MAP: Clarifying goals of PPP projects crucial

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THE Management Association of the Philippines (MAP) has listed recommendations to strengthen government and private sector collaboration, including defining the objectives of different public and private partnership (PPP) projects. 

At the Pilipinas Conference 2022 on Tuesday in Makati City, MAP President Rogelio Singson presented MAP’s recommendations for Socioeconomic Planning Secretary Arsenio M. Balisacan and some Cabinet secretaries. 

Singson said these recommendations intend to achieve and create an “atmosphere of trust” between the public and private sector. 

Among the recommendations, Singson noted that it’s important to “clearly define the purpose and objectives of the different public and private partnership projects.” He added that mixing the objectives “may not be a good proposition.” 

With this, he dropped a rhetorical question, noting, “Is the PPP project a fundraising project for government, like disposition of government shares or are these development of airports, toll roads, is the objective to let the private sector provide the public service republic good using private sector technical financial capability and giving the benefit to the public users of the facility?” 

Another recommendation of the business group is to “leave the operations and maintenance of public infrastructure to the private sector.” 

Singson said this particular recommendation was born out of the “very restrictive government procurement rules and regulations which practically prevents even well-meaning government officials from being able to do a good job.” 

In fact, the head of MAP cited a few examples of such restrictions: awarding to the lowest price equipment supplies, having no value for money proposition, budgetary constraints which he said is on a yearly basis and therefore procurement will not be on economies of scale “but you have to buy based on what is budgeted.” 

Singson cited more examples of restrictions such as limited allowable emergency purchases, and limited allowable overtime, among others. 

The head of MAP also stressed the third recommendation—to “create a level playing field.” Singson noted that it’s important to “provide an atmosphere supported by policies,” taking into consideration the rights of both the public and private sector. 

Both the state and private sectors, he added, must fully understand the technical, commercial and legal aspects of the PPP projects, particularly the risk-sharing arrangement which is referred to as the material adverse government action (MAGA). 

The fourth recommendation of MAP is the need to “clarify the roles and responsibilities of the various government institutions involved in the review and approval processes for PPP projects.” 

Often, he said, the delay happens between national government agencies. To add to that however, Singson said the delay now also happens between national and local government units. 

With this, he said, MAP has made one concrete recommendation for the National Economic and Development Authority (NEDA) and PPP Center which is to increase threshold amounts of investments in projects to avoid needing “several layers of reviews and final approval that will have to go all the way to the NEDA board.” 

Another recommendation of MAP is to “respect government contracts entered into in the past and the future” because, he said, “often they have mutual review of contracts entered into by previous administrations even after an arbitral court ruling.” 

The head of MAP also emphasized the need to create a joint public-private sector advisory council, noting that “there has to be a market sounding.” 

“It could be on agriculture, trade and investment, energy, water sector. The reason for that is that we want a project before it is finally issued and bidded out that at least the terms of reference [TOR] has been discussed with potential investors. There has to be a market sounding, you don’t issue a TOR without even knowing whether there are investors or not,” Singson said.