Lights, camera, action

Published by rudy Date posted on April 8, 2011

The government has made public-private partnership a cornerstone of its economic growth platform. And rightly so. After a decade of underspending on infrastructure (an annual spending of between 2 percent and 3 percent of GDP versus the Asian average of 5 percent to 6 percent) the Philippines is way behind everyone else.

Infrastructure is essential for economic development, even social well-being. You must have roads, and bridges to get food to the market, products to the port, people to and from work. You need power plants and distribution lines to light up your world and power your factories. You need dams to store your water – to drink and to irrigate, and to provide clean, renewable power. You need airports and terminals to bring in the tourists, speed the overseas Filipino workers on their way and make life easy for investors arriving. You need efficient government services.

The Philippines has none of these in any real measure (have you driven down EDSA recently?).

So President Aquino was right to put it at the top, and the three-day conference in November last year got it all excitingly started.

But this early the program is starting to unravel, all because of one thing: Entrenched bureaucracy that has no incentive to move fast. Already the government has announced it couldn’t push through with the plan to bid out three airport projects in the first quarter. The first quarter is over and the feasibility studies are not yet finished.

I work to deadlines, sometimes impossible ones. But I meet those deadlines even if it means working all night. Public servants, of course, don’t work all night. And on the miserable pay they get, I don’t blame them. As an aside, their salaries should be increased by 100 percent. Learn from Singapore, pay your workers well – and expect results. The overall cost savings will more than pay those higher salaries.

Anyway, back to project delays, it’s not just those three of the ten priority projects but eight (that’s 80 percent) are actually delayed. Five of them because the feasibility studies aren’t completed. While the other three are all related to LRT-1 and MRT-3 where the ownership is in question.

NAIA Expressway (Phase II) was originally scheduled for bidding last April. Bidding initially moved to August 2011 and then to November 2011 due to an unfinished feasibility study.

The new Bohol Airport and Puerto Princesa Airport developments were set for bidding before the end of March but moved to third or fourth quarter of the year due to unfinished feasibility studies.

The new Legaspi (Daraga) Airport development’s original schedule for bidding was by first quarter of the year. This has been moved twice (second quarter then moved again to third quarter). The delay was attributed to an unfinished feasibility study.

The privatization of Laguindingan Airport O& M was originally set for bidding 2nd quarter of 2011 but moved to 3rd quarter as its feasibility study has yet to be completed.

The privatization of LRT 1 (Operation & Maintenance), MRT (O & M), and LRT-1 South Extension Project delayed indefinitely due to ownership issues. Bidding for LRT-1 and MRT-3 was scheduled for the second quarter while the government planned to offer LRT-1 South Extension Project to investors as early as first quarter of 2011.

Even these delayed deadlines may not be met.

The idea of PPP is to get the private sector to do what government can’t afford to do. So why not get the private sector to do the feasibility studies? Get independent consultants with no links to companies who might bid. Give them a deadline; they’ll meet it.

But is farming out services part of PPP? Yes, indeed. A services project I’ve been involved in has been remarkably successful. This is the computerization of all NSO records. Ten years ago, Unisys was hired to do it under the BOT (now PPP) scheme. It used to take four weeks to register a birth, or marriage, or death. Now it takes one day outside Manila, two hours (yes, hours) inside Manila. A computerized system that just works. Unisys and the government have been working together to make it work. It’s a success story the government can tell in trying to entice others into PPP.

Outsourcing is the name of the game today. There’s no reason it shouldn’t apply to governments as well as companies.

That was a success, but there have also been failures. The most public of all of course is NAIA-3. A decade now tied up in costs all over the place while government and the contractor argue. It was ok for Arroyo to do, I suppose, although she did promise to pay immediately after expropriation, but not ok for Aquino. NAIA-3 has no place in court anymore, the damage it is doing to the Philippine image and to foreign investment is enormous. I’ve said it before, again and again, and I’ll say it again. Get an independent valuation, drop all court cases and pay. It can be done before the next State-of-the-nation address, if the will is there.

As it now stands it is certainly a deterrent to PPP investment. Businessmen won’t risk where their project could dangle for a decade in court. And foreigners wonder what kind of country they’re entering when NAIA-1 hits them in the face.

We’re not far away from Aquino being one year in office; he needs some tangible results to talk about. Here’s one that easily could be. It’s time for action.–Peter Wallace, Manila Standard Today

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