The Philippine Development Plan (PDP), 2011–2016 called for real gross domestic product (GDP) to grow by an average of 7%–8% per year; for investments to reach 22% of GDP by 2016, compared to 19.7% during 2011–2013; and for extreme poverty to decline to 17% by 2016 from 33% in 1991. However, years of underinvestment in infrastructure had put the Philippines at a competitive disadvantage compared with its ASEAN and regional peers, and inadequate supply of quality infrastructure was seen as an impediment to achieving the goals of the PDP. Indeed, many economic analysts considered insufficient investment in infrastructure to be the most significant constraint to doing business in the Philippines. Forgone income because of road congestion in Metro Manila alone was estimated at 8% of GDP per year. Moreover, the government had not been able to harness the potential efficiency gains of boosting private sector investment in infrastructure.
The government addressed the first set of development constraints during 2010–2012 and successfully revived the national public–private partnership program. The Public–Private Partnership Center (PPP Center) was established and became one of the best regionally, and even globally. This was followed by the establishment of a project development and monitoring facility (PDMF)—a revolving fund for PPP project preparation—which the PPP Center used to prepare transactions using internationally recognized firms. Finally, the PPP Center developed a credible project pipeline and completed and adopted regulations to implement the Build–Operate–Transfer (BOT) law. These efforts resulted in nine PPP projects (total investment of $3 billion) being awarded during 2011–2015, up from six PPP projects awarded from 1992 to 2010. In addition, the project pipeline increased from 11 projects ($3.3 billion) in November 2010 to 45 projects ($23.2 billion) in March 2015. The robust PPP rollout sent a strong signal that the government intended to boost private investment in infrastructure. However, additional measures were required to fully harness the benefits of PPPs.
The Expanding Private Participation in Infrastructure Program, financed by the Asian Development Bank (ADB) through two policy-based loans, each amounting to $300 million, was designed to put additional measures in place. Subprogram 1 was approved in November 2015, and subprogram in August 2018. The program’s impact was aligned with the government’s plan to increase public spending on infrastructure to 7.4% of GDP by 2022. Its outcome was private participation in infrastructure improved. It had three planned outputs: (i) strengthened government financial support to PPPs; (ii) expanded and efficiently implemented pipeline of PPP projects; and (iii) strengthened legal and regulatory frameworks for PPPs.
Output 1 was substantially achieved. Adequate budgets were provided for: (i) right-of-way acquisition and resettlement in PPP projects; (ii) building adequate access to major airports and roll-on, roll-off (RORO, or car ferry) facilities developed through PPPs; (iii) viability gap funding for PPPs; and (iv) contingent liabilities arising from PPP projects. Guidelines for a risk management program on contingent liabilities were also developed and implemented.
Performance targets for output 2 were met or exceeded. Under subprogram 1, the government signed six national, PDMF-supported PPP projects in transport, health, and education, for a total investment of $1.5 billion. An additional 10 feasibility studies were completed for new projects. The medium- and long-term transport infrastructure planning and programming frameworks were strengthened, the Roadmap for Infrastructure Development for Metro Manila was finalized, and Philippine Transport Infrastructure Roadmap was initiated. Under subprogram 2, the government competitively tendered and awarded 12 national PPP projects totaling $4.47 billion and completed feasibility studies for six national PPP projects. These projects subsequently progressed to the next step of preparation, evidencing the continuous development of a robust PPP project pipeline. Initiatives to develop a strong pipeline of projects in support of the government’s Build, Build, Build program were introduced, including a Public Investment Program (PIP) for 2017–2022, along with a Three-Year Rolling Infrastructure Program under the national budget to ensure funding for projects requiring immediate implementation.
Output 3 targets were likewise achieved. Amendments to the BOT Law were submitted to Congress for approval. The amendments sought to institutionalize the PPP Governing Board, the PPP Center, the PDMF and its consultant engagement framework, the funding for government direct and contingent liabilities, and the new process for appraising PPP projects. Implementing rules and regulations for Executive Order 78 (2012) mandating the inclusion of provisions on the use of alternative dispute resolution mechanisms in all contracts involving PPP projects were also approved and issued.
Completion of most output targets allowed the program to achieve its outcome targets, although on one of these targets, confirming documentation was not available. Confirmed achieved was an average 5.5% increase in public spending on infrastructure in 2016-2017, which was slightly in excess of the average 5% target. The target of $3 billion annual average in private sector investment in infrastructure (excluding telecommunications) in 2015-2017 was also likely achieved: said investment was reported to have aggregated $13 billion or an average of $4.3 billion per year. Disbursements into PPP projects averaged only $367 million per year, but this significantly underrepresents total commitments.
The Department of Finance (DOF) served as the executing agency and the National Economic and Development Authority, the Department of Budget and Management, the Department of Transportation and Communications, the Department of Public Works and Highways, and the PPP Center were the implementing agencies. The Bureau of the Treasury was added as an implementing agency for subprogram 2.
