PRIVATE-sector leaders want economic managers to give domestic firms more space and participation in the Duterte administration’s infrastructure blitz, touting their capacity to shoulder some of the projects listed under the “Build, Build, Build” (BBB) program.
In a forum hosted by CNN Philippines, representatives from San Miguel Corp. (SMC) and Banco de Oro (BDO) said their firms are just waiting for the government to tap them in its infrastructure plans. They claimed the balance of scale for bankrolling the 75 BBB flagship projects is heavily reliant on official development assistance (ODA), government-to-government deals and domestic spending, and biased against private funding under the public-private partnership (PPP).
SMC Infrastructure Chief Financial Officer Raoul C. Romulo said the government is executing the BBB well, and admitted there is no single scheme that can fill in the country’s infrastructure gap in the immediate term. He also welcomed the inclusion of additional financing schemes, including the introduction of hybrid PPP.
In funding its public infrastructure, the government makes use of a hybrid model of the PPP that utilizes a combination of the National Treasury, inflows from ODAs and funds raised from bond floats at investment-grade rates. Economic managers explained they do not want to commit on PPPs alone, and added the hybrid model is more flexible in that it can speed up the delivery of infrastructure projects.
This does not bode well with SMC, according to Romulo, and he asked the economic team to consider balancing the scale of distribution for the financing of BBB projects by involving the private sector more instead of seeking grants and loans from foreign governments. “There is no one single bullet that can address all the neglect of government deficit throughout the decades,” he stressed.
“What we would like to see—and we are very grateful that the government is supporting a lot of the projects that are still unfinished—is some more balance, opening and distribution of these different kinds of budget funding. You have the ODA, you have the hybrid and also the unsolicited proposals, which we are one of the most prolific submitters to you.
“But we would like to see a more balanced approach, if possible, to see all of these projects rolled out more efficiently as it is now. We understand that a lot of the projects that you put together [still have to be completed] from the previous administration, but we also like to see the different agencies [having] more people to help us analyze all of these projects [so they] can go into fruition faster.
“Yes, this hybrid is a welcome avenue, but we also like to see the reopening again on the thrust of the PPP side,” Romulo said.
BDO Capital and Investment Corp. President Eduardo V. Francisco agreed with Romulo, and said domestic firms are always up in arms should the government need them in rolling out the BBB. He said the hybrid model is working, but they will appreciate it better if they were tapped as a whole in some of the projects under an organic PPP.
“Our request is that even if you go into ODA, maybe as a bridge, we’re there to support. If there are some delays, use us,” Francisco said, adding private banks have liquid capital as of present.
Former Finance Secretary Margarito B. Teves told the economic team to look at the private sector as a strong partner in the rollout of the government’s infrastructure program. He said allowing domestic firms to finance some of the projects will make them take the burden of the risk, and will subsequently give the government some flexibility.
“Get them [domestic firms] to bear more of the risk, but at the same time, we would like you to assure us that the timetable is within our own timeline. The burden of the risk will be on the private sector, and then that will give some flexibility on the part of the government to also anticipate other requests in the future—social, education and so.
“I would, in effect, suggest a more open attitude toward private participation, including unsolicited proposals, and look at the macroeconomic indicators. They were not as comfortable as they were from a few years back,” Teves said.
In the government’s defense, Budget Secretary Benjamin E. Diokno said the government is making use of different financing schemes to hasten the rollout of public infrastructure. He said the PPP is infamous for delays, and the administration—wanting to be known for getting things done immediately—cannot commit to that.
“We’re opening many financing roads for us. We do not commit to PPP alone because there is a natural delay for PPP—29 months from project identification to takeoffs. We cannot afford that long, so we decided to have a hybrid PPP,” Diokno explained.
Image credits: Nonoy Lacza