Decoding the PPP Code

Every ordinary citizen understands that government's preference for public-private partnerships over general appropriations and official development assistance as a way of solving the country's infrastructure deficit rests on the efficiency of the private sector in delivering assets, services, and projects. Needless to say, PPP comes under the big tent of New Public Management ­—­ a paradigm shift in the 1990s that noted scholar John Donahue rightly referred to as — "private means to public ends."

With Republic Act 11966, or the Public-Private Partnership Code of the Philippines, signed on 5 December 2023, this "private funding initiative" makes its debut in the country's infrastructure landscape. It seems a master stroke, if not too "anarchic," its sweeping repeal of twelve prior Republic Acts or sections thereof as well as sections or provisions of three Presidential Decrees, and all executive orders and administrative laws, decrees, orders, codes, issuances, rules and regulations and ordinances.

The PPP Code does not read ala our older Philippine Codes like the Labor Code, the Revised Penal Code, and so on. Instead, it's a mere 25-page document too patronizing of the private sector, encompassing in its reach more so its "effect and force," and absolutely, its general tone and language too "contract-centric" (see Sections 14-15, 21, 29).

To illustrate that last point, we care only to look further at Section 32. Administrative, Civil, and Penal Sanctions which exhausted a list of all conceivable violations of any provision of the Code by "any person" irrespective if private individual, public officer or employee. Nonetheless, it did not fail to also spell out what are allowed, authorized, if notably, the preferential use of Filipino labor, domestic materials and locally produced goods — which is one of the newly minted law's high points. Never mind an old Dean Fidel Nemenzo once having said, viz: "the private sector corrupts the public sector."

Thus, Section 32 may be called the "devil in the details." It only means that the government really means business with the private sector to fast-track growth, development, and push the economy to the "take-off" stage in Rawl's theory. So there are 13 prohibited acts as stipulated (i.e., Section 32  —  a,c,d,e,f,k,l,m,n and o plus b,h,I, and j) that are enough to scare a would-be violator and that could in fact cause the termination of the PPP contract.

However, it may well be early in the day to more correctly appreciate the benefits of RA 11966 in its totality, unless and until the Implementing Rules and Regulations are promulgated. Its final form and substance bear watching but it should be expected to serve as a convenient "menu guide" for both private and public sector actors or stakeholders.

There are other observable facts in this Code, even apprehensions, that cynics might have to entertain. The more luminous ones, albeit in no particular order, include the following:

1) The mention of Maharlika Investment Corporation as one of the government financial institutions;

2) Mention of Guarantees on Demand, Loan Repayment, Private Sector Return under "Section 2, Definition of Terms" might imply how the government would assume (a) the market demand risks, (b) responsibility for the repayment of debt directly incurred by the Private Partner, and (c) guarantee of a predetermined rate of return on the investment of the Private Partner.

It is clear that the private sector becomes the government's "most favored patron" based on the tone of these three kinds of agreements that are at best nearly a case of class legislation gone uncouth.   

Finally, there are only two novel concepts that actually define the nature of the country's PPP. By "joint venture" means a specific investment activity within a specific period of cooperation to deliver an infrastructure or development project undertaken by the private sector for what should typically be done by the public sector. By "land value capture strategies" means they could optimize the financial and economic efficacy of a PPP project.

Let's pray a hundred flowers bloom!