25/03/2022
BBB versus PPP is a Grossly Illogical Comparison
For the longest time, many Filipinos get confused and oftentimes compared the Duterte administration’s “Build, Build, Build” (BBB) Program with Public-Private Partnerships (PPP) that some mistakenly identified with the late former President PNoy.
Some even mistakenly think that PPP stands for PNoy, PNoy, PNoy, or even PNoy’s Projects for the Philippines. It was not.
In any case, comparing BBB with PPP is wrong and invalid.
BBB is an infrastructure program — and not merely a funding scheme.
BBB is the centerpiece and a call to action program of the Duterte administration to fully recognize and fast track all infrastructure projects, big or small, that have been conceptualized, continued, planned, or executed in the country during the Duterte administration. It is the battle cry and guiding principle adopted by the Duterte administration to bring about the Golden Age of Infrastructure in the country.
From big-ticket projects such as the Metro Manila Subway, PNR Bicol, the MRT-3 Rehabilitation Project, Common Station, Bohol-Panglao International Airport, down to bridges, farm-to-market roads, toll roads, passenger terminal buildings of airports and seaports — all these projects fall under the BBB.
Now, why do I say that it is illogical to compare BBB with PPP?
Unlike the BBB, which is an overarching program of infrastructure, Public-Private Partnerships, on the other hand, is a financing scheme, which involves the private sector’s assistance in funding certain government projects and services.
To understand further, there are various funding sources available to implement an infrastructure project under the BBB Program, or even non-infra projects and services. These are:
1. ODA — Official Development Assistance
2. PPP — Public-Private Partnership
3. GAA — General Appropriations Act
Contrary to claims by people from the other side of the political fence, it is not true that the Duterte Administration is disregarding the PPP funding option. Just look at the MRT-7 Project, the Pasig-River Expressway, the Harbor Link Project, the Mactan-Cebu International Airport, among others. These are PPP projects that the government decided to push through. Even the Terminal 2 of the Clark International Airport is a hybrid PPP project.
But some are asking: Why is the government capitalizing on ODA Loans, especially on railway projects?
Firstly, cheap borrowing is available to developing countries, including the Philippines from its ODA Partners such as the Asian Development Bank, China Eximbank, Japan International Cooperation Agency, and the World Bank. As a country becomes richer, it loses access to cheaper ODA financing.
A country that has more needs than available resources has to borrow, and when a country borrows, it has to find cheaper borrowing, including lower interest rates, longer repayment terms, and longer grace periods.
For instance, most of the railway projects of the Department of Transportation (DoTr) are financed with ODA. Examples of these are the Metro Manila Subway, MRT-3 Rehabilitation Project, and the PNR Clark Project. Funds for these projects were borrowed at very concessional rates of up to 0.1 percent per annum, up to 40 years to pay, and up to 12 years grace period, meaning, the government will not start paying for the principal borrowed for these projects until the 12th year, when the projects are already completed, operational, and benefitting the public.
To optimize financing cost, particularly to reduce commitment fees, all ODA Loans for railway projects from 2016 to date have adopted a “Multi-Tranche Financing Structure”, wherein the total Loan Amount needed for a project is not made effective all at once at the beginning.
For those raising “utang na naman? (debts again?),” take note: Large-scale infrastructure projects are not simple government expenses. They are investments that are made for the purpose of realizing a minimum required economic return.
Until the Philippines closes its decades-built massive infrastructure gap, and until sufficient resources are generated to finance the investments needed to close this gap, the government will have to borrow and fund these projects through ODA loans.
And closing this massive infrastructure gap is precisely the mission of the BBB.
And we are lucky that the BBB knows no political color. Notwithstanding the political debates, the Duterte administration knows that what should be upheld and considered in each project is not the “who started” but the “why it is needed”, and “who will benefit the most.”
Fortunately, the Duterte administration decisively pursued these projects, regardless of who conceptualized or initiated them.
President Duterte knows that important projects are worthy to be finished and that their long-term effects will be most beneficial to the Filipino people and the entire country.
[Please read and share my Daily Tribune commentary today: https://tribune.net.ph/index.php/2022/03/24/bbb-vs-ppp-grossly-illogical-comparison/]
