Bernardo M. Villegas
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Infrastructure Plan for Next Administration

           The bad news is that the present Administration has been very slow in implementing vital infrastructure projects under the Public Private Partnership (PPP) program.  It has already become a sick joke that PPP under the Aquino Administration means Power Point Presentations.  Out of a list of some 50 projects announced in various State of the Nation Addresses of the President, only nine projects have been awarded with a total value of some US$2.9 billion.  Another 19 totaling US$21.9 billion have not yet been awarded.  Among those awarded are the Daang Hari-SLEX Link Road Project, the PPP for School Infrastructure Project Phases 1 and II, NAIA Expressway Project, Modernization of the Philippine Orthopedic Center, Automatic Fare Collection System, Mactan-Cebu International Airport Passenger Terminal Building, LRT Line 1 Cavite Extension and O&M and the Integrated Transport System-Southwest Terminal Project.

          The good news is that the Administration that will take over in June 2016 can hit the ground running literally.  It can immediately award and implement at least 19 projects amounting to some 986 billion pesos which include the following:  Bulacan  Bulk Power Supply Project; Integrated Transport System:  South Terminal Project; Laguna Lakeshore Expressway Dike Project; O&M of LRT Line 2; New Centennial Water Supply Source Project;  New Bohol (Panglao) Airport O&M and Development Project; Laguindingan Airport O&M and Development Project; Puerto Princesa Airport O&M and Development Project; Davao Airport  O&M and Development Project;  Bacolod Airport O&M and Development Project; Iloilo Airport O&M and Development Project; Davao Sasa Port Modernization; Regional Prison Facilities through PPP; Cavite-Laguna Expressway; NLEx-SLEx  Connector Road; Motor Vehicle Inspection System Project; Civil Registry System-IT Project (phase 2); Mass Transit System Loop; and North-South Commuter Trail.

          Whoever is the next President should appoint a Cabinet that should make infrastructure development the key strategy for the period 2016 to 2022.  It would be ideal if the current Secretary of Public Works and Highways can be reappointed, at least for the first three years of the next Administration so that he can continue his sterling leadership of this very critical department for the  infrastructures that have to be put up by the public sector.   A completely new team should be appointed to implement the PPP.  There is nothing wrong with the concept of the PPP.  As Alfred Dy, Head of Philippines Research of CSLA, wrote:  “Under the PPP initiative, large infrastructure projects will be competitively bidded out to the private sector.  The PPP framework breeds efficiency given the transparent bidding process.  It also fosters fair competition among the bidders as all have equal access to the bid documents.  In bidding for the projects, proponents face IRR requirements/hurdle rates, which force them to look for ways to be efficient in implementing projects.”   Unfortunately, the lack of competent managers in the implementing agencies resulted in what has been called “paralysis by analysis.” 

    My unsolicited advice to the next Government is to recruit some people I know who have both the competence and the integrity to do a better job of rolling out these projects that amount to almost a trillion pesos.  Among these are Ramoncito Fernandez of the First Metro Pacific Group; Mark  Dumol of the San Miguel group; Henry Basilio,  a UA&P professor and transport consultant; George Consunji of the DMCI group; and Mabini (EQ) Pablo, former top official of the DPWH.  It does not bother me that some of them are now working for organizations that will be among those active in bidding for PPP projects.  Their integrity is unassailable that I am sure they will fully respect fair competition and will subject themselves to the transparent bidding process of which Mr. Alfred Dy wrote.  I hope others who know of the best people for transport and communication will also come out with their own wish lists.  Our getting a 8 to 10 percent annual GDP growth during the next Administration hinges very much on the quality of DOTC officials.

          As Alfred Dy also wrote, “Aside from the PPP programme in infrastructure development, the Aquino administration is pushing for digitalization in the free-TV industry by the end of 2017, from the current analog format.  Specifically, free-TV companies should use Japanese ISDB-T standard for digital television.  The rationale behind digitalization is for the same capex, fee-TV operators can offer more channels for the same frequency bandwidth.  Moreover, the viewing public gets better free-TV signal.  For the media company, the shift to digital from analog should enhance their ROIs by around 50bps.”

          If the next Administration can unleash these infrastructure projects, the first direct impact on the national economy is the pump priming effect of one trillion pesos worth of investments.  This can surely lead to an accelerated GDP growth of 8 percent or more annually.  In addition, as can be gleaned from the 19 projects that did not take off during this present Administration, it is obvious that the airport projects are predominant.  This will further stimulate domestic tourism which already numbers 40 million Filipinos yearly discovering their own country.  In fact, this domestic tourism is one of the main engines of growth that have helped us attain an annual growth rate of 6 to 7 percent for the last three years.  The digitalization of free-TV will add to the growth of another sector of the FUN industry, i.e. entertainment.  With enhanced infrastructures, tourism and entertainment will contribute even more to the consumption-led growth that we have been experiencing in the last three years.  For comments, my email address is bernardo.villegas@uap.asia.