‘Infrastructure crisis’ feared if spending wanes

The Philippines may slide into an “infrastructure crisis” if the next administration fails to sustain current levels of public spending, the head of the Public Private Partnership (PPP) Center warned Monday night.

“There is an urgent need for infrastructure. We feel the need every day… The people describe it as an infrastructure gap and it’s pretty much close to an infrastructure crisis. We have done a lot, and if we don’t do more, we could very well slide into an infrastructure crisis,” said PPP Center executive director Andre Palacios.

Speaking on the sidelines of the 2nd Joint Economic Briefing hosted by four foreign chambers, Palacios said that an infrastructure gap means that current infrastructure is not sufficient to meet the demand for public services.

There is, however, an opportunity for the government to bridge that gap.

“If we can continue our present rate of progress (in terms of our PPP projects), we will be able to avoid [a crisis],” Palacios added.

This is why it is critical for the next administration, Palacios said, to keep the PPP a central pillar of its infrastructure program and provide policy support for it.

One way to do this is to institutionalize the best practices from the PPP program through an enactment of a new law, and enhance it by addressing the concerns raised by investors.

“The (proposed) PPP act will ensure the success of PPP program (although) the absence of that law will not stop the program… One of the enhancements (under the PPP Act) is with respect to friction during the implementation. The risks of a project (are more apparent) during implementation wherein projects are either assessed with high real property taxes or are not given local permits,” Palacios explained.

“The proposed PPP Act will do away with this. It will reduce the risk of implementation by creating a special class of PPP projects. These will be called projects of national significance. If they are classified as projects of national significance, they will be exempt from real property taxes and will be automatically granted local permits,” he added.

There are 51 PPP projects in the pipeline, which will require a combined investment of about P1.6 trillion. Of these projects, 12 have been awarded while the rest are in various stages of development.

The target, according to Palacios, is to award eight more projects before President Aquino steps down from office. These include regional airports in  Iloilo, Bacolod, Davao, Laguindingan and Bohol.

“Of the eight projects, the most ripe will be regional airports, the prequalified bidders are very much committed and are ready to bid,” Palacios said.