Project execution risk

There was a time when citizens were told not to expect too much by way of big ticket infrastructure because we don’t have the money for such things. That is no longer the case these days. We have the money. Foreign governments and multilateral development agencies are eager to help. Or, we have funds from the Treasury itself.

Indeed, there are many times when it makes more sense to reject seemingly cheap loans in the form of foreign aid or ODA and just let the treasury finance projects outright. The country’s financial system is so liquid that the central bank is paying good money to keep billions of pesos out of circulation.

In other words, a special bond issue to finance the construction of a dam that will provide a new source of water for Metro Manila is more than feasible. The problems we now have are two fold: one is lack of imagination on the part of our bureaucrats, and the second is a seeming inability to execute projects.

To be successful, a country’s leaders must be boldly imaginative, able to see future requirements well before such needs become obvious. Then, they must have what it takes to make bold dreams come to life.

Let us put it this way. If we had Col. Joseph McMicking as president of the Philippines instead of Garcia, Macapagal or Marcos, there might have been a chance the country would have looked like a well planned community like the Ayala developments once were. Col. McMicking’s vision and ability to execute the vision are what our presidents lack.

I refuse to believe that our country is as bad as it is today because there is no one among the 100 million of us who can think big and deliver on the vision. It is just that we elect noisy demagogues and scare away those who may be potential McMickings from public service.

Adequate infrastructure is not the only measure of good governance, but it is the most visible. Having good roads, public transportation system, reliable water and power supply can mitigate the usual irritants citizens have with government. Filipinos tend to be forgiving and have low expectations… we are happy to see evidence our taxes are being used in things we can see and use daily.

Making the best of the lean offerings to us in 2010, I chose to elect P-Noy because honesty was on top of the list of attributes I thought was important at that time. An honest president can be helped by capable cabinet members in running the country properly. A capable candidate but whose honesty is somewhat questionable can’t be good from the start.

It turns out it wasn’t that simple. The honest president surrounded himself with some friends whose integrity can be considered questionable. His stubborn loyalty to them proved to be rather big stumbling blocks as the years went on. Then too, some of the guys we thought were capable technocrats turned out to be incapable of making timely decisions. Hence, our current infrastructure lag.

To be fair, there were pockets of hope here and there. The Education secretary was able to make the difficult, but necessary decision to implement the K-12 program. That should help address joblessness in the years to come. The Education department also surprisingly, was the most successful in implementing the PPP program which it used to wipe out the perennial classroom deficit.

The Health department followed the Education department in using PPP to improve the delivery of health services. The educators and the doctors proved better than supposedly former investment bankers in using PPP, a development scheme where people like Mar Roxas should have been more at home with.

The World Economic Forum (WEF) happening today, BSP Gov Say Tetangco said, is expected to be an opportunity to showcase the Philippines as an investment destination in partnership with the private sector of the region. The governor is probably right. Hosting the WEF here gathers movers and shakers interested in the region but wouldn’t have come to the Philippines otherwise.

But I am worried that seeing things here for themselves can be a double edged sword. We get the opportunity to tell them about our country, our people and the promising business prospects offered by our growing market. They also experience and see things first hand. They see how we do things… they can see how things can go terribly wrong, as in that oven we call NAIA Terminal 1.

Being here for a few days gives them the opportunity to mingle with other investors, including those already here. That’s good and bad too. Some have good experiences here. Others may tell stories on the seamier facets of doing business here.

To me, it really boils down to having a leader with vision or an idea of how he sees the nation’s future. Maybe six years is too short for a real long term view but still, four years into his term, it is still difficult to say what P-Noy’s vision is. He seems too busy surviving day to day to dream one up. Like his predecessors, leadership myopia is at the root of this feeling of nothingness many of us now feel.

My favorite example is that four-kilometer extension of LRT2 to Masinag, Antipolo. It almost got killed at the start because P-Noy wanted another study to prove it has users.

A leader with foresight will build infrastructure even before its need becomes obvious. What’s tragic with P-Noy’s reaction to Masinag is that the need had long been there. Henry Sy had built a mall in the area, which proves there are enough people to be served. Indeed, the extension should not stop at Masinag but go all the way to Cogeo where a low cost government housing development is located.

They finally approved the four kilometer extension but not before Mar Roxas, then the DOTC secretary, suggested doing two kilometers first. He was told the mobilization cost for two or four kilometers would be the same. They still won’t finish the four kilometers before June 2016.

The other good example of lack of foresight is the second runway for NAIA. FVR thought of building an additional terminal, the controversial T3 because he saw increased passenger traffic. He should have thought a second runway would also be ideal because more passengers mean more flights than the single runway can eventually handle.

The Estrada and Arroyo administration came around and they didn’t think of building that second runway either. I imagine everyone took as gospel truth the impression that there is no room for that second runway. The Aquino administration didn’t think any differently until last week.

 P-Noy is now said to be enthusiastic about building that second runway. Of course he should be glad there is a worthwhile major project he may yet inaugurate before 2016. He became enthusiastic after Ramon Ang showed him a Google Map-based drawing demonstrating there is room for a second runway… a small area of squatters may have to be moved, but most of the land belongs to government already.

To me, this just shows bureaucrats lack imagination and so do the politicians and even the technocrats we thought could make a difference. No one had the audacity to use a common enough tool these days, Google, to help come up with a fresh solution to an old problem.

Thus, it seems to me that the expectations of our economic managers on the benefits of hosting WEF are too high. The delegates will appreciate our traditional hospitality, but they will view our presentations on our economic prospects with a critical eye.

I am afraid that the one thing that will stick out like a sore thumb is our execution risk. Sure, we make good Power Point presentations and our colorful brochures are interesting. But they will compare what we have told some of them when we launched PPP in 2010 and during the ADB conference held here the other year to results now on the ground.

They will see our biggest infra projects are still stuck with DOTC. They have experienced sweating it out with the warm welcome at NAIA 1. They will note that despite massive foreign assistance, the victims of Yolanda are still roofless and concrete rehab plans still up in the air.

They will continue to love the honesty of P-Noy. But they will weigh this against his ability to deliver everything else. Our credit risk may have been upgraded again by S&P, but project execution risk will make investors think twice. That’s a tough one because I don’t see this administration licking this hurdle or they would have by now.

PBA team

There is no truth to the rumor the Aquino administration is putting up a new PBA team to be called, NAIA Heat.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco