YOKOHAMA, Japan—The Duterte administration is keen on using government funds to hasten the rollout of various infrastructure projects than go through the public-private partnership (PPP) route, according to the chief of the Department of Finance (DOF).
Finance Secretary Carlos G. Dominguez III told reporters here on the sidelines of the 50th Asian Development Bank (ADB) Governors’ Annual Meeting that the “lengthy negotiation process” for PPP projects could delay infrastructure projects.
“In most projects, it is quicker for government to implement it rather than go through that lengthy negotiation process, which will take up to 30 months or go through a process where it is opened to a [Swiss] challenge and everybody will throw a monkey wrench into it,” Dominguez said.
Apart from speeding up project implementation, he said another benefit will be in terms of access to financing. Dominguez said some lenders do not want to assume the risk involved in construction.
By undertaking the construction of public infrastructure projects, the government assumes the construction risk. This then prompts lenders to offer a premium in their lending to the Philippines.
However, Dominguez said this does not mean the government will no longer engage the private sector in its infrastructure program.
As in all government projects, Dominguez said the actual civil works will be bidded out to the private sector since the government does not have the capacity to do construction work on a massive scale.
“We’re not going to construct it ourselves. We will bid it out. That’s where the private sector comes in. In supplying the services to actually implement [projects],” Dominguez said. According to the ADB, increasing investments in infrastructure is key to sustaining Asia’s growth. The Manila-based multilateral development bank said this is part of its new long-term strategy dubbed as “Strategy 2030”.
ADB President Takehiko Nakao said Asia will need $1.7 trillion annually to finance investments in power, transport, telecommunications and water until 2030.
Nakao said the ADB is ready to support its Developing Member-Countries (DMCs) in this regard and to increase investments needed for social sectors, especially health and education, which were identified as the second most important priority area in Strategy 2030.
“The ADB is supporting an increasing number of private-sector projects in education, health and agriculture,” Nakao also said. “Funding micro-, small- and medium-sized enterprises through local banks will remain a priority.”
Total ADB operations last year, including cofinancing and technical assistance, reached $31.7 billion. ADB’s loan and grant approvals reached a record high of $17.5 billion, a 9-percent increase from the previous year. Climate finance reached $3.7 billion, up from $2.6 billion in 2015.
Also, cofinancing with public and private partners increased to $13.9 billion. This includes ADB’s first two cofinanced projects with the Asian Infrastructure Investment Bank for roads in Pakistan and a natural-gas project in Bangladesh.