WHEN President Aquino returned from his working visit to Europe and the United States last month with $2.3 billion in investment commitments, with $904 million already in the bag, the buzz they created was more about the Philippines’s public-private partnership (PPP) projects, and how they could become a game-changer for a nation dealing with potholes, floods and other problems in the economy. This is the reason the President made a pitch for PPPs that would mean the entry of much-desired foreign direct investments (FDI).
This pitch, in which President Aquino underscored the attempt to make PPP project biddings transparent as part and parcel of his daang matuwid (straight path) campaign, may have unduly raised the expectations of the international business community. This is just as well, for if these expectations are unmet, it would hurt not just Mr. Aquino’s legacy and the country’s image in the global market, but also the government’s efforts to receive more FDI that would further grow the economy.
FDI, after all, are what the country needs to generate jobs, reduce poverty and net a better quality of life for Filipinos. This is what PPPs aspire for: Economic growth based on investments and not just on consumption, which is the reason for the lack of inclusive growth. Hence, even with the quarterly 7-percent growth in gross domestic product, unemployment and underemployment rates remain high.
President Aquino, who cited the country’s economic growth at each stop of his two-continent trip, himself said the investments translated into 55,500 jobs. It is, thus, imperative for his administration to ensure that the rosy investment picture he presented before the investing community is 100-percent true. International investors want a country’s investment environment to meet certain requirements.
One such requirement is that prospective projects are free from potential major conflicts and that the bidding and award process for such projects are well-defined, respected and free from politics. The President is in a good position to get more foreign and local investments in infrastructure and energy projects in the country through a credible PPP program. This means that the government should assure local and foreign businessmen that the bidding and award process has adequate safeguards to keep it fair.
The memory of the botched handling of the Ninoy Aquino International Airport Terminal 2 project is still fresh in the minds of many foreign investors. For this reason, the country’s attempt to bid out what is, by far, its biggest PPP project—the much-ballyhooed P123-billion Laguna Lakeshore Expressway Dike Project—should be handled with great care. It is the Aquino administration’s showpiece, as far as PPP projects are concerned, and, as such, the government needs to ensure that no controversy hounds it.
Sticky issues about the project, such as the grievances aired by officials and communities in Region 4A (Cavite, Laguna, Batangas, Rizal and Quezon provinces, or Calabarzon), should be adequately addressed. These officials, after all, are raging against the planned implementation of the project, which, they say, is not in accordance with what was agreed upon during the consultations with stakeholders. It appears that the original agreement was to implement the project on all sides of the lake, because if it is implemented on only one side, the other areas will be affected by floods.
There are two components of this particular project: a 47-kilometer road dike and the reclamation of about 700 hectares of foreshore and offshore areas in the cities of Taguig and Muntinlupa for mixed-land use. As it turns out, the dike-cum-highway will be built only on the Laguna side, making several areas in Metro Manila and Rizal a virtual catch-basin for waters from the lake whenever it overflows. This is precisely the concern the stakeholders raised when they were asked for their feedback.
Aside from this, the business community is wary about the bidding and award process that accompanies some PPP projects, especially after Malacañang appeared to have shelved a major PPP project after it underwent that process. This merely fanned speculations that the process may not be free from possible intervention at all.
These are the problems that confront certain PPP projects that the government should steer clear of. Once it removes them, the government should be able to woo more investments than what President Aquino has brought from his recent trip to Europe and the US. Foreign investments that are as large as those received by Indonesia would hopefully go a long way in getting long-overdue infrastructure projects off the ground.
If the expectations of the international business community regarding the Philippines’s investment climate and the integrity of the rules of the investment game are met, PPPs can be a boon for the country. However, the Palace must admit that there are doubts that must be dispelled. It is hoped that the government would honor what it has discussed and agreed on during its consultations with stakeholders, as well as the integrity of the bidding and awards process for PPP projects. That way, PPPs can be a boon, rather than the bane, for the Aquino administration.
E-mail: hugagni@yahoo.com.