for Filipinos.

In 2011, Stratbase Research Institute published

its analysis on PPP through its Occasional Paper

entitled The PPP Challenge. The paper sought to

establish the importance of PPP to the countrys

economic growth for the succeeding years and,

further, provided recommendations on how PPP

can be properly implemented by the Aquino

administration so as to make it an eective

tool in national development.

Yet, the promise of growth via PPP has been

weakened by the vulnerability of the scheme to

politics. Had the Aquino administration maximized

the full potential of the PPP scheme, the Philippines

would have reaped the benets of a growing

economy and a high rate of inclusive growth.

The underlying question arises as to how the

slow progress of the PPP program of the

Philippines has aected its competitiveness.

Big ticket projects that investors h

watching out to fund under the PP

been slow to materialize. To date,

three projects in the PPP pipeline

projects have been awarded:

(1) Daang Hari-South Luzon E

Road;

(2) First phase of the PPP for

ture Project;

(3) Ninoy Aquino International

way;

(4) Second phase of the PPP

structure Project;

(5) Modernization of the Philip

Center;

(6) Automatic Fare Collection

(7) Mactan-Cebu Internationa

(8) LRT Line 1 South Extensio

(9) Integrated Transport Syste

Terminal Project;

(10) Cavite-Laguna Expressw

(11) Integrated Transport Sys

Terminal Project; and

(12) Bulacan Bulk Water Supp

Out of these twelve projects, only

Hari-South Luzon Expressway Lin

called the Muntinlupa Cavite Expr

(MCX), is operational.2

*Section 1 of R.A. 7718 enumerated/dened the following contractual arrangements: 1. Build-operate-and-transfer; 2. Buildand-operate; 4. Build-lease-and-transfer; 5. Build-transfer-and-operate; 6. Contract-add-and-operate; 7. Develop-operate-aoperate-and-transfer; 9. Rehabilitate-own-and-operate; and 10. Such other variations as may be approved by the President of



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Table 1. Global Competitiveness report(2015-2016)

Source: the Global Competitiveness report 2015-2016

As of February 2016, 10 PPP projects are up for

bidding:

(1) Operation and Maintenance of LRT Line 2;

(2) Regional Prison Facilities;

(3) Laguna Lakeshore Expressway Dike Project;

(4) Davao Sasa Port Modernization Project;

(5) PPP Airport Operations and Maintenance of

the Bacolod (Silay) Airport & Iloilo Airport (bundle

1);

(6) PPP Airport Operations and Maintenance of

the New Bohol (Panglao) Airport, Laguindingan

Airport and Davao Airport (bundle 2);

(7) Road Transport IT Infrastructure Project

(Phase II);

(8) North-South Railway Project (South Line);

(9) Civil Registry System-Information Technology

Project (Phase II); and

(10) LRT Line 6 Project3

Infrastructure Limits PhilippineCompetitiveness

The World Economic Forum (WEF)s Global

Competitiveness Report denes competitiveness

as the set of institutions, policies, and factors that

determine the level of productivity of a country. The

level of productivity, in turn, sets the level of

prosperity that can be reached by an economy. The

productivity level also determines the rates of return

obtained by investments in an economy, which in

turn are the fundamental drivers of its growth rates.

In other words, a more competitive economy is

one that is likely to grow faster over time. 4

Infrastructure is one of four pillars in the Global

Competitiveness Reports index (GCI), alongside

institutions, macroeconomic environment, and

health and primary education. In elevating

infrastructure as a pillar, the Global Competitiveness

Report nds that [a] well-developed infrastructure

system reduces the eect of distance between

regions, integrating the national market and

connecting it at low cost to markets in other

countries and regions. In addition, the quality and

extensiveness of infrastructure networks

signicantly impact economic growth and reduce

income inequalities and poverty in a variety of ways.

A well-developed transport and communications

infrastructure network is a prerequisite for the

access of less-developed communities to core

economic activities and services.5

Overall, the Philippines has improved its

competitiveness: rising ve notches on the Reports

2015-2016 index to 47th of 140 countries. The

countrys latest performance followed a 7-notch

jump to 52nd in the 2014-2015 report and a

6-notch jump to the 59th spot in 2013-2014. The

Philippines has jumped 33 places in total under the

Aquino administration, showing the largest gain

among all other countries in the study since 2010.

The Philippines got the highest ranking in terms of

macroeconomic environment followed by market

size and business sophistication (see Table 1).


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The same report shows, however, that the

country lags behind in terms of infrastructure,

labor market eciency and goods market

eciency. The report lists the Philippines

infrastructure score as the second most

problematic factor for doing business in the

Philippines, with the country ranking 91st ofthe 140 countries in the study. As the report

illustrates, the countrys poor infrastructure

holds back its total productivity, even given a

permissive macroeconomic environment and

other positive indicators. With infrastructure as

the second pillar of competitiveness, serious

actions must be taken in improving the quality

of the countrys infrastructure. The specic

diculties in the countrys infrastructure

can be seen in Table 2.

Compared to other Southeast Asian countries,

Philippines is still lagging behind, stuck behind

Singapore, Malaysia, Thailand and Indonesia

at the bottom of the so-called ASEAN 5.

Disappointingly, the country did not even show

a close margin among the higher four; Indo -

nesia, the next ranking neighbor placed ten

notches away at 37 (see Table 3). With this in

mind, the Philippines must identify

best practices in these four countries to be

able to know what it must follow for the

betterment of the country.

Singapore ranks to be one of the top

competitive countries, not just in Asia, but in

Table 2: Philippines Infrastructure Pillar Sub-index Ranking2015-2016

Source: The Global Competitiveness Report 2015-2016


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the world ranking. It has an outstanding and stable

performance across all pillars. It takes pride in its

world-class infrastructure such as its roads, ports

and air transport facilities. Malaysia remains to be

highest among the developing Asian economies,

and has been achieving high tourist arrivals.

Thailand, which has been experiencing politica l

crisis, performs well on macroeconomics pillars. Like

the Philippines, there are barriers challenging market

competition, most especially those that restrict

foreign investment. Aside from these, Thailand faces

challenges such as political instability, excessive red

tape, pervasive corruption, security concerns and

high uncertainty on property rights. Indonesia has

prioritized infrastructure: Presidential Special Staer

for Economic Aairs and Development Prof.

Firmanzah, Ph.D. mentioned that infrastructure de-

velopment in the last ve years is the Governments

main priority to strengthen the countrys national

competitiveness.6 The accelerating infrastructure

development is supported by the Master Plan forAcceleration and Expansion of Indonesias Econo-

mic Development (MP3EI), according to Firmanzah.

With these assessments, the Philippines can learn a

lesson or two from each of the countries mentioned.

First, the country must focus its eorts on invest-

ing on world-class infrastructures, in order to be at

par with or at the least approach Singapores rank.

Second, it should nd out how Thailand manages to

obtain a high rank despite facing the same challeng-

es similar to the Philippines, especially in the aspect

of market competition. By doing so, the Philippines

may be able to combat these barriers and excel

in other pillars wherein Thailand stands out.

It has been said that the Philippines lacks competitiveness in the

global arena and has an unattractive investment climate. Investors

have been repeatedly aected by the unpredictable policy environ-

ment; government ineciency, and a poor regulatory quality and

ineective control of corruption in the Phil ippines. Transparency, a

level playing eld, and consistent govern

factors that foreign investors are right to

scheme. Returns on investment should b

importantly, the investment should be se

reprisals. Investors to PPP expect a well-

Table 3: Global Competitiveness Index Ranking 2015-2016 of Southeast Asian Econo


Table 4: Global Competitiveness Index Ranking 2015-2016 of Southeast Asian Economies for the In


OCCASIONAL PAPER FEBRUARY 2016

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tor Cosette Canilao of the PPP Center, the process

of conceptualizing the PPP projects and reviewing

the qualied companies who can participate in the

bidding takes time. The concerned government

agencies play the bigger role of conceptualizing and

evaluating the projects. Although these government

agencies are guided by a timeline, these are merely

notional and can be adjusted. Thus, no direct

accountability can be attributed to the PPP Center.

For the implementing agencies, a major cause of

delay is the prolonged period of consultation bet-

ween the private sector and the concerned

government agency. There is uneven technical cap-

pacity within the implementing agencies, with many

government ocials not equipped with technical

training nor exposure to the nitty-gritty of infrastruc-

ture projects. As such, consultants are often hired to

provide an in-depth understanding of the complexi-

ties involved and a full assessment of the projects.

The Premium Bid (aka Concession Payment)

controversy in the case of CALAX

The controversial Cavite-Laguna expressway

(CALAX), which aims to connect Bacoor and Kawit

in Cavite and South Luzon Expressway areas, is a

P35.4 billion project under the Build-Operate-and-

Transfer structure. CALAX faced an issue on its bid-

ding done in 2014. Among the bidders were Team

Orion, the 50-50 joint venture of Ayala Corporation

Critics of the Aquino governments PPP Policy are

quick to point out that no capitalist will invest in

big-ticket projects in a relatively small market like

the Philippines without certain guarantees that will

ensure the protection and protability of his

investment. It is unlikely that investors will come in

with fewer incentives. More investors will come only

if given guarantees and protection such as guar-

anteed investment return, access to loans backed

by government guarantees, and in recent years,

protection from risks arising from unfavorable

court decisions that aect protability7

PPP Programs Choke Points

The majority of the delays occur during the feasibil-

ity study and prequalication stages. The tendering

stage would range anywhere between nine to twelve

months: Invitation to Bid (21 days); Response (45

days), Prequalication (60 days), Preparation of Bids

(120-150 days), Evaluation & Award (30-60 days).

Next comes contract negotiation and government

approvals and this takes three months. Then there is

nancial closing which takes anywhere from three to

12 months.8The target deadlines keep on moving

and moving for months, as seen in all projects.

The PPP Center coordinates this process, working

to ensure that timelines for proposals and

studies are met. According to then Executive Direc-

and Aboitiz Equity Ventu

structure Development C

ed conglomerate San M

The nancial proposal o

premium/concession pa

the other hand, the conc

was P20.105 billion. Op

ceed with the bid due to

In its defense, Optimal s

is valid until 29 Novemb

compliant with the bid re

with the provisions of th

the project as the highe

Rebidding of CALAX wa

NEDA Board chaired by

ident explained that fore

ence in premium bid of

government projects. W

Works and Highways as

it underwent a revampe

June 2015 after the gov

from a previous bidding

Board also approved a

billion, the same amoun

supposed winner of the

no longer participated in

Aside from Team Orions

ment towards the gover


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investors have likewise expressed their sentiments

towards the governments blunders. Speaking on

behalf of local and foreign investors, Peter Angelo B.

Perfecto, Executive Director of the Makati

Business Club (MBC) previously pointed out that

the groups level of condence will erode if the

government approves a rebidding of the CALAX

project. Notwithstanding Aquinos approval of therebidding, Perfecto remains rm in his statement but

pointed out that there remains still a level of

condence that the government will roll out

more PPPs without such similar issues9

In the end, rebidding happened between San

Miguel Corporations Optimal Infrastructure

Development, Inc. and Metro Pacic Investments

Corporations MPCALA Holdings (MPIC). MPIC

won with the highest bid of P27.3 billion.

The Presidents decision to order the re-bidding

of said CALAX project instigated the public to reviewprevious bids for certain PPP awarded projects like

the Mactan-Cebu International Airport

Passenger Terminal Building and Automatic Fare

Collection System. Contracts were awarded to

bidders who submitted the highest present value of

proposed payments to government pursuant

to Section 4.2 (H) of the Revised Implementing

Rules and Regulations of BOT law, in lieu of the

lowest bid and most favorable terms for the

project, as set out in R.A. 7718.

In a statement issued by the PPP Center, Deputy

Executive Director, Ms. Sherry Ann N. Austria, shed

light on the nature of premium payments. The

PPP Center would like to point out that premium

payments for the CALAX Project, just like in any

other PPP contracts previously awarded, will not

be passed on to the public through increased user

charges as these charges are pre-determined prior

to the bidding process and will be subject to the

review and approval by the concerned regulatoryagency (e.g., Toll Regulatory Board). These premium

payments will go straight to the National Treasury

which can then be used to fund other equally

important projects of the national government.10

Further, it was noted that R.A. 7718 allows as

bid parameter the highest present value of

proposed payments to the government.

R.A. 7718 does not unequivocally provide as a bid

parameter the highest present value of proposed

payments to the government. Verily, Section 5 of

R.A. 7718 only provides that in case of build-

operate-and-transfer arrangement, the contractshall be awarded to the bidder who, having satised

the minimum nancial, technical, organizational and

legal standards has submitted the lowest bid and

most favorable terms for the project, based on the

present value of its proposed tolls, fees, rentals and

charges over a xed term. On the other hand, in the

case of build-and-transfer or build-lease-and-trans-

fer arrangement, the contract shall be awarded to

the lowest complying bidder based on the present

value of its proposed schedule of amortization

payments for the facility to be constructed accord-

ing to the prescribed minimum design and

performance standards, plans and specications.

Reference must be made

Revised BOT Law Implem

tions, which sets out the

evaluation of nancial co

i. Lowest proposed tol

the start of project ope

parametric tari adjustprescribed in the bid d

ii. Lowest present valu

to be provided for the

by the contract;

iii. Highest present valu

to Government, such a

lease/rental payments,

payments, and/or varia

percentage shares of r

period covered by the

iv. Any other appropriaas may be approved b

Except for item iii, the for

port from R.A. 7718, wh

that the contract should

complying bidder. On the

of highest present value

government was not con

If at all, the premium/s (to

ders, which represents th

proposed payments to g

vance payments or prep


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Only Filipinos or corpothat are A

60% owned by Fare allowed to own lanPhilippines, but foreign

allowed to leafor 50 to 7

or its share of revenue, to the detriment of the

future users of said infrastructure.

As Henry Schumacher, Executive Vice President of the

European Chamber of Commerce of the Philippines

(ECCP), stated, It is also important to understand that

the higher the bidding goes, it only favors government

coers; Juan de la Cruz will later on have to pay more

for the utilization of CALAX.11 Business logic dictates

that proponents will seek to recover their investment for

the said project/s, which necessarily translates

to higher costs to the public. This arrangement

defeats the purpose of a PPP.

This view was supported by Senator Ralph Recto in

his statement on August 10, 2014,12 thus: If a public

infrastructure or basic service is the one being

auctioned o, logic dictates that the best lowest bid

should win it as it would translate to lower fees to be

paid by the public who will use it. The higher the bid,the higher the fees that the public will eventually

shoulder. It has a domino eect and the last tile will fall

on the people. Further, he stated that the govern-

ments main consideration in awarding contracts should

be what the public will pay at the minimum, which will

not be achieved if the government will get an advance

payment or a prepaid tax, by way of premium,

for a structure that has yet to be built.

In view of the foregoing, the Senate passed

Resolution No. 810 on August 6, 2014, which

resolution was introduced by Senator Recto, directing

the appropriate Senate Committee to conduct an inquiry, inaid of legislation, on the bidding process of PPP projects with

the end in view of ensuring that the Filipino will benet quality

public services at the least possible costs.

The 60/40 Rule Applied to Infrastructure Investments

Easing restrictions on foreign investments will give the

countrys PPP program a shot in the arm. Republic Act No.

7042 or Foreign Investments Act of 1991, the law that governs

the participation of foreign entities in economic and

commercial activities in the Philippines, states that

foreigners may hold interests in corand other entities in the Philippines

engaged in an activity that is reserv

citizens or entities that are wholly ow

citizens. The maximum amount of f

allowed in a company depends on

company is engaged in, which is un

investors. Only Filipinos or corporat

owned by Filipinos are allowed to o

but foreigners are allowed to lease

depending on the lands classicati

whether local or foreign, can only le

alienable public lands. There is no l


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Image Credit: corporatelivewire.com

lands. The diculty lies when foreign investors try to tap the domestic market and work their way through

complicated bureaucratic procedures, local government corruption, only to nd out that they are notqualied to do business in the Philippines due to the foreign equity restriction. However, foreign

investors could still participate in the public bidding by partnering with a

Philippine national or domestic corporation, provided that. 13

at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held by

citizens of the Philippines; or a trustee of funds for pension or other employee retirement or separation

benets, where the trustee is a Philippine national and at least sixty (60%) of the fund will accrue to the

benet of the Philippine nationals: Provided, That where a corporation and its non-Filipino stockholders

own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least sixty percent

(60%) of the capital stocks outstanding and entitled to vote of both corporations must be owned and

held by citizens of the Philippines and at least sixty percent (60%) of the members of the Board of

Directors of both corporations must be citizens of the Philippines, in order that the

corporations shall be considered a Philippine national

Notwithstanding the foregoing options, Philippines is still not an attractive place for foreign investments,

whose capital is especially important for infrastructure investment. Big investments in infrastructure

developments are brought in by foreign investors, yet their ownership cannot go beyond 40% of the

equity and their participation in the management therefor is likewise subject to the same limitation. A

minority shareholder is often at risk of losing. Thus, without removal of the foreign equity limitations,

at least in the area of infrastrusture development, the condence level of foreign investors

in the country will not improve, which is to the Philippines detriment.


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Recommendations and Conclusion

1. President Aquino can hasten the awarding of

more PPP projects, focus on monitoring already

existing PPP projects, or do both. Improved

transportation and infrastructure are needed to fully

harness the countrys economic potential. These

projects are also benecial in terms ofgenerating additional employment, investments and

more foreign arrivals. The failure of the

governments agship program thrust to take

o has been a source of frustration since

its launch in November 2010.

2. For the progress of the program to accelerate, the

government should be rm on the observance of its

processes and timelines. Stakeholders such

as the bidders, among others, should also do its

part in strictly observing the process. There should

be a strong mechanism for collaboration and

consultation between the public and privatesectors in order to facilitate project development

with minimum legal impediments.

3. The success of a countrys PPP program

depends on the continuity of a government policy,

a perception of minimal political and economic risk

that is instilled in the minds of the investors and

stable macroeconomic management. As reality

checks were made since its ambitious launch, the

PPP Center is still optimistic that at least 80% of the

PPP projects in the pipeline will be awarded before the term of President Aquino e

4. The proposed amendments to the BOT Law, which is one of the priority bills of

would have institutionalized the supposed reforms initiated by his administration a

ensure that said reforms would be continued by the next administration.

In particular, House Bill No. 6331, the House of Representatives version of the pro

to the BOT Law, features provisions attuned to international standards, where priv

truly encouraged and the partnership valued. Among the notable clauses of HB 63

a) Issuance of Administrative Franchise, License or Permit. HB 6331 provides f

grant of administrative franchise, local or national permits, or any other requirem

implementation of the PPP project once the contract is duly executed;

b) Projects of National Signicance. Upon classication by the President of ene

transit, water, sewerage, and such other projects, HB 6331 proposes that said

imbued with national signicance shall be exempt from the real property taxes

Government Code, and from all local taxes and fees. The project shall also be

issued the necessary business permits, including renewals of such permits; an

c) Recovery of Investment. HB 6331 likewise mandates that PPP contracts inc

the recovery of the proponents investment by collecting of tolls, fees, rentals o

commercial development, or receiving viability gap funding (VGF), that is nanc

government to make user fees aordable, or direct payment from government,

The above cited provisions reect modern governance where there is acknowledg

through a robust partnership with the private sector, the government can

better deliver the services our country and our people need.*

* House Bill No. 6331, An Act Institutionalizing and Strengthening Public-Private Partnerships, and Appropriating Fuas part of Committee Report No. 947, submitted by the Committee on Public Works and Highways, the Committeetions, and the Committee on Ways and Means on December 14, 2015, Sections 13, 20, 28 (c).


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Endnotes:

1 Global Source Partners. (2011). A Bet on PPP. Retrieved fromhttp://www.globalsourcepartners.com

2 PPP Center. (2016). Pipeline of Projects. Retrieved from http://ppp.gov.ph/?page_id=26075

3 PPP Center. (2016). Pipeline of Projects. Retrieved from http://ppp.gov.ph/?page_id=26075

4 World Economic Forum. (September 2014). The Global Com-petitiveness Report 2014-2015

5 World Economic Forum. (September 2014). The Global Com-petitiveness Report 2014-2015

6 Sekretariat Kabinet Republika Indonesia. (September 21,2014). Increase in Indonesias Global Competitiveness Index ReectsImprovements in Its Economic Performance. Retrieved from http://setkab.go.id/en/increase-in-indonesias-global-competitiveness-in -dex-reects-improvements-in-its-economic-performance/

7 IBON. (November 11, 2010). PPP: More public debt, less govtresponsibility. Retrieved from http://ibon.org/2010/11/ppp-more-pub-lic-debt-less-govt-responsibility/

8 Chanco, B. (Feb. 28, 2011). Philippine Star. Stale bureaucraticthinking delays PPP Retrieved from http://www.philstar.com/busi-ness/661176/stale-bureaucratic-thinking-delays-ppp

9

Business Mirror. (February 17, 2015). Calax should be soleexception. Retrieved from http://www.businessmirror.com.ph/calax-should-be-sole-exception/

10 PPP Center. (Septembto Calax commentary. Retrienews=ppp-centers-reaction-to

11 Amojelar, Darwin. (NoveCommerce of the PhilippinesCavite-Laguna Expressway prcom/articles-page.php?categ

12 Senate of the Philippinebids could lead to higher usersenate.gov.ph/press_release/2

13 Republic Act No. 7042 F

5. The best lowest bid should always win as it would

translate to lower fees to be paid by the public

who will use it. The higher the bid, the higher the

fees that the public will eventually shoulder.

Inevitably, it will be the public who will suer from

such arrangement. The governments main

consideration in awarding contracts should be whatthe public will pay at the minimum, which will not be

achieved if the government will get an advance

payment, by way of premium, for a structure that

has yet to be built. Not only is the public required

to pay a fee for a basic service that a government

should have rendered for free, but the public will be

required to pay a higher fee in order to recompense

the bidder for its premium payment to the govern-

ment. Government should see that PPP is not

crafted for the purpose of raising revenues

but rather to be able to provide public services that

the government cannot aord.

6. Finally, more than being just a mere coordina-

ting agency, the PPP Center should be given more

leeway to act independently on proposals, whether

for solicited or unsolicited projects. The PPP Center

should be able to independently address the whole

process of the PPP scheme. For that purpose,

the PPP Center becomes a one-stop shop for

infrastructure developments which would include

the conceptualization, evaluation and approval ofprojects. This concept would eliminate or at the very

least, minimize the bureaucracy problem.

PPP projects should be a reection of the

Philippines on how modernized and integrated our

facilities will be, a link for an innovative and

competitive environment for the future. Certainly, the

PPP scheme has yet to reach its fullest potential.


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is an independent international and strategic researchorganization with the principal goal of addressing theissues affecting the Philippines and East Asia

Stratbases Albert Del Rosario Institute

9F 6780 Ayala Avenue, Makati CityPhilippines 1200

V 8921751F 8921754

www.stratbase.com.ph

ABOUT

Victor Andres Dindo C. Manhitis the CEO and Managing Director of the Stratbase Group andPresident of the ADR Institute. He specializes in Strategic PublicManagement, Legislative Research and Governance Reforms. Hisresearch interest and eld of specialization had led him to pursueactive involvement in legislation, bureaucratic workand civil society advocacy.

Maria Claudette L. Guevarais the Chief of Staff of theStratbase Group and is a Research Analyst at the ADR Institute.

9.3VOLUME

delay and dissatisfaction in the aquino administration's ppp program: recommendations for future...

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