RESIDENT Ferdinand Marcos Jr. has advised local government units (LGUs) to engage the private sector for possible funding of their investments, such as for infrastructures, through public-private partnerships (PPPs). I wish to introduce here unsolicited ideas that can be developed further into PPP projects, for anyone’s consideration, that is, especially those who have the authority and means to carry out PPPs.
The PPP route has become fashionable for many developing countries, especially those which struggle to collect enough funds for their public goods and services investments. Through PPPs, private funds come in; they free up government funds for other much-needed expenditures. In certain cases, private firms are quick to propose PPP agreements with government when opportunities to profit from them are hard to ignore.
Governments can sweeten PPP deals and make them more enticing for private firms, such as providing guarantees (where government assumes contingent liabilities in case the private firm defaults on its debts with which it funded the PPP project), or by creating conditions that make a PPP some kind of a commercial monopoly (as in the case of the Parañaque Integrated Terminal Exchange, or PITEX).
In some instances when access to PPP goods or services entails costs that price out the lower segments of the population (such as skyways), some PPPs can be seen as serving private interests more than public welfare (hence the “private gain, public pain” rant). There is also the argument for comparing, from a whole-of-society perspective, the costs and benefits over a period of, say, 25 years, between two similar projects, one funded by PPP and the other by government debt.
Overall, however, the Philippines (according to an Asian Development Bank paper) is known as having a relatively robust enabling legal framework (Republic Act 6957, the Build, Operate and Transfer Law of 2012, and its amendment, Republic Act 7718), and implementing structures such as the PPP Center, for PPP projects.
The PPP Center defines PPP as a contractual agreement between the government and a private firm targeted towards financing, designing, implementing and operating infrastructure facilities and services that were traditionally provided by the public sector.
There can be many forms of PPPs in terms of modalities and scope, for example. In the Philippines, the PPP Center identifies two basic forms of PPP. One is called availability PPP, the other is a concession-based PPP. The center says that “they are distinguished from each other on the roles the partners assume.”
In the availability PPP, government “contracts with a private sector entity to provide a public good, service or product at a constant capacity to the implementing agency for a given fee (capacity fee) and a separate charge for usage of the public good, product or service (usage fee). Fees or tariffs are regulated by contract to provide for recovery of debt service, fixed costs of operation and a return on equity.”
In a concession PPP, “the government grants the private sector the right to build, operate and charge public users of the public good, infrastructure or service, a fee or tariff which is regulated by public regulators and the concession contract. Tariffs are structured to provide for recovery of debt service, fixed costs of operation and return on equity.”
Examples of finished/ongoing PPP projects include Cavite-Laguna Expressway (Calax), NLEx-SLEx Connector Road Project, Muntinlupa-Cavite Expressway, NAIA Expressway, Tarlac-Pangasinan-La Union Expressway (TPLEx), North Luzon Expressway Harbor Link Project, Southeast Metro Manila Expressway Project (Semme/C-6), and Metro Manila Skyway.
Most of these projects are located within or near Metro Manila. While some PPP projects have been considered for LGUs, they are few and far between as it were.
The Local Government Code identifies several sectors in which PPP projects can be adopted, such as agriculture and fisheries, commercial and industrial development, education, government buildings and operations centers, forestry, health, housing, information and communication technology (ICT) systems and facilities, land use, roads and bridges, social welfare, transportation, water and sanitation.
On government buildings and operations centers, I suggest that LGUs develop through PPPs some of their real estate properties as host for the relocation of central offices of government agencies that are presently located in Metro Manila. The host LGU may need to make it easy for central personnel to relocate, such as by offering free unlimited Wi-Fi, free housing for at least 25 years, etc. The multipliers and positive externalities that such an investment can bring to the local economy promise to be almost boundless, while helping to somehow decongest human and vehicular traffic in Metro Manila. Thus, the national government would have a vested interest in such a prospect. Public policy should deem it compelling enough for a presidential edict to be issued, directing the dispersal of government offices to the countryside.
Initial preferences for location should suggest that the mandate of each office should fit to specific leverages offered by an LGU. For the Department of Tourism, for example, prime locations should include Palawan or Bohol. For the Department of Environment and Natural Resources, I would recommend my home province, Eastern Samar. Here, one can still see vibrant canopies; the better for our DENR people to appreciate the rewards of being able to protect the environment. For the Commission on Elections, any site beside a body of water should be appropriate, so that it can dive into it whenever a fire alarm rings out from any of its data centers.
There can be social costs, of course, as red districts can be expected to proliferate with the influx of migrants. Offices like the Department of Public Works and Highways, Bureau of Internal Revenue, Bureau of Customs, Department of Health, Bureau of Immigration, and Department of Agriculture, among many others, as suggested by a 2021 Presidential Anti-Corruption Commission report, would bring in enough spoils to the countryside that, although foreseen as being able to lift the local economy to new levels of activity, may also encourage new lifestyles.
