Archive for the ‘News’ Category

ADB: Private investment lags in Southeast Asia

The Philippine Star, 23 May 2014

By Teresa Cerojano

 

MANILA, Philippines — An Asian Development Bank official warned Thursday of a largely unnoticed crisis in Southeast Asia: private investment in infrastructure has not recovered in the nearly two decades since the Asian financial crisis.

Stephen Groff, ADB Vice President for operations, said in an interview on the sidelines of the World Economic Forum on East Asia, that private funding for infrastructure in five of the biggest Southeast Asian members has declined steeply. It was $38 billion in 1997 and around $25 billion in 2010.

“It’s coming up but it’s nothing like it was in 1997,” he told The Associated Press. “Essentially, the ASEAN financial crisis led to a crisis of confidence with governments, a crisis of confidence in the private sector, and there hasn’t been enough investment or discussion or development of tools that allow risk-sharing to be used appropriately.”

The five members he referred to were Indonesia, Malaysia, the Philippines, Thailand and Vietnam. The other members are Singapore, Cambodia, Laos, Myanmar and Brunei.

Groff said while private investors assume risks, there are other types of risks that governments and financial institutions need to assume “and that hasn’t yet come into play as much as it needs to.”

The region, which will launch next year a common market comprising 600 million people, needs to spend $60 billion yearly until 2020 to meet its infrastructure needs. But Groff said ASEAN currently spends only about half that.

He said while there has been some progress in a number of countries in recent years in helping facilitate private investments in infrastructure by addressing legal and regulatory issues that restrict private participation, the process is not easy and takes time.

There is a need to think about financing interest mechanisms, mechanisms to mitigate risks, developing bankable projects that attract private investments and bringing back home the region’s extra savings that have been invested in low-yielding treasury bonds in the U.S. and Europe, he added.

To bring back some of those funds, the ADB has helped develop the ASEAN Infrastructure Fund which began lending last year. Two infrastructure projects in Indonesia have been funded while more projects throughout the region are in the pipeline, Groff said.

The fund is being managed by the ADB, with funding coming from ASEAN members and the bank.

Indonesian Finance Minister Muhamad Chatib Basri said infrastructure is the “first priority” for his country after it had established political stability under outgoing President Susilo Bambang Yudhoyono.

However, he said the ” main challenge in the future is not only sustainable growth but also shared growth.”

Philippine Finance Secretary Cesar Purisima said the region’s relatively young population, natural resources and its geographic location are factors that would contribute to growth. But to make sustainable growth a reality the “capital surplus region” has to make more infrastructure investments, he added.

“We have the money … but we need to make our financial markets more efficient and more connected,” he said. “Governance is the most important ingredient because businesses want predictability, want open economy, want to be able to reduce the risks.”

 

World Economic Forum zeroes in on development gaps

Business World, 22 May 2014

 

SOUTHEAST ASIA, the Philippines in particular, is primed for continued economic growth but will have to hurdle barriers such as territorial disputes, political unrest and continued socioeconomic inequality.

Regional leaders and speakers at the ongoing World Economic Forum on East Asia in Makati City highlighted gains that have been made so far — from regulatory reforms to curbing corruption — but noted that countries faced similar challenges involving infrastructure, governance and even food security.

Philippine President Benigno S. C. Aquino III, keynoting the afternoon plenary session, touted gains made in the first four years of his administration — from above-target economic growth and resulting credit ratings upgrades to the detention of his predecessor, Gloria Macapagal-Arroyo, on corruption charges.

The same themes were expounded by Cabinet officials who spoke at earlier sessions, including Finance Secretary Cesar V. Purisima and Budget Secretary Florencio B. Abad.

Similar reforms were presented by Indonesian President Susilo Bambang Yudhoyono, Vietnamese Prime Minister Nguyen Tan Dung and Myanmar Vice-President Nyan Tun.

At a morning session focusing on the region’s prospects, the upcoming economic integration of ASEAN was cited as a means of addressing barriers to development and stability, including the ongoing political crisis in Thailand and territorial disputes with China — seen as risks to investment.

Highlighting the heightened tensions over China’s claims to the South China Sea, Vietnam’s Mr. Dung blasted the regional power for “slandering” his country, and Klaus Schwab — the Forum’s founder — while stressing that the organization was not taking sides, said there was a need to “resolve this situation which has potential to create a situation we do not want.”

‘WE HAVE TO CHANGE…’
Mr. Schwab, returning the discussion to the issue of growth and equitable progress, said the biggest challenge for the world, and not just the region, was “social inclusion.”

“We have to change the way we run our economies,” he said.

“Income inequality has been getting worse across the world for the past 30 years,” Lee Il-Houng, G20 Sherpa and ambassador for international cooperation of South Korea, noted earlier in the day.

Mr. Aquino was in agreement, saying in his speech that “[i]nclusive growth cannot be delivered by simply delivering the services… [that the people] deserve.”

Mr. Yudhoyono called for “mobility for all”, while Mr. Dung said “domestic reform must be coupled with regional integration.”

Mr. Schwab said it didn’t matter if the viewpoint was glass half full or glass half empty, only that the “glass is still growing… there is more water [in it].”

The morning session on East Asia’s economic outlook also cited long-standing development gaps.

“We need to invest in infrastructure to assure our connectivity with each other and the rest of the world,” Mr. Purisima told forum participants.

Among others, he noted that the Philippines’ infrastructure backlog has hindered the country from implementing an “open skies” policy, which would relax aviation restrictions that currently provide local players an advantage over foreign rivals.

“The challenge really is congestion in Manila, so we need to fix, of course, infrastructure,” Mr. Purisima said.

Mr. Purisima was responding to a comment by AirAsia Group Chief Executive Officer (CEO) Anthony F. Fernandes in the same session that many Southeast Asian economies have been moving in the right direction by taking steps toward an “open skies” policy. At the same time, Mr. Fernandes noted: “Open skies is one thing, but many invisible barriers still exist.”

Mr. Purisima also highlighted infrastructure’s role in supporting agriculture, which in the Philippines accounts for a third of the work force but contributes less than a fifth to national output.

‘“There is need for sectoral interventions, in particular, in agriculture,” Mr. Purisima noted.

“And here infrastructure takes that role. Rice facilities, storage facilities, irrigation — we need to invest [in those],” he stressed, adding: “We need to give [farmers] better access to technology.”

“If we succeed in doing that, we improve the overall competitiveness of the country.”

Mr. Fernandes echoed Mr. Purisima’s view later in the session, urging governments to “allow businesses to grow by facilitating them by providing the right infrastructure.”

Infrastructure, however, is not the only issue casting a shadow on the region’s otherwise upbeat outlook.

In an opening press conference, Forum co-chairs Takeshi Niinami, chairman of Lawson, Inc., and James T. Riady, CEO of Lippo Group in Indonesia, cited risks posed by current geopolitical tensions.

“Tensions are real and this impacts directly and indirectly business enterprises,” Mr. Riady said at the press conference.

“Capital markets reflect that immediately.”

Mr. Niinami stressed, however, that business must not take a back seat to territorial disputes.

“We have to focus on the business first, then politics follows,” he said.

 

EDITORIAL – Sustaining economic growth

The Philippine Star, 23 May 2014

 

Organizers of the 23rd World Economic Forum on East Asia have declared that holding the regional event in Manila is a vote of confidence on the Philippines. Similar gestures of confidence have also been manifested by other groups, with the Philippines being rated investment grade by all the major international credit rating agencies.

Much of the confidence can be attributed to the focus of the Aquino administration on good governance and the fight against corruption. The United Nations, the World Bank and other groups have recognized corruption as one of the biggest hindrances to economic growth. Corruption prevents fair and open competition, turning away investments that are needed to create decent employment.

The WEF on East Asia is being held as the pork barrel fund scandal continues to rage. The corruption scandal is raising concern about the sustainability of reforms, as even officials and political allies of the daang matuwid administration are implicated in the mess.

The answer to such concerns is to build the reforms into systems and procedures, with measures to enforce compliance, so that these will survive leadership changes and the vagaries of politics. Reforms cannot be sustained if their implementation is dependent on personalities. The Aquino administration must spend the remainder of the President’s term building capabilities and strengthening the institutions that will ensure the sustainability of reforms to promote transparency and accountability. The wang-wang mentality cannot return as soon as the Aquino presidency ends.

The good news about the Philippines is being trumpeted at the WEF on East Asia. When the forum ends today, the nation must come away with a firmly rooted belief that economic growth can be sustained and made equitable only if there is no backsliding on reforms. This is true whether in disaster mitigation and prevention, which now emphasizes resilience, or in the battle against corruption.

 

Gov’t trims PPP completion estimate

Business World, 22 May 2014

By Alden M. Monzon

 

THE GOVERNMENT has dialed down its expected number of Public-Private Partnership (PPP) projects completed before the end of the Aquino administration in mid-2016.

PPP Center Executive Director Cosette V. Canilao said that the government has trimmed its initial estimate due to unforeseen delays in the bidding and the awarding of some projects.

Kasi na-delay tayo (It’s because we were delayed) in awarding the Orthopedic center as well as the Mactan airport,” Ms. Canilao toldBusinessWorld yesterday.

The P5.6-billion contract to modernize the Philippine Orthopedic Center hit a road block when activist groups composed of health workers and partylist organizations filed a petition against the project due to its supposed “privatization”.

The P17.5-billion Mactan-Cebu International Airport (MCIA) project, meanwhile, faced delays when losing bidder Filinvest-Changi Consortium filed a complaint against winning bidder GMR-Megawide Consortium, alleging conflict of interest.

According to Ms. Canilao, the government now expects these PPPs by mid-2016:

• the P20.1-billion Phases I and II of the PPP for School Infrastructure Project (PSIP);

• the P15.5-billion Ninoy Aquino International Airport Expressway;

• the P2-billion Daang Hari — South Luzon Expressway Link; and

• the P1.7-billion Automatic Fare Collection System (AFCS).

She added that the orthopedic center and MCIA projects would likely be halfway done before the next President steps in.

 

Officials reviewing papers for P10.2-B recla project

Sun Star Cebu, 23 May 2014

By Rebelander S. Basilan

 

THE Lapu-Lapu City Government wants the proposed 400-hectare reclamation project, which is estimated to cost P10.2 billion, to be implemented next year.

Mayor Paz Radaza said in a news conference that they are reviewing documents submitted by four investors interested to undertake the Mactan North Reclamation and Development Project (MNRDP).

“It will be a long process, but we hope the project will materialize next year,” she added.

The reclamation will be undertaken along the coast of Barangays Ibo, Buaya and Mactan.

The reclaimed land will host ports, warehouses, a golf course, information technology establishments, commercial centers, resorts and other tourism facilities. Investments in the area are expected to generate some 40,000 jobs.

No rush

But Radaza said the City is not in a hurry to implement the MNRDP, with a number of other big projects soon rising in the city.

These include the planned expansion of the Mactan Newtown, which is being developed by Megaworld Corp. and the expansion of the Mactan-Cebu International Airport.

The MNRDP was unveiled in 2008 but suffered a setback after it was opposed by the Regional Development Council, then chaired by former Cebu governor now Rep. Gwendolyn Garcia (3rd district), for supposedly not undergoing consultations with affected stakeholders.

The project regained momentum after President Benigno Aquino III included it in his list of priority projects to be undertaken through public-private partnership.

Radaza said the project will lead to economic development in the city. She pointed out, though, that only low- and medium-rise buildings can be constructed in the reclaimed land because of a policy restricting high-rise buildings in areas where there are airports.

Preparations

In 2009, the Department of Environment and Natural Resources granted the City an environmental compliance certificate to implement the project.

It has also formed a multi-sectoral team to monitor the City and the developer’s compliance with environmental regulations.

In February last year, environmentalists and a group of fishers called on the National Government to stop for at least 10 years all reclamation projects proposed by local government units, including the one in Mactan.

The Central Visayas Fisherfolk Development Center sent a resolution to the Office of the President calling for the moratorium on reclamation projects.

According to the group, there were seven reclamation projects lined up in Metro Cebu, and these could damage some 6,000 hectares of marine habitat and marine life.

The group said that apart from Mactan, reclamation projects are proposed in the cities of Naga, Talisay and Mandaue, and in the towns of Minglanilla and Consolacion.

 

 

PPP scheme crucial to meeting infra targets, says NEDA

InterAksyon, 27 May 2014

By Darwin G. Amojelar

 

MANILA – The National Economic and Development Authority (NEDA) said the government’s public private partnership (PPP) program is important to meet the country’s infrastructure target by 2016.

“The success of PPPs will ease the burden of the government providing infrastructure that will subsequently lower the costs of logistics, transportation, and doing business, in general,” Economic Planning Secretary and NEDA Director-General Arsenio Balisacan said in a statement.

The NEDA statement comes after several participants to last week’s World Economic Forum on East Asia said PPP alone may not hold the key to addressing the Philippines’ infrastructure bottlenecks.

Under the Philippine Development Plan 2011-2016 Midterm Update, the country is pursuing comprehensive and long-term strategies to bolster the country’s investment climate and competitiveness which include increasing infrastructure spending targeted at five percent of the GDP by 2016.

Since launching its PPP Program in 2010, the Aquino administration has awarded the following projects:

 

  • P2.01 billion Daang Hari-SLEX Link Road;
  • P15.52 billion NAIA Expressway;
  • P16.42 billion PPP for School Infrastructure Phase 1 and P8.80 billion Phase 2;
  • P5.69 billion Modernization of Philippine Orthopedic Center;
  • P17.52 billion Mactan-Cebu International AIrport Passenger Terminal Building; and
  • P1.72 billion Automatic Fare Collection System (AFCS).

 

The following projects are up for bidding:

 

  • P2.2 billion Integrated Transport System Project – Southwest Terminal Project;
  • P64.9 billion LRT Line 1 Cavite Extension Operation and Maintenance; and
  • P35.42 billion Cavite Laguna Expressway.

 

The PPP Program had suffered delays, with the government pushing back timetables because these were found to be financially unviable.

The NEDA had said the PPP initiative would require up to P739.78 billion in investments through 2016 to boost the economy and the country’s investment rate.

 

Dipolog to adopt public-private partnership

Manila Bulletin / Yahoo!, 25 May 2014

By Nonoy E. Lacson

 

Dipolog City – The Public-Private Partnership (PPP) Center recently conducted an Orientation-Workshop on PPP and Initial Project Structuring for the local government units (LGUs) here, aiming to update the feasibility study of the Galas Port Project in this city.

The two-day orientation workshop was facilitated by the Region 9 office of the National Economic and Development Authority (NEDA-9), and was hosted by the city government here.

The local government had requested the NEDA-9 to provide an update on the feasibility study of the Galas Port Project, and to determine the appropriate PPP scheme – should a private investor gets interested to partner with the LGU in completing and operating the port.

City Mayor Evelyn T. Uy said the PPPC staff, led by Director Eleazar Ricote of the Capacity Building and Knowledge Management Service, provided the necessary technical inputs.

Local government officials, including some members of the City Council here attended the forum.

NEDA-9 Director Teresita Socorro C. Ramos said the workshop started with a presentation of the Galas Port project, highlighting its contribution to regional development, followed by a discussion of the fundamentals of the PPP and the various issues confronting the LGU regarding the PPP scheme.

They also discussed the initial PPP structuring project preparation, and the viability indicators under the project study, Ramos said.

It was also learned that the PPPC staff facilitated a workshop on the templates that may be used by the city government here in pursuing its proposed PPP project.

 

Public-private partnerships crucial to infra program

The Manila Times, 26 May 2014

By Mayvelin Caraballo

 

The National Economic and Development Authority (NEDA) on Monday stressed the crucial role of public-private partnerships (PPP) in the success of the government’s infrastructure program, citing the need to raise infrastructure spending in order to boost the investment climate and improve the country’s competitiveness.

“The success of PPPs will ease the burden of the government in providing infrastructure that will subsequently lower the costs of logistics, transportation, and doing business in general,” NEDA Director General Arsenio Balisacan said.

Balisacan was speaking during the Kick-Off Meeting on the Capacity Development Technical Assistance (CDTA) for “Strengthening Public-Private Partnerships (PPPs) in the Philippines” held at the National Statistical Coordination Board in Makati City on May 22.

The CDTA is part of the current Joint Asian Development Bank (ADB)-Australia-Canada Review Mission in the country.

The group discussed ways to strengthen PPPs in terms of capacity building, project development and monitoring facility, coordination with development partners, and support for PPP reforms of the government.

Under the Philippine Development Plan 2011-2016 Midterm Update, the country is pursuing comprehensive and long-term strategies to bolster the country’s investment climate and competitiveness, which include increasing infrastructure spending targeted at 5 percent of GDP by 2016.

“This review exercise and subsequent third-party evaluation of the CDTA is crucial in our attempt to deepen our understanding of the PPP Program. We need to have a critical assessment of the program’s implementation and outcomes just to be sure that we create accountabilities, meet expectations and increase its impact,” Balisacan said.

Meanwhile, the PPP Center of the Philippines has partnered with various academic institutions nationwide in its effort to reach out to more local governments units (LGUs) that are considering the PPP option for their infrastructure and development projects.

In a statement, the PPP Center said it tapped state universities and colleges (SUCs) and private higher educational institutions (HEIs) to be their partners in providing PPP capacity building interventions at the local level.

The PPP Center noted that the partnership is part of the agency’s LGU-PPP Strategy following its mandated capacity building program, which started with the regional PPP briefings and workshops in 2011 and the development of an LGU PPP Manual in 2012.

PPP Center executive director Cosette Canilao stressed that this is consistent with the PPP Center’s commitment to expand its reach and to share its resources to facilitate properly prepared projects at the local level.

“We wanted to engage these credible and apolitical academic institutions given their inherent potential to assist LGUs and their understanding of local conditions and realities. This will also establish the presence of PPP resource institutions all over the country,” Canilao said.

The PPP Governing Board noted the increasing demand for local governments to be given project-focused assistance in the light of various local project initiatives that could have been better pursued as PPP.

Several SUCs and HEIs nationwide have been selected based on their institutional capacity and resources to deliver technical assistance to local governments in their respective jurisdictions, the PPP Center said.

To date, the PPP Center has already formalized said partnerships through memoranda of agreement with the University of the Philippines (UP)-Planning and Development Research Foundation Inc. of the UP School of Urban and Regional Planning, and the Dela Salle University’s Jesse M. Robredo Institute of Governance.

Both have identified faculty lineup who will be trained and capacitated by the PPP Center on the provision of PPP competency-building interventions to selected local governments, it said.

The PPP Center said there are 57 infrastructure projects under the PPP program that are in various stages of implementation.

So far, contracts have already been awarded for seven PPP projects that have a combined cost of P62.6 billion. These projects are: Daang Hari-SLEX Link Road Project, PPP for School Infrastructure Project Phase 1, NAIA Expressway Project, PPP for School Infrastructure Project Phase 2, Modernization of the Philippine Orthopedic Center, Automatic Fare Collection System, and the Mactan-Cebu International Airport Passenger Terminal.

 

PPPs crucial in attaining gov’t infra spending target by 2016 – NEDA

NEDA, 26 May 2014

 

MANILA—The National Economic and Development Authority (NEDA) stressed the crucial role of public-private partnerships (PPPs) in the success of the Philippine government’s infrastructure program.

This statement was made during the Kick-Off Meeting on the Capacity Development Technical Assistance (CDTA) for “Strengthening Public-Private Partnerships (PPPs) in the Philippines” at the National Statistical Coordination Board, Makati City in May 22, 2014.

The CDTA is part of the current Joint Asian Development Bank (ADB)-Australia-Canada Review Mission in the country. The group discussed ways to strengthen PPPs in terms of capacity building, Project Development and Monitoring Facility, coordination with development partners and support for PPP reforms of the government.

“This review exercise and subsequent third-party evaluation of the CDTA is crucial in our attempt to deepen our understanding of the PPP Program. We need to have a critical assessment of the Program’s implementation and outcomes just to be sure that we create accountabilities, meet expectations and increase its impact,” Balisacan said.

Under the Philippine Development Plan 2011-2016 Midterm Update, the country is pursuing comprehensive and long-term strategies to bolster the country’s investment climate and competitiveness which include increasing infrastructure spending targeted at 5.0 percent of the GDP by 2016.

“The success of PPPs will ease the burden of the government providing infrastructure that will subsequently lower the costs of logistics, transportation, and doing business, in general,” Balisacan said.

Officials in the meeting were NEDA Deputy Director-General Rolando Tungpalan, PPP Center Executive Director Cossette Canilao, Asian Development Bank (ADB) Country Director Richard Bolt, ADB PPP Specialist Aziz Haydarov, SEPF/ADB Director Shigeko Hattori, Australia’s Department of Foreign Affairs and Trade representative Daniel Featherstone, and Canada’s Department of Foreign Affairs, Trade and Development representative Luke Myers.

 

 

 

Inclusive growth pushed

The Philippine Star, 23 May 2014

By Aurea Calica

 

MANILA, Philippines – Southeast Asian leaders voiced their commitment to inclusive growth during the World Economic Forum (WEF) on East Asia yesterday as they cited the importance of investing in people to improve lives and protect resources.

Inclusive growth has been President Aquino’s goal since becoming president in 2010.

“It is a truly symbiotic relationship: As we empower our people to improve their lot in life, they empower us to battle the vested interests that remain in society,” Aquino said during the opening plenary of the forum also attended by Indonesian President Susilo Bambang Yudhoyono, Vietnamese Prime Minister Nguyen Tan Dung and Myanmar Vice President U Nyan Tun in Makati City.

“Ultimately, it is our countrymen who give us the confidence to continue blazing the path of reform,” Aquino said.

The four leaders expressed optimism about the future of the region despite the enormous challenges that they admittedly would have to hurdle to further improve their countries’ economies.

Aquino said the biggest resource of the Philippines now is its people, who have been the principal players in turning points in the country’s history.

He stressed the collective efforts of the Filipino people have “allowed us to achieve national redemption and progress” despite the “worst efforts of our leaders” at times.

Aquino cited the restoration of democracy through the bloodless People Power Revolution in 1986 and the elections in 2010 during which Filipinos took a stand against decades of neglect, corruption and impunity by giving his administration a mandate to initiate reforms.

He emphasized that good governance is good economics and that large-scale reforms in every aspect of society would only take root if inclusive growth is achieved.

The President noted that reforms have made it harder for unscrupulous officials to tinker with taxpayers’ money and ensured punishment against “all those who committed wrongdoing – regardless of their power, wealth, or influence.”

The task, however, is not that easy, he pointed out.

“As you may have guessed, tangling with these very wealthy individuals and sectors with vested interests was not an easy task. But those in our administration were not shaken: Dismantling the culture of corruption was a promise we made to the people,” he declared.

“If we truly wanted to improve the lives of our people, we could not possibly shirk from this challenge. We had to take on all those who had a misplaced sense of entitlement – who believed that they had more rights than their fellow Filipinos,” Aquino said.

Proof of his administration’s determination to make wrongdoers – even those in high places – accountable were the hospital arrest of his predecessor and now Pampanga Rep. Gloria Macapagal-Arroyo who is facing corruption charges, and the ouster of then chief justice Renato Corona for failing to declare over 98 percent of his wealth in his statement of assets, liabilities and net worth.

“It is evident: Our country is in the midst of a dramatic turnaround in every sector, and we are intent on continuing this trend and making certain that each and every Filipino enjoys the full dividends of progress,” he said.

All signs point upward

Despite the expected rise in population in the coming years, opportunities still abound for the country to reach or even breach economic growth targets, he said.

“All signs for the future are pointing upwards: According to United Nations population projections, in 2015, we will be hitting a ‘demographic sweet spot’ that will last approximately for the next 35 years,” Aquino said. “Countries in such conditions post an average yearly growth of 7.3 percent over the next 10 years. We are incredibly poised to take full advantage of the situation, having made strategic investments in education and skills training, which will equip our future workforce with the correct skills to fill the jobs that are being and will be created,” he maintained.

He stressed that it’s ultimately the people who would propel the country to inclusive growth and global competitiveness.

“This is why inclusive growth is not just a mantra for us; it is the yardstick by which we measure any government undertaking. After all, it is a participatory public – one that is empowered, and one that gives government their trust and confidence – and a government that never misplaces that trust that ultimately makes equitable progress possible,” Aquino said.

He also said the country was able to survive its “darkest moments” through the “patriotism, the willpower, and the wisdom of the Filipino people.”

He said the country now has public servants “fully committed to harnessing their power for good – for the betterment of the nation” and help sustain the economic momentum.

Aquino said this has enabled the nation “to go from success to success, and truly make waves throughout our archipelago, in the international community, and in the vast, immeasurable ocean of history.”

Resources unleashed

With reforms freeing significant amounts of resources, the administration was able to undertake bigger development projects and invest more in social services.

He cited the expanded conditional cash transfer program and the adoption of the K-12 scheme to make the educational system at par with global standards.

“There is a simple idea behind all these initiatives: Our people are the be-all and end-all of this government, and we are not content with waiting for the benefits of growth to just trickle down the social pyramid,” he said.

“This is why, from the beginning of our term, most of our efforts have been targeting the poorest of the poor. This year, however, we have expanded the scope of our efforts and are now likewise targeting those who are deemed ‘near poor,’ or those who are one catastrophic illness or one natural disaster away from going below the poverty threshold,” he added.

He said the country’s achievements have even attracted the attention of major credit ratings agencies.

He said the WEF itself has given the country a positive outlook.

“And we are set to build on our momentum and become even more competitive, as our manufacturing sector continues its revival, and as we continue to increase our infrastructure spending – more than doubling it, from around P200 billion in 2011 to more than P400 billion in 2014,” he said.

Leaders’ consensus

Indonesian President Yudhoyono, who arrived in the country yesterday for a state visit and to participate in the WEF, said Manila’s hosting of the event “is a solid vote of confidence for this country’s remarkable economic achievements.”

“We live in an extraordinary era. Asia is in the midst of a revolution. This revolution is quite a different kind than the explosive 20th century revolution, but equally if not more powerful,” he said.

Vietnamese Prime Minister Dung said the holding of the WEF on East Asia in Manila “indicates the interest of the international business community and the Philippines’ reform efforts and fast growth in the recent years.”

Dung also lashed out at China’s aggressive moves in regional waters, saying full development cannot be achieved without stability.

“Development is not possible without peace and stability. Vietnam always strives for peace and stability in Asia Pacific, and is optimistic about the future prospects and cooperation development in the region,” he said.

Klaus Schwab, founder and executive chairman of the WEF, praised the Philippines for its rebound despite being hit by disasters, particularly Super Typhoon Yolanda.

“We are indeed moving forward in every step for the inclusive, equitable, and sustainable development. It’s a long way to go; however, we are moving forward. I am confident that this situation will bring inspiration to understand the importance of promoting growth with sustainable development,” said Myanmar vice president U Nyan Tun.

 

Philippines to pursue more reforms in next 2 years

The Asset, 25 May 2014

 

While quite a number of governance reforms had already been put in place over the last four years, the Philippines’ Aquino administration is bent on implementing more.

The country’s finance secretary Cesar V. Purisima said the administration will continue to take advantage of the political capital of President Benigno Aquino III to pursue additional reforms in his remaining two years in office.

This is to help ensure the good governance agenda is institutionalized and sustained beyond 2016.

“The people have come to know the impact of good governance on their lives as the economy makes huge strides,” Purisima said in one of the sessions of the 23rd World Economic Forum on East Asia (WEF-EA), which the Philippines recently hosted.

As the public appreciates the benefits of good governance, he said, the administration is hoping for the swift passage in Congress of bills backed by the executive branch.

Some of these legislative measures are the amendment of the charter of the Philippine central bank, the streamlining of customs procedures, the rationalization of fiscal incentives, and the easing of restrictions on foreign investments.

The bill seeking to amend the regulator’s charter is aimed at providing the monetary authority with more flexibility in managing liquidity in the economy. It is also aimed at giving the central bank more teeth in regulating banks.

One of the key provisions in the proposed bill seeks to allow the central bank to trade its own bonds in the capital market. Another seeks to require banks to secure prior approval of the regulator before changes in their ownership structure take place. This is to ensure the financial entities are managed by qualified people.

The bill seeking to streamline customs procedure is aimed at helping the bureau of customs in its fight against smuggling, while the one seeking to rationalize fiscal incentives seeks to lift unnecessary tax perks to boost revenue collection of the state.

The bill easing restriction on foreign ownership is aimed at boosting investments and job creation, and increasing incomes.

So far, some of the key reforms implemented in the first four years of the Aquino administration include the Sin Tax Reform law that raised levy on alcohol and cigarettes, the Reproductive Health law, the tighter campaign against smugglers and tax evaders, and the reform in the national budget process to have integrity in handling of public funds, among others.

Moreover, infrastructure development has been accelerated under the Aquino administration.

Purisima said that out of over 50 projects included in the Public-Private Partnership (PPP) programme, seven have been awarded to winning bidders.

These projects are the Daang Hari-SLEX Link Road, the first and second phases of the PPP for school infrastructure project, the Ninoy Aquino International Airport (NAIA) Expressway Project, the modernization of the Philippine Orthopedic Center (MPOC), the automatic fare collection system, and the Mactan-Cebu International Airport passenger terminal building.

Purisima said that with the continued pursuit of reforms, the Philippines, which has become one of the fastest growing economies in Asia, is expected to generate more gains in the economic and political front.

 

Schools tapped to help LGUs with PPPs

Business World, 25 May 2014

By Alden M. Monzon

 

THE PHILIPPINE government has tapped higher educational institutions to help boost the capacity of local government units (LGUs) to handle public-private partnership (PPP) projects.

“We wanted to engage these credible and apolitical academic institutions, given their inherent potential to assist LGUs and their understanding of local conditions and realities. This will also establish the presence of PPP resource institutions all over the country,” Undersecretary Cosette V. Canilao, Executive director of the PPP Center, said in a statement dated May 22.

The PPP Center said that it has entered into a formal agreement with the University of the Philippines Planning and Development Research Foundation (UP-Planades) and the Jesse M. Robredo Institute of the De La Salle University to help conduct the capacity building program.

LGUs as well as national agencies have called for more capacity building as the PPP model has increasingly become the favored option to fund infrastructure and development projects, according to the PPP Center.

Ms. Canilao said that the agency has arranged for the necessary personnel from both UP-Planades and the Jesse M. Robredo Institute to undergo appropriate briefing and training next month.

“I think the schedule will be this June,” Ms. Canilao told BusinessWorld via telephone.

She also mentioned that a PPP manual for national line agencies is in the works and will be published soon.

“By second or third quarter — June or July,” she said, when asked when the manual would be ready.

As of last week, there are a total of 57 PPP projects in the government’s pipeline.

 

DPWH finalizing agreements for Cavite-Laguna expressway

Rappler, 25 May 2014

 

DPWH is finalizing the MOA for the interconnection of Calax with the Manila-Cavite expressway

MANILA, Philippines – The proposed Cavite-Laguna Expressway (Calax) project will soon be underway, with the Department of Public Works and Highways (DPWH) finalizing agreements with various companies for the P35.4 billion project.

In Supplemental Bid Bulletin No. 37, DPWH undersecretary Eugenio Pipo Jr. said the agency is finalizing the MOA with the Cavitex Infrastructure Corporation regarding the interconnection of the Calax with the Manila-Cavite Expressway.

“The DPWH is in the process of finalizing the MOA with the Cavitex Infrastructure Corp. regarding the interconnection of Calax with the Cavitex,” he stated.

“DPWH shall ensure the interconnection of Calax with Mamplasan Interchange and will secure the necessary agreements and consent from Greenfield Development Corp., South Luzon Tollway Corp., and the Toll Regulatory Board.”

This is the third public private partnership (PPP) expressway project under the Aquino administration, following the P2 billion Daang Hari-SLEX link project scheduled for completion by June 2015 and the ongoing P15.5 billion Ninoy Aquino International Airport (NAIA) expressway project.

Last May 19, the agency discussed the proposed changes in the alignment of the project with the prequalified bidders:

  • The Ayala-led Team “Orion” composed of the consortium of AC Infrastructure Holdings Corporation, Aboitiz Land Inc., and Macquarie Infrastructure Holdings (Philippines) Pte. Ltd.
  • Metro Pacific Investments Corporations’s MPCALA Holdings Inc.
  • San Miguel Corporation’s Optimal Infrastructure Development Inc.
  • Malaysia’s Alloy MTD Philippines

Under the revised DPWH guidelines, bidders are required to submit a bid either as a concession payment to the government or viability gap funding (VGP) not exceeding P5 billion.

The original guidelines stated the basis of the bid was the toll fee per kilometer for Class 1 vehicles in 2018.

Under the new guidelines, bidders who would offer a premium instead of asking for a subsidy would likely win the project; as the government is reluctant to pay the subsidy to generate more savings.

For the third time, the DPWH also deferred the submission of bids for the project to June 2 instead of May 21 to give bidders enough time to prepare their documents.

The proposed four-lane expressway is expected to provide a faster and more convenient route to or from Metro Manila to the Calabarzon region (Cavite, Laguna, Batangas, Rizal, and Quezon). – Rappler.com

 

Independent body needed to regulate PPP

Business World, 21 May 2014

By AJMS and Alden M. Monzon

 

WORLD Economic Forum (WEF) experts noted that the Public-Private Partnership (PPP) program of President Benigno S. C. Aquino III — touted by his administration as an efficient solution to completing infrastructure projects — is far from perfect.

“The government should actively pursue establishing a robust legal and institutional PPP framework, with an independent regulatory function and a trusted dispute-resolution process to enhance regulatory commitment,” Pedro De Almeida, head of Infrastructure and Urban Development Industries, World Economic Forum, told BusinessWorld in an e-mail.

Mr. De Almeida added that PPP is “not a panacea to all the infrastructure challenges,” and that the government should select the best delivery model for infrastructure projects after considering “key criteria” such as funding basis, popular perception, and market competition.

Hanseul Kim, Associate Director and Head of Engineering and Construction Industry of the World Economic Forum, said that the ideal setup would be to separate the functions of the agencies involved in PPP projects.

“The point here is to establish entities with separate authorities (i.e. policy-making, contracting, monitoring, and dispute resolution) with a clear governance structure in order to avoid any conflict of interests, and to have clear responsibilities and competencies,” Mr. Kim said in a separate e-mail.

“This way, authorities can be independent from the political influence or other externalities, and be able to carry out long-term infrastructure plans, often over 10-20 years, that generally exceeds more volatile political duration,” he added.

In the Philippine context, the contracting, implementation and policy-making functions reside with several different national line agencies and government departments.

The reviewing and approving bodies, depending on the costing of the project, are the National Economic and Development Authority (NEDA) Board, the Investment Coordination Committee (ICC) and the Local Development Council.

The NEDA Board is chaired by the President of the Philippines, with the Socioeconomic planning Secretary as Vice-Chairperson, and counts as members the secretaries of Agriculture; Budget and Management; Energy; Environment and Natural Resources; Finance; Interior and Local Government; Public Works and Highways; Science and Technology; Trade and Industry; and Transportation and Communications.

Other members include the Vice President of the Philippines, the governors of the Autonomous Region in Muslim Mindanao and the Bangko Sentral ng Pilipinas — the country’s central monetary authority — as well as the chairman of the Metro Manila Development Authority.

The PPP Center, established on Sept. 9, 2010 by Executive Order No. 8, is the attached agency of the NEDA that monitors projects and coordinates with implementing agencies and other concerned parties.

Its previous incarnation was the BOT Center, established by law in 1990 as an attached body of the Department of Trade and Industry.

Dispute resolution, however, is handled either by each implementing agency’s Special Bids and Awards Committee (SBAC) — in which the PPP Center has observer status — or via proper filing with the courts.

This is separate from the other bids and awards committees of agencies, which are covered by Republic Act (RA) 9184, or the Government Procurement Reform Act.

NEDA Undersecretary Cosette V. Canilao, the executive director of the PPP Center, agreed that regulatory agencies should not be a contracting party in government projects in order to preserve their independence.

She also mentioned that while there are government agencies sharing some of the functions, they are currently trying to change the system through amendments in RA 7718, or the Build-Operate-Transfer (BOT) law.

“There is an overlap for some regulatory and contracting parties. That is being proposed to be separated in the BOT law amendments,” Ms. Canilao said in an e-mail.

Ms. Canilao added that they are planning to institutionalize the role of the PPP Center as the secretariat for the ICC committee and the NEDA board to complete its role as an effective facilitator.

LEGAL CHALLENGES
“Infrastructure PPP projects face a number of challenges over their life cycle, such as regulatory failures, public budget risk, restricted control and flexibility on the assets under the government, lack of transparency in business and renegotiation of contract terms, and these challenges can significantly alter the feasibility of projects,” Mr. De Almeida said.

He added that the decades-long lifespan of some projects can compound investors’ “perceived risks” for returns, noting that in emerging markets, about 6% of PPP projects have experienced distress or cancellation, and over 50% have involved subsequent renegotiation.

Department of Transportation and Communication (DoTC) spokesman Michael Arthur C. Sagcal said that legal challenges arise from private-sector bidders’ desire to expand the scope, and that changes to aspects of bids during the auction process, such as the various terms of reference, are due to government factoring in the bidders’ expertise.

“We also learnt from LRT-1, where DoTC crafted the terms of the LRT-1 project to be more advantageous to government, and we found out that the bidders were actually being very frank when they told us we should change some of the terms,” adding that the auction failed because the financial terms made “little sense” to them.

The project, known as the Light Rail Transit Line-1 Cavite Extension, will be bid out on May 28 after a failed attempt in August 2013, where only one of four pre-qualified bidders made a conditional offer.

The government has since bundled rights to the design for a Common Railway Station at the northern end of EDSA with the project to make it palatable to bidders.

The Aquino government has so far awarded seven projects costing a total of some P62.6 billion under its flagship PPP Program, but it appears that all, save for two or three, are not foolproof legally.

Of the seven awarded, only the school building projects — bid out in two phases — and the NAIA Expressway project have been spared from protests by the losing bidders, or from legal suits.

The awarding of the P1.72-billion Automatic Fare Collection System (AFCS) was questioned both in court by a consumer group and at the DoTC level by the losing bidders.

Awarding of the P17.52 billion Mactan-Cebu International Airport (MCIA) Passenger Terminal Building project also hit snags after second highest bidder Filinvest Development Corp.-Changi Airports International MENA Pte. Ltd. (FDC-CAI) questioned top bidder’s, the tandem of GMR Infrastructure, Ltd.-Megawide Construction Corp., financial capability and raised conflict-of-interest issues.

Questions from the San Miguel-Citra group, particularly SLEx concessionaire South Luzon Tollroad Corp. (SLTC), meanwhile stalled the completion of the Daang Hari toll road, which was awarded to Ayala Corp. in 2011.

A petition, meanwhile, was filed with the Supreme Court seeking to stop the privatization of the Philippine Orthopedic Center (MPOC), also a PPP.

“If done correctly, the PPP model can offer significant advantages to the governments, as well as business and society. By better allocating capacity, risks and incentives to the stakeholders, the model can improve project selection, accelerate infrastructure provision, optimize the costs and utilities throughout the asset’s life cycle, and bring more possibility for innovation,” Mr. De Almeida noted.

 

Moody’s: New upgrade for Phl possible

The Philippine Star, 21 May 2014

By Kathleen A. Martin

 

MANILA, Philippines – A senior official of Moody’s Investors Service hinted yesterday at the possibility of the Philippines securing another credit rating upgrade soon.

“Last year, when we upgraded the Philippines to investment grade, we also assigned a positive outlook so I think that was a pretty clear signal that we thought that further adjustments to credit (rating) are forthcoming within the next 12 to 18 months,” Christian de Guzman, vice president and senior analyst at Moody’s, said.

Moody’s in October last year raised the country’s credit rating to Baa3 from Ba1 and assigned a positive outlook.

“We’re still fairly bullish on the way things are going here,” De Guzman said but noted the credit rater is assessing how the country fares as compared with other economies graded with the same rating.

“What we’re looking for… our ratings are also somewhat ordinal ratings, that is, we’re comparing one country versus another through this ratings scale. So what this means is we’re looking to see if the Philippines continue to outperform other countries with the same rating,” De Guzman said.

Moody’s rating action last year was on the back of the Philippines’ robust economy, fiscal and debt consolidation, and political stability and improved governance.

De Guzman said that the country’s tax efforts will have to be improved as the share of tax revenues to total GDP remains low.

“It is a fact that the tax revenue as a share of GDP in the Philippines is amongst the lowest among investment grade countries so there is still room for improvement. But at the same time, you can also say that the government is not spending beyond its means so even though tax revenue as a share of GDP is low, expenditures as a share of GDP is also low,” de Guzman said.

But the recent efforts being undertaken by the new Customs Commissioner to collect more revenues is a credit positive for the Philippines, the debt watcher said.