Bringing Private Sector Power to the Province
How local governments in the Philippines are successfully forging multi-million dollar public-private partnership deals.
Statement of Issue
The Philippine infrastructure gap is prominent at the local government level. In the Philippine Development Plan for 2011-2016, the public-private partnership program was identified as the main mechanism through which infrastructure development can be accelerated and inclusive economic growth can be attained.
Drawing on lessons of the successful revival of the Philippine public-private partnership program, the study examines past experiences of public-private partnership projects of local government units in the Philippines and provides solutions for:
- Helping local government units prepare bankable public-private partnerships
- Ensuring efficient project procurement
- Enhancing financial viability of public-private partnerships
- Strengthening local government unit’s public-private partnerships legal and institutional frameworks to enable leveraging more private investment in local economic and social infrastructure
Lack of technical and financial resources for project preparation, monitoring, and implementation has always been cited and continues to be a major impediment to local government units undertaking public-private partnership projects.
To successfully implement public-private partnerships, these needs should be addressed simultaneously and comprehensively via technical assistance and financing facilities
Lessons learned from the study can be found in the following areas:
National Government Level
At the national level, the success of public-private partnerships involve the President setting the policy direction, cabinet members providing the technical and financial resources and the regulation and clear definition of the role of the private sector in public-private partnerships.
Factors for success at the local level include strict adhesion to a build operate transfer law and other relevant laws involving transparency, projects that are viable and attractive enough for the private sector, and a reasonably large number of potential investors with managerial, technical and financial capabilities.
Recognizing the need for technical assistance to identify viable partnerships, to help prepare and bid out projects successfully, and in monitoring, implementing and evaluating projects contribute to overall success of public-private partnerships.
Success factors include offering low interest rates to make financing attractive to local government units, regular monitoring, and financially viable projects.
ADB. 2016. Philippines: Public-Private Partnerships by Local Government Units. Manila.
The views expressed in these articles are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.