PPP: More Public Debt, Less Government Responsibility

Manila –Aside from further bloating the debt burden, Aquino’s PPP thrust will also facilitate increased corporate takeover of government roles and at the expense of public interest

On November 17-19, Malacañang will host a major event called “Infrastructure Philippines 2010” or what is referred to in the media as the public-private partnership (PPP) summit. This is an important summit for President Benigno “Noynoy” Aquino III, who has made PPP the centerpiece of his administration’s development plan.

According to its website, the summit “will examine investment opportunities, profiles of PPP projects in the Philippines, as well as policy, regulatory, and legal concerns in developing the infrastructure sector in the Philippines”.

Apologists of neoliberal globalization argue that while the corporations and banks will profit from PPP projects, they will in return finance and build much-needed infrastructure, which the cash-strapped government cannot afford. Aside from reaping the gains brought about by more infrastructures, the people will also supposedly benefit from improved government services since limited public resources will now be more focused on the provision of social services.

But are PPP projects, just like in any partnership, a mutually beneficial setup?

At no cost?

With a population of more than 94 million and growing, and a government that is facing a record fiscal deficit of Php325 billion by yearend, the Aquino administration claims that there is no viable way to meet the tremendous and increasing need for infrastructure in the country other than the PPP route.

Meanwhile, compared to its Southeast Asian neighbors that are spending on infrastructure an average of 5% of gross domestic product (GDP), the Philippines is only spending 3 percent.

The logic is that PPP will allow the government to save its scant resources because the private sector will shoulder the financial burden of building, maintaining, and operating costly infrastructure. In his first State of the Nation Address (SONA) last July, Aquino keenly plugged his PPP thrust declaring that through such partnerships, “we will meet our needs without spending, and we will also earn”.

However, no capitalist will invest in big-ticket projects in a relatively small market like the Philippines without certain guarantees that will ensure the protection and profitability of his investment.

Consequently, PPP contracts are loaded with favorable terms for investors like guaranteed return on investment, guaranteed market and sales, fiscal incentives, full cost recovery including on inflation and currency fluctuation, and even unheard of sweeteners such as subsidies for production input (the fuel cost subsidy of Napocor’s independent power producers comes to mind) – all of which are borne by the people as consumers and as taxpayers.

This has been the case in past PPP efforts since the first Aquino administration, Noynoy’s late mother Pres. Cory, introduced the Build-Operate-Transfer (BOT) Law in 1990.

Not Manna From Heaven

But Aquino wants to outdo his predecessors including the Arroyo administration whose much-hyped “legacy” centers on supposed unprecedented achievements in infrastructure development. “I am very confident we will not only exceed (Arroyo’s achievements) but will beat it by a mile,” Finance Secretary Cesar Purisima boldy predicted.