Source: BusinessWorld Online Edition
PUBLIC-PRIVATE partnership (PPP) projects are “at the core” of the government’s growth strategy for the country, but it will take sound processes to ensure their success, the Finance chief said in remarks during a panel discussion last May 3 at the sidelines of the Asian Development Bank’s (ADB) 44th Annual Meeting in Hanoi, Vietnam.
“The PPP modality is at the core of the Philippines’ growth strategy,” an ADB statement quoted Finance Secretary Cesar V. Purisima as saying during the seminar on “Bridging the Gap: Catalyzing Private Capital for Investment in Infrastructure.”
“The lessons we learned from past PPPs — particularly the importance of well-structured contracts, open and transparent bidding processes, untainted by corruption — will enable the country to effectively mobilize increasing capital inflows to productive uses.”
The Bangko Sentral ng Pilipinas (BSP) has constantly said that capital inflows to the economy have remained manageable, amid warnings from multilateral institutions like the International Monetary Fund and the ADB of the potentially destabilizing effects of huge foreign fund flows into emerging markets.
At the same time, the central bank has acknowledged prescriptions by multilateral agencies for economies like the Philippines to find ways to funnel such funds into infrastructure and other development priorities.
Latest available BSP data show that foreign portfolio investments — also known as “hot money” for the ease by which they enter and exit markets — registered a net inflow of $1.65 billion as of April 15, more than double the mere P664.62 million recorded in the same period last year.
The ADB seminar in Hanoi cited the need for emerging markets to offer risk-mitigation tools like guarantees to draw huge private funds that continue to look for good investment opportunities.
“Without them, private companies and financial institutions may not be prepared to invest their capital,” ADB said in its statement.
It also quoted Lakshmi Venkatachalam, ADB’s vice-president for Private Sector and Cofinancing Operations, as saying in the same seminar that “the time-tested public-private partnership financing modality needs to be redesigned and customized to address some of the issues emerging out of the post-crisis environment.”
To rope in investor interest, the PPP Center of the Philippines is working to strengthen the accountability of project implementors and transparency of the deals to be auctioned off this year.
“These safeguards include providing assistance to implementing agencies and local government units in the necessary due diligence in project structuring, contract preparation, securing of approvals and in the selection of private partners,” PPP Center Director IV Eleazar E. Ricote said via text yesterday.
“Such diligence is critical to transparency requirements and in ensuring that projects will stand scrutiny,” he added.
Mr. Ricote said the government is also banking on assistance from international organizations like ADB and the World Bank to improve the capacity of state agencies and the design of processes.
The PPP Center is also looking at amending the build-operate-transfer law and its implementing rules and regulations in order to provide clearer guidelines on procurement, he added. — Diane Claire J. Jiao
