Government still needs private sector to build infrastructure projects

Alot has already been said about the country's infrastructure sector — with the Philippine government even setting aside billions worth of funds to "Build, Build, Build" program — but some are saying that without the private sector or PublicPrivate Partnership (PPP) projects for that matter, the golden age of infrastructure will still be far from happening.

At the ASEAN Business and Investment Summit ysterday, port and gaming magnate Enrique Razon said that the government and the private sector have to be "on the same page" when it comes to infrastructure development.

"While the forum is on ASEAN, I'd like to focus on the Philippines. To be blunt about it, I'm not really concerned with what other countries are doing. I'm more concerned about the Philippines because we have a lot of things to do and a lot of catching up to do," Razon told businessmen and delegates at the Summit.

"My hope is that this administration is able to change the culture of how things get done in this country. The private sector, I think, we have no problem. We are capable. I use the world culture because that's what it is, everybody has to be in the same book on that. Until that happens, we will just be behind or ahead of Laos and Cambodia," he further said.

For his part, Ayala Corp. Chief Executive Officer Jaime Augusto Zobel de Ayala believes that if only the government and the private sector could work more closely, the infrastructure sector would have improved so much faster.

"I believe in Public-Private Partnerships. Infrastructure is about ecosystem, you can't just do one piece in above itself... It's not just about [building] one component to another. I think all of this can't be done without the public sector and the private sector working together," Zobel de Ayala said. Razon and Zobel de Ayala spoke at the first panel of the ASEAN Business and Investment Summit, which is happening on the sidelines of 31st ASEAN Summit and Related Meetings being held now in Manila.

Their statements on infrastructure development came at the time when the government seems to have already veered away from PPPs and instead decided to rely more on Official Development Assistance (ODA) in financing the country's major infrastructure projects.

For Zobel de Ayala, funding is not the problem but the way to implement projects and what standards have to be followed to get them rolling.

"The financing needs are going to be tremendous and of course you could have public sector's funds coming in and you got private sector funds, [funds from the] multilateral sector, and foreign investments. But in the end you have to have global set of standards to live by," he said.

"I think structures like PPP, which originally oriented by the US, is a way of getting our standards to come together," he added.

Meanwhile, Thomas Hardy, acting director at the US Trade and Development Agency, thinks that the private sector needs to exert more effort in explaining to the government their intentions in participating in PPP projects.

"It all goes down to having transparency, sanctity of contracts, and commitment on both sides. In PPPs, at the end of the day, the public sector is giving something up so they need to have partners that is willing to go along and take it," Hardy said.

As the government's "slower than expected" rollout of public infrastructure projects caused World Bank to trim its growth projections for the Philippines for this year and next year, it's already clear that the administration has failed to execute swiftly its ambitious "build, build, build" program.

To recall, the government pledged to spend as much as R8 trillion throughout President Rodrigo Duterte's six-year term for the infrastructure sector alone.

Critics are now saying that this might be the right time for the government to resort to PPP which they believe is a more successful model than ODA.