Pundits doubt economic, social impact of PPP

PUNDITS doubt whether the Aquino administration’s public-private partnership (PPP) imitative would improve the economy and people’s welfare.

Rene Ofreneo, Fair Trade Alliance co-convenor, said the PPP initiative, which serves as the government’s “centerpiece” economic thrust, is “too simplistic” and “too narrow.”

“PPP in the context of what? What are its social and economic priorities? It’s nothing but a big business contract,” the University of the Philippines professor said, adding that the projects were rushed and chosen without consultations.

He said the PPP initiative lacks partnership with small and medium enterprises, domestic industries and the labor sector.

The UP professor said the rules of the PPP game have yet to be established, even as the government would roll out the initial set of projects next year.

“So far, the only rule for foreign investors is ‘come and get it,’” Ofreneo said.

“We have to be judicious. We have to regulate the entry of foreign businessmen. PPP is all about opening up [the economy],” he said.

“We are not against PPP per se but we want it transformed into a transparent program . . . Transform it into a more democratic program that is open to all players. Clarify its development, regulatory and competition framework,” he added.

In a policy paper, the Congressional Policy and Budget Research Department (CPBRD) said the Aquino administration’s plan to rely more on infrastructure projects under its PPP initiative instead of increasing the budget for similar undertakings would drag down the economy next year.

The House of Representatives think tank said the 2011 budget is focused “too much” on containing the budget deficit at P290 billion that the government had cut back on infrastructure spending in the absence of new tax measures to support revenue.

CPBRD said the government should not resort to reducing productive investments since “there is enough fiscal space under conditions of public debt sustainability and credible exit strategy.”

“The multiplier effect of government spending also supports acceptable deficit-spending on growth sustaining and high-impact social services,” it said.

Based on the 2011 budget, the proposed allocation for productive services, which declined to 14.2 percent of gross domestic product (GDP) from 15.2 percent in 2010, “does not appear to be fully supportive of growth objective,” the think tank said.

It said the economy may only grow by 4.1 percent to 5.1 percent next year since the projected robust growth this year, which benefited from a low base and election spending, is not easy to attain.

The major concern, CPBRD said, is the cut in infrastructure outlay from 3.8 percent to 3.5 percent of GDP, which is way below the 5-percent benchmark set by the World Bank.

Furthermore, the approval and implementation of such PPP projects often take a long time, the think tank said. –BEN ARNOLD O. DE VERA REPORTER AND LIKHA CUEVAS-MIEL ASSISTANT BUSINESS EDITOR, Manila Times