P200-B seed fund allotted for Aquino's PPP initiative

Four of the country’s largest government financial institutions on Thursday committed P200 billion to jump-start the public-private partnership initiative of President Benigno Aquino III, who pledged to shield investors from regulatory risks when they invest in infrastructure projects. Aquino told a gathering of 500 people, including 200 foreign investors, at the Marriot Hotel in Pasay City that he is aware investors in the past were discouraged from pouring funds into the country when the rules governing infrastructure projects were suddenly changed “without warning" after contracts have been signed with the government. "When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees – by regulators, courts, or the legislature – then our government will use its own resources to ensure that they are kept whole," said Aquino. As the conference went on, at least 30 protesters led by Bayan Muna staged a picket outside the hotel, radio dzBB reported. The report said the militants branded the PPP program as "Private Public Plunder."

Critics of the PPP claimed the program would bloat the country's debt burden and facilitate increased corporate takeover of government roles at the expense of public interest. Militant think tank IBON Foundation said 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." Development Bank of the Philippines (DBP) president and CEO Francisco Del Rosario said at the opening of the PPP conference that the GFIs' money will be pooled under the Philippine Infrastructure Development Fund or PIDF. The fund, now being established by the Department of Finance, will be made available within the time frame envisioned by the national government for rolling out the infrastructure projects, he said. The DBP, Government Service Insurance System (GSIS), Land Bank of the Philippines and the Social Security System will shell out P200 billion to jump start the initiative, he said. The money would complement the P12.5-billion budget the Aquino administration has proposed to Congress under the 2011 budget for the PPP, Del Rosario said. In providing the seed money, the GFIs aim to quicken infrastructure development, promote more partnerships, and finance qualified projects via long-term funding in local currency, he said. The fund support may entail the purchase of PIDF Bonds to be issued by the National Development Company (NDC), the investment arm of the government, the DBP executive said. PIDF bonds “One of the financing options we are currently evaluating is for NDC or another GOCC [government-owned and –controlled corporation] that may be designated by the DOF to issue the PIDF bonds." The bonds will be issued in various tenors or maturities from five to 25 years, depending on the amount of financing a project will need, Finance Secretary Cesar Purisima told reporters earlier. Credit rating agency Standard & Poor on Friday gave long-term Philippine debts a BB rating, from BB-, bringing the country’s sovereign obligations two notches from investment grade. Proceeds of the bonds would finance land acquisition for right-of-way costs and other pre-development needs as the government’s counterpart initiative to attract investors. Growth driver Infrastructure projects under the Aquino administration’s public-private partnership will serve as the primary growth driver for the Philippines in the next few years, ING Investment Management Philippines said Thursday. “The infra projects of the government will result in more jobs, higher income, and lower structural inflation," ING head Paul Joseph Garcia said during a forum with reporters. He pointed out that the government should be transparent in implementing PPP projects to avoid discouraging private investors from coming to the Philippines. "They're not here for charity. They're here for money. The government should be clear and transparent," Garcia said. A 12-15 percent return on investments would keep investors interested in the Aquino administration's PPP projects, he said. — LBG/VS, GMANews.TV