Novel rural development move

Two weeks ago, while the public’s attention was drawn to political events and preparations for Typhoon Ruby, the public-private partnership agreement between a Malaysian company and the Nueva Ecija provincial government was formally launched.

MTD Philippines, a subsidiary of AlloyMtd, a Malaysia-based global infrastructure conglomerate, and Nueva Ecija have entered into a joint venture for the construction and operation of the Palayan City Business Hub.

The P1.5-billion facility, which will be built on land donated by Palayan City, aims to host national and provincial line agencies operating in the Cagayan region, and call center offices.

Also part of the blueprint is the construction of a building that will house a 75-room hotel with two floors reserved for commercial establishments.

With key executives of the Malaysian companies and top local government officials in attendance, the project recently broke ground and work is scheduled to commence in January 2015.

Upon completion in March 2016, the business hub is expected to create 13,000 jobs, in addition to the hundreds of laborers who will be hired to undertake numerous construction works.

Negotiations

It was a no mean feat for the local government officials who negotiated the project to convince MTD to invest in Palayan City, rather than in Metro Manila or other highly urbanized places in the country.

Palayan City is a fifth-class city in Nueva Ecija. With a population of about 37,000 people, based on the 2010 national census, it is considered the most sparsely populated city in the country.

Talking business with Malaysian businessmen is not easy. They have a reputation for being snooty and demanding in business negotiations, a trait they apparently imbibed from their British colonial masters.

Rather than wait for the national government to do the work for them, the local government officials took matters into their own hands, and after taking full measure of the powers granted to them by the Local Government Code, forged their own version of public-private partnership with MTD.

Whoever advised on or prepared the business plans and financial projections of the proposed business hub did their homework well. They knew the tender spots of their Malaysian counterpart.

They were able to convince them that Palayan City is worth taking a chance on with P1.5 billion, and possibly more once the project gets going.

Hopefully, between now and the completion of the project, no publicity hungry politician or pseudo environmental activist will come out from the shadows and file an action in court questioning the validity of the joint venture on some dubious legal grounds.

Revenues

The county’s other local government officials can take a leaf from the actions that led to the groundbreaking of the Palayan City Business Hub.

It is futile for local governments to depend on internal revenue allotments from the national government, local business taxes and special congressional budgetary allocations for the funds needed to develop their areas of governance.

With the rapid growth of our population [no thanks to the misguided notion that children should be welcome even if parents do not have the means to properly take care of them] and soaring financial needs of the country, the national revenue pie is not getting any bigger in spite of aggressive revenue collection efforts.

Worse, corruption is taking a big bite on taxpayer money that should otherwise have gone to projects that will redound to the greater good of the public.

Under these circumstances, local government officials should not just be content with raising revenues for their constituencies from traditional funding sources.

They have to learn to think out of the box. They have to adopt a business-like approach in finding other viable sources of revenues for their territories.

This is not hard to accomplish because they have sufficient leeway under the Local Government Code to come up with measures that can reduce their dependency on the national government to meet their funding requirements.

Initiative

The local governments can draw inspiration from the initial results of some of the public-private partnership programs (PPP) that the national government has already awarded.

Ahead of the commencement of the project, the winning bidders made upfront payments and shouldered the costs of construction.

A similar, or perhaps modified, approach can be applied to projects in the provinces and cities that can be mutually beneficial to the local government and private companies.

There is no one-size-fits-all format for PPPs. The design of PPPs depends on what the local government can offer or what resources can be made available to private business

A province, for example, that has interesting or unique tourist spots can use PPP for tourism-related projects. If its strength lies on having large tracts of fertile agricultural land, the PPP can relate to food production or operating as a hub for food distribution.

By and large, PPPs are a numbers game. All things fair and equal, the local government that can offer better financial terms or more secure operating conditions will have an edge in attracting private participation in the PPP.

These are matters that are perfectly within the local government’s control. They can lower their business taxes, extend grace periods for tax payment and offer a myriad of other financial incentives that the law authorizes them.

With political will and imaginative thinking, local governments will not find it difficult raising the money they need to improve the living conditions of their constituents.

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