More on growth prospects, PPP
The country’s growth prospects for the year continue to be a subject of debate. Joining the fray on the subject is Moody’s Analytics Inc., the non-rating arm of Moody’s Corp. focused on economic research regarding risk and performance, among others. Moody’s Analytics is keeping its full-year forecast of 6.6-percent growth for the country this year despite the reported dismal performance in the first quarter.
Among the positives is the improvement in the disbursement process of the Department of Budget and Management, which lately “established a permanent delivery unit system that will keep track of expenditures under each agency” in addition to having now learned how to address “the root causes of underspending, including agency-wide problems in procurement, budget planning and project implementation.” The other positive is an increase in exports. Moody’s Analytics estimated that exports would pick up in the remaining three quarters of the year.
PPP status
The public-private partnership program (PPP) is a flagship project for economic development and national prosperity. Ten projects worth P171 billion ($3.76 billion) have been awarded since the program’s launch in the third quarter of 2010. One is the Daang Hari-SLEx Link Road project awarded to publicly listed Ayala Corp. for the construction of a four-kilometer, four-lane paved toll road that will connect Bacoor, Cavite, to the South Luzon Expressway (SLEx). The P2.01-billion project was awarded in December 2011 with the contract signed in April 2012. It was 96 percent completed as of May 25 this year.
Next is the PPP for school infrastructure is estimated to cost P16.28 billion and involve the design, financing and construction of 9,300 one- and two-storey classrooms in Regions I, III and IV-A. The project was awarded to BF Corp.-Riverbanks Development Corp. and the joint venture of Citicore Investment Holdings and publicly listed Megawide Construction Corp. (MWIDE). Project completion was 2014.
Third is the Naia Expressway project awarded to DMCI Holdings Inc. involving the construction of a four-lane elevated expressway with a total length of 7.15 km. Estimated project cost is P15.86 billion. It was awarded in May 2013 and the concession agreement signed in July 2013. Target completion, as revised, is October 2015 for Phase IIA and April 2016 for Phase IIB. Fourth is the PPP for another school infrastructure project for Regions I, II, III, X, CAR and Caraga. Estimated project cost is P3.86 billion. Publicly listed MWIDE is the contractor for Regions I, II, III and CAR while private companies BSP & Co. Inc. and Vicente T. Lao Construction are the contractors for Regions X and Caraga. Project completion date was March 2015.
Fifth is the modernization of the Philippine Orthopedic Center involving the construction of a 700-bed capacity hospital at an estimated cost of P5.69 billion. It was offered for bidding in December 2013 and was won by the MWIDE-World Citi Consortium. The contract was signed only last March due to objections to the project. Implementation is delayed. Sixth is the Automatic Fare Collection System (AFCS) awarded in January 2014 to AF Consortium, made up of AC and MPI. The project involves the installation of a contactless smart card technology on LRT Lines 1 and 2 and MRT Line 3. Estimated project cost is P1.72 billion. Project completion is September 2015. Seventh is the Mactan-Cebu International airport passenger terminal building project awarded in April 2014 to the consortium of publicly listed MWIDE and India’s GMR Infrastructure with estimated project cost of P17.52 billion. Opening of the new terminal and all facilities is February 2018.
Eighth is the LRT Line 1 Cavite extension project or LRT6 that will extend from Baclaran to Dasmariñas City. Estimated project cost is P64 billion. It was awarded in October 2014 to the Light Rail Manila Consortium (LRMC), jointly controlled by Metro Pacific Light Rail Corp. (55 percent), AC Infrastructure Holdings Corp. (35 percent) and Macquarie Infrastructure Holdings (Philippines) Pte Ltd. (10 percent). The project is scheduled to provide transportation service by 2019. Ninth is the Integrated Transport System (ITS)-south terminal project that will connect passengers from the Laguna/Batangas side to other urban transport systems that serve inner Metro Manila at an estimated cost of P4 billion. The project was awarded in April 2015 to MWIDE. Project completion is 18 months. Tenth is the Cavite-Laguna Expressway or CALAx project costing P34.42 billion and involving a 47-kilometer four-lane toll road between Cavite Expressway in Kawit and the South Luzon Expressway-Mamplasan Interchange in Biñan, Laguna. It was awarded last week to MPI. Completion of construction is July 2020 and contract to run from July 2020 to July 2050.
Bottom line spin
A former colleague, presently a senior lecturer and technical editor for Policy Notes at the UP School of Economics, noted that it was “strong private consumption and investments but weak government spending” that kept economic growth at only 5.2 percent in the first quarter.
Considering all that happened, too, she felt that Moody’s Analytic’s latest forecast of 6.6 percent was “on the high side.” She expected growth to “range from a low of 6.1 percent to a high of 6.4 percent.”
She admitted, however, that economic “fundamentals are strong” and that should things kick up in the next three quarters, as some quarters are suggesting, she might just even agree with the government’s yearend growth target.
The writer is a licensed stockbroker of Eagle Equities, Inc.. You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com
