FINANCE Secretary Carlos Dominguez III said the private sector will continue to play a lead role in the government’s P8.4-trillion “Build, Build, Build” infrastructure program.
Dominguez said over the weekend the construction as well as the operations and maintenance component of the projects under the massive infrastructure buildup would still be undertaken by private contractors through the “hybrid” Public-Private Partnership arrangement.
Dominguez said the government was taking care of the financing of big-ticket infrastructure projects to speed up the process and cut on costs, so it could deliver the economic benefits of these projects to the people at the soonest possible time.
With a steady revenue stream from the Tax Reform for Acceleration and Inclusion Act, increased official development assistance flows, and investment-grade credit ratings, Dominguez said it was also an opportune time for the government to build its asset base, which future administrations could later put on the auction block to raise funds.
“All the construction [under the ‘Build, Build, Build’ program] is done by the private sector. All of these are private sector construction so there are contracts given to private contractors,” Dominguez said. “Now, the opportunities will come when we bid out the O&M. So that is their opportunity as well.”
Dominguez cited the 25-year concession to operate and maintain the Clark International Airport, which attracted several bidders from local and foreign companies from Asia and Europe.
A “hybrid” PPP mode would prove to be the most viable way of implementing “Build, Build, Build” projects because the government could borrow money at lower rates than the private sector and do away with protracted private sector negotiations that sometimes led to lawsuits, Dominguez said.
“And let me add another thing. While we are doing all these projects ourselves, the government is building up an asset base that is going to be very large. Some future government, you know, down the road, 20 to 30 years from now, may need money, they can sell those and go to a privatization program,” Dominguez said.
The Duterte administration is investing about $170 billion over the medium term in 75 high-impact flagship projects under the “Build, Build, Build” program. Of these projects, 35 have already passed the approval process.
Earlier, Dominguez said the unprecedented infrastructure buildup “will drastically alter the Philippine economic landscape,” create over a million jobs per year and bring the country’s logistics backbone up to par with other fast-growing economies in the region.
Dominguez said combined with other reforms such as the long-due modernization of the tax system and improvements in the ease of doing business, the Duterte administration envisioned the infrastructure program to reduce poverty incidence by a third of the 2015 level of 21.6 percent to just 14 percent by 2022.