Top economist urges gov’t to tap PPP as ‘Build, Build, Build’ sputters

By: Ben O. de Vera, Inquirer Business, Aug 15, 2019

A leading economist urged the government to tap the private sector for partnership programs again as the Duterte administration’s ambitious “Build, Build, Build” infrastructure campaign appeared to sputter with key agencies enforcing it continuing to underspend.

“The absorptive capacity of infrastructure agencies need to be given an earnest look,” said economist Cielito Habito, a columnist of the Philippine Daily Inquirer.

‘Build, Build, Build’ seems to be at risk if we can’t make it work,” said Habito, also an Ateneo de Manila University professor, at an Ateneo Eagle Watch forum on Thursday (Aug. 15).

The slowdown in public construction at the start of 2019 had been attributed to a delay in approval of the P3.7-trillion 2019 national budget by a Congress squabbling over corruption-ridden pork funds.

Habito also cited a recent Commission on Audit (COA) report showing that the two departments central to Build, Build, Build—transportation and public works and highways—had difficulty spending their annual budgets.

The Department of Public Works and Highways (DPWH) spent only a third of its budget in 2017 while the Department of Transportation (DOTr) spent only 26 percent in 2017 and lower, or 21 percent, in 2018, said Habito, citing the COA report.

“There’s something wrong with the absorptive capacity of infrastructure agencies. If we trust these two agencies, we need to worry,” he said.

Tapping PPP again, he added, would boost Build, Build, Build, an ambitious plan to splurge more than P3 trillion on public infrastructure to stir economic growth.

The Duterte administration, however, had been shunning the PPP mode because of the program’s record under the administration of President Rodrigo Duterte’s predecessor, Benigno Aquino III, during which only 10 projects were carried out in six years.

Duterte’s economic managers were instead pushing for a “hybrid” PPP model wherein the government rolls out the projects, then bids out operations and maintenance (O&M) to the private sector.

But Habito said “if you look at the entire landscape, the PPP performance has been good,” citing high-profile projects such as the Mactan Cebu International Airport.

He said the Duterte administration’s openness to PPP could be gleaned from approval of San Miguel Corp’s mega airport project in Bulacan province.

“The body language is telling us that there’s a move backward toward PPP,” said Habito. “Why? Because they have no choice,” he said.

“If your DPWH and DOTr cannot deliver, nothing will happen,” the economist said. “We have to rely more on PPP,” he added.

He said while the government might be awash with cash through increased revenue collection and foreign borrowing, mostly from China, “the question is implementation—capability is the problem.”/TSB