The government’s much-hyped “golden age of infrastructure” may not happen under the administration of President Rodrigo Duterte. A decision by the Finance department to have the government first build the infrastructure projects and later bid out their operation and maintenance to the private sector may take a longer time given the state’s poor track record in construction.
Finance Secretary Carlos Dominguez III calls the new infrastructure tack as “hybrid” public-private partnership deals that essentially exclude private sector investments during the construction stage. The government is tapping cheaper official development assistance loans, presumably from China and Japan, to finance the infrastructure projects, instead of letting commercial bank credits fund them.
Construction of PPP projects by the government would actually prove cheaper and quicker in the long run because the state could borrow at lower rates through grants and concessional loans. But the private sector does not totally agree with this presumption.
Metro Pacific Investments Corp., one of the biggest infrastructure companies in the Philippines, says the funding shift to ODA loans may result in delays. With ODA loans as the main source of funding, Philippine infrastructure projects will be covered by procurement procedures and protocol by the donor-country. “And since the funding will come mainly from abroad, say Japan or China, then disbursements of the funds are subject [to review] of their government. That may take time,” MPIC Metro Pacific Investments Corp. chairman Manuel Pangilinan warned earlier.
The new funding mode has already prompted the Transportation department to abandon the auctions planned for the P108.2-billion contracts to develop, operate and maintain five regional airports under the PPP scheme. The airport projects are situated in Bohol (Panglao), Davao, Iloilo, Laguindingan and Bacolod.
Opting for the ODA-loan type of funding, however, opens major infrastructure projects to graft opportunities, as well as red tape. The government should also learn its lesson from the past, when no major infrastructure project was built under the Aquino administration because of too much bureaucracy.