A NEOPHYTE lawmaker on Saturday sought to overhaul the Build-Operate-Transfer Law to empower local governments to implement their own Public-Private Partnership programs and thereby play a major role in the Duterte administration’s envisioned “golden age of Philippine infrastructure.”
Villafuerte said his proposed measure introducing amendments to the BOT law aimed to institutionalize the PPP mode of financing government projects for both national government and LGU projects.
“Although our country is one of the pioneers in private sector participation in major infrastructure projects in Asia with the enactment of the BOT law, we have yet to fully utilize the advantages of the PPP as shown by our status as among the laggards in the region in terms of public infrastructure,” Villafuerte said.
“This is why we need to introduce amendments to the BOT Law. We need to ensure that our LGUs can take advantage of the opportunities available to them in implementing their own PPPs, especially now that the Duterte administration has committed to dramatically increase spending on infrastructure over the next five years,” Villafuerte said.
The President’s economic team plans to spend P8 trillion on public infrastructure between now and 2022 to sustain high—and inclusive—growth and usher in what Budget Secretary Benjamin Diokno had described as the “golden age of Philippine infrastructure.”
Villafuerte said his proposed HB’s amendments to the BOT law must be institutionalized prior to the planned federal switch, so LGUs could be ready and capable of assuming greater fiscal and political autonomy to chart their respective growth and development agenda once the new form of government had been in place.
These BOT amendments, he said, should: one, accelerate public infrastructure development by strengthening the PPP institutional framework; two, provide financial and technical support through the
Project Development and Monitoring Facility; three, optimize project risks and obtain government support; four, expand PPP contractual arrangements; five, provide for transparent and competitive bidding; six, set standard contents and implementation of PPP projects for transparency,
consistency, and predictability; and seven, grant incentives to PPP projects.
Villafuerte pointed out that “PPPs could be viable sources of financing to help the government fill the infrastructure gap at the local level should LGUs be armed with enough knowledge and expertise on how to effectively carry out this funding arrangement.”
“We need to arm our LGUs with the technical expertise to properly prepare, monitor and implement PPP projects at the local level. Our LGUs can be able partners, rather than obstacles, to the Duterte administration’s infra-led growth agenda if we provide them with the tools they need to implement infrastructure projects in partnership with the private sector,” Villafuerte said.
A report by the Manila-based Asian Development Bank noted that many LGUs encounter snags in implementing PPP projects related to infrastructure, power generation and bulk water supply in their respective communities because of the lack of technical and financial resources to carry out these initiatives.
The ADB report, titled “Philippines: Public-Private Partnerships by Local Government Units,” said “the lack of guidelines for LGUs forming joint ventures with the private sector has been the source of uncertainties for LGUs interested in that particular form of PPP, which does not fall under the ambit of the Build-Operate-Transfer Law, as amended.”
The report noted LGUs could enact their own PPP codes to include fiscal and non-fiscal provisions to better attract investors.
Villafuerte, vice chairperson of the House committee on local governments, said empowering LGUs in implementing PPP projects should be part of the preparatory measures the national government should prioritize in paving the way for the switch to a federal system of government.
“Federalism will empower LGUs to decide for themselves and craft their own development agenda customized in accordance to their respective resources, problems, development paths and potentials for growth,” he said.
Under a federal system, LGUs would be able to retain a huge chunk of their respective incomes and turn over only a portion to the federal government, he noted.
“This setup will lead to genuine industrial and agricultural growth because LGUs would by then have more powers to manage their funds and resources, instead of merely waiting for so-called ‘Imperial Manila’ to give the go-signal on how to spend their share of government revenues,” Villafuerte said.
