PPP Center bats for greater foreign participation in infra

MANILA, Philippines - Allowing greater foreign participation in public infrastructure would become a “change driver” for the country’s public-private partnership program as it would contribute to the efficiency and cost effectiveness of projects, said Public-Private Partnership (PPP) Center executive director Ferdinand Pecson.

Foreign investment caps contained in the present Foreign Investment Negative List (FINL) would be placed under review in May 2017.

The list, which was last updated in 2015, limits foreign participation in several areas that include, but are not limited to, practice of professions; mass media; ownership of land; exploration, development and utilization of natural resources; obtaining franchises for public utilities, telecommunications etc.

The FINL currently allows only up to 40 percent foreign equity in the operation and management of public utilities as well as acting as project proponent and facility operator of a build-operate-transfer (BOT) project requiring a public utilities franchise.

“The opening up of the economy to foreign investors would be a change driver as well,” said Pecson in a recent interview.

“So there is also talk of reviewing the negative list of public utilities and what that is aiming to achieve it to have more infrastructure projects that would allow more foreign involvement especially in participation in the operations and maintenance of projects,” he added.

The PPP Center wants to attain the outmost value for money for new public infrastructure by way of obtaining cheaper financing for the actual construction and leveraging on the expertise of the private sector for the operations and maintenance.

It is currently looking at several modes of carrying out PPP projects on the financing and operations side. These include a combination of traditional procurement for construction involving soft loans obtained by the government and bidding out of the operations to the private sector; receiving more unsolicited proposals from private proponents, and eliminating the use of bid premiums as a parameter during the procurement process.

Pecson said easing the rules for foreign ownership in public utilities and other forms of infrastructure would spur greater competition, hence driving down the project cost as well the price of services for the public.

“In some ways, that is also going to benefit PPP in terms of improving competition because more players coming into the PPP space would drive efficiency and improve cost,” said Pecson.