Private sector to play a larger role in Philippines’ urgent infra needs amid fiscal constraints
MANILA, Philippines — President Rodrigo Duterte’s ambitious infrastructure program is now expected to rely more on private capital as it faces fiscal challenges, a Fitch unit said.
The Philippine government earlier said it would revamp the list of infrastructure projects under Duterte’s “Build, Build, Build” program after some items were found to be “challenging and costly.”
From the original 75 projects, the new list now has 100 projects, with the proportion of public-private partnership (PPP) projects now at 26 from nine previously. The revised list now has an estimated value of P4.2 trillion ($83 billion), twice the value of the original list.
“The increase in the number of PPP projects suggests the government’s eagerness to tap on private capital for infrastructure investment, as its ambitious infrastructure plans face fiscal constraints,” Fitch Solutions said.
In a bid to close the Philippines’ infrastructure gap, the Duterte admin previously said it would shift from PPP as the primary mode of financing and would rely more on public funding and official development assistance, or ODA, to avoid delays and higher project costs.
The sudden change in funding modes was a departure from former President Benigno Aquino III’s high reliance on PPPs for major projects.
Government data as of end-July this year shows that out of the 75 original projects, only nine have started construction. Senate Minority Leader Franklin Drilon called the “Build, Build, Build” program a “dismal failure”.
According to Fitch Solutions, the Philippines’ relatively well-structured PPP framework gives it an edge over its regional peers in attracting private capital.
However, the Fitch unit said bureaucratic inefficiencies, crime and security, and corruption will continue to be a source of risk for investors.
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