GOVT HAS ENOUGH FISCAL SPACE TO INVEST IN PUB-PRIV PARTNERSHIP PROJECTS
[PHOTO - President Benigno Aquino III (right) and Executive Secretary Paquito Ochoa Jr. enjoy a chat during the PPP conference in Pasay City Thursday. Ryan Lim, GMAMEWS TV]
MANILA, NOVEMBER 19, 2010 (STAR) (Xinhua) - Budget Secretary Florencio Abad said Thursday the government is in a better position to provide sufficient fiscal space of as much as over P100 billion ($2.30 billion) in the near-term for investments in public-private partnership (PPP) projects to flourish.
"With the reforms that we are implementing to ensure the judicious allocation and use of public funds, I am confident that the national government is in a better position to ensure that PPPs will ultimately expand economic opportunities for our people, " Abad said in a presentation before participants of the Infrastructure Conference.
The budget department estimates the projected fiscal space - or available funding that the government could use for its priority programs, including PPP support - could increase from P12.8 billion ($292.2 million) in 2011 to O49.6 billion ($1.13 billion) in 2012 and P113.3 billion ($2.59 billion) in 2013.
Abad said that success of PPPs could be ensured by providing this fiscal space in the near-term. Fiscal space is computed as the difference of projected obligations ceilings (after considering projected revenues and deficit targets) and forward estimates of the cost of ongoing programs.
He noted that the government's failure in the pask to make counterpart investments has discouraged private sector from participating in PPP. This is why in the government's budget for 2011, a total of P12.5 billion ($285.40 million) has been set aside for PPP Strategic Support Projects. About P600 million ($13.69 million) was earmarked for feasibility studies and other project preparation support.
"We are addressing in an upfront way the reasons why private interest has been dampened, if not converted into cynicism. Through good governance and prudent fiscal management, we can assure private partners that the government will fulfil its part in such partnerships," he said.
Abad said this fiscal space could further be widened by ensuring the judicious allocation and use of public funds, using tools such as the zero-based budgeting (ZBB) approach, increased transparency and accountability in budget releases, and other budget reforms.
Aquino administration opens PPP conference today By Iris C. Gonzales (The Philippine Star) Updated November 18, 2010 12:00 AM Comments (2)
MANILA, Philippines - The much-trumpeted Public-Private Partnership (PPP) for infrastructure of the Aquino administration which will be presented in a two-day conference starting today, hoping to attract global investors in at least 10 projects.
Finance Secretary Cesar Purisima said the conference, to be held at the Marriott Hotel in Pasay, will lead to the creation of more jobs in the country.
“That will create a lot of jobs for us. Unfortunately, it’s hard to get to our tourist destinations so we need infrastructure to make it easier to get there. After all, Malaysia gets 22 million tourists (yearly) but we only get three million but our country is much more beautiful,” he said in a radio interview.
During the conference, the government is set to introduce a revitalized framework for PPP during the conference. This involves project financing and risk allocation in structuring as well as project monitoring.
Purisima also assured prospective investors that the Philippines under the Aquino administration would ensure a level playing field.
He said implementing agencies such as the Department of Public Works and Highways and the Department of Transportation and Communications would also be presenting their pipeline of infrastructure projects for possible PPP as well as their planned timelines for bidding out these projects.
Purisima has high prospects for the project, saying that the partnership has been a tried and tested formula in many parts of the world.
The Finance chief also said the partnership would enable the government to provide funds for other areas and sectors in need.
“The new government is faced with decade-old problems which have discouraged private sector investments in infrastructure. We’re not saying this will be fixed overnight but we’re saying that we know the problem and the entire economic team is aggressively finding ways to solve these problems soonest. We are committed to build the institutional framework that will allow government to smoothly undertake PPP transactions,” he said.
FROM GMANEWS TV
P200-B seed fund allotted for Aquino's PPP initiativeJAM L. SISANTE and JESSE EDEP, GMANEWS.TV 11/18/2010 | 03:55 PM
Four of the country’s largest government financial institutions on Thursday committed P200 billion to jump-start the public-private partnership initiative of President Benigno Aquino III, who pledged to shield investors from regulatory risks when they invest in infrastructure projects.
Aquino told a gathering of 500 people, including 200 foreign investors, at the Marriot Hotel in Pasay City that he is aware investors in the past were discouraged from pouring funds into the country when the rules governing infrastructure projects were suddenly changed “without warning" after contracts have been signed with the government.
"When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature – then our government will use its own resources to ensure that they are kept whole," said Aquino.
As the conference went on, at least 30 protesters led by Bayan Muna staged a picket outside the hotel, radio dzBB reported. The report said the militants branded the PPP program as "Private Public Plunder."
President Benigno Aquino III (right) and Executive Secretary Paquito Ochoa Jr. enjoy a chat during the PPP conference in Pasay City Thursday. Ryan Lim Critics of the PPP claimed the program would bloat the country's debt burden and facilitate increased corporate takeover of government roles at the expense of public interest.
Militant think tank IBON Foundation said no capitalist will invest in big-ticket projects in a relatively small market like the Philippines, "without certain guarantees that will ensure the protection and profitability of his investment."
Development Bank of the Philippines (DBP) president and CEO Francisco Del Rosario said at the opening of the PPP conference that the GFIs' money will be pooled under the Philippine Infrastructure Development Fund or PIDF.
The fund, now being established by the Department of Finance, will be made available within the time frame envisioned by the national government for rolling out the infrastructure projects, he said.
The DBP, Government Service Insurance System (GSIS), Land Bank of the Philippines and the Social Security System will shell out P200 billion to jump start the initiative, he said.
The money would complement the P12.5-billion budget the Aquino administration has proposed to Congress under the 2011 budget for the PPP, Del Rosario said.
In providing the seed money, the GFIs aim to quicken infrastructure development, promote more partnerships, and finance qualified projects via long-term funding in local currency, he said.
The fund support may entail the purchase of PIDF Bonds to be issued by the National Development Company (NDC), the investment arm of the government, the DBP executive said.
“One of the financing options we are currently evaluating is for NDC or another GOCC [government-owned and –controlled corporation] that may be designated by the DOF to issue the PIDF bonds."
The bonds will be issued in various tenors or maturities from five to 25 years, depending on the amount of financing a project will need, Finance Secretary Cesar Purisima told reporters earlier.
Credit rating agency Standard & Poor on Friday gave long-term Philippine debts a BB rating, from BB-, bringing the country’s sovereign obligations two notches from investment grade.
Proceeds of the bonds would finance land acquisition for right-of-way costs and other pre-development needs as the government’s counterpart initiative to attract investors.
Infrastructure projects under the Aquino administration’s public-private partnership will serve as the primary growth driver for the Philippines in the next few years, ING Investment Management Philippines said Thursday.
“The infra projects of the government will result in more jobs, higher income, and lower structural inflation," ING head Paul Joseph Garcia said during a forum with reporters.
He pointed out that the government should be transparent in implementing PPP projects to avoid discouraging private investors from coming to the Philippines.
"They're not here for charity. They're here for money. The government should be clear and transparent," Garcia said.
A 12-15 percent return on investments would keep investors interested in the Aquino administration's PPP projects, he said. — LBG/VS, GMANews.TV
Chief News Editor: Sol Jose Vanzi
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