PPP Act to help close P7.3T infra investment gap

The proposed Public-Private Partnership Act passed by the House of Representatives will help close an infrastructure investment gap of P7.3 trillion.

House Bill 6527 defines PPP as a "contractual arrangement between the implementing agency and the private sector proponent for the financing, designing, constructing, operating and maintaining, or any combination thereof, of infrastructure or development projects which are typically provided for by the public sector, where each party shares in the associated risks."

The PPP Act is meant to provide an enabling environment that would foster the growth of public-private partnerships for large infrastructure and other development projects.

"PPPs matter now more than ever," said Albay 2nd District Representative Joey Salceda, the Ways and Means chair and principal sponsor of the measure, in a statement on Wednesday.

The House voted 254 against three on 12 December.

"Our national government debt stands at 62.1 percent of the Gross Domestic Product GDP and is expected to remain elevated to around 52 percent at the end of President Ferdinand Marcos Jr.'s term. The implementation of the Mandanas-Garcia ruling has also reduced the national government's fiscal space," Salceda said.

The Mandanas-Garcia ruling fully transfers the delivery of basic services to local government units.

It stemmed from a 2013 petition made by Batangas Governor Hermilando Mandanas, former Bataan governor Enrique Garcia Jr. and other local officials before the Supreme Court on LGU shares of the internal revenue allotment.

"Borrowing costs are also expected to remain elevated as central banks continue to fight global inflation. Limited fiscal room forces us to be more creative in looking for funding sources for the country's infrastructure investment gap," Salceda explained.

Quoting the G20 Global Infrastructure Outlook, Salceda said the Philippines "needs US$559 billion in investments in key infrastructure sectors until 2040 to meet its Sustainable Development Goals," Salceda said.

The national government cannot realistically raise P1.047 trillion in taxes every year to meet this gap, according to Salceda.

"As Ways and Means chair, I can already tell you that we cannot raise this much. The government, however, can leverage the resources of the private sector to ensure that these projects are undertaken in some form and under some arrangement," he said.

Key features of the proposed PPP law include institutionalization of a PPP project pipeline; clarity in the proper approving body for each PPP project; clarity in defining solicited and unsolicited proposals, parameters and guidelines in negotiated procurement of PPP projects; clearer and stronger safeguards in the case of unsolicited projects; and stronger rules on competition for procurement of PPP projects.

The PPP law is among the priority legislations announced by President Marcos during his first State of the Nation Address in July.

The urgent passage of the PPP Act will "greatly enhance private sector participation in infrastructure development and will aid in the country's post-pandemic recovery and long-term economic growth," according to a letter jointly signed by Socioeconomic Planning Secretary Arsenio Balisacan, Finance Secretary Benjamin Diokno, and Budget Secretary Amenah Pangandaman.