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INFRAWATCH

Q1-2019

LAGUNA LAKE MACTAN-CEBU INT’L PARAÑAQUE INTEGRATED


HIGHWAY AIRPORT TERMINAL 2 TERMINAL EXCHANGE

The Duterte administration has promised


a “Golden Age of Infrastructure” for the
Philippines. From 2017-2022, it aims to
spend Php 8-9 trillion on infrastructure
programs, activities, and projects
nationwide. Infrastructure spending is
targeted to reach 7.4% of gross domestic
product (GDP) by 2022.

Central to this is the “Build, Build, Build”


(BBB) Program which prioritizes the
completion of high-impact, “big ticket”
flagship projects developed from the
previous and current administrations.
This central socioeconomic agenda
believes in infrastructure as the key to
sustained inclusive economic growth
and poverty reduction.1

MONITORING BUILD, BUILD, BUILD


(as of March 15, 2019)
The 61 BBB projects monitored here are
those officially listed on the Philippine
Infrastructure Transparency Portal
(http://build.gov.ph/). MBC’s monitoring
data here on the said projects is based
on desk reviews of official government
data, press releases, and news reports,
and on interviews with key officials and
officers on projects.

InfraWatch is Makati Business Club’s survey of Build Build Build (BBB), the government’s aggressive infrastructure drive. The purpose is to help the
business sector plan around and support infrastructure projects. This first instalment provides an overview. Succeeding instalments will focus on
various aspects of BBB.
FINANCING has diplomatic, trade rela-
tions or bilateral agreements
MODES
or which are members of the
Mode 1: BUDGET/General United Nations, their agen-
Appropriations Act cies and international or mul-
(GAA) tilateral lending institutions.2
Projects financed purely An ODA loan includes: (1) lon-
by the Budget make up the ger-term maturity and favor-
smallest of the three financ- able concessional financing
ing modes. The Budget is pro- terms, with a grant element
posed by the Administration, of at least 25%, (2) a wider
passed by Congress, released access to knowledge, expe-
by the Department of Man- rience, and technology; and
agement and Budget, and (3) improved overall project
spent by the Department of implementation due to the
Public Works and Highways, absence of contractual dis-
Department of Transporta- putes.3 ODA challenges line
tion, and other agencies. agencies to avail and spend
the loan in accordance with
Mode 2: Official timelines and targets.
usually by users through toll group of entities and a gov-
Development Assistance fees and train fares. This usu- ernment entity or group of
(ODA) Mode 3: Public-Private ally happens over decades, entities contribute capital,
after which the developer services, and/or assets to
ODA is a loan or grant admin- Partnership (PPP) relinquishes control of the undertake an investment ac-
istered with the objective of Public-Private Partnerships asset to the government. tivity. Both parties share prof-
promoting sustainable social allow the private sector to its, risks, and losses subject
and economic development participate in designing, fi- Integrated or Hybrid PPP to agreement by both par-
and welfare of the Philip- nancing, building, and oper- In an integrated PPP, the de- ties. The investment activity
pines. Its resources must ating infrastructure projects veloper finances, builds, and is eventually transferred to
be contracted with govern- beyond getting paid to build operates the infrastructure. the private sector or govern-
ments of foreign countries them. Instead, the private In a hybrid PPP, the govern- ment.5
with whom the Philippines sector developer gets paid, ment builds the project with
GAA and/or ODA funds, then Unsolicited Proposal (USP)
bids out/grants a private In publicly-bidded projects,
sector company an Opera- the government decides
tions and Maintenance (O&M) what infrastructure it wants
contract. While the Aquino built, draws up specifications,
government preferred in- and bids it out. In unsolicit-
tegrated PPPs, the Duterte ed projects, a private sector
government has said it wel- company proposes an infra-
comes hybrid PPPs to take structure project and the
advantage of the cheaper government rejects or ap-
financing available to govern- proves it. If it is approved, the
ment, as well as accelerate government opens the proj-
development by eliminating ect to a Swiss Challenge in
pre-bidding procedures and which other companies may
negotiations with prospective offer the government better
bidders.4 terms for the same proj-
ect. If a competitor does so,
Joint Venture (JV)
the original proponent may
A JV is an arrangement where
match the bid and win it, or
a private sector entity or
decide to drop out.6
2019 TARGETS
Metro Manila Subway Project Groundbreaking
on Q1 (February)
NLEx Harbor Link, Segment 10 Inauguration
and Opening on Q1 (February)
Laguna Lake Highway Completion of All
Segments on Q2 (April)
Tarlac-Pangasinan-La Union Expressway
(TPLEx) Completion of All Segments on Q2 (June)
Cavite-Laguna Expressway (CALAx) Opening
of First Segments on Q3 (July)
Broadband Backhaul Modular IT Facilities
Completion of Project on Q3 (August)
New Clark City National Government
Administrative Center (NGAC) Hosting of 30th
Southeast Asian Games on Q4 (November)
ENDNOTES
1 Rosales, “Financing Infrastructure Projects in the Philip-
pines,” 9-11.
2 NEDA, “Official Development Assistance Act of 1996.”
3 Rosales, Financing Infrastructure Projects in the Philippines,
28-37.
BBB Projects Completed in 2018 4 Hybrid projects include unapproved USPs for the same
project but have not yet been approved; hence, the project
New Communications Navigation Surveillance / Air Traffic Management (CNS/ATM) Systems is classified as hybrid based on the government’s business
Development Project model.
5 NEDA, “Revised Guidelines and Procedures for Entering into
Completed in January 2018 | Japanese ODA loan for installation of upgraded communications, navigation,
Joint Venture (JV) Agreements between Government and Pri-
surveillance, air traffic management systems nationwide. vate Entities.”
6 In this report, USPs considered are those that were started
and completed as USPs.
Mactan-Cebu International Airport Project (Terminal 2)
Completed in July 2018 | Build-Operate-and-Transfer (BOT) PPP project for construction of new BIBLIOGRAPHY
international passenger terminal in Cebu. Department of Finance. “Hybrid PPP to Complement Infra
Buildup.” Accessed February 7, 2019. https://www.dof.gov.ph/
index.php/hybrid-ppp-to-complement-infra-buildup/.
Parañaque Integrated Terminal Exchange (PITX)
Completed in November 2018 | Build-Transfer-and-Operate (BOT) PPP project for an intermodal transport National Economic Development Authority. “Official
Development Assistance Act of 1996.” Accessed February 7,
terminal between Manila and Cavite. 2019. http://www.neda.gov.ph/2013/10/22/oda-act-1996/.

------. “Revised Guidelines and Procedures for Entering into


Cavite Barge Gateway Terminal Joint Venture (JV) Agreements between Government and
Completed in November 2018 | Unsolicited proposal PPP project for ferry terminal with cargo shipments Private Entities.” Accessed February 7, 2019. http://www.
via barge and roll on, roll off ferries between Manila and Tanza, Cavite. neda.gov.ph/wp-content/uploads/2017/09/2013-Revised-JV-
Guidelines.pdf.
CAVITE BARGE NEW CLARK CITY Public-Private Partnership Center. “What is PPP.” Accessed
GATEWAY TERMINAL NATIONAL GOVERNMENT February 7, 2019. https://ppp.gov.ph/ppp-program/what-is-
ppp/.
ADMINISTRATIVE CENTER
(NGAC) Rosales, Jose Patrick. Financing Infrastructure Projects in
the Philippines (Revised Draft). Bangkok: United Nations
Economic and Social Commission for Asia and the Pacific,
2017.
Programs and Projects Head
Roxanne.Lu@mbc.com.ph
Report by
Miguel.Rivera@mbc.com.ph
Design and Layout by
Clinton.Balbontin@mbc.com.ph