Infra building for sustainable growth

Rolling out the infrastructure projects will be the key driver for the Philippines to achieve a sustainable 7.0-percent gross domestic product growth, AC Energy Holdings President and CEO John Eric Francia said.

At the panel discussion during the Oxford Business Group’s The Report 2017: The Philippines launching Wednesday, Francia said the lack of infrastructure remains to be one of the bottlenecks for the country to achieve strong and sustainable development.

He said there was “a lot of hype” from the government to improve public infrastructure, but he noted that “there is not much outcome yet on this space”.

“I remember much promise from the start of the previous administration, 2010, when the Aquino government announced big plans, PPP (public-private partnership), and so forth. And it took a long time before the program can get off the ground,” Francia said.

“But we were all excited. We thought that was the right direction and so forth. I also remember that when the previous government was gaining traction in terms of laying out the process, the framework, building the capabilities including government capability to run all the processes, etc., and do all the gory detailed feasibility studies and structuring the projects, we thought that we had good momentum getting in to this new administration,” he further mentioned.
The executive stressed the need for continuation of reforms and rolling out of pending projects than “pushing the restart button” which drags the implementation of public infrastructure program.
Francia echoed some concerns on the shift of policy of the current administration, which include setting aside PPP projects and favoring official development assistance from other countries, especially from multilateral institutions, as well as the encouragement of unsolicited proposals.
He said while the government had strong balance sheet to fund its infrastructure program with the support of the tax reform program, allowing the private sector to lead the projects would bring benefits for the government and the market as well.
He cited the energy sector, whose investments were led by businesses, the country now has slight oversupply of power, while open competition pulls down prices in the market.
“Our hope is that, the government, while it is good for them to leverage their balance sheet and execute against projects of national importance, it’s also good for them to balance it well by enabling private sector to do its job, especially in a vibrant sector where a lot of big corporate groups with very strong balance sheets and very strong appetite to take risk and to invest,” Francia said.
Moreover, the executive from the Ayala-led energy firm noted that the encouragement for unsolicited proposals by the government “could be a distraction”.
“I think, personally, it could be a distraction. It takes a lot of government effort to review all of these unsolicited bids from the private sector. But let’s get real, will the government really accept an unsolicited bid in a very critical infrastructure asset like a national airport, with more than one group submitting?” Francia said.

“Let’s cut the chase. It will be very very controversial if the government awards it in unsolicited manner and award the original proponent status to one of the bidders just because it was one month or one week or one day ahead of submitting versus the others,” he added.