Multilateral lenders are now working with the government in harmonizing the country’s procurement procedures with international standards to allow more foreign participation, especially for massive infrastructure projects that require the latest technologies to speed up and improve implementation.
Asian Development Bank (ADB) Philippines Office Country Specialist Joven Balbosa told reporters that International Competitive Bidding (ICB) and international best practices are needed to access “global technologies” that will make the construction of various projects more efficient.
“You got these large projects like tunneling, you know, flood management for Metro Manila, not just pumping stations. These require new global technology.
Bringing that in requires changes in the economy. For example, the Procurement Act, perhaps it is time to look at it once again,” Balbosa said. The ADB and the World Bank, she disclosed, are currently working with the national government in harmonizing its procurement rules with international norms.
In a document, the World Bank said the Philippine government does not subscribe to the globally accepted ICB. The bank said the country only uses national competitive bidding (NCB).
NCBs are particularly used for contracts on farm-to-market roads, school buildings, community hospitals and health centers.
The World Bank explained that while ICB and NCB are both open and transparent procurement processes, ICB requires advertising the procurements internationally and nationally, whereas NCB requires national advertising only.
“In the case of the Philippines, however, the most common method is NCB because the nature and scope of contracts are unlikely to attract international competition and the advantages of ICB are outweighed by the administrative or financial burden involved,” the World Bank said.
However, Section 4 of Republic Act (RA) 9184, or the Government Procurement Reform Act, stated that foreign entities may participate in the procurement of infrastructure projects, goods and consulting services.
This was detailed in the Implementing Rules and Regulations (IRR), particularly Section 4, or the scope and application of the IRR, and Sections 23 and 24, which pertain to the procurement of goods and infrastructure projects and consulting services, respectively.
“Unless the Treaty or international or executive agreement expressly provides another or different procurement procedures and guidelines, RA 9184 and this IRR shall apply to foreign-funded procurement of goods, infrastructure projects, and consulting services by the GoP [Government of the Philippines],” the IRR stated.
“As you move into large complex projects, you would get into issues of design, preparation, identification, and then terms of reference and crafting terms of reference, bids and awards and then monitoring later on, these are the next steps,” Balbosa said.
In its Asian Development Outlook (ADO) 2017 Update, the ADB said the government’s massive infrastructure push will boost the country’s economic growth to 6.5 percent in 2017 and 6.7 percent in 2018.
The ADB added that while inflation rose to 3.1 percent in the first eight months of the year, from 1.5 percent a year before, it remains within the Bangko Sentral ng Pilipinas target range of 2 percent to 4 percent.
The Manila-based multilateral development bank forecasts inflation to slow to 3.2 percent from 3.5 percent for 2017, and to 3.5 percent from 3.7 percent for 2018.
Apart from the public funds, the ADB said, however, that the “Build, Build, Build” program will require the timely implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) and increased private-sector funding.
The TRAIN, ADB Country Director for the Philippines Richard Bolt said, will be crucial in financing the infrastructure push of the government through 2018.
ADB Philippine Country Office economist Aekapol Chongvilaivan also said the country will require some P160 billion to P180 billion for projects in the next three years alone.
With this amount, he said, the country will also need the help of the private sector. Public-private partnerships (PPPs), Balbosa said, should be viewed from a long-term perspective.
This, he said, is the reason the ADB, the Canadian and Australian governments assisted the PPP Center through the creation of the Project Development Monitoring Fund, which finances feasibility studies and the procurement of transactional advisers.
The ADB believes that PPPs can help fill the infrastructure gap, not only in the Philippines, but also in the region. The ADB estimates that the infrastructure-financing gap reaches $500 billion annually.
“While state funds currently finance 92 percent of the region’s infrastructure investment, some economies struggle to meet these needs, constrained by high fiscal deficits and deepening public debt,” the report stated.
Doubling the ratio of PPP investment to GDP will add 0.1 percentage point to GDP growth per capita across the Asia and the Pacific.
The report added that doubling PPP investment from 0.5 percent of GDP in 2015 to 1 percent could bring safe drinking water to 12 million people among the 300 million who currently lack it, and provide electricity to 14 million of the 400 million without.
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