Economic managers are seeking to assuage private sector concerns over the “Build Build Build” program by reiterating that Duterte government is not adopting a go at it alone approach.
A day after Finance Secretary Carlos Dominguez 3rd declared that the administration was open to both solicited and unsolicited proposals, Socioeconomic Planning Secretary Ernesto Pernia said the funding mix for the infrastructure initiative would also include private sector sources.
“We are open to a mix of funding sources, private, ODA (official development assistance) or government.
There’s no really rule by how much [we should tap]through PPP (public-private partnerships), ODA or GAA (General Appropriations Act),” Pernia said on Wednesday at a Philippine Economic Society conference.
With extensive delays having hit PPP projects under the previous administration, he said the Duterte government was trying to experiment with different modalities for infrastructure projects.
“What we are doing is the government will pour the money first through ODA and GAA and then the project will be operated and maintained by the private sector,” he explained, referring to the hybrid PPP scheme that officials have said would be utilized to implement “Build Build Build”.
The hybrid approach involves the government selecting, financing and building big-ticket projects. Once completed, operation and maintenance contracts will be auctioned off to the private sector.
Pernia said the first experiment involving this modality was the construction of a new Clark International Airport terminal.
“From conception to ground-breaking, it only took 18 months. So we have been telling the private sector that if you can come up with that kind of speed using PPP then we are willing to consider PPP projects again,” he said.
On Tuesday, a Finance department statement said businessmen were assured by Dominguez that the government was open to team-ups with the private sector for big-ticket projects.
These partnerships will be done via solicited and unsolicited proposals for PPPs or joint ventures (JVs) under terms that would prove most beneficial to the Filipino people, the department added.
Dominguez was said to have met with top business leaders in a dialogue where he declared that the Duterte administration was not abandoning the PPP mode in implementing its ambitious infrastructure program.
He said the government was merely exploring ways how PPPs could be most advantageous, not only for the government in terms of costs, but also for the people in terms of how soon they can get to benefit.
Dominguez said the government remained open to unsolicited proposals as so long as these do not entail government subsidies or guarantees.
For solicited proposals, the government is also open to these as long as these are consistent with legal conditions such as the 50-percent limit on government undertakings with regard to total project cost.
“The past administration relied on [the traditional PPP]exclusively to finance the projects,” Dominguez noted.
“The situation has changed a bit because our President is beginning to tap a lot of financial commitments, and thanks to the last administration, we have a big headroom for debt and they left us quite a bit of money,” he added.
“It’s incumbent upon us to use that, use those to push the projects ahead,” Dominguez was quoted as telling business leaders.
“People have been questioning us why we are supposedly ‘abandoning PPP.’ We are not abandoning PPP. For us it is just another way of financing projects.”
The Finance chief also made it clear that the private sector “won’t be out of the loop” in taking part in large-scale infra projects.
“Some banks are telling us they cannot grow their loan portfolio. Quite frankly, we tell the banks that’s not true because if we go to the project, we will still need contractors to do it. We can start the projects quickly, they won’t be out of the loop because the projects will still go on,” Dominguez said.
The Duterte government has identified 75 projects that will be prioritized, approved and implemented under the ‘Build Build Build” program.
These projects will be backed by a budget that could reach P8 to P9 trillion over the administration’s six-year term.