09 May 2014
The Project Development and Monitoring Fund (PDMF)â€™s panel of consulting firms, now being expanded and reconstituted given the increasing number of PPP projects applying for support, has generated thirty-one (31) expressions of interest (EOI) from national and international firms that would later be tapped to provide project preparation and transaction support services to said PPP projects.
This is in an indication of the international consulting industryâ€™s confidence in the success of the PDMF as the Philippine PPP Programâ€™s main facilitator of diligent PPP project structuring and procurement.
Mr. Louis Braam, a transaction advisor from the RebelGroup International BV based in The Netherlands, pointed out that the â€śPDMF in the Philippines is successful because of its professionalism and commitment.Â Some countries failed to deliver because in their case, the PDMF is very political.Â There is a lukewarm response from the government. PDMF in the Philippines is successful because of the commitment of the people working on the projects and the level of professionalism that is evident in the exacting way it is managed.â€ť
The expansion and reconstitution is timely as more implementing agencies are drawn to the PDMF as their source of the much needed experience and expertise in pursuing critical infrastructure and development projects.Â Eleven (11) projects have recently been granted PDMF support and are now for procurement of project preparation Â and transaction support consultants from the PDMF panel. Â Five (5) projects applying for PDMF support are also lined up for the upcoming PDMF Board Meeting.
â€śSince its inception in 2010, the PDMF has already proven its critical value towards ensuring that projects are diligently structured and procured, with the benefit of international experience and expertise. Â The actual projects that went on to successful award and the very encouraging response from international bidders are real and the implementing agencies now recognize thisâ€ť, stressed Usec. Cosette Canilao, PPP Center Executive Director.
To date, the PDMF has provided transaction advisors (TAs) to twenty-three (23) out of the fifty-four (54) projects under the PPP pipeline. Five (5) out of seven (7) successfully tendered PPP projects have been supported by PDMF. As a revolving fund, PDMF reimbursements or reflows amounting to US$ 6.2Million, have already been received from the successfully tendered projects â€“ Department of Educationâ€™s (DepEd) School Infrastructure Program I and II, Department of Healthâ€™s (DOH) Modernization of the Philippine Orthopedic Center, and the Department of Transportation and Communicationsâ€™ (DOTC) Automatic Fare Collection System and Mactan Cebu New Passenger Terminal Projects.
Established in 2010, the PDMF had initial funding of USD7 Million put in by the government.Â Â Through an Asian Development Bank (ADB) administered Technical Assistance to the Philippine PPP Program, contributions (USD 6 Million and USD 12 Million) from the Australian Government were later added. The Philippine government also put in an additional counterpart contribution of USD 37.5 Million. The total available fund of the PDMF is now at USD 62.5 Million and is currently being tapped to support projects in the PPP pipeline.
09 May 2014
The Philippine Public-Private-Partnership (PPP) Program, through its main coordinating and monitoring agency, the PPP Center, will introduce probity advisory into its procurement mechanisms to further institutionalize due diligence, transparency and accountability in engaging private sector partners.
The initiative is envisioned to further build up the current confidence of local and international business community on the credibility and competitiveness of the countryâ€™s PPP procurement policy and practice, in key infrastructure and development sectors.
Probity advisory is an internationally recognized best practice in PPP procurements that ensures PPP projectsâ€™ ability to stand legal and procedural scrutiny by harnessing independent review and advice at all stages of procurement decisions and processes by the concerned institutions and/or committees.
For the private sector, this is an assurance of fairness under a framework of a level playing field and a competitive environment for PPP investment opportunities. This in turn, facilitates avoidance of costly and unpredictable bidding issues and challenges that impact on the credibility of the project, the concerned implementing agency (IA) and its selected private partners.
â€śThis is aligned with the Daang Matuwid agenda of the Aquino administration where we are continuously improving on our processes. We are committed to upholding transparency and accountability in our PPP biddings. And we want to assure the private sector a level playing field at all times,â€ť according to Undersecretary Cosette V. Canilao, PPP Center Executive Director.
Highly advanced PPP programs such as that of Australia, New Zealand and Canada have long institutionalized probity advisory into their PPP procurements.
The PPP Center will bring in this international best practice of probity advisory through a learning and mentoring program with its counterpart from Infrastructure New South Wales Australia (INSWA). A formal Twinning Partnership Memorandum was recently signed between the two institutions in Sydney, Australia.
The twinning arrangement will facilitate bringing into the PPP Center and key implementing agencies, probity advisory experts from INSWA, providing direct learning and advice as the center and concerned IAs work on actual PPP projects.
Aside from probity advisory, other areas of the twinning arrangement include contract management, knowledge management and public communications. Support is provided through the ADB-Capacity Development Technical Assistance (CDTA) for the Philippine PPP Program.
Visayan Daily Star, 09 May 2014
Public-private partnership does not lead to privatization of government-owned facilities, Eleazar Ricote, national director of the Public Private Partnership center, said Wednesday.
Ricote, who was at the investment forum organized by the Negros Occidental provincial government and the Development Bank of the Philippines, also said that public-private partnerships will not result in the increase of the cost of government services.
He said private sectors do not only fund the development of government-owned entities but also bring efficiency in technology and expertise to better serve the public and it is necessary to fast-track government projects as well.
Ricote, however, admitted that the challenge they are facing is how to explain to everyone how public-private partnership works.
Meanwhile, the P198.29 million Talisay City Plaza Complex Heritage Restoration and Redevelopment Project, that will be undertaken through a public-private partnership scheme, will hopefully start this year, Ricote said.
The project involves the redevelopment of the central public market into a mixed-use facility; restoration of the old city hall; and retention of neighborhood character through adoption of the architectural designs of the old Lizares Mansion, St. Nicolas de Tolentino Parish Church, old city hall, and rural bank.
Ricote said the bid invitation for private firms interested to undertake the project has already been issued.*APN
Business Mirror, 08 May 2014
By Lorenz Christoffer S. Marasigan
The auction for the P64.9-billion Light Rail Transit (LRT) Line 1 Cavite Extension Project will be staged as scheduled as the government sees no more roadblocks for the dealâ€™s tender, including requests for extension from the bidders.
â€śWe are pushing through with theÂ May 28Â bidding. The planning department said that there are no more roadblocks for the auction,â€ť Transportation Secretary Joseph Emilio A. Abaya told the BusinessMirror in a text message.
Separately,Â Transportation Undersecretary for Legal Affairs Jose Perpetuo M. Lotilla said there are no more reasons to further delay the second auction.
â€śAs far as the government is concerned, weâ€™ve tried to make the bid parameters as fair as possible, taking into consideration the concerns of the private sector for viability,â€ť said Lotilla, who chairs the agencyâ€™s bids and awards committee.
The bid submission for the largest public-private partnership project was originally set on April 28, but requests coming from the bidders forced the agency to delay the project by a month.
This is the second time that the government will try to auction off the project. Bidding for the original P60-billionÂ Cavite Extension contract was met by fearful bidders, who complained that the project was not commerciallyÂ viable.
This left Metro Pacific Investments Corp. as the lone bidder during the August tender, withÂ partner Ayala Corp. and three other prequalified partiesâ€”San Miguel Corp., DMCI and Samsung-MTD Capital joint ventureâ€”backing out.
The government has since sweetened the terms of the deal, adding a viability-gap funding to the projectâ€™s contract.
The Transportation department also gave the winning bidder the right to design the facility of the P1.4-billion LRT North Extension Project, which will be auctioned off in the third quarter of the year.
The new and improved Cavite Extension contract has since attracted new players: SMC Infra Resources, Inc., Spanish firm Globanvia Inversiones S.A.U., MTD Philippines, Inc., DMCI Holdings, Megawide Construction Corp., Ecorail Transport Services, Inc. and Light Rail Manila Consortium led by Metro Pacific and Ayala.
The project aims to extend the existing line by 11.7 kilometers (km), adding eight new stations, where approximately 10.5 km of the extension will be elevated and 1.2 km will be at grade. The winning bidder will also serve as the operator and the maintenance provider of the railway line.
The project is expected to be completed by December 2018.
08 May 2014
The Public-Private Partnership (PPP) Center of the Philippines and Infrastructure New South Wales (INSW) signed a twinning partnership memorandum of understanding (MOU) today in Sydney, Australia to forge closer cooperation and exchanges between the parties. Design and support Â for Â implementation Â of Â twinning Â partnerships Â between Â the Â PPP Â Center Â and Â its counterparts in selected PPP success countries is part of the capacity development technical assistanceÂ Â project Â ”StrengtheningÂ Â PPPsÂ Â in Â theÂ Â Philippines” Â co-financedÂ Â by Â the Â Asian Development Bank, the Government of Australia, and the Government of Canada.
Undersecretary Cosette V. Canilao, Executive Director of the PPP Center and Jim Betts, Chief Executive Officer of Infrastructure NSW signed the Memorandum of Understanding for the Twinning Partnership between the two institutions.
“The twinning partnership will help further increase the capacity of the PPP Center as an anchor office of the Government in helping agencies Â design, prepare, tender and monitor PPP projects in Â the Â PhilippinesÂ in Â a Â high Â quality and Â sustainable Â manner Â drawing Â on Â best Â international practice”, Undersecretary Canilao said.
“Building world-class infrastructure to support our economy and community is a focus for the NSW Government, as it is for The Philippines. The NSW Government was an early adopter of the public private partnership model for infrastructure and now has more than 20 years’ experience in partnering with the private sector to deliver quality road, rail, school and hospital infrastructure.” commented the CEO of Infrastructure NSW, Mr Jim Betts.
The twinning partnership will involve peer-to-peer exchanges, technical advice and knowledge sharing, lectures/workshops, roundtable discussions and dialogues and site visits of successful PPP social infrastructure Â projects Â such as Â hospitals and Â schools Â and Â trains Â and Â transport systems in New South Wales.
Various PPP areas of interest include sector PPP policy, legal and institutional frameworks, knowledge management, contract management, public communications, transparency and efficiency in PPP tendering.
During the visit of Undersecretary Canilao, meetings with prospective Australian investors and Australian financial institutions interested in investing in the Philippine PPP program were scheduled.
“This twinning partnership will enable the PPP Center to learn from the vast experience of New South Wales Government and Infrastructure NSW in implementing successful PPP projects, which we can replicate in the Philippines. We areÂ also greatly appreciative of the Â support provided by the Asian Development Bank, together with the governments of Australia and Canada, under their TA project, which, as part of a comprehensive capacity building agenda, helps us to connect to our counterparts in other countries to learn from their experiences”, Canilao added.
PHOTO: (L-R) Mr. Jim Betts, CEO of Infrastructure New South Wales; Ms. Anne Jalando-on Louis, Philippine Consul General in Sydney, Australia; Hon. Victor Dominello, Minister for Citizenship and Communities; Undersecretary Cosette V. Canilao, PPP Center Executive Director; and Hon. Bill Tweddell, AustralianÂ Ambassador to the Philippines.
Malaya Business Insight, 08 May 2014
The Board of Investments (BOI) in its first public hearing for the 2014 Investment Priorities Plan yesterday bared the preliminary 7 specific sectors that would be entitled to incentives.
The BOI will attempt to craft a more concise, sector-specific 2014 IPP valid for three years to provide policy stability to investors.
The seven sectors include 1.) manufacturing that covers motor vehicle Â assembly like engineered products, Â body panel, stamping, engines; chemicals Â such as fertilziers, pesticidies, copper wire rod, , paper pulp etc; 2. agribusiness and fisheries like extraction of natural ingredients, mechanized agri-support services and infrastructure; 3. services like integrated circuit design, ship repair, Â testing facilities, charging stations for e-vehicles; Â 4. economic and low- cost housing horizontal and vertical; Â 5. energy; 6. public infrastructure and logistics like airports and PPP projects; 7. Â sectors mandated by law to be entitled to incentives like tree plantation, mining, refining, storage and distribution of petroleum products, renewable energy and tourism
The BOI in the hearing also highlighted the importance of incentives to enterprises for investors in choosing the site for investments.
BOI managing head Adrian Cristobal Jr. said the new IPP will be more progressive as a â€śfundamental investment policy toolâ€ť rather than just a list of activities to be given incentives where first movers to an unexplored sector will get an advantage.
This IPP will now be effective for three years and will end to coincide with the end-of-term of the Philippine Development Plan in 2016.
â€śIn the past the IPP has always been a list of generic list of activities. In the past the model was more free enterprise but after experiencing state interventions in the 80s and 70 so now trying to balance this,â€ť Cristobal said.
Trade Assistant Secretary Fita Aldaba said the market environment is very much different in the past and that studies showed incentives needed have become more signification factors in location decision of investors.
Aldaba cited other countries which give out incentives like tax holiday (ITH) and lower corporate income tax (CIT).
China grants two to three years ITH and 25 percent of CIT; Thailand 3 to 8 years ITH and 20 percent CIT; Vietnam, 1 to 8 years ITH and 22 percent CIT; Indonesia 1 to 8 years of ITH and 25 percent CIT and Malaysia 5 to 10 years ITH and 25 percent CIT.
The Philippines gives to 3 to 8 years of ITH and has the highest CIT rate of 30 percent.
Philippine Information Agency, 08 May 2014
MANILA, May 8 — Â The 2014 Investments Priorities Plan (IPP) will now be effective for three Â years and will end to coincide with the end-of-term of the Philippine Development Plan in 2016.
For the past 40 years, the IPP has been reviewed and changed on an annual basis. Every year, the BOI receives recommendations from relevant government agencies and the private sector for proposed changes in the list of sectors and economic activities that are eligible for fiscal incentives under the IPP.
â€śA consistent, coherent, and a predictable policy environment attracts serious investors to choose the Philippines as their investment destination. We are after businesses that come here for the long term,â€ť said Undersecretary Adrian Cristobal Jr., Managing Head of the BOI.
The BOI has been conducting inter-agency consultations and deliberations on the 2014 IPP framework since late last year. The agency also analyzed industry roadmaps, reviewed national development plans, industry studies, and relevant empirical work related to incentives. The current draft has undergone several peer review sessions with distinguished economists and experts while taking into consideration the actual needs of industry as seen through the more than 27 industry roadmaps submitted to the agency last year.
According to the BOI, the current draft focuses on sub-sectors and economic activities that address specific supply- or value-chain gaps. â€śIPP serves both as a developmental tool for investment decisions of the private sector, and as a promotional tool for government to encourage first movers in new investment areas. More than a list of economic activities, the 2014 IPP will articulate the countryâ€™s industrial policy, strategies, and provide an appropriate response to the key constraints that hinder the entry of investments in critical areas of the economy.â€ť Cristobal added.
The BOI launched in 2012 the Industry Development Program that aims to integrate policy efforts for industry into a Comprehensive National Industrial Strategy (CNIS). For the past two (2) years, the agency has been leading industries in developing roadmaps that will identify gaps in investments, among others. â€śWe are working smart to ensure that policies are harmonized and data are accurate to feed into this new industrial policy,â€ť Cristobal said.
A series of nationwide consultations on the 2014 IPP is being scheduled by the BOI this May, starting with consultations in Metro Manila from May 7 to 9, and followed by consultations in Cebu on May 12 and in Davao, onÂ May 13. (DTI)
Business Mirror, 07 May 2014
By Catherine N. Pillas
The Board of Investments (BOI) is readjusting the 2014 Investment Priorities Planâ€™s (IPP) duration of validity to three years from the present annual review, in a move which the board said is aimed to allow more stability and certainty to investors.
The BOI also released a preliminary list of sectors included in the 2014 IPP at a public consultation with private-sector stakeholders on Wednesday.
â€śThe new IPP is proposed to be valid for three years to give some sense of certainty and stability to investors. The legal requirement to annually review the list will still be met but it will be a minor review, maybe to add rather than subtract,â€ť said BOI Managing Head Adrian S. Cristobal at a public consultation at the Asian Institute of Management.
Cristobal explained that the agency is giving chance to areas that are attracting little investments and leveling the playing field to all players through the imposition of the three-year window.
He added that the 2014 version of the IPP, which lists the preferred economic activities that may avail tax perks, is â€śmore than just about incentives.â€ť
â€śThis IPP will be a fundamental investment policy tool, or will contain industrial development strategies and planning process with sectoral write-ups. The BOI is committed to develop industries not just through incentives but through these other interventions,â€ś said Cristobal.
The IPP, he added, will take a more specific look at the subsectors rather than broad areas of preferred economic activities.
The preliminary list revealed by the BOI include manufacturing, under which falls motor-vehicle assembly, engineered products, chemicals including fertilizer and pesticides, copper wire rod, paper pulp, tool and dye.
Agribusiness and fishery activities include extraction of natural ingredients, mechanized agricultural support services,Â Â and agricultural infrastructure support.
Economic and low-cost housing is included, both vertical and horizontal as well as energy exploration and development of energy sources and power-generation plants.
Public infrastructure and logistics are on the preliminary list, as well, with airports and seaports, newly purchased ships, aircraft, seaplanes, roll-on, roll-off vessels and duty-free importation of equipment specified under the category. Rounding off the preliminary list are PPP projects.
For exports, the list specifies production and manufacture of export products, services exports and activities in support of exporters.
Manila Bulletin, 07 May 2014
By Bernie Magkilat
The Board of Investments (BOI) yesterday unveiled a preliminary list of 7 preferred economic activities for 2014 Investment Priorities Plan (IPP), which could be eligible for government tax incentives and other policy interventions in the next three years in an effort to create more quality jobs and achieve inclusive growth for most Filipinos.
The draft list includes manufacturing, agro business and fishery, services, economic and low-cost housing (horizontal and vertical), energy (exploration and development of energy resources and power generation plants), public infrastructure and logistics, and Public-Private Partnership (PPP) projects.
Activities identified under manufacturing are motor vehicle assembly; engineered products like body panel stamping, engines; and chemicals such as fertilizers, pesticides, oleochemicals, and petrochemicals and derivatives,Â copper wire rod, pulp and paper, and tool and die.
Under the agro-business and fishery sector, activities identified include extraction of natural ingredients, mechanized agri support services and agri support infrastructure.
The services list includes IC design, ship repair, testing facilities, and charging stations for e-vehicles.
Public infrastructure and logistics refer to airports and seaports to include RO-RO ports for cargo and passengers. This, however, may be limited only to newly purchased ships, aircraft and seaplanes.
There has been no changes on the Exports List. For the Mandatory List, which are special laws that grant incentives, the BOI has initially included 7 mandated laws â€” industrial tree plantation, mining (limited to capital equipment incentives), oil refining, storage and distribution of petroleum products; tourism, rehabilitation self development and self-reliance of persons with disability, andÂ publication and printing of books.
After this first public hearing, a series of nationwide consultations on the 2014 IPP is being scheduled by the BOI this month. Consultations will also be held in Cebu on May 12 and in Davao, on May 13.
Trade and Industry Undersecretary Adrian S. Cristobal Jr. said the 2014 IPP is expected to be submitted to Malacanang by June this year. Under the law, the IPP should have come out end of March each year.
Trade and Industry Assistant Secretary Rafaelita Aldaba in presenting the draft 2014 IPP stressed the selection of economic activities have to adhere to four criteria: potential to create employment; Potential to move up the value chain; potential to create spillover effects â€” horizontal, vertical spillover effects; backward and foreword linkages and output multipliers; and potential to create a competitive market.
As such, Aldaba also presented sample analysis of five activities â€” electronics, cement, agribusiness/fishery, tool and die, and IT-BPM â€” based on the four criteria.
Addressing the contentious issue of fiscal incentives,Â Cristobal has assured that government has Â recognized incentives as a critical component in the countryâ€™s industrial policy.
â€śIncentives is recognized as critical component of industrial policy but there may be different ideas on how to enhance incentives regime, the very premise is that incentives has a role to play that is not under dispute,â€ť said Cristobal.
Likewise, Aldaba said during her presentation on the significance of incentives and even quoted studies justifying the grant of incentives to investors by Morriset and Pirnia in 2002.
â€śThe market environment now is very much different in the past and we are facing within this context and studies showed incentives needed have become a more significant factors in location decision of investors,â€ť Aldaba said.
Aldaba said the grant of incentives is also provided under the Omnibus Code of Investments or Executive Order 226, which also provides that fiscal incentive system shall be devised to compensate for market imperfection.
During the public hearing, the DTI also presented a comparison of incentives granted by neighboring countries. The Philippines grants 30 percent corporate income tax (CIT) with income tax holiday of up to 8 years.
Comparatively, China grants 2-3 years of income tax holidays and 25 percent CIT; Thailand with 20 percent CIT and 3-8-year ITH; Vietnam is with 22 percent CIT and 1-8-year ITH; Indonesia withÂ 25 percent CIT andÂ 3-8-year ITH;Â Malaysia withÂ 25 percent CIT and 5-10-year ITH; and,Â Singapore with 17 percent and 15 year ITH.
Rappler, 04 May 2014
Government addresses concerns that prompt the private sector to boycott in 2013 the bidding for the LRT-1 Cavite extension project.
MANILA, Philippines â€“ No further delays. The May 28 scheduled rebidding of the P65-billion Light Rail Transit Line 1 (LRT-1) Cavite extension project should push through as scheduled.
â€śI think there is no reason to further delay it,â€ť Department of Transportation and Communications (DOTC) Undersecretary Jose Perpetuo Lotilla said. The government, according to him, has addressed concerns that prompted the private sector to boycott the bidding last year.
BiddingÂ failed last yearÂ because the lone bidder did not meet requirements. Rebidding was initially scheduled on April 28 but it was moved another month.
Lotilla said none of the interested bidders have signified an intention to defer submission of their bids.
TheÂ groups interestedÂ in the project are the following:
Last year’s boycott
The DOTC and the Light Rail Transit Authority (LRTA) declared a failed bidding August 2013 when only one of the 4 prequalified bidders â€“ Light Rail Manila Consortium â€“ submitted a bid. Other major proponents backed out due to concerns about the viability of the project.
“As far as the government is concerned weâ€™ve tried to make the bid parameters as fair as possible taking into consideration the concerns of the private sector on viability,â€ť Lotilla said.
The National Economic and Development Authority (NEDA) Board chaired by President Benigno Aquino III approved in November 2013 the revised terms for the project, including the payment by the government of real property taxes (RPT).
In addition, the government ensured the integrity of the facilityâ€™s structure for a 2-year period, approved a 5% fare increase upon completion of the project, and allowed the submission of negative bids.
The cost of the public private partnership (PPP) project increased by P5 billion from P60 billion due to additional components originally intended to be pursued as separate projects but which were later included in the project.
The agency alsoÂ slashed the P6-billion subsidyÂ to only P5 billion. The subsidy is supposed to be offered to the winning bidder and would be contained in the revised instructions to bidders (ITB) of the LRT1 Cavite extension project.
This subsidy reduction is consistent with the deletion of the concessionaire’s obligation to fund up to P900 million the relocation specified in the draft Concession Agreement.
Last February 10, the DOTC said the subsidy amount (inclusive of taxes and value added tax) would have a ceiling of P6 billion. The department will also be asking for bids that will cover the construction of a common station connecting LRT-1 with the Metro Rail Transit Line 3, and with the MRT Line 7 that will be built in the EDSA-North Avenue area. This station is estimated to cost P1.4 billion.
The design of the proposed common station, according to Lotilla, will be included in the LRT1 Cavite extension project bid.Â â€“ Rappler.com