A. Double infrastructure spending to 5% of GDP with PPP. Overcome the constraint of low tax collection and the high budget deficit by harnessing available resources and capacities of the private sector for infrastructure development.
(Medium-term action)
B. Prepare, bid out, award, and implement with full transparency several large PPP projects that are already viable. This can create a pipeline of PPP projects to attract domestic and foreign investors. (Immediate action NEDA, DOTC, DPWH, DOF, DTI, and private sector)
C. Potential pilot PPP projects include two rail and three toll road projects: LRT-1 South Extension and LRT-2 East Extension and the Cavite-Laguna Expressway, C-6, Expressway and SLEX 4 Calamba-Lucena. Total estimated cost of these five projects is PhP 173 billion. (Immediate action NEDA, DOTC, DPWH, and private sector)
D. To speed the process, use foreign technical and financial assistance; bring in experts who can be "embedded" in line agencies to prepare project bidding, evaluate proposals, and rank proponents with project monitoring to be done at PMS and final decisions made by the cabinet and the president. (Immediate action NEDA, DOTC, DPWH, and DOF)
E. Use available domestic capital for infrastructure investment. Interest rates are low and sustained growth in domestic liquidity indicates funds are available. Special Deposit Accounts and Reverse Repurchase Agreements total nearly PhP 1 trillion. (Immediate action private sector)
F. Create a coalition of the Philippine Bankers Association, investment houses, and the Philippine Constructors Association and agree to promote good projects and good processes (transparent and competitive). Foster participation between local and foreign contractors, investors, and banks. (Immediate action private sector)
G. Amend the BOT Law. The role of the GRP in planning and preparing infrastructure projects for BOT should be more clearly defined. GRP should determine and identify projects it will undertake and projects to offer to the private sector under BOT/PPP. Increase Swiss challenge timeframe from 30 to 180 days. Pending passage of amendments, review again and issue revised BOT IRRs. (Immediate and medium-term action NEDA, DTI, Congress, and private sector)
H. Institute long range planning for infrastructure development. Plans should not be limited to one president’s six-year term of office. Infrastructure project planning should be depoliticized. NEDA should consider a 10-year plan, rather than encouraging plans, such as its MTDP and MTPIP, which are always for only a single presidential term. (Medium-term action NEDA, implementing agencies, and RDCs)
I. Government should minimize removing projects from its PPP priority list. All priority projects should be solicited and awarded through public bidding. Require all major projects to undergo review by NEDA-ICC. (Immediate action NEDA and implementing agencies)
J. Study setting up a Philippine Infrastructure Facility with a World Bank (WB) loan, as Indonesia has done. Funds can be sought from donors, insurance companies, OFWs, and others. The fund could support project preparation and promote PPPs, as well as take equity and debt positions in projects. (Medium-term action NEDA and DOF)
K. Rescind or amend the EO on JVAs. Review all JV arrangements and ensure that they are consistent with NEDA Board policy that major projects (over PhP 500 million) should pass through the NEDA-ICC. (Immediate action NEDA and line agencies)
L. Require mandatory disclosure of projects under JVA prior to the signing of an agreement. Adhere to the principle "No decision is valid without pre-signing disclosure." Review rules on risk sharing in the EO on JVAs. (Immediate action NEDA and line agencies)
M. Reduce cost overruns due to unsolicited inputs particularly from LGUs. Clarify the limits of LGU authority regarding national projects, but also include LGUs and local communities in stakeholder consultations to explain project benefits. Protect investors from political risks (TROs, LGU interference, right of way problems). (Medium-term action NEDA, DTI, DILG, LGUs, and line agencies)
N. Review foreign equity restrictions on infrastructure with a view to maximizing foreign participation. (Immediate action NEDA, DTI, and DOJ)
O. Implement the National Transport Policy Framework and the National Transport Plan (2011-2016) that were prepared with the support of Australian Agency for International Development (AusAID). (Medium-term action NEDA and line agencies)
P. Build technical and legal capabilities of government agencies to prepare BOT projects, to have technical expertise to determine viability of BOT projects, to prepare feasibility studies, and to better allocate risks. More funding and technical assistance should be made available for such capacity building. (Medium-term action NEDA, DTI, line agencies, and private sector)
Q. Government should create reasonable timetables to address the long registration period of BOT projects. Upon submission of a proposal, there should be a 90-day deadline for approval. Information should be on agency websites with credible explanations when deadlines are not met. (Immediate action NEDA and DTI)
R. CDF should be utilized for necessary infrastructure projects and not follow political considerations. Strictly use HDM-4, which identifies and prioritizes project funding using objective technical and economic criteria. (Medium-term action DBM, DPWH)
S. Process and submit supporting documents during the loan period prior to expiration of loan, so the financing agency shares payment of obligations. (Medium-term action NEDA, DBM, DPWH, and private sector)
T. DBM should release funds on time to meet contractual obligations and diminish the backlog of payment obligations. (Medium-term action DBM)
U. Continue and strengthen the Pro-Performance Team that monitors infrastructure project implementation. (Immediate action OP and PMS)
V. Pass the Freedom of Access to Information Act. There should be a complete commitment to transparency. Create penalties for non-compliance of disclosure requirements and implement thoroughly. (Immediate action Congress)
W. Develop an on-line registry for information on infrastructure projects. Require permanent and updated online disclosure for priority projects, including timeline, status of project, proposed and actual expenditure, variation orders, etc. Foreign technical assistance should be requested to create a website to track major projects. When the Freedom of Access to Information Act is passed, it will be mandatory for government to fully disclose transactions. (Immediate action NEDA, DBM, and COA)
X. The private sector can also create a website tracking the top 200-300 large infrastructure projects, or find an independent government agency to create such a website (e.g. NEDA) without a need for legislation or an EO. (Immediate action private sector and NEDA)
Y. Lump sum budgets should be kept to a minimum, if not totally avoided, in order to promote transparency and accountability. (Immediate action DBM and DPWH)
Road and Rail FGD Participants, Moderator and Secretariat Members November 12, 2009
Joint Foreign Chambers of the Philippines
FOCUS GROUP DISCUSSION ON ROADS AND RAIL71
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The FGD on Road and Rail spent much of its time discussing reforms in process, resulting in the recommendations listed above. It also discussed roads and rails, and its recommendations for these are described under the Road and Rail section below. Its members included several former senior officials and investors with considerable experience in the Philippines who made valuable contributions.
