A tale of two PPPs
A news item in The FREEMAN yesterday reported about the plan of Cebu City Mayor Michael Rama, who is concurrently president of the League of Cities in the Philippines, to spread awareness of the importance of a Public-Private Partnership (PPP) among the member cities of the league.
This is in response to President Ferdinand Marcos Jr.'s call for local governments to engage in more PPPs as a means of funding their projects. Rama cited the Cebu-Cordova Link Expressway (CCLEX) and the Carbon Public Market Redevelopment Project as “examples of PPPs that have succeeded.”
These two examples caught my attention because I don’t think they belong to the same category. The CCLEX is a textbook example of an apparently successful PPP. The Carbon Market redevelopment, on the hand, presents a disheartening picture of wholesale private intervention in local public enterprise.
PPP is not a one-size-fits-all solution to government inadequacy in providing basic infrastructure and services to the people. Not all public projects and services can be best recommended for PPP, especially when social equity is involved.
In the case of public markets, for example, systemic inequality in the access to fresh and cheap goods is the reason why public markets around the world have largely remained as public enterprises. “Public markets are not just places of commerce,” says the Project for Public Places, a US-based non-profit that specializes in the user-centered design of public spaces. “What sets public markets aside from other retail locations is that they operate in public space, serve locally owned and operated businesses, and have public goals,” it added.
Public markets offer low-risk business opportunities for vendors, “often from vulnerable populations, and depending on the type of public market, they feed money back into the rural economy where farmers grow, raise, and produce their products.”
Thus, the reason for seeking a partnership in the private sector in a public enterprise should not only be to push for efficiency and productivity. It should be foremost to serve the public good which is a difficult balancing act when large profit-oriented private entities enter the picture.
In the case of the Carbon Public Market Redevelopment
Project, there may sure be on the surface a redesigning of the old market into something “world-class”. But there is no guarantee of fair rent, transparency, and affordability. Maximization of profit comes first for private investors. Instead of synergies, this creates a perennial tension among stakeholders.
Contrast that to transportation infrastructure. In the case of the MRT and LRT in Metro Manila, these rapid transit systems are operated by a consortium of private companies. Yet there is also a substantial government subsidy per ride to ensure that these rail transit lines remain as vital cogs in the efficient movement of people in an economy.
In the case of CCLEX, it is a shining example of a promising PPP because it tends to benefit even those who don’t use it, while allowing the private entity responsible for its construction and operation to recoup its investments over the long term. The project also promises to create synergies in Metro Cebu’s transportation network and economy in general.
The CCLEX has been described as a game-changer in the post-COVID-19 economic recovery of Cebu. It does not only reduce travel time for those who use the bridge. It also extends the same benefits to those who choose the old routes since it now absorbs some of the traffic load of those routes. The economic impact is even more remarkable in the form of increased accessibility and productivity, and in developing real estate and opening new business opportunities.
“In the case of the Carbon Public Market Redevelopment Project, there is no guarantee of fair rent, transparency, and affordability.”