Return of PPP projects

Last week, the government turned over the operation and maintenance of Clark International Airport to Luzon International Premier Airport Development (Lipad) Corp., a joint venture of JG Summit Holdings Inc. and Filinvest Development Corp.

With Singapore’s Changi Airport as its technical partner, the consortium will operate Clark Airport for 25 years.

When fully operational under new management, the once largest American air force base outside of the United States will be a viable alternative to the Ninoy Aquino International Airport.

If Lipad Corp. makes good its promise to build a new terminal, Clark Airport would be able to service eight million passengers a year by the middle of 2020.

Commenting on the first public-private partnership (PPP) project awarded under the Duterte administration, Transportation Secretary Arthur Tugade said “now Clark Airport will be in better hands, achieving greater heights.”

Wow, after three years, PPP projects have found favor with and are no longer anathema to the administration.

Recall that during the administration’s early days, its economic managers expressed their preference for government money and foreign loans to fund its “Build, Build, Build” program.

The economic managers cited delays in the implementation of PPP projects, which was the cornerstone of the past administration’s infrastructure program, as the principal basis for their aversion to them.

From the looks of it, however, the PPPs’ downgrading appeared to be a case of one-upmanship that often happens when a new set of officials takes over the reins of government.

With a sense of hubris, the economic managers made a big hoopla over the billion-dollars worth of loans and grants that China promised to give to the Philippines in reciprocation of President Duterte’s unabashed admiration for the world’s second largest economy.

But as things turned out later, outside of the Chico River Dam project and rehabilitation of a bridge in Makati City, the expected largesse from China has not come.

What has come are thousands of Chinese nationals who man overseas gambling offices and whose presence has been viewed with suspicion by the authorities.

The bulk of the promised financial assistance remains stuck in memoranda of understanding and project studies in the Chinese bureaucracy.

To aggravate matters, the revenue measures the administration is relying on to fund some of its infrastructure projects are barely making their way through the legislative mill. It would be a miracle of sorts if one-third of those bills are enacted into law.

With Lipad Corp.’s take over of the operation and maintenance of Clark Airport, PPP projects seem to have been (quietly) adopted by the administration as an additional means to complete its promised infrastructure projects by 2022.

And rightly so because the way things are going, additional government revenues will not be coming any time soon. And neither can China be expected to promptly live up to its financial commitments as it is having serious economic problems of its own on account of its ongoing trade war with the US.

With many of the country’s business conglomerates oozing with money, the government will not find difficulty in convincing them to invest in mutually beneficial infrastructure projects. All it has to do is say so.

Note that many of these conglomerates have to look elsewhere in the Asean region for investment opportunities that can help maximize their resources and maintain their financial growth.

Given the right incentives and assured of fair play, there is no question these entities would prefer to invest their money in the Philippines.

The advantage of shifting back to PPP at this stage of the Duterte administration is there is no need to reinvent it. Its rules and parameters are already in place and all it takes is to tweak them to adapt to the projects to which it can be used.