THINKING BEYOND POLITICS
LONG-TERM INFRASTRUCTURE PLANNING
During the round table discussion, several participants suggested that a long-term infrastructure planning should be adopted. Separately, the Department of Budget and Management ( DBM) has said that it is considering a Mediumterm Expenditure Framework to “ensure the consistency and responsiveness of the spending program.” Dr. Patalinghug notes that since the legislative budgeting process is conducted annually, funding over the medium-term only provides budget ceilings over a period, which may be difficult to follow especially as administrations come and go. The link between the medium- term budget framework and longer-term planning can be strengthened by introducing long-term budget commitments for large investment projects.
Ideally, a national policy or masterplan on infrastructure could be crafted, detailing the country’s priorities on the sector. An independent commission could decide which projects to roll out based on the framework established by national agencies. For instance, Infrastructure Australia, an independent body mandated to prioritize nationally significant infrastructure, was established to depoliticize the public investment assessment and decision- making processes.
The Duterte government must prioritize improving its absorptive capacity to implement its infrastructure plans; otherwise, it risks repeating its predecessor’s sluggish rollout. HYBRID PPPS
The Public-Private Partnership ( PPP) program was popularized under the Aquino administration to fund large- scale infrastructure programs. At the end of his term, however, 12 projects were awarded but only 3 were completed. Delays were partly caused by weaknesses in the Build Operate Transfer Law and institutional limitations. Compared to traditional modes of procurement, PPPs could be advantageous since developers could internalize cost savings by bundling project development, operations, and maintenance. Dr. Patalinghug, however, reasons that internalization could also be undesirable because of developer risk aversion.
Early into Duterte’s presidency, DBM Secretary Benjamin Diokno proposed a “hybrid” PPP deal. Under this scheme, the government builds, while the private proponent operates and maintains the project. Dr. Patalinghug concurs that pursuing a hybrid PPP might be a more preferable option, since the government has the comparative advantage of ‘ build’, given its responsibility of addressing Right-of-Way issues. Once built, the project will be bid out to a private proponent, which is better-suited to maintain, operate, and market the project. A hybrid PPP will also guarantee that projects are built based on the government’s infrastructure plan, and reduce unsolicited proposals that are more oriented towards profitability rather than connectivity.
While the government has a number of policy and financing options at its disposal, it must prioritize improving its absorptive capacity in order to implement its infrastructure plans; otherwise, it risks repeating its predecessor’s sluggish infrastructure rollout. National agencies should also adopt a long- term infrastructure plan, one that can withstand changes in government. Most of all, the current administration should not waste this opportunity to boost economic growth.