Posts Tagged ‘PPP’

Firms urge gov’t to maintain PPP momentum as 2016 looms

The private sector is gaining confidence in public-private partnership projects as the government mulls joining a China-led development bank to help narrow the infrastructure gap

MANILA, Philippines – The new administration in 2016 would have to learn a lot of the lessons from how the current administration handled public-private partnerships (PPPs), and this would take a few years, said Ramon Ang, president of San Miguel Corporation (SMC).

“To maintain momentum, I hope we bid out as many of the additional PPP projects planned as we can before the current administration ends,” Ang said in an infrastructure discussion at the Euromoney Investment Forum on March 24.

Ang said on March 23 during the SLEX-TR4 project briefing that the conglomerate is setting aside billions to put the country’s toll roads on a par with those in neighboring countries in Asia.

“We look at infrastructure as an opportunity to participate in the growth of our country. Quality infrastructure will change and impact lives,” Ang said.

The Aquino administration was initially slow but the sizes of the projects that are being bid out are growing – 9 are underway with 16 to be rolled out, said Jorge Consunji, president of DM Consunji.

“We welcome this and we hope it will continue,” Consunji said.

Consunji’s DMCI was awarded the civil works contract to complete within 18 months the elevated guideway or viaduct for the Light Rail Transit line 2 project.

Vote of confidence

The private sector’s increasing confidence in the PPPs played a significant part in the momentum.

But there are generally no power projects among the PPPs, said Eduardo Francisco, president and chief executive officer of BDO Capital and Investment Corporation.

This is because private firms can do power projects by themselves, supported by merchant banks, Francisco explained.

“Transitioning power projects to PPPs is the same – proponents are bidding without any government guarantees for profit. So the banks have gotten themselves comfortable supporting these projects,” Francisco said.

Banks are also coming up with a “staple financing,” which pre-analyzes a project and finances whoever the winning bidder is as long as it is pre-qualified, he explained.

BDO has done it for some projects and is looking at doing the same for the many projects that are coming along, Francisco confirmed.

The growing confidence the private sector has in the PPP projects was reiterated by Department of Public Works and Highways (DPWH) Secretary Rogelio Singson.

“We offered viability gap funding for all the toll roads we bid out, but no private firm took it so it’s an indication of the confidence the private sector has in these projects,” Singson said.

He also acknowledged that initially, the unsolicited mode as a method of getting PPPs bid out caused some delays, like that experienced in the North Luzon and South Luzon expressways (NLEX-SLEX) connector road project.

The government still needs to address right-of-way issues. But success would be evident if all of the PPP projects that DPWH initially lined up are bid out.

“We hope to have the remainder bid out by the middle of this year. If we close them all, we’re done as far as DPWH is concerned,” Singson confirmed.

To date, DPWH set July 7 for the issue of notice of award to the winning bidder for the controversial Cavite-Laguna expressway project.

Asian Infrastructure Investment Bank

The current administration is also mulling joining the China-led Asian Infrastructure Investment Bank (AAIB) to help bridge the infrastructure gap in the country.

The government is gathering information on the AIIB before it makes its final decision by June, Finance Secretary Cesar Purisima said at the sidelines of the forum.

“We are part of several meetings, but the President (Benigno S. Aquino III) has not yet made a decision whether we will join or not,” Purisima said.

The Philippines, along with other countries, signed in October a non-binding agreement to become a founding member of the $50-billion multilateral institution that would finance infrastructure projects in the Asia-Pacific region.

Switzerland and Luxembourg were the latest nations to declare their intention to join the institution that is viewed by some to be a rival to the Manila-based Asian Development Bank (ADB), as well as the World Bank.

Japanese officials had previously expressed concern about the new bank’s transparency standards, while the United States is reportedly fiercely opposed to the AIIB.

Despite such, Purisima believes that the AIIB is “financial and economic in nature,” and has no relation with the territorial conflict between China and the Philippines over the West Philippine Sea. – Rappler.com

Rappler, 25 March 2015
By Chris Schnabel
 

PH moderates ASEAN Integration Summit 2015 infra session

PRESS RELEASE
26 March 2015
 

 

Key government and private sector leaders in the Southeast Asian Region convened at the first Asian Legal Business (ALB) ASEAN Integration Summit 2015 in Singapore last March 26.

According to ALB website, the summit aims “to forge partnerships and devise solutions on the legal, regulatory, and business challenges of the ASEAN Economic Community (AEC)”.

One of the important sessions in the summit was moderated by the Public-Private Partnership Center Deputy Executive Director Eleazar E. Ricote. The session discussed the importance of physical connectivity as pre-requisite for shared economic growth and the infrastructure development requirements towards an increased intra-regional trade and regional demand.

It also tackled the role of regional infrastructure cooperation in growth and integration and the various projects for improved and integrated roads, railways, airways, ports and energy and telecommunication networks for the ASEAN.

The summit provided a venue to discuss the different challenges and opportunities for this year’s ASEAN Integration. One of topic highlights to accelerate the necessary private investment in the region through overcoming challenges on public-private partnership (PPP).

Last December 2014, the Philippines hosted the first ASEAN PPP Forum in Manila. It was a significant event that allowed ASEAN member states to share PPP experience, discuss proposed PPP guidelines, and explore strategies to attract the private sector to invest in infrastructure in the region. Infrastructure development is seen as a vital component to a stronger ASEAN integration. And public-private partnership is considered to be one of the solutions to the infrastructure gap in the region.

Also, part of the objectives of the ASEAN integration is the freer flow of goods, services, investment, and skilled labor. Thus, ALB gathered public and private sectors to exchange views and opinions on the various transformations required in all aspects of doing business across ASEAN member states.

Aquino to investors: Bet on PH

President Benigno Aquino 3rd called on investors to place their money on the Philippines as he boasted that his administration is “making history” in terms of economic gains and promising that greater things are yet to come.

Speaking at the Euromoney Philippine Investment Forum held in Makati City, Aquino cited the economic gains during his term, ticking off other accomplishments such as record foreign direct investments, improved global competitiveness and credit rating upgrades.

The president said these economic gains “have led to even greater optimism for our country’s prospects.”

“To those who are here to take a closer look at the Philippines, I invite you: Bet on the Filipino people, and discover for yourself how it’s more fun and more profitable to do business in the Philippines,” he said.

“If, on the other hand, you decline this invitation, perhaps I may pose a question, how confident are you that you will never say: we missed such a good opportunity?” he added.

“The tremendous amount of confidence the global community has developed for the Philippines is incredibly gratifying, especially considering that, not too long ago, we were known as the ‘Sick Man of Asia’,” Aquino said. “However, our administration remains hard at work so that we can maximize every opportunity available to us, and I think many of you will agree with me when I say: You ain’t seen nothing yet.”

The president said the Philippines is “poised for even more success” and “there is indeed much reason for optimism.”

“These past few years, our people have proven themselves to the world. But having been exposed to the skill, talent, loyalty, and resilience of so many of our countrymen, I know that we have only scratched the surface,” he said.

Aquino said his administration allotted a bigger budget for the Department of Public Works and Highways from P165 billion in 2010 to almost P570 billion in 2015, and to have infrastructure spending comprise five percent of GDP by 2016.

He said his administration is also focused on accelerating infrastructure development through the Public-Private Partnership program (PPP).
Under his watch, Aquino said nine projects have been awarded, 16 are in the process of being bid out, and over 30 other projects are in various stages of development.

He said the government is focused on developing the power supply situation, noting that “48 committed incoming power projects with 4,693.6 megawatts of power are expected to come online between now and 2018.”

“Out of these 48 power plants, 21 will be from renewable energy, in line with our goal of diversifying our energy mix and building a power supply that is as clean and reasonably priced as possible,” the president said.

“As you can see, we are determined to continue treading green pathways to development, and to maintain our status as one of the driving forces for clean energy in the region,” he added.

President Aquino also addressed the realization of the Asean Economic Community (AEC) expected by the end of the year, saying Philippines “is taking every possible measure to take on a more dynamic economic role in the region.”

“Our compliance rate in the AEC scorecard in terms of our commitments to AEC 2015 is now at around 86 percent. I have already signed crucial laws that will help us meet our financial integration commitments, including an Act Strengthening the Insurance Industry and the Act Allowing the Full Entry of Foreign Banks in the Philippines,” he said.

For the remainder of his term, the government “will continue expanding the range of financial tools available in our country, so we can maximize the advantages of integration,” Aquino added.

He also discussed the empowerment of micro, small, and medium enterprises (MSMEs) that will “establish economic dynamos in even the most remote parts of the nation,” which could become “one of the strongest and most direct tools towards inclusive growth.”

To accomplish this, he said the SME Roving Academy has conducted more than 1,871 training sessions focused on skills training, product pricing and costing, business planning, entrepreneurship development, and financial management, which has helped more than 85,000 potential and established entrepreneurs.

Aquino said he also signed the Go Negosyo Act that will build business centers that will offer MSMEs a full range of services, including business registration processing, training sessions and seminars, and the establishment of market linkages.

“By the end of this year, we intend on putting up 100 of these establishments across the archipelago,” the president said.
“Rest assured, our administration will do everything in its power to build on our economic momentum by continuing to invest in the Filipino people,” he added.

The Manila Times, 25 March 2015
By Catherin Valente
 

PNoy to investors: Philippines poised for even more success

MANILA, Philippines – “You ain’t seen nothing yet.”

This was President Benigno Aquino III’s message to investors on Tuesday as he boasted the country’s economic growth under his watch, claiming that the best is yet to come.

Speaking at the Euromoney Philippines Investment Forum in Makati, Aquino cited the economic achievements during his term including the country’s new all-time record in foreign direct investments, improved global competitiveness rankings and the credit rating upgrades.

“The tremendous amount of confidence the global community has developed for the Philippines is incredibly gratifying, especially considering that, not too long ago, we were known as the ‘Sick Man of Asia’,” Aquino said.

“However, our administration remains hard at work so that we can maximize every opportunity available to us, and I think many of you will agree with me when I say: You ain’t seen nothing yet,” he added.

Aquino told investors that the country is “poised for even more success” and that “there is indeed much reason for optimism.”

Despite the country’s economic gains, Aquino said that the “limitless potential” of Filipinos has yet to be “sufficiently measured.”

“I know that we have only scratched the surface.. To those who are here to take a closer look at the Philippines,” Aquino said.

“I invite you: Bet on the Filipino people, and discover for yourself how it’s more fun and more profitable to do business in the Philippines,” he continued.

In his speech, Aquino did not fail to take a swipe at the Philippine media for not trumpeting the country’s economic achievements.

“There has been so much good news these past few years, and yet, this good news has often been relegated to the back pages of our broadsheets. I must admit: our campaign to change the mindset that negativism sells is still a work in progress,” Aquino lamented.

The Philippine Star, 24 March 2015
By Louis Bacani
 

Philippines spending more on infrastructure, Aquino tells investors

MANILA – President Benigno Aquino III on Tuesday reiterated the government’s commitment to put in necessary infrastructure that would ensure the sustained growth of the domestic economy.

In his speech during the Euromoney-hosted Philippines Investment Forum at The Peninsula Manila, the President said nine projects have been awarded within his term, with 16 in the pipeline.

He said the government is committed to attain its goal of increasing infrastructure spending to five percent of gross domestic product (GDP) by 2016 to sustain the high level of economic growth that the county enjoys.

He said domestic growth averaged 6.3 percent from 2010 to 2013, as against the 4.3 percent during the previous administration.

He, however, stressed that more will still be done especially on infrastructure and power generation.

”Infrastructure is one of the sectors that has greatly benefited from our drive to become more competitive,” he said, attributing this to the Public-Private Partnership (PPP) Program.

On the power sector, Aquino said the country has about 15,665 megawatts (MW) of dependable capacity, which is enough to meet the highest projected demand of about 10,222 MW for 2015.

”But we cannot be content with this, especially with the potential power supply gap in Luzon this summer, due to the threat of El Niño and rehabilitation of the Malampaya gas field,” he said.

Thus, the government is expediting the rehabilitation of the 300-MW Malaya Thermal Power Plant Unit 1 to help increase Luzon’s power supply.

The government also has asked the National Grid Corporation of the Philippines (NGCP) “to optimize the dispatch of hydropower plants, which will generate additional energy supply during peak hours,” the President said.

He said the Interruptible Load Program (ILP), which is being undertaken with the private sector, has about 688.67 MW of available capacity, which can be tapped when demand rises during the summer months.

Under ILP, customers of distribution utilities (DUs) that have generator sets will be allowed to augment capacity when electricity supply. These customers will then be paid for the fuel used in running their own gensets and on the depreciation of the equipment.

The President said 48 committed projects with a projected capacity of 4,693 MW are scheduled to go online between this year and 2018, ensuring that additional demand for power will be addressed.

He said 21 of these projects use renewable energy (RE), which is in support to the government’s bid to tap alternative sources.

”As you can see, we are determined to continue treading green pathways to development, and to maintain our status as one of the driving forces for clean energy in the region. As I have said before, our vulnerabilities to climate risk should not keep us from exerting maximum efforts in pursuing non-conventional sources of energy. We are hopeful that the rest of the world will see the value in such a strategy,” he added.

InterAksyon, 24 March 2015
By Philippine News Agency
 

Aquino vows increased spending for infrastructure, power projects until 2016

PRESIDENT Aquino on Tuesday committed to further increase his administration’s multibillion-peso annual spending for various infrastructure and power projects in the remaining 15 months of his six-year term, which ends on June 30 next year.

Speaking before business leaders attending the Philippine Investment Forum at the Peninsula Hotel in Makati City, Mr. Aquino also vowed to continue pouring public funds to other government projects intended to create more jobs.

President Aquino announced his term-ending plans, as Moody’s on Tuesday increased its Philippine growth forecast for the year at 6.6 percent.

The President affirmed that infrastructure remains one of the sectors that greatly benefited from the government’s drive to become more competitive, acknowledging that, through the efforts of the Department of Public Works and Highways (DPWH), “corruption has been vastly minimized, if not eradicated” and projects are now regularly completed ahead of time and under budget, including those started by past administrations.

“The good news is that the DPWH’s budget has more than tripled: from P165 billion in 2010 to almost P570 billion in 2015. We can expect this to grow even more, as our goal is to have infrastructure spending comprise 5 percent of GDP [gross domestic product] by 2016,” he said.

Mr. Aquino assured that the administration is continuing to pursue another path toward accelerating infrastructure development in the Philippines, through the so-called Public-Private Partnerships (PPP) Program.

“Thanks to the good work of those in the Public-Private Partnership Center, we have proved to be exceedingly efficient in executing PPP projects. If you will allow me to make a quick comparison: The past three administrations combined were only able to complete six solicited PPP projects. On the other hand, under our administration, nine projects have been awarded; 16 are in the process of being bid out; and more than 30 other projects are under various stages of development.”

Mr. Aquino reported that another sector his administration is focused on is that of power, which, he admitted, “has been rather complicated, to say the least.”

“Rest assured: We share your concern. Right now, the Philippines has a total dependable capacity of 15,665 megawatts (MW), which is—or should be—sufficient to meet our highest projected demand level of 10,222 MW for 2015. But we cannot be content with this, especially with the potential power-supply gap in Luzon this summer, due to the threat of El Niño and rehabilitation of the Malampaya gas field,” President Aquino informed the investors’ forum.

At the same time, Mr. Aquino disclosed that his administration is also pursuing an entire menu of options to address this projected power-supply shortfall.

“We are expediting the rehabilitation of the 300-MW Malaya Thermal Power Plant Unit 1 to help augment power supply in Luzon. We are also requesting National Grid Corp. of the Philippines [NGCP] to optimize the dispatch of hydropower plants, which will generate additional energy supply during peak hours. Partnerships with the private sector have also proved useful: Under the Interruptible Load Program, as of January 2015, 252 participants have signed up to use their own generators and deload a total of 688.67 MW during times when power supply is too tight.”

According to Mr. Aquino, the good news is that a total of 48 committed incoming power projects with 4,693.6 MW of power are expected to come online between now and 2018. He added that out of the 48 power plants, 21 will be from renewable energy, in line with the government’s goal of diversifying the energy mix and building a power supply that is as clean and reasonably priced, as possible.

“As you can see, we are determined to continue treading green pathways to development, and to maintain our status as one of the driving forces for clean energy in the region. As I have said before, our vulnerabilities to climate risk should not keep us from exerting maximum efforts in pursuing nonconventional sources of energy. We are hopeful that the rest of the world will see the value in such a strategy,” he said.

The President explained that these efforts are even more crucial, in light of the realization of the Asean Economic Community, expected to take place further this year. He noted that Asean remains a formidable economic force, adding that at a time where many countries in the world are experiencing economic uncertainty, it has remained one of the world’s fastest-growing regions.

“On top of this, one must consider its size: If Asean were just one country, it would be a $2.4-trillion economy. This is precisely why, as Asean integration takes full effect, the Philippines is taking every possible measure to take on a more dynamic economic role in the region,” he said.

Mr. Aquino reported that he had already signed crucial laws that will enable the Philippines to “meet our financial integration commitments, including an “Act Strengthening the Insurance Industry” and the “Act Allowing the Full Entry of Foreign Banks in the Philippines.” Moving forward, we will continue expanding the range of financial tools available in our country, so we can maximize the advantages of integration.”

The President also pointed out that widening the range of financial options in the country also helped another key sector: that of micro, small and medium enterprises (MSMEs), explaining that an empowered MSME sector is one of the main foundations of a healthy economy, as it “enables us to establish economic dynamos in even the most remote parts of the nation; it creates opportunities, giving our countrymen yet another path through which they can take hold of their destinies. Ultimately, it can become one of the strongest and most direct tools toward inclusive growth, and thus, we want MSMEs to take on a leading role in our country’s growth story.”

This is why, he said, “We have been working overtime to provide MSMEs the wherewithal to compete and succeed in an increasingly global market. For instance, our SME Roving Academy has conducted more than 1,871 training sessions focused on skills training, product pricing and costing, business planning, entrepreneurship development and financial management, among many others. To date, these have helped more than 85,000 potential and established entrepreneurs.”

President Aquino lamented that “there has been so much good news these past few years, and yet, this good news has often been relegated to the back pages of our broadsheets,” he told guests at the forum. “I must admit: Our campaign to change the mind-set that negativism sells is still a work in progress.”

Admitting that his administration had its share of setbacks and challenges, Mr. Aquino asserted, “we also have an impressive number of achievements under our belt. This is why I have made it a point to spread the good news, and why I am always thankful for those who stay balanced and constructive: pointing out areas in which we can improve, while also acknowledging our progress.”

For instance, he recalled that 2014 was “indeed, a banner year for net FDI [foreign direct investments], reaching an all-time high of $6.2 billion, 65.9 percent higher than what we received in 2013.”

“We have, likewise, posted impressive growth: from 2010 to 2013, the Philippines averaged a GDP growth of 6.3 percent,” he said, adding: “Compare this to the previous three-year period, under my predecessor, where growth was just at 4.3 percent. On top of this: in spite of the lingering effects of Typhoon Haiyan and the uncertainty in the global economy, our country still posted a respectable 6.1-percent GDP growth figure last year.”

According to Mr. Aquino, the Philippines was upgraded to investment grade by all three major credit-rating agencies in 2013, and has continued to receive upgrades since. “We are, indeed, making history. All these, and many other factors, have led to even greater optimism for our country’s prospects.”

The President also cited a recent Bloomberg report which, he said, noted that “the Philippines is forecasted to be the world’s second-fastest-growing economy in 2015.”

“The tremendous amount of confidence the global community has developed for the Philippines is incredibly gratifying, especially considering that, not too long ago, we were known as the ‘Sick Man of Asia.’ However, our administration remains hard at work so that we can maximize every opportunity available to us, and I think many of you will agree with me when I say: You ain’t seen nothing yet,” President Aquino added.

Business Mirror, 24 March 2015
By Butch Fernandez
 

Value of PPP deals breaches P1.23-trillion mark, data show

DEALS under the government’s flagship Public-Private Partnership (PPP) program amount to roughly P1.23 trillion, or $27.52 billion, as of March 10, data from the PPP Center showed.

The figures, however, do not take into account bigger-ticket projects, such as the $10-billion Sangley International Airport, which is seen to replace the old Ninoy Aquino International Airport; the C-6 Expressway; the Light Rail Transit (LRT) Line 1 Dasmariñas Extension; the Santa Mesa-Ortigas-Angono Rail Line; and the North Luzon Expressway East Extension, among others.

There are still 31 deals whose project costs have yet to be finalized. But the government is quickly making progress, with about P130 billion worth of key infrastructure contracts awarded in five years’ time, quicker than its peers in the Asean region.

Some of the big-ticket projects that have been awarded are the P64.9-billion LRT Line 1 Cavite Extension; the P17.52-billion Mactan-Cebu International Airport Modernization; the P16.28-billion PPP for School Infrastructure Project (PSIP) Phase 1; and the P15.52-billion Naia Expressway Phase 2.

The name of the PPP Program is making rounds here and abroad, with foreign players calling the Aquino administration’s flagship infrastructure thrust “one of the best” in the region. This is reflected by the various nations that sought the assistance of the Philippine government in crafting their own PPP plans and projects.

Currently, the concerned departments, such as transportation, public works and energy, are bidding out deals that aim to spur economic growth through sustainable infrastructure. There are 13 deals that are currently under tender.

In particular, the Department of Transportation and Communications is currently bidding out bundled contracts for five airports in key cities around the Philippines. The development of the Bacolod-Silay, Davao, Iloilo, Laguindingan and New Bohol (Panglao) airports has a ticket price of roughly P100 billion.

The same government agency is also close to the final stages of the auction for the P4-billion Integrated Transport System South Terminal.

The Metropolitan Waterworks and Sewerage System, meanwhile, is busy with the bidding for the P24.4-billion Bulacan Bulk Water Supply Project and the P19-billion New Centennial Water Source-Kaliwa Dam Project.

The Department of Public Works and Highways, on the other hand, is in the process of finalizing the results of the prequalification stage of the auction for the P122.8-billion Laguna Lakeshore Expressway Dike deal. The same department is currently tightening the loose ends of the P35.42-billion Cavite-Laguna Expressway (Calax) rebidding.

Documents from the public work agency showed that the deadline for the submission of bids for Calax is on May 19. The opening of the technical proposals is set for June 2. The technical requirements will then be evaluated. The financial proposals of those whose documents passed the review will then be opened on June 15. The awarding is set for July 7.

So far, three parties have signified their interest in the controversial deal. These are San Miguel Corp. (SMC), Metro Pacific Investments Corp. and another private company that is represented by a law firm.

The tender process, as earlier reported, will require bidders to place offers higher than P20.1 billion in premium, the alleged financial proposal of SMC.

To recall, the results of the initial auction for the deal were declared void by President Aquino, after his uncle’s firm sought for a reconsideration of its multibillion-peso bid.

It took the Aquino administration four months to decide on the petition of Optimal Infrastructure Development Inc., which sought to overthrow the offer of Team Orion of Ayala Corp. and Aboitiz Equity Ventures Inc.

Team Orion emerged as the first auction’s top bidder, with a premium bid of P11.33 billion.

Business Mirror, 21 March 2015
By Lorenz S. Marasigan
 

House panel approves bill that will institutionalize PPP center

THE MEASURE seeking to legislate rules governing public-private partnership (PPP) deals on infrastructure projects, which when enacted into law is seen to boost investor confidence, has secured the nod of a House of Representatives panel.

The House committee on public works and highways unanimously approved yesterday a measure which amends the country’s decades-old Build-Operate-Transfer law to replace it with a PPP Act, a reform sought by business groups to further boost the country’s attractiveness for infrastructure investments.

“It is declared the policy of the State to recognize the indispensable role of the private sector as the main engine for national growth and development, create an enabling environment for PPP, and provide the most appropriate incentives to mobilize private resources for the purpose of financing, design, construction, operation and maintenance of infrastructure projects and services normally financed and undertaken by government,” the bill reads.

REFORMS INCLUDED
The bill institutionalizes the creation of the PPP Center, along with the procedure for announcing, entering, and awarding PPP contracts, both of which was only created by virtue of an Executive Order in 2010, which can still be repealed by the next President.

“We have already included the reforms that we have initiated for the past four or five years,” PPP Center Executive Director Cosette V. Canilao said in an interview on the sidelines of the hearing. “By institutionalizing these reforms into law, that gives sustainability to the program beyond this administration.”

As in the measure, contractors of PPP projects will be exempted from paying real property tax and transfer taxes, such as capital gains tax and documentary stamp tax, and all local taxes in the case of projects of national significance.

To dodge delays in the PPP process, the bill also provides for the automatic grant of licenses and permits for winning bidders, alongside prohibitions against the issuance of temporary restraining orders in the bidding, awarding and construction of PPP projects.

Investment incentives also await infrastructure projects worth P1 billion or higher.

Joint ventures, where risks will be equally split between government and private sector, will also be recognized as a PPP agreement under the proposed law.

CONTINGENT FUND
The new bill approved by the House committee likewise seeks to include a contingent liability fund which will provide the necessary cover in case the government fails to fulfill its part in the project contract.

Initially, a lawmaker wanted to make the fund as an automatic appropriation, but the committee decided against such proposal. Instead, it shall form part of the annual budget of the agency tasked to implement the PPP project, and may also be sourced from bid premiums or via official development assistance grants.

A Joint Congressional Oversight Committee, to be composed of five members each from the House and Senate, will also be created for check and balance.

With more perks and diminished risks, officials anticipate more investors taking on PPP deals in the Philippines.

“There will be a defined streamlining of the process, there would be clear accountability and transparency,” Ms. Canilao said. “We expect more projects to be developed by the various implementing agencies as well as the local governments.”

The measure must first get approval of the appropriations committee for funding before it can be opened at the plenary.

Business World, 18 March 2015
By Melissa Luz T. Lopez
 

Philippines seen growing 6.2% this year

MANILA, Philippines – Philippine economic growth should accelerate this year, although still below the government’s seven to eight percent target, the Institute of Chartered Accountants in England and Wales (ICAEW) said in a report.

ICAEW has estimated the country’s economic growth at 6.2 percent this year, faster than the 6.1 percent recorded in 2014 but still below the government’s target.

“Infrastructure problems persist, threatening the Philippines’ stellar growth rate, and blackouts are foreseen (this) year. A focus on this area … (this year), made possible partly by strong public finances, should enable the islands to pursue a raft of infrastructure projects,” the ICAEW said in a report.

The economy grew by only 6.1 percent in 2014, slower than the stellar 7.2-percent growth recorded in 2013. This was also short of the government’s 6.5-to 7.5-percent goal but the figure was the second fastest in Asia during the period.

The government has already awarded nine projects worth about P135 billion under the Aquino administration’s public-private partnership program, which launched in late 2010.

The government’s PPP center in December said another P625 billion worth of projects are being readied under the program to further improve the country’s infrastructure and also help boost domestic economic growth.

The Philippine Star, 12 March 2015
By Kathleen A. Martin
 

How Philippines can reverse ‘brain drain’

MANILA, Philippines – As some Filipinos continue to seek greener pastures abroad, it may seem as if the decades-long “brain drain” shows no signs of stopping.

But there’s still hope for the Philippines in reversing “brain drain”.

In its latest Economic Insight report, Institute of Chartered Accountants in England and Wales (ICAEW) noted that ASEAN economies are benefiting from growing populations, but some, particularly the Philippines and Malaysia, are facing difficulty in “brain drain.”

“In terms of labor force, the Philippines is faced with a brain drain issue, which is depriving the labor pool of much of its greatest talent. This has been a problem for a while now, with the country having lost an estimated 10 percent of its population to work abroad, including many highly qualified professionals,” Charles Davis, ICAEW economic advisor and Centre for Economics and Business Research (CEBR) director, said.

In 2013, the Philippines deployed around 1.8 million workers. Most of the OFWs were deployed to Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Kuwait and other Middle East countries.

The Philippine economy benefits from remittances the overseas Filipino workers send back home, but Davis noted “most of the productivity gains accrue to the developed economies in which these emigrants live.”

Similarly, in Malaysia, around 295,000 skilled workers left the country in 2012, out of only 4.3 million Malaysians working in skilled occupations. Over half of Malaysian emigration flowed to Singapore.

ICAEW acknowleged that the Philippines and Malaysia cannot compete with the wages being offered in Singapore and United States.

Plus the establishment of the ASEAN Economic Community (AEC) later this year would likely lead to more skilled workers moving to other ASEAN countries for better job opportunities.

But ICAEW noted that brain drains have been reversed before, particularly in India and China where many emigrants are returning.

“As we have seen, in China and India for example, emigrants are willing to return to their home countries despite even wage cuts, so long as they are confident their sector of expertise exists. One key strategy will be to make sure that the Philippines’ high-tech industrial centers are integrated into relevant international networks; this means that people can return to their home nation without fearing that their career progression will suffer,” Mark Billington, Regional Director of ICAEW South East Asia, said.

This could include providing incentives, such as grants for knowledge businesses.

“Creating clusters of businesses in areas with good-quality infrastructure can catalyse the development of a viable new sector in an economy, particularly if those with the requisite education exist. There is little point in investing in upgrading higher education systems to cope with the new economy, if those workers will simply leave to start a career elsewhere,” the ICAEW report stated.

ICAEW noted the Philippines will be pursuing more infrastructure projects this year, due to strong public finances.

 

 

It forecasts Philippine GDP growth at 6.2 percent for 2015, the highest growth forecast among six ASEAN countries.

“Infrastructure problems persist, threatening the Philippines’ stellar growth rate, and blackouts are foreseen next year. A focus on this area over the next year, made possible partly by strong public finances, should enable the islands to pursue a raft of infrastructure projects,” ICAEW said.

The Public–Private Partnership Center has already 26 approved infrastructure projects, collectively worth $24.5 billion.

ICAEW is a world leading professional membership organisation that promotes, develops and supports over 144,000 chartered accountants worldwide. The report on South East Asia is produced by Cebr, ICAEW’s partner and economic forecaster.

ABS-CBN News, 11 March 2015
 

‘Brain drain’ holding back growth – study

PLANNED investment in infrastructure could help the Philippine economy accelerate growth to 6.2 percent this year, but only if the problem of ‘brain drain’ is seriously addressed, a new economic review said.

In the latest edition of “Economic Insight: South East Asia,” UK-based Institute of Chartered Accountants in England and Wales (ICAEW) said strong public finances will allow the Philippines to pursue more infrastructure projects in 2015.

According to the study, strong public finances have enabled the Philippines to place a new focus on infrastructure investment in 2015.
“The Philippines public-private partnership (PPP) center has approved construction projects worth $24.5 billion, which could contribute greatly to infrastructure improvements,” it said.

It is uncertain, however, whether the entire $24.5 billion would be applied in 2015.

ICAEW’s latest gross domestic product (GDP) estimate for the Philippines for 2015 is higher than the 6.1 percent growth of the economy last year, but still lower than the 7 percent to 8 percent target of the government this year.

‘Brain drain’

The study stressed that the brain drain issue is depriving the labor pool of much of its greatest talent, but this could be reversed with greater internationalization within industry sectors.

“This has been a problem for a while now, with the country having lost an estimated 10 percent of its population to work abroad, including many highly qualified professionals,” Charles Davis, ICAEW Economic Advisor and Centre for Economics and Business Research (CEBR) director, said.

Davis noted that while the Philippine economy is partly compensated through remittances, most of the productivity gains accrue to the developed economies in which these emigrants live.

The study recommends that while the Philippines can’t compete with higher wages in Singapore or the United States, it could follow in the footsteps of other Asian countries that have successfully reversed similar brain drain challenges and seen emigrants returning in large numbers.

“As we have seen, in China and India for example, emigrants are willing to return to their home countries despite even wage cuts, so long as they are confident their sector of expertise exists [in the local labor market],” Mark Billington, Regional Director, ICAEW South East Asia, said.

One key strategy will be to make sure that the Philippines’ high-tech industrial centers are integrated into relevant international networks; this means that people can return to their home nation without fearing that their career progression will suffer, the study said.

Vital infrastructure

Lastly, the ICAEW report pointed out that good infrastructure is also going to be vital.

“It allows clusters of new industries to develop, which is crucial to maximize the potential of sectors of the workforce that are already highly-educated and qualified, and encourages entrepreneurship. Other incentives, such as providing grants for the right new businesses, will also help,” it concluded.

The “Economic Insight: South East Asia” study is produced by Cebr, ICAEW’s partner and economic forecaster. Commissioned by ICAEW, the report provides its 144,000 members with a current snapshot of the region’s economic performance.

The report undertakes a quarterly review of Southeast Asian economies with a focus on Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

The Manila Times, 11 March 2015
By Mayvelin U. Caraballo
 

Awarded

We’re familiar with how the country’s public-private partnership (PPP) program gets flak at home from time to time—either by its own doing or due to factors outside its control. Nonetheless, it remains highly regarded abroad and some of its projects may even go on to win awards this year.

That seems a possible scenario based on the short list for the Partnership Awards 2015, which recognizes and rewards the best PPP projects and organizations from around the world for 17 years now.

Three Philippine PPPs awarded in the last two years have made it to the current short list for the Partnership Awards, which include as many as 40 deals in various categories such as healthcare, education, energy and transportation.

The Department of Education’s PPP for School Infrastructure Project was named in the short list as well as two transportation department projects: the Automatic Fare Collection System (AFCS) and Mactan Cebu International Airport.

These projects were won by Filipino companies Ayala Corp. and Metro Pacific Investments Corp. for the AFCS and Megawide Construction Corp. and its partners for the Cebu airport and certain packages under the school infrastructure project.

The Philippines’ PPP Center, led by executive director Cosette Canilao, is itself a contender for the “best” government PPP promoter after bagging the “gold award” for the same category in 2014. For financial institutions, Henry Sy’s BDO Unibank is in the running for the financial adviser of the year award.

The final winners should be known in a few months, with the awarding to take place on May 14 in London.

Philippine Daily Inquirer, 11 March 2015
By Miguel R. Camus
 

Apec aims for inclusive growth

GREATER ACCESS TO FINANCE PUSHED

MANILA, Philippines–The 21 member-economies of the Asia-Pacific Economic Cooperation (Apec) aim to put in place within the next two years measures to make economic growth more inclusive through greater access to finance and improved infrastructure under the proposed Cebu Action Plan.

The Philippines, which hosts this year’s Apec meetings, has its own share of initiatives that target to make public-private partnership (PPP) in infrastructure more appealing to investors, such as expanding insurance coverage to projects being rolled out by local government units (LGUs), Philippine officials said on the sidelines of last week’s Apec Finance and Central Bank Deputies’ Meeting.

Finance Undersecretary Gil S. Beltran noted that while the Apec jurisdiction is expected to post growth of 3.5 percent this year and a slightly higher 3.7 percent next year, there has been a “slowdown” in investments across the region.

“There’s a need for member-economies to do some more structural reforms, and improve on their policies so that their economies will strengthen and investor confidence will be restored,” Beltran said.

“The main issue that concerns [Apec members] is how to make their economies grow as fast as before the global financial crisis” amid global economic volatility, he added.

Hence, reforms that will integrate the region by granting easier access to financing among low-income households as well as micro, small and medium enterprises (MSMEs) should be high on members’ agenda, according to Beltran.

“The best antidote to [financial] volatility is structural reforms—adopting measures that will make your economy grow faster, enhancing efficiency in the markets and production processes, reaching some sectors which are not able to get financing so that they will be able to finance their businesses. These are the things that will make investors think twice before leaving a country. If your economy is growing, your private sector is showing some resiliency and good growth, then the funds will stay,” he pointed out.

For the part of the Philippines, it is spearheading initiatives to promote fiscal transparency via an open data initiative, the finance official said.

“This transparency measure is intended to make sure that taxes are collected, put into the right projects, and that the agencies that implement these projects attain the objectives for which they are mandated,” he said.

Another initiative is institutionalizing credit information bureaus across Apec members in order to better connect borrowers to potential lenders, Beltran said. “Under the Cebu Action Plan, we want all the [Apec] economies to have credit information bureaus,” he said.

Microinsurance for farmers, households and MSMEs, especially in light of the natural disasters that almost on a regular basis hit the region, will also be promoted, the finance official said.

Beltran said, “The losses from disasters in the Apec region is about $200 billion each year, and only less than half of those are insured, so there’s a big market out there that needs protection.”

In terms of infrastructure development, PPP should be pushed by tapping the “huge savings” of Apec member-economies, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said.

“There are tremendous PPP opportunities in Apec, but the issue is financing, which is a very important component. We have excess savings and yet financing continues to be problematic,” Guinigundo noted.

But the BSP official noted that the real problem was the fact that Apec members “don’t have sufficient, bankable and credible infrastructure projects.”

“If we are able to provide the member-economies sufficient and bankable projects immediately, I think we could have good use of excess savings which end up in the banks and government securities. What we need to do is to translate those financial assets into tangible infrastructure projects,” he said.

“Many of our countries have a high savings rate; there’s a lot of savings that can be used to revive growth, [which] could be done if we can use these investable funds for infrastructure,” Beltran added.

The Asian Development Bank has estimated the infrastructure requirement across Apec until 2030 to cost $8 trillion.

To facilitate better financing for infrastructure projects via PPP, Apec would introduce initiatives for leveraging of private funds while continuing the disposition of public funds, Guinigundo said.

Apec will also put up a regional PPP knowledge portal that will connect potential investors to proponents of projects in member-economies’ respective pipelines, the BSP official said.

Another proposal being looked at is standardizing PPP contracts across the region, Guinigundo said.

In the case of the Philippines, Beltran said National Treasurer Roberto B. Tan and the Insurance Commission were in talks with insurance industry players to urge the latter to introduce products that will also cover LGUs’ infrastructure projects.

At present, only projects being rolled out by the national government get insurance coverage.

Thus far, there has been “broad” support for the Cebu Action Plan, Beltran said, adding that multilateral lenders have also expressed interest to finance Apec’s growth initiatives.

The Cebu Action Plan, which will be up for approval by the group’s finance ministers during their September meeting in Cebu, targets to make the region more financially integrated, transparent and resilient alongside infrastructure development.

Philippine Daily Inquirer, 09 March 2015
By Ben O. de Vera
 

PPP Executive highlights achievements during APEC advisory council meeting

TAGAYTAY CITY, March 4 (PIA)—Public Private Partnership Executive Director Cosette Canilao highlighted during her welcoming speech at the APEC PPP Advisory Meeting at the Taal Vista Hotel, Tagaytay that several projects have been awarded under the current administration amounting up to USD 2.9 billion.

Nine projects have been awarded including some which benefit the Calabarzon region such as the Daang-Hari-SLEX Link Road and the LRT1 Cavite Extension Operation and Maintenance. Exec. Dir. Canilao emphasized that the number of PPP projects not only represent the public benefit but also increasing confidence of investors.

Aside from PPP projects, the center capacitated and trained more than 90 local government units, 63, government owned and controlled corporations, 81 national government agencies and 8 academic institutions in developing projects which are both bankable and well-developed structurally this 2014.

“Despite these major achievements, the PP Center remains committed in establishing a stronger PPP program that will continue to sustain the gains made and improve on those that still need work.” Said Canilao

Executive Director Canilao also added later in a press conference on the same day at the Summit Ridge Hotel, that infrastructure is one of the factors for growth and leveraging in the efficiency of the private sector. (PIA4A)

Philippine Information Agency, 04 March 2015