CANILAO’S LAW: PPP MUST SERVE DEV’T FIRST
‘The PPP is an evolving story. We should continue to exchange ideas and experience and nurture a level of trust between the public and private sectors.’
An aggressive infrastructure buildup under the “Bagong Pilipinas” pursuit promises greater mobility across the country through a huge development plan that consists of over 100 projects worth P9.14 trillion. To accelerate the construction of these projects, the government is increasingly banking on the resources of private companies under the amended Public-Private Partnership, or PPP, Code.
Aboitiz InfraCapital Inc. president and chief executive officer Cosette Canilao shares a few insights on water recycling, smart cities and airports, and relationship needs of the private sector during the march towards sustainable growth.
“The PPP is an evolving story. We should continue to exchange ideas and experience and nurture a level of trust between the public and private sectors,” Canilao told DAILY TRIBUNE and British investors last Wednesday in a forum organized by the British Chamber of Commerce in the Philippines.
“Despite the vast opportunities presented to the private sector, we must also acknowledge the challenges of companies in such endeavors,” she stressed.
Returning to basics, Canilao said a major challenge is the misconception for some that the PPP is a revenuegenerating tool. While PPP projects should create a business, she said they should also be well-designed to provide overall convenience to surrounding communities.
“PPP is not a revenue-generating scheme; it’s an infrastructure development tool,” Canilao explained.
The PPP allows private firms to shoulder costs, create the design and carry out operations of projects for public services as a way to lighten the duties of the government with its limited funds, knowledge and skills in certain industries.
Infra heavy hitter
Aboitiz InfraCapital Inc. is the Aboitiz Group’s infrastructure arm that develops water, digital and transport infrastructure. It also develops and operates economic estates consisting of residential, commercial and institutional areas.
Canilao observed an often overlooked aspect of project proposals for airports, which is the flood risks and water sources in the immediate site.
While regional airports bring massive opportunities for tourism and job creation in the provinces, she said the safety of passengers and nearby communities and businesses should be prioritized.
“It’s very challenging and frustrating that we compute for economic, investment returns, etcetera, but when it’s translated to how we’re going to bring real value to the infrastructure in terms of marketing and fixing the water system — for example in Bohol — that doesn’t get factored in,” Canilao said.
“Our regional airports need a lot of upgrading. You wouldn’t believe that the safety issues we have right now are so scary. For our regional airports, we not only weigh our capital,” the Aboitiz executive said.
Aboitiz InfraCapital Inc. applied its expertise to the Mactan Cebu International Airport which was recently named the best airport in Asia under the 5-million passenger category by Routes Asia, a global aviation and airline events firm.
Canilao said her team is exploring further ways to reuse and conserve water, including water impounding by building water systems linked to runways.
“What I’m excited about is, airports are notorious for flooded runways. So how can we reuse that water so that we remove the flooding problems and at the same time reuse it as gray water for landscaping, for our economic estates? Imagine if we could do that for each industry,” she said.
“We aspire to develop world-class regional airports to bolster the local economy and tourism. A fundamental model for this is the award-winning Mactan Cebu International Airport,” Canilao added.
She also shared that Aboitiz InfraCapital is enhancing sustainability efforts over the 40,000 hectares of new commercial lots in its Lima Estate in Batangas to be launched in the first half of the year.
In the second quarter, she said the firm will also break the ground for its fourth economic estate in Tarlac which spans 200 hectares.
Aboitiz InfraCapital has been building mixed-use estates for 30 years.
Smart traffic, agri system
Thinking about creative solutions, Canilao also suggested upgrading the traffic system in the country to enable a smoother flow of vehicles.
“The government also needs to open their minds to ways of identifying which projects are beneficial. Why can’t we have a centralized intelligent traffic system or let the private sector handle it,” she said.
In terms of agriculture, she said the government can develop a digital system to deliver government assistance
faster.
“For example, in agriculture, we could start to digitalize so we can track the assistance to the farmers if we’re output-driven,” Canilao added.
A study by the Japan International Cooperation Agency indicated the Philippines loses at least P3.5 billion daily and P1.27 trillion annually from road traffic.
A good start
While the PPP can still be improved, Canilao said the government has expanded its scope toward other high-impact projects.
“PPP law encompasses everything now that the Water Crisis Act is recognized,” she said.
President Ferdinand Marcos Jr. signed an executive order last year to create the Office of Water Management which will organize policies on water concerns and a preparatory measure for the possible creation of the Department of Water.
Canilao added the new PPP also provides more consistency of rules and supports ease of doing business through its tariff terms that are strictly based on the contract between the private firm and the implementing government agency.
“Once it is set there, the tariff setting should be followed in accordance with the contract and not intervention by another regulatory body. I hope that the regulatory body will just ensure that the services are delivered,” she stressed.
“I don’t want to go back to the government and argue that this is included in my expenses and I need to prove that I spent P1 billion for me to get a tariff increase; it can be politicized,” she added.