Philippine Daily Inquirer, 24 July 2014
By Miguel R. Camus
MANILA, PhilippinesâIt has been battered and bruised but the Aquino administrationâs public-private partnership (PPP) program, whose implementers admit is still a work in progress, remains committed to getting crucial infrastructure projects off the ground.
PPP projects have continuously drawn the spotlight given the crucial roles they play in driving economic growth today and in the decades to come. Reassuring the public and investors in President Aquinoâs State of the Nation Address (Sona) on Monday, as the administration had done in the past, would help the program.
This reassurance is critical as the program has its fair share of criticsâfrom impatient bidders to those who feel the process favors certain personalitiesâbut the PPP Center that oversees the massive infrastructure drive says the criticism has not dampened investorsâ interest thus far, according to its executive director, Cosette Canilao.
She said the lessons learned and reforms implemented over the last three-and-a-half years meant that the PPP deals could be ramped up until President Aquino steps down in 2016.
âWe are going faster now,â Canilao said. âWe have a healthy pipeline of projects and everything is now moving.â
Canilao said a total of five PPP projects would be completed in two years.
These include the 4-kilometer Daang Hari-SLEx Road project, 7-km Ninoy Aquino International Airport (Naia) Expressway project, a smart-card system for Metro Manilaâs railways and deals for the construction of new classrooms, she said.
The number of projects may seem small relative to the programâs overall scale and the administration has refrained from mentioning targets, preferring instead to mention specific projects and how they would benefit the public, based on last yearâs Sona of the President.
Aquinoâs previous address noted key airport deals like the P17.5-billion Mactan-Cebu International Airport, which has been awarded to a Filipino-Indian consortium, Megawide Construction Corp. and GMR Infrastructure.
The government got a P14.4-billion premium payment for this project, meaning Aquino was expected to highlight this PPP deal in his Sona on July 28.
While bagging a significant premium payment was noteworthy, the government may also highlight the robust participation for the PPP by other groups, both local conglomerates and global airport operators.
Sanctity of contracts
This is also to underscore the growing investorsâ confidence in a country, where there is still some concern over the sanctity of contracts.
The President made reference to this in last yearâs Sona, when he said the public âseemed to have lost confidence in the contracts the government undertook.â
He assured the public that transparency was observed in awarding contracts to PPP projects.
âWe have no plans of entering into questionable contracts today just to bequeath problems to the next administration. Each project has to go through the correct process to ensure that our taxpayersâ hard-earned money will be spent the right way,â Aquino said.
Despite the heavy criticism on the slow pace, some in the private sector said the seeds sowed in the current administration were important for future projects.
Roman Azanza III, Aboitiz Equity Ventures first vice president for business development, said the recent successful projects under the program signaled that the Philippines was a safe place to invest and he âhopedâ this could be sustained even under future administrations.
âThis administration and the people that devised the BOT [build-operate-transfer] law made real efforts, deal by deal, and project by project, to get to a state where a process can be run that attracts the confidence of not just local investors but foreign players,â Azanza said.
More PPP projects, meanwhile, were on the way.
Canilao noted that getting a steady pipeline was the key in ensuring the programâs sustainability and keeping investors interested.
Indeed, the sheer scale of the program highlights how much work still needs to be done for government and on the other side of the fence, for investors, the pool of potential opportunities.
7 deals so far
As of July 10, the government had awarded seven deals out of a total of 54 identified projects. Those seven, including a P17.5-billion contract to expand and operate Cebuâs main international airport, have a combined value of over P60 billion.
The amount, however, is relatively small compared with about 20 more projects valued at P900 billion ready for awarding or to be rolled out.
Part of these are a P135-billion âsubwayâ project in Metro Manila, a P271-billion commuter rail in Luzon, both of which are under study, and a P24-billion bulk water project for Bulacan province.
The remaining 28 projects, which include more seaports, expressways and a natural gas pipeline, are in various stages of development, the agencyâs data showed.
Canilao said the list did not include new projects being considered, including the privatization of the operations of Manilaâs Naia, the countryâs busiest air gateway.
15 more contracts by 2016
All told, she said the government was still aiming to have 15 PPP contracts signed by the end of Aquinoâs term, with 10 turned over to the private sector. Over the next 12 months, the PPP Center is planning to roll out another 20 projects, she said.
âWe are now at this sweet spot in the next 12 months,â she said.
Most of the deals are being implemented by the Department of Transportation and Communications and the Department of Public Works and Highways.
Strengthening the capabilities of the two agencies is important to the programâs success, according to Canilao. Timing is also an issue and as the 2016 deadline looms, the PPP Center is keen on what happens beyond Aquinoâs term amid concerns the future administration would take a different direction from what was started.
Amend BOT law
âWhat we need now is to institutionalize the changes that we have started. Part of this is amending the BOT (build-operate-transfer) law to reflect these changes to make the program more sustainable,â Canilao said as she hoped lawmakers would approve these revisions within the year.
She said recent reforms included beefing up its project development and monitoring facility, crucial in ensuring âa steady deal flow.â
Government units and agencies are now more used to dealing with PPPs and processes have been âstreamlined,â while measures have been taken to address risks through the creation of a contingent liability fund, Canilao said.
âAll of that creates a good environment to attract investor participation,â she said.
This was very different from how the program started out, Aquino said in last yearâs Sona as he shared that âstudies on which the projects were based were outdated; and the bureaucracy lacked the sufficient knowledge to implement them.â
The projects, given their large size and potentially lucrative nature, have also attracted some controversy.
Recently, the awarding of the 45-km Cavite Laguna Expressway deal has stalled after San Miguel Corp. sought the intervention of MalacaĂ±ang last month to reverse its disqualification, which it said was due to a typographical error.
The front-runner for the project is a tandem between Ayala Corp. and Aboitiz Equity Ventures.
Canilao said that despite these issues, investorsâ interest had not waned.
Local conglomerates like Ayala Corp., Metro Pacific Investments and San Miguel are PPP regulars. They said they would continue to bid for projects they found attractive.
But Canilao noted that drawing foreign groups would be crucial in the months and years to come as the PPP Center introduced ever larger projects like the planned subway and commuter railway.
Foreign participation, which also comes with expertise, has been limited, thus far.
Apart from the foreign groups that participated in the P17.5-billion Mactan-Cebu International Airport, only Malaysiaâs MTD Group has consistently shown interest in Philippine PPPs. But this has not deterred the agency.
âWeâre putting forward a system to deliver marketing abroad on our PPP projects,â Canilao said, adding that she was optimistic more international groups would participate.
âWe have done our homework in making the process transparent. With the big projects we have conducted, those call the attention of foreign bidders. It says we are open for business,â she said.âWith a report from Inquirer Research
Philippine Daily Inquirer, 24 July 2014
By Miguel R. Camus
MANILA, PhilippinesâAyala Corp. and Aboitiz Land Inc. again urged President Aquino to uphold the strict implementation of bidding rules for the 45-kilometer Cavite-Laguna Expressway (Calax) public-private partnership (PPP) deal, where their consortium is the frontrunner, amid a row between the government and disqualified conglomerate San Miguel Corp.
Roman Azanza III, spokesman for Ayala and Aboitiz-backed Team Orion, again raised the possibility that the credibility of the Aquino administrationâs flagship PPP program would be eroded should MalacaĂ±ang take a position not in line with the build-operate-transfer (BOT) law.
San Miguel-backed Optimal Infrastructure Development Inc. last month asked President Aquino to intervene in the process after it was disqualified on a technicality, or when its bid security validity was stated to be four days short of the required 180 days.
That action put any awarding of the P35.4-billion tollroad on hold as MalacaĂ±ang said it would review the appeal, where Optimal Infrastructure asked that its disqualification be reversed and its bid of P20.1 billion be considered.
While the amount was higher than Team Orionâs P11.659 billion, Azanza told reporters in a press briefing on Wednesday that the offer could not be considered because Optimal Infrastructure was disqualified, its technical proposal was not reviewed and its financial bid was not opened by the Department of Public Works and Highways (DPWH).
Moreover, he noted that Optimal Infrastructure âspoiledâ its bid when they withdrew their bid envelope from the DPWH last June 13 to open this before the members of the press at a different venue.
Noel Kintanar, executive vice president for Ayala Corp. subsidiary AC Infrastructure, said during the same briefing that investors needed an assurance that existing rules could be trusted.
âIf the rules donât apply, how do we award a bid,â Kintanar said, citing the massive number of PPP deals either to be rolled out or were under study.
Optimal Infrastructure earlier said the DPWH bids and awards committee exercised âgrave abuse of discretionâ when it decided to disqualify it based on a technicality.
The Philippine Star, 23 July 2014
By Lawrence Agcaoili
MANILA, Philippines – Infrastructure conglomerate Metro Pacific Investments Corp. (MPIC) sees further delay in the P18-billion toll road connecting the North Luzon expressway and the South Luzon expressway after the Department of Justice (DOJ) issued an opinion on the legality of the joint venture with state-run Philippine National Construction Corp. (PNCC).
Justice Secretary Leila de Lima has issued an opinion dated July 7 that the National Economic and Development Authority (NEDA) erred when it approved the joint venture between MPICâs Metro Pacific Tollways Development Corp. (MPTDC) and PNCC on the connector road project.
Based on the recommendation of Transportation Secretary Joseph Emilio Abaya, the NEDA Board approved the amendment or extension of existing joint venture between MPTDC and PNCC as well as the supplemental toll operations agreement (STOA) to cover the extension of the franchise of NLEX under Presidential Decree 1894.
De Lima said in the 68-page letter sent to Transportation Undersecretary Jose Perpetuo Lotilla that âthe NEDA Board approval appears to have been issued beyond its powers, and without factual basis or justification.â
Even if the proposal is to proceed, instead, in accordance with the scheme described in the NEDA Boardâs amended approval, De Lima said all government agencies, bodies and officials are constitutionally and statutorily required to ensure that such proposals do not merely offer advantageous terms from a business perspective.
She added that it would be highly unwise and even contrary to the tenets of good governance to suddenly convert an unsolicited proposal, which is about to be subjected to Swiss Challenge, into another mode of implementation by entering a joint between the Unsolicited Proponent and the PNCC.
MPTDC president Ramoncito Fernandez said in an interview with reporters the company is amenable to subjecting its unsolicited connector road project proposal to a âSwiss Challenge.â
âIf you ask me, I believe it should be shorter than six months. Itâs just a revival of what was stopped last year. We are now studying our options whether to go back to unsolicited or not, because we have retained that right until we are awarded a contract,â Fernandez explained.
The NLEX SLEX connector project was originally submitted to the Department of Public Works and Highways (DPWH) in May 2010 under the Build-Operate-Transfer (BOT) Law.
The joint venture arrangement between Manila North Tollways Corp. (MNTC) and PNCC was duly approved by the NEDA Board in January last year.
MalacaĂ±ang has earlier directed the Department of Transportation and Communications (DOTC) to immediately resolve the legal hurdles to the NLEX-SLEX connector road.
InterAksyon, 22 July 2014
By Darwin G. Amojelar
MANILA – The Department of Justice (DOJ) has ruled that an P18-billion road project proposed by the Metro Pacific Group be subjected to a Swiss challenge.
In a 41-page legal opinion dated July 7, 2014, Justice Secretary Leila M. de Lima said the National Economic and Development Authority (NEDA) Board’s decision to implement the NLEX-SLEX Connector Road project as a joint venture, and not as an unsolicited venture, is “without factual basis or jurisdiction.”
President Benigno Aquino III chairs the NEDA board.
To recall, Metro Pacific Tollways Development Corp (MPTDC) earlier sealed a joint venture with Philippine National Construction Corp (PNCC) in a bid to facilitateÂ construction of the NLEX-SLEX Connector Road.
MPTDC controls Manila North Tollways Corp (MNTC), which operates the North Luzon Expressway. State-run PNCC is the holder of the NLEX franchise, which MNTC manages on behalf of the government.
Under their deal, the Supplemental Toll Operations Agreement (STOA) between MNTC and PNCC was amended to incorporate the Connector Road project.
According to the amended STOA, the NLEX-SLEX Connector Road, which will be called Segment 10.2, would be integrated to Segment 10.1, aÂ 5.65-kilometer road that starts where Segment 9 ends on MacArthur Highway and stretches all the way to C3 Road.
Segment 9 is a 2.4-kilometer portion linking the NLEX to MacArthur Highway. The 3 projects would now be called NLEX MetroÂ Expressway Link Project.
The joint-venture route was meant to do away with the Swiss challenge, which had been required of the project when it was still being pursued as an unsolicited venture. The Department of Transportation and Communications (DOTC) had endorsed the joint-venture route toÂ expedite the project.
“It would be highly unwise and even contrary to the tenets of good governance to suddenlyÂ convert an unsolicited proposal, which isÂ about to be subjected to Swiss challenge, into another mode of implementation, i.e., entering a JV between the unsolicited proponent andÂ the PNCC at the behest,”Â de Lima said.
“Any perception that piggy banking on the franchise of PNCC would, in any way, allow the unsolicited proposal of MPTDC to evade or circumvent the Swiss challenge requirement or would allow it to obtain the contractÂ without competitive challenge, is erroneous,” she added.
Sought for comment, MPTDC president Ramoncito Fernandez said the company received the DOJ opinion.
“We are now studying our options whether to go back to unsolicited or not because we have retained that right until we are awarded aÂ contract. We have retained our original proponent status,” Fernandez said.
He said MPTDC is ready to undergo a Swiss challenge, which would take about 3 months.
With the DOJ ruling, the company expects further delay in the implementation of the project, which “we are projecting to startÂ by early next year,” Fernandez said.
He expects the project to be completed in 2.5 years. The company was banking on completing the NLEX-SLEX Connector Road by end-2016.
MPTDC is a unit of listed Metro Pacific Investments Corp (MPIC). InterAksyon.com is the online news portal of TV5, which like MPIC is chaired by Manuel V. Pangilinan.
Stock Market Trading Strategy For New Filipino Investors, 22 July 2014
ByÂ Josef Panerio
The Philippine economy cannot compete with China, United States and Europe market. But theÂ Philippine market is brewing something biggerÂ to be able to put a flag in the global trade.
One very striking quote that hit me during the PLDT SME Nation FutureTalks about theÂ ASEAN Integration 2015Â last July 18, 2014 at Solaire Resort and Casino was
“Big fish is coming to the small ponds, scary right? Yes it is very scary, especially for the small businesses (Small-Medium Enterprises) in the country (Philippines).Â However the dam is broken.”
The Philippines need our ally countries to join together as one nation and that is what we call theÂ ASEAN Integration 2015Â also known asÂ ASEAN Economic Community (AEC). This vision will start next year December 2015 and no matter what, whether we (Philippines) are ready or not it will happen next year.
Philippines may not be ready yet to compete in the global market especially the small and medium enterprises but with theÂ ASEAN integrationÂ it helps prepare the small and medium enterprises how to get ready and how to make it happen to enter in theÂ global market.
And according toÂ Joey Concepcion IIIÂ President and CEO, RFM CorporationÂ for us to make it happen the Philippines government needs to award all the Public-Private Partnership (PPP) to give way and gear-up of the upcoming change.
Once the Public-Private Partnership projects are awarded, many companies stock prices will appreciate higher as this is the much awaited event to happen. Like for the infrastructure improvement and development many companies will benefit from it like EEI, SM, SMC, Ayala Corp, SM Holdings, Megaworld.
We (Philippines) cannot compete to the challenges of the global trade, the global market is too scary for the Philippines to face, we are too small and too vulnerable if we do it alone. With theÂ ASEAN nations united as one, challenges in the global market can be addressed with great and perfect solution, because we are not alone.
The Philippines may face great challenges ahead, but we are not alone in facing those challenges in the global market. We only just have to be educated of the upcoming events and financially educated. Everything starts with awareness and the nation will take action.
Allow me to share this story I got from the web, which perfectly fit why the ASEAN is necessary to happen and it goes like this.
There once was a farmer who grew award winning corn. Each year he entered his corn in the state fair where it won a blue ribbon.
One year a newspaper reporter interviewed him and learned something interesting about how he grew it. The reporter discovered that the farmer shared his seed corn with his neighbors.
âHow can you afford to share your best seed corn with your neighbors when they are entering corn in competition with yours each year?â the reporter asked.
âWhy sir,â said the farmer, âdidnât you know? The wind picks up pollen from the ripening corn and swirls it from field to field. If my neighbors grow inferior corn, cross-pollination will steadily degrade the quality of my corn. If I am to grow good corn, I must help my neighbors grow good corn.â
Business World, 21 July 2014
ByÂ Agbayani P. Pingol II
A few weeks ago we published aÂ mapÂ that showed how the government concentrated on Luzon when it came to distributing projects under its signature Public-Private Partnership (PPP) program. The private sectorâs involvement means that the projects which come to the fore will tend to have strong profit potential. One of the implications of this selection process is that only the richer sections of Luzon and major cities in the Visayas and Mindanao have the ability to pay the tolls and the charges demanded by investors. It seems clear on an intuitive level that the in-built bias for potential payoffs will lead to the widening of the gap between developed areas of Luzon and the rest of the country.
Here is a second map that presents the PPP from another angle, which shows the voter-rich areas of the country getting an outsized share of the infrastructure. While it is a staple of democratic thinking that government decisions should benefit the most number of people, it is equally difficult to be a resident of a neglected area and watch other provinces corner the spoils.
Let us take a stab at the possible electoral logic behind this uneven distribution. The Philippines has 44,269,792 registered voters in more than 80 provinces, according to the 2010 Census. Nineteen of the top 20 vote-rich provinces also belong to the top classification for local government revenue, with sixteen of the top 20 vote-rich provinces to be found on Luzon. So far, so good. But it is also possible to be voter-dense while also having a small voter population in absolute terms – the top examples here are Camiguin, Tarlac and Bataan, three electorally insignificant provinces that have also not managed to attract a PPP project. Meanwhile, La Union, with a similar demographic profile, bagged a project under the PPP for reasons that have more to do with the strategic location of its airport, and should be counted as a notable exception.
It all seems quite unfair, but the reality is that, all things being equal, businessmen will go where the money is, and the politicians will go where the votes are. When their interests converge it will sometimes produce a concentration of investment in areas that already enjoy a development head start on the rest of the country. It is possible that a future government will redress the balance by implementing vitally-important projects with little consideration for electoral factors and no hope of a payoff, but that does not seem to be where the policy winds are blowing right now.
22 July 2014
Malaya Business Insight, 22 July 2014
Ayala Corp., and Aboitiz Equity Ventures, Inc., firms comprising Team Orion consortium that offered the highest complying bid for the Cavite-Laguna Expressway (CALAX) said disqualified bidder San Miguel Corp., through unit Optimal Infrastructure Development, Inc. (Optimal), should not be allowed to undo the bidding process.
In a letter to Malacanang, in response to the appeal of Optimal, Team Orion though its counsel, said Optimal cannot be allowed to undo and reset the bidding process simply by its own announcement of its alleged bid, given that it is non-verifiable and legally non-existent,â a bid that was returned unopened and that was, in a manner of speaking, officially dead, especially after Appellant [Optimal] spoiled it as evidence.â
âPublic policy and the dictates of transparency and good governance demand strict compliance with the bidding rules,â it said.
âThe sanctity and integrity of the PPP framework and bidding process must be protected, lest confidence in the process is undermined,â Team Orion added.
Team Orion said Optimal did not follow the legal process and went to the media to announce its alleged bid.
âBased on the Build-Operate-Transfer (BOT) Law that governs the bidding of the CALAX project and all other Public Private Partnership projects, if a bidder fails to comply with any of the requirements of the bid, its financial proposal should be returned unopened and the bidder shall be disqualified from further participating in the bidding, regardless of whatever its bid amount might have been,â Team Orion said.
âThis is the very purpose of the multi-stage bidding process being followed by the DPWH and the SBAC to help them determine the best available bid and prevent their judgment from being clouded by financial considerations,â it added.
Team Orion said winner in a public bidding is not merely the bidder with the highest bid amount, but rather the bidder with the âhighest complying bidâ.
âThe other bidders who participated, namely, the Metro Pacific Group and MTD Capital Bhd (Malaysia), both submitted bids that were compliant with the requirements and followed the rules. Optimal was the only participating bidder that failed to meet the requirements, and as a result, it was disqualified from further participating in the opening of the financial bid,â it said.
The Philippine Star, 22 July 2014
By Lawrence Agcaoili
MANILA, Philippines – The tandem of Ayala Corp. and Aboitiz Land Inc. has asked Malacanang to dismiss the appeal filed by San Miguel Corp. (SMC) regarding its disqualification in the bidding for the P35.4 billion Cavite-Laguna Expressway (CALAX) project held last month.
Team Orion, a 50-50 joint venture between Ayalaâs AC Infrastructure Holdings Corp. and Aboitiz Land, submitted to the Office of the President a comment on the Memorandum of Appeal filed by SMC last June 27 appealing the disqualification of Optimal Infrastructure Development Inc.
Team Orion spokesperson Roman Azanza III said the group earlier filed a Motion to Intervene with Malacanang to inform the public about the ongoing dispute in the award of the infrastructure project.
âWe believe that nobody or no entity should ever be allowed to undermine the bidding process. There are rules and procedures that must be followed in a public bidding. If we do not follow it, and if we let errant participants act outside of the rules of a public bidding process, then the whole process will lose credibility,â Azanza said.
He warned that the controversy puts in peril close to P900 billion worth of major infrastructure projectsÂ under the Aquino administrationâs PPP scheme.
âWe stand more to lose as a nation if we do not respect our own bidding rules and procedures. We need to keep the hard-earned confidence of investors in the stability and integrity of our public bidding process,â he said.
âLosing the confidence of investors would certainly have more of a âchilling effect on the Philippine economyâ, particularly if any disqualified bidder could, after being disqualified and after the bidding process itself has been concluded, force to change the results by simply proclaiming a bid that, because of its own actions, cannot be verified to be existent in the first place,â Azanza said.
Last June 30, Malacanang issued a âStay Orderâ preventing the Department of Public Works and Highways (DPWH) from implementing a June 11 resolution disqualifying SMCâs Optimal Infrastructure from opening of the financial bids due to the submission of an erroneous and deficient bid security last June 2.
The DPWH issued a Resolution dated June 11 announcing the disqualification of Optimal Infrastructure for violating several provisions of the bidding rules particularly the provision on bid security as it was short of the 180-day validity period requirement as its security was valid only until Nov. 25, 2014 instead of the required Nov. 29, 2014.
After a series of appeal with the DPWH, SMC was forced to elevate the case before the Office of the President where it filed a 37-page Notice of Appeal last June 27.
Manila Standard Today, 22 July 2014
By Jenniffer B. Austria
Conglomerates Ayala Corp. and Aboitiz Equity Ventures asked MalacaĂ±ang Palace to junk the petition of San Miguel Corp. questioning its disqualification from the P34.5-billion Cavite Laguna Expressway project.
Team Orion Consortium, composed of Ayalaâs AC Infrastructure Holdings Corp. and Aboitiz Land Inc., submitted the comment with the Office of the President in response to a memorandum of appeal filed by San Miguel-led Optimal Infrastructure Development Inc.
Team Orion said in a statement Optimal could not be allowed to undo and reset the bidding process, after it was disqualified for submitting an âerroneousâ and âdeficientâ bid, on the basis tof a claim that it submitted a superior bid of P20.1 billion compared with Team Orionâs P11.65 billion.
âWe filed a Motion to Intervene with MalacaĂ±ang because we want our voice to be heard on this very important matter. We believe that nobody or no entity should ever be allowed to undermine the bidding process,â Team Orion spokesman Roman Azanza III said.
âThere are rules and procedures that must be followed in a public bidding. If we do not follow it, and if we let errant participants act outside of the rules of a public bidding process, then the whole process will lose credibility,â he said.
Azanza warned investors might lose confidence in government projects if the bidding rules and procedures were not respected. He said this would have more of a âchilling effect on the Philippine economy.â
âThere remain nearly P900 billion worth of PPP infrastructure projects that will still have to be bid out to investors because government alone cannot undertake these projects. We need to keep the hard-earned confidence of investors in the stability and integrity of our public bidding process,â Azanza said.