The Philippine Star, 11 May 2014
By Lawrence Agcaoili
MANILA, Philippines – The Aquino administration is pushing for the enactment of a new law amending the Build-Operate-Transfer (BOT) law to lure more investors to participate in Public-Private Partnership (PPP) projects worth over P200 billion.
Cosette Canilao, PPP Center executive director, said the enactment of the PPP Act of the Philippines through the amendment of Republic Act 7718 or the BOT Law would entice more investors to join the bidding for the PPP projects.
â€śWe want to lure more investors to participate in our projects,â€ť she stressed.
With the PPP Act, the gains of the PPP program would be institutionalized through a policy and institutional environment that has now been strengthened and made more facilitative of private sector engagements over the long term.
â€śWe are pushing for the amendments to ensure that current process improvements are sustained and that these PPP contracts, procured through credible, transparent and accountable processes, will be honored in succeeding administrations. We also want to allay the fears of investors, so we are aligning all our national policies, guidelines and processesâ€ť, she explained.
Part of the amendments, she said, would introduce new provisions on how government would treat unsolicited proposals to include lengthening the time for the Swiss challenge.
â€śThis will enable challengers to come up with better counter proposals,â€ť she added.
Canilao also shared that some of the amendments hope to give additional incentives to the private sector for undertaking PPP projects of national significance.
The additional incentives, she added, includes exempting the winning private proponent from real property tax and other local taxes as well as the automatic grant of franchise, licenses, and other necessary business permits.
In order to ease private sector concerns on perceived risks from big-ticket projects, Canilao said the creation of a contingent liability fund would likewise be institutionalized through the amendment.
The PPP Center is also advocating full disclosure of PPP contracts, with exemption to those that contain proprietary information which may be kept confidential for a limited period.
Further, this initiative would institutionalize the Project Development and Monitoring Facility (PDMF), the PPP Center and its Governing Board â€“ all aimed at ensuring the sustainability of the program.
Several bills were filed in both houses of Congress and are now going through deliberations.
â€śWeâ€™re hoping that both Houses of Congress will work on the amendments before the end of the year,â€ť Canilao said.
Canilao earlier said at least 15 major infrastructure projects worth over P222 billion would be awarded before the term of President Aquino ends in June 2016. These include the P64.9-billion Light Rail Transit Line 1 Cavite extension project, the P35.4-billion Cavite â€“ Laguna expressway project, the P29.83-billion Bulacan bulk water supply project, and the P15.92-billion operation and maintenance (O&M) of the Laguindingan Airport.
Business World, 09 May 2014
By Alden M. Monzon
On its website, the PPP center noted that as of this week, seven PPP projects in the governmentâ€™s pipeline have already been awarded:
â€˘ the P2.01-billion Daang Hari — South Luzon Expressway (SLEx) Link Road project,
â€˘ the P20.14-billion phases I and II of the PPP for School Infrastructure Project (PSIP),
â€˘ the P5.69-billion Modernization of the Philippine Orthopedic Center project (MPOC),
â€˘ the P1.72-billion Automatic Fare Collection System (AFCS),
â€˘ the P15.52-billion Ninoy Aquino International Airport (NAIA) Expressway Project and the P17.52 billion Mactan-Cebu International Airport (MCIA) Passenger Terminal Building.
Meanwhile, Undersecretary Cosette V. Canilao, Executive Director of the PPP Center, said the center is still reviewing how many of the planned PPP projects will be completed before the term of President Benigno S. C. Aquino III ends in mid-2016.
â€śNirereview pa namin ngayon iyan, kasi di ba, nadelay yung awarding ng Mactan? … Ang dating estimate namin is seven, pero ngayon nirereview ulit namin yan (We still reviewing that, because wasnâ€™t there some delay in the awarding of the MCIA project? … Our previous estimate was seven, but now we are reviewing that again),â€ť Ms. Canilao toldÂ BusinessWorldÂ in a telephone interview.
The awarding of the MCIA project was delayed by about three months, after one of the bidders questioned the governmentâ€™s decision to award the contract to the GMR-Megawide Consortium.
For its part, the Department of Transportation and Communications (DoTC) sees at least two of its PPP projects completed before President Aquino steps down.
â€śAFCS will be operational by September 2015. Other than that, only [the] Integrated Transport System Project-Southwest terminal seems possible by mid-2016,â€ť DoTC Spokesman Atty. Michael Arthur C. Sagcal said in a text message.
Currently, of the projects under the DoTCâ€™s supervision, only the AFCS and the MCIA have been awarded.
Three more in the bidding stage: the LRT Line 1 Cavite Extension and the south and southwest terminals of the Integrated Transport System Project.
Another three await approval from the National Economic and Development Authority (NEDA), including two airport projects and the maintenance and operation of LRT Line 2.
09 May 2014
The Public-Private-Partnership Center, through its Governing Board, pushes for the enactment of the PPP Act of the Philippines through the amendment of Republic Act 7718 or the BOT Law. With the PPP Act, the gains of the PPP Program will be institutionalized through a policy and institutional environment that has now been strengthened and made more facilitative of private sector engagements over the long term.
â€śWe are pushing for the amendments to ensure that current process improvements are sustained and that these PPP contracts, procured through credible, transparent and accountable processes, will be honored in succeeding administrations. We also want to allay the fears of investors, so we are aligning all our national policies, guidelines and processesâ€ť, explained Usec. Cosette Canilao, PPP Center Executive Director.
Part of the amendments will introduce new provisions on how government would treat unsolicited proposals, which include lengthening the time for the Swiss challenge. â€śThis will enable challengers to come up with better counter proposals,â€ť added Executive Director Canilao.
Executive Director Canilao also shared that some of the amendments hope to give additional incentives to the private sector for undertaking PPP projects of national significance. The winning private proponent will be exempted from real property tax and other local taxes. The private partner will also be accorded automatic grant of franchise, licenses, and other necessary business permits.
In order to ease private sector concerns on perceived risks from big-ticket projects, the creation of a contingent liability fund will likewise be institutionalized through the amendment. â€śWe want to attract more investors to participate in our projects,â€ť Canilao said.
The PPP Center is also advocating full disclosure of PPP contracts, with exemption to those that contain proprietary information which may be kept confidential for a limited period. This is consistent with the good governance agenda of the Aquino Administration.
Further, this initiative will institutionalize the Project Development and Monitoring Facility (PDMF), the PPP Center and its Governing Board â€“ all aimed at ensuring the sustainability of the program.
Amending the BOT Law is an urgent economic policy measure of the executive branch. Several bills were filed in both houses of Congress and are now going through deliberations.
“Weâ€™re hoping that both Houses of Congress will work on the amendments before the end of the year,â€ť Canilao concluded.
Since the launch of the Program, the PPP Center has been advocating measures to enhance the policy environment for private sector participation in infrastructure and development projects. This is consistent with the PPP Centerâ€™s policy formulation and evaluation mandate over the PPP Program.
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)