’16 elections may pose risk to PPP environment

Despite delays in the rollout of some projects, the Philippines is a standout in the Asean in terms of bidding out vital infrastructure via public-private partnership (PPP), according to a global expert.

Building roads, highways and airports through PPP is important for the country to catch up with the impressive existing infrastructure that its neighbors enjoy, according to James Stewart, chair for global infrastructure of international audit, tax and advisory firm KPMG.

Stewart told reporters Wednesday that in terms of the number of awarded PPP projects combined with those in the pipeline, the Philippines is on top in the region.

Since the centerpiece initiative was launched by the Aquino administration in 2010, the government has awarded eight PPP projects, alongside the existing 50 others in the pipeline.

According to the PPP Center website, nine projects are expected to be rolled out this year, while 12 are undergoing procurement process.

However, Stewart pointed out that the Philippines was lagging behind most of its neighbors in terms of existing infrastructure, citing the World Economic Forum’s Global Competitiveness Report 2013-2014. This report ranked the country’s infrastructure at 98th place, behind Singapore (5th), Malaysia (25th), Thailand (61st) and Indonesia (82nd).

Infrastructure is necessary for the Philippines to attract more foreign direct investments, he said.

“You need better power and water infrastructure, airports and roads that would make it easy to move around the city or country,” he said.

It helps that most private investors that have been bidding for PPP projects being rolled out by the government are homegrown companies and conglomerates, Stewart said.

“A domestic player has a very strong national spirit; it has a feeling that it should not only return gains to stockholders but also contribute to the good of the Philippines,” he explained. “A sympathetic investor is better than an investor with no interest in the country at all.”

Nonetheless, if the Philippine government also wants more foreign investors to participate in PPP projects, Stewart said the program must make foreigners “feel comfortable in the environment” besides having a level playing field for bidders from both here and overseas.

The upcoming national elections in 2016, however, may pose risk to the relatively healthy PPP environment in the country, as was the case in other countries implementing a similar program.

“In general and worldwide, elections cause disruptions; everyone will be nervous” as priority projects pushed by previous officials may no longer be pursued by the next leaders, according to Stewart.