Part One
The Duterte administration spent 2017 preparing for battle. It dug trenches and carefully crafted plans on how best to move its infrastructure vision forward.
The National Economic and Development Authority (NEDA) was instrumental at this stage. The oversight agency completed the government’s 2017 to 2022 Philippine Development Plan (PDP)—the country’s socioeconomic blueprint that details the current administration’s plans in addressing issues surrounding specific sectors of the economy.
The plan is accompanied by the Public Investment Program (PIP), which identifies the projects and programs that will be implemented to achieve the plans and targets included in the PDP. Based on the draft PIP, the initial estimates showed that implementing the plans and meeting the PDP targets will cost the government nearly P11 trillion.
Among the big-ticket programs and projects are the Payapa at Masaganang Pamayanan (Pamana) program costing P8.61 billion, while P114.04 million will be allocated for the program on the Implementation of the Normalization Program in the Bangsamoro.
“Strong economic growth aside, the biggest highlight of the year is our launch of the Philippine Development Plan, or PDP 2017-2022, last June. The PDP will guide all of government’s policies, programs and projects for the entire duration of the Duterte administration,” Socioeconomic Planning Secretary Ernesto M. Pernia said.
“As I keep stressing, the Duterte administration will be relentless and unflinching in directing its efforts toward infrastructure development, regional and rural development, and human capital development through 2022, to fight poverty and reduce inequality in our country,” Pernia added.
With an ambitious plan and sky-high targets, most notably the P8.4-billion spending on infrastructure projects, the government needed to improve its efforts in project evaluation and approval.
The President himself did not mince words. He specifically directed the Neda to speed up its project approval process. The President knew efforts to meet his vision of bridging the country’s infrastructure gap needed to be fast-tracked.
Suiting up
In response, the Neda instituted changes and introduced innovations that sought to speed up the project approval process. This became the focus of the oversight agency’s efforts this year.
“The year 2016 and 2017 were years of improving the pipeline of projects. The year 2018 will be a year of implementation,” Neda Undersecretary for Investment Programming Rolando G. Tungpalan said in an inter-view with the BusinessMirror.
In his year-end briefing, Pernia said one of the major changes in the project approval process this year was the creation of the Project Facilitation and Monitoring and Innovation (PFMI) Task Force. The PFMI Task Force aimed to ensure that infrastructure flagship projects are implemented and completed on time.
Tungpalan earlier said that setting up the PMFI required funding, such as the technical-assistance loan from $100 million worth Asian Development Bank (ADB) dedicated to project monitoring.
The PMFI had the Neda as its secretariat, while its members included the Neda secretary, finance secretary, budget secretary and heads of other agencies that are part of the “Build, Build, Build” program.
Tungpalan said the PMFI uses project monitoring techniques, such as S-curves, which plot the release of monetary resources with time, as well as the Project Evaluation Review Technique/Critical Path Method (PERT-CPM) that helps predict which projects will encounter delays.
He added the PERT-CPM can help the PMFI determine certain activities that can be done in parallel with the completion of a certain milestone in project implementation. It will help monitor the slack, as well as the critical path, of projects.
The flagship projects, which are the focus of the PMFI, is itself one of the infrastructure-related initiatives this year. The list of 75 projects has an initial cost estimate of P1.58 trillion.
Creating this exclusive list of “game changing” infrastructure projects, Tungpalan said, allows the Neda and the line agencies to have a focus on which projects must be prioritized. Without this focus, Tungpalan admitted, some important projects could fall into the cracks and not get implemented.
He added that while funding is not a concern given the country’s fiscal health, speed is. Undertaking Feasibility Studies take anywhere from three to 12 months, depending on whether previous work on the project has been done.
The ICC project approval period adds another six weeks to this process, while post-approval time needed to undertake contracts and bidding will take time to complete. Only after projects are bidded out and contracts are awarded will the projects start contributing to the economy.
Getting loan funding approval from development partners will also take time. This will matter considering that the bulk of the 75 flagship projects will be funded through official development assistance.
Apart from the PMFI and the flagship projects, another initiative that sought to hasten project appraisal and approval process was the the $100-million Infrastructure Preparation and Innovation Facility (IPIF).
Neda Assistant Secretary Jonathan L. Uy recently told reporters the list of projects to be financed by the IPIF now cover 21 projects from the indicative list of 19 projects. The list now includes eight road and bridge projects; six water projects; and six rail, public transport, port and airport projects.
“The IPIF is a facility we hope to use in the feasibility assessment. Essentially feasibility studies will be done by the departments but the IPIF is supposed to provide further technical validation and improvement, particularly in your rollout implementation. It includes institutional capacity assessment,” Uy earlier explained.
In August the ADB said the total cost of the facility is $164.06 million, with the Philippine government contributing $64.06 million. The project is expected to be completed in the second quarter of 2021.
The new loan, along with the recently approved $5-million technical-assistance grant, serves as a catalyst for the government’s project-management and -monitoring system.
The list of projects that the facility can finance is about $3.8 billion. Initially, the loan for the facility is good for five years but the IPIF can receive additional loans from ADB depending on the implementation of the projects and the need for additional resources by the national government.
Also, while the facility is still limited to financing projects from the Department of Public Works and Highways and the Department of Transportation, later on the use of the facility can be used for other projects, such as those for agriculture, health and education.
The government’s infrastructure invest-ments in national roads, railways, bridges, flood control, ports and airports will add as much as $10 billion to the country’s GDP between 2019 and 2024.
Also included in the list of initiatives is the “3-in-1” process introduced by the Department of Finance to streamline the Neda Board approval process.
This is where the Neda Board approval, together with the issuance of the special presidential authority to government officials to negotiate and sign the loan, guarantee or grant agreement for the project, as well as the Forward Obligational Authority by the Department of Budget and Management, would be issued simultaneously during a single Neda Board meeting.
Finance Secretary Carlos G. Dominguez III earlier said the 3-in-1 process is among the steps taken by the Duterte administration to significantly improve the absorptive capacity of government agencies, particularly those involved in the government’s Build, Build, Build infrastructure program.
“Our goal here is to speed up the approval and implementation of our flagship infra projects so that we can get shovels on the ground as soon as possible,” Dominguez earlier said. Apart from these initiatives, the national government also agreed to make the ICC the “clearing house” for all Chinese-funded projects.
Screening companies undertaking government projects is not part of the current functions of the ICC-Cabcom. It is only tasked to evaluate publicly funded projects that cost P5 billion and up. Pernia earlier said the Chinese government will also create or assign its own group to act as the first level of screening for Chinese companies wanting to participate in Philippine projects.
The Chinese firms will be assessed based on certain qualifications, including their track record in undertaking projects and financial capability to complete a project. The ICC-Cabcom will screen Chinese companies only. Pernia earlier said this is because the country does not have any “sour experience” with contractors of other nationalities.
There are also smaller initiatives created to speed up projects this year. This includes creating levels in Project Evaluation Reports (PER), where projects with a full PER will be directly evaluated by the ICC, as well as reducing the number of Neda Board members.
Pernia said rationalization of the composition of the Neda Board as stated in the President’s Administrative Order 8 only aimed to streamline the approval process.
To be continued
Image credits: Nonie Reyes