PPP and Infrastructure Development in the Philippines
By Cayetano W. Paderanga, Jr.
Secretary of Socioeconomic Planning
JETRO Public-Private Partnership Seminar
Ballroom A, Dusit Thani, Ayala Center, Makati City
February 17, 2012, 9:30 am
Vice Minister for International Affairs Hideichi Okada, Chairman Toru Tsuji; our partners from the Japan External Trade Organization (JETRO); our friends from the Japanese business community and other investors present here today; distinguished guests, ladies and gentlemen, good morning.
Thank you for inviting me to talk about the Philippines’ recent efforts in infrastructure development and the important role of Public Private Partnership or PPP in this development.
But first, let me take this opportunity to thank the Government of Japan for its continued support of our efforts to improve the country’s investment environment through its Official Development Assistance or ODA. For the last ten years, the Japan International Cooperation Agency or JICA has been the biggest source of ODA for the Philippines, with the infrastructure sector as the top recipient.
In fact, the NEDA-Investment Coordination Committee or ICC recently approved Phase I of the Central Luzon Link Expressway (CLLEX) Project that will be funded through a loan from JICA. The Project will integrate the Tarlac, Nueva Ecija, Aurora and the Cagayan Valley region with Metro Manila and the rest of Northern Luzon, which is consistent with our regional growth strategy. We expect that the succeeding phases of the Project are to be implemented under a PPP arrangement.
The PPP, incidentally, is one of the flagship programs of the Aquino administration. It seeks to encourage greater participation of the private sector in the provision of basic public infrastructure through construction, investments, and operations and management. It recognizes the private sector as a reliable and capable partner in pursuing infrastructure projects that will help improve the lives of Filipinos.
We see PPP as a more focused strategy to help attain inclusive growth for all Filipinos, hence, its substantial role in the Philippine Development Plan (PDP) for 2011-2016.
The PPP, however, can only work well if all participating partners are assured of getting a fair deal. Thus, the Philippine government has put into place a business environment characterized by broader emphasis on transparency, accountability and good governance. Ultimately, this environment should be able to create new jobs, improve delivery of basic socioeconomic services, and spur positive economic growth.
Ladies and gentlemen, now is the time to consider taking advantage of the investment opportunities in the Philippines. Investor confidence in the Philippines has lately been improving, leading the international financial community to rate the Philippines as the third most preferred market in the world for global fund managers. This confidence from the international finance community reflects a collective affirmation of the government’s current reform agenda.
The Philippine economy has remained robust and resilient, growing by 3.7 percent in the fourth quarter of 2011, from 3.1 and 3.6 percent in the second and third quarters, respectively, despite the global economic turbulence that includes the US and European debt crisis. We expect such steadfast resilience, supported by initiatives in good governance, to help the country move forward in a sustained manner.
To enhance private sector investments in development projects, the government has already initiated the necessary amendments to the existing Build-Operate-Transfer (BOT) Law for a more transparent and level playing field. While the proposed amendments are yet to be finalized to become a new law, revisions to the existing implementing rules and regulations of the BOT Law will soon take effect. Further, revisions to the existing Guidelines and Procedures for Entering into Joint Venture (JV) Agreements between Government and Private Entities are also being finalized.
Currently, various government agencies have their own PPP Units and, with the assistance of the PPP Center of the Philippines, are reviewing and evaluating how to structure development projects into the PPP scheme. We have received further instructions from President Aquino to further streamline the PPP process. We may keep a small facilitative staff in NEDA but will keep a China wall between facilitation and investment evaluation. PPP programs vary from the conventional projects, like toll roads, railway lines, airport passenger terminals and water supply projects to health and social facilities.
We have identified projects that we believe to be advantageous to both government and the private sector. These also have multiplier effects on the economy and aim to benefit the poor. At present, we have 16 PPP infrastructure projects in various stages of development that will be ready for the private sector participation. According to the PPP Center, these projects include traditional infrastructure projects like airports, roads and rail, as well as water projects. We have the Laguindingan Airport in Misamis Oriental, the new Bohol Airport, Mactan Airport, Puerto Princesa Airport, the LRT Line 1 and Line 2, and the BALARA water hub and Angat Hydro Electric Power Plant for its operation and maintenance.
We also see PPP as a viable and creative solution to our other infrastructure needs in addressing social concerns like hospitals, schools, grain centers, and storage facilities for our agriculture sector, among others.
There has been much interest from the private sector to collaborate with us and build these projects at the soonest possible time. But as the nature of transparency and accountability dictates, we have to take very careful and measured steps, so as not to dampen business sector confidence in the country. With this growing confidence, the PPP Program has gained momentum and the international business community is already taking notice.
I think we have been ranked as the third most preferred market in the world for global fund managers because the international financial community welcomes the present administration’s reform agenda. We see this as an opportunity to improve the lives of our countrymen, including the development of the country’s infrastructure that is being supported through PPP, among other reforms. Imagine new classrooms for 9,000 municipalities. Imagine the number of children whose lives can be changed forever because of a better learning environment provided by these classrooms. There are other such types of projects. We are aware of the importance of education in reducing poverty and in attaining our development goals. It is the great equalizer that allows every young Filipino a chance to realize their dreams. That Is why we shall prioritize education and continue to build, literally, on the good foundation that we have today.
We will continue to focus on sustaining the gains achieved through our reform agenda and strengthen our country’s international competitiveness. We shall continue to make sound fiscal policies while improving the process of doing business in the Philippines. We shall also continue to work together with the private sector which we regard as the main engine of economic growth.
It is our hope that the partnership between the Philippines and Japan will continue to flourish as we seek to improve and develop our country’s infrastructure. We are thus very thankful to the JETRO for opening the doors of partnership and collaboration much wider. Through the strong mutually reinforcing relationship that we have now, we are confident that we can move forward in helping the country towards development.
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