By Rea Cu & Jasper Emmanuel Y. Arcalas
THE Public-Private Partnership Program (PPP) remains to be the more effective mode in the implementation of large-scale infrastructure projects, according to some Association of Southeast Asian Nations representatives in the ongoing ADB Annual Meeting 2018 in Mandaluyong City.
PT Indonesia Infrastructure Finance Managing Director-Chief Investment Officer Harold Tjiptadjaja told the BusinessMirror that PPP “is more fitting” for infrastructure projects that are larger and more complex in scale.
“Normally, it should be for the larger and complex, and wherein the private sector will have an added value. If you are doing what the government has done for the last 100 years, unless the private sector bring efficiency, then I don’t see any reason [not to go into PPP] unless it’s budget constraint issues,” Tjiptadjaja said.
Not an elixir
ASIAN Development Bank (ADB) President Takehiko Nakao, however, warned countries, including the Philippines, not to rely exclsively on PPP as it is not an elixir that would solve their respective infrastructure gap problems and other economic development woes totally.
“PPP is not a magic panacea to resolve all the issues. It should be designed and implemented in a very fair and transparent, wise way, otherwise, the burdens end up in taxpayer, consumers or users,” he said at a news briefing at the ADB Annual Meeting 2018 on Thursday.
Nakao added that an efficient and effective PPP scheme requires a “good infrastructure and good investment climate,” which includes a “stable” policy and regulation environment.
Under the Duterte administration, the government has laid out a plan to implement 75 flagship projects of scale under its “Build, Build, Build” (BBB) program, and has tweaked the traditional PPP into a “hybrid” model so that the government now implements the projects using a combination of its own budget, inflows from the official development assistance and funds raised from bond floats at investment-grade rates, to speed up project implementation.
Tjiptadjaja added that the government has options other than the PPP in terms of implementing infrastructure projects, but it has to invest time in imposing proper due diligence and preparation for project implementation.
“Regardless if it’s a PPP or not, you have to do the preparation properly. Some of the people…cut [corners but], you shouldn’t do it that way, you should have the proper due diligence, the proper preparation, and then you decide which way to go,” he added.
Tjiptadjaja further stated that the government cannot implement infrastructure projects alone, and that it has to provide opportunities for the private sector to contribute to the project.
“We all know that the government alone can’t do infrastructure, we have to find a way how we can drive the private sector to contribute,” he said during the ADB seminar on Private Sector Participation in Asian Infrastructure Development on Thursday at the ADB Headquarters in Ortigas City.
Last month Finance Secretary Carlos G. Dominguez III expressed confidence that projects under the Duterte administration’s BBB program will be implemented fast enough, with an assurance that such projects would be free from graft and corruption.
The finance chief said that with an array of flagship infrastructure projects due for rollout this year, he expressed confidence that the BBB projects will be also completed on time, given that the government had put in place measures to ensure graft-free completion.
The Duterte administration has identified 75 flagship infrastructure projects under its five-year BBB program with a combined total cost of $170 billion, with 23 projects already having been given the go-signal by the National Economic and Development Authority Board chaired by President Duterte.
Nandita Parshad, managing director for Energy and Natural Resources of the European Bank for Reconstruction and Development (EBRD), pointed out that when starting a PPP, endorsement from the government is key, and that the government should keep the private sector engaged, among others.
“Make sure that there is a headline government endorsement and commitment. Pile in when you get the endorsement, if you want to bring in the private sector you have to pile in. Keep the private sector engaged,” Parshad said.
Syed Afsor Hassan Uddin, CEO of the PPP, Authority of the Prime Minister’s Office in Bangladesh, for his part, said that financing remains to be an issue in terms of going into the PPP which needs to be addressed to make the partnership sustainable.
“I think if you look at the sustained goals, financing is an issue, and we need to work in partnership in order to address [that]. PPP has become more mainstream, which should be considered as simply another financing avenue in order to get projects done,” Uddin said.