MANILA,
Philippines - The Philippines, among
member-countries of the Association of Southeast Asian Nations (Asean), offers
the most ideal environment for public-private partnerships (PPPs).
The
verdict was handed down recently by Asian Development Bank (ADB) in its 2011
Infrascope.
In the
Asia-Pacific region, ADB ranked the Philippines eighth in PPP-readiness.
It said
on a scale of 0 to 100, with 100 representing the perfect environment for PPP
projects, the country scored 47.1 out of 100 on its way to the No.1 spot in
Asean.
In the
Asia-Pacific region, other Asean member-countries that scored high in
PPP-readiness are Indonesia, with a score of 46.1 out of 100, to land ninth;
Thailand, 45.3, 10th; and Vietnam, 26.3, 14th.
Asean
also groups Brunei Darussalam, Cambodia, Laos, Malaysia, Myanmar and Singapore.
The
index was topped by Australia, with a score of 92.3.
“[The] Philippines
[has] updated, or in the process of updating, regulations and [has]
restructured existing institutional frameworks in the hope of improving the
processes around PPP selection and oversight, and to develop specialist
capacity in the public sector,” ADB said.
Results
of the assessment suggest that each country can be grouped into four: mature,
developed, emerging and nascent. These groups categorize the environment for
sustainable and long-term PPP projects. The Philippines was classified as an emerging
country.
A
country’s overall score comes from their weighted category scores. The six
categories given by the 2011 Infrascope are: legal and regulatory framework,
institutional framework, operational maturity, investment climate, financial
facilities and subnational adjustment factor.
Legal
and regulatory framework, wherein quality of PPP regulations and openness of
bids and contract changes are measured, was weighted 25 percent. Institutional
framework, which is measured by the quality of institutional designs, was
weighted 20 percent.
Regulators
measure operational maturity, which was weighted at 15 percent, in terms of
PPP-readiness and risk-allocation. Investment climate received a weight of 15
percent.
Financial
facilities, wherein government payment risk and government support are
measured, was weighted at 15 percent. Subnational adjustment factor, in which
infrastructure concessions are evaluated, was weighted 10 percent.
The
Philippines placed 7th with a score of 43.8 in legal and regulatory framework,
8th with 41.7 in institutional framework, 10th with 44.8 in operational
maturity and 13th with 46.3 in investment climate.
Despite
the long history of PPP projects in the Philippines, ADB said, limitations on
resolving rows and financing hinder the projects from reaching their full
potential. Even when the bidding process is well-structured, it added, debates
and disputes are left to the parties to resolve and occasionally are brought to
the courts.
ADB
cited the Philippine government for its interest in attracting foreign PPP
partners. It said state support remains limited due to the government’s “poor
fiscal position.” ADB, however, added that this shortcoming remains a threat,
too, to fostering sustainable and efficient PPP infrastructure projects not just
in the Philippines but also in the Asia-Pacific region.
“In
order to leverage the $8 trillion required over the next decade for physical
infrastructure in Asia, public financiers like ADB must undergo a complete
change of mindset and shift their focus from sovereign projects to [PPP
projects],” ADB Regional and Sustainable Development Department Deputy Director
General Woochong Um said. “Studies such as this one [on PPP readiness] will
help our developing member-countries address the areas of [PPPs] that need to
be strengthened.”
The
2011 Infrascope said South Korea, India and Japan are the top performing
countries in the Asia-Pacific region. The feat, it added, reflects the three
countries’ robust institutional and regulatory frameworks. Two benchmark countries,
Australia shared overall top scores with the United Kingdom.
ADB
said India came in slightly ahead of Japan, which reflects strong political
will and rising capacity for PPPs, despite implementation remaining a
challenge. China also performed well with 614 PPP projects reaching financial
closure between 2000 and 2009.
The ADB
report said Vietnam, Mongolia and Papua New Guinea were at the lower end of the
index, due to a lack of experience with PPPs and underdeveloped institutions
and regulatory frameworks.
It
added that the Philippines and other emerging economies such as Pakistan,
Bangladesh, Kazakhstan, Thailand and Indonesia are moving swiftly to put in
place necessary laws and structures to attract more private investments.
The
2011 Infrascope, conducted by ADB’s Economist Intelligence Unit, uses a
benchmark index system to rank the readiness and capacity of a country to carry
out sustainable, long-term PPPs.
Itt was
carried out in 11 developing economies in the Asia-Pacific region, along with
four benchmark countries and one state, Gujarat state of India. (Myleen
Coronel)
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