SSS eyes toll road investments

By Prinz P. Magtulis (The Philippine Star), October 29, 2016

MANILA, Philippines – Toll roads should source at least a quarter of their funding from pension funds like the Social Security System (SSS) for a sustained stream of revenues, the agency’s new chair said.

“All toll roads, the financing of those, 25 to 35 percent should come from the pension fund,” said Amado Valdez, chair of the Social Security Commission, SSS’s governing body.

“This will be a priority legislation we want to fight for,” he told reporters in a briefing yesterday.

In this way, Valdez said SSS would be paid fees “so long as the roads are being used,” giving it additional revenue source for its operations, including pensions.

Currently, toll roads are owned by the government, but operated and maintained by private firms under concession agreements for a particular period. In turn, firms get revenues from toll fees.

Valdez said it is about time the government benefits from these infrastructure, and not only “big families and oligarchs,” without citing any names.

Among the present tollways, San Miguel Corp. manages the South Luzon Expressway, while the Pangilinan-led Metro Pacific Investments Corp. operates its northern counterpart and Subic-Clark-Tarlac Expressway.

San Miguel also operates the Southern Tagalog Arterial Road, while Ayala Corp. maintains the Muntinlupa-Cavite Expressway.

“We want to make it mandatory. This is also to allow us to invest on the social part of our program for our members,” Valdez said.

Valdez said this is a “separate undertaking” from the planned P2,000 pension hike since he would also like the Government Service Insurance System (GSIS) to be involved.

SSS is the pension fund for private workers, while GSIS is for public employees. The latter has investment with Macquarie Infrastructure Holdings Pte. that is among the firms that operate Light Rail Transit 1.

Sought for comment, Emilio Neri Jr., economist at Bank of the Philippine Islands, said the extent of state participation in toll roads should be clarified.

He said while it is not unusual for the government to buy into companies operating toll roads like those in Canada and US, direct financing would be entirely different.

“I suppose the extent of the stake is critical. If the stake is just a reasonable size and reasonable portion of the total, then it’s fine. But if it is too high, there may be concentration risk,” he said in a phone interview.

Astro del Castillo, managing director at First Grade Holdings Inc., said the plan is a “good idea,” but questioned whether the SSS investment fund could take it.

“For instance, they should also think about how much of their total investment fund will that 25 to 35-percent exposure corner,” Del Castillo said in a separate phone interview.

As of the first semester, the bulk of SSS investments were in the form of government securities, accounting for 37 percent or P170.21 billion of their P456.91-billion portfolio.

Equities followed with 24 percent or P107.49 billion, while earnings from loans to members cornered 18 percent at P82.24 billion, data showed.

The balance was in the form of bank deposits (nine percent, P40.35 billion), corporate bonds (eight percent, P36.59 billion) and real estate (four percent, P20.03 billion).

Combined, the investments earned a seven-percent average return.