MANILA, Philippines—Climate change adaptation and mitigation as well as smart infrastructure development are expected to form part of the incoming Marcos administration’s medium-term socioeconomic blueprint, officials of the state planning agency National Economic and Development Authority (Neda) said on Monday (June 27).
At a press briefing, Socioeconomic Planning Undersecretary Roderick Planta noted that smart and sustainable infrastructure was supportive of achieving the United Nations’ (UN) sustainable development goals (SDGs) and the Paris agreement on climate change action. “So it really makes sense that this will feature in the next PDPs,” Planta said, referring to the six-year Philippine Development Plans being formulated by each administration.
The outgoing Duterte administration put in place the 2017-2022 PDP, whose socioeconomic targets were downscaled due to the COVID-19 pandemic. The next administration will begin work on the 2023-2028 PDP as soon as it takes over in July.
Socioeconomic Planning Undersecretary Mercedita Sombilla also noted that incoming Neda chief Arsenio Balisacan had expressed support for the next PDP to revolve around climate change, which impacts lives and livelihood in the Philippines, one of the most climate-vulnerable countries in the world due to its location in the typhoon belt.
Sombilla said Balisacan considers climate change as a development challenge that needs to be addressed.
Outgoing Socioeconomic Planning Secretary and Neda chief Karl Kendrick Chua said prioritizing climate change adaptation and mitigation plus smart and sustainable infrastructure were part of his transition discussions with Balisacan.
Specifically, Chua said the next administration should pursue policies like shifting to renewable energy—solar, tidal and wind, using electric vehicles and taxing single-use plastics to make climate change response more in line with the government’s priorities.
“On smart infrastructure, we want to use digital technologies, we want to have a policy on master plan so that all our infrastructure are well thought of — that they really connect transport with urban planning, with land use, with water use, [and] the issue of population, demographic and congestion,” said Chua.
“And also to make sure that all infrastructures are planned very well and not just accepting unsolicited proposals that are totally out of the scope of our plans,” Chua said.
As economic officials of the incoming Marcos administration were looking at public-private partnership (PPP) to enhance infrastructure investments at a time that the government needed to repay pandemic-induced ballooning debts and narrow the budget deficit through fiscal consolidation, Chua reiterated the need to protect consumers who will ultimately shoulder the cost of contingent liabilities.
“PPPs are really part of several modes of [infrastructure] financing, and well-structured PPPs that really serve the people and improve the quality of their lives, and at the same time protect the government, which is the custodian of the people’s money, are, of course, welcome,” Chua said.
“In fact, in the ICC [Investment Coordination Committee] secretariat, we have been receiving a lot of PPP proposals, both solicited and unsolicited over the past six years during the Duterte administration, and it is our job to make sure that all submissions are complete and compliant, and that they really serve to deliver better services to the people without risking the government or adding to contingent liabilities, which eventually are paid by the people,” Chua said.
“So this is a very difficult balancing act that we continue to do, and I’m sure the next administration will have that at the heart when they evaluate PPP projects,” Chua added.
Last month, Chua said the amended guidelines of the Build-Operate-Transfer (BOT) law will protect Filipinos from liabilities wrought by big-ticket infrastructure projects jointly undertaken by the government and the private sector.
Business groups have been jittery about the revised BOT law implementing rules and regulations (IRR) approved by President Rodrigo Duterte’s economic managers, which not only shielded the government from arbitration, but also provided supposedly “anti-market” definitions of contingent liabilities arising from PPP projects.
Contingent liabilities included material adverse government action (Maga) clauses, force majeure, breach of government warranties, as well as failure to deliver contractual obligations, according to the amended IRR.
The Cabinet-level Development Budget Coordination Committee (DBCC) had projected the contingent liability stock—or the aggregate amount—wrought by PPP projects to have risen to P456.2 billion in 2021 from the estimated P311.8 billion in 2020. It was on top of the P60.4-billion “flow” of contingent liabilities or the amount which “may materialize within a specific interval of time taking into consideration a project’s risk factors” among 18 national PPP contracts signed between 2008 and 2020.
Last year, the ICC ordered agencies and local governments implementing massive PPP projects to ensure private proponents’ financial capacity by setting minimum equity requirements.
The Duterte administration had previously shunned PPPs, especially unsolicited projects, as it did not want disadvantageous provisions like government guarantees, subsidies, and Maga clauses. But the current pipeline of flagship infrastructure projects in the ambitious “Build, Build, Build” program included 20 unsolicited PPP projects worth P1.5 trillion, which will be financed by tycoons’ deep pockets.
TSB