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East Asia & the Pacific

After a False Start, Philippine Public-Private Partnership Projects Find Spark

Ed Fernando runs a small Internet café in Bacoor, Cavite, a southeastern suburb on the coast of Manila Bay. To get to his suppliers in Manila, less than 20 kilometers north, he rides a bus for nearly an hour and then transfers to the Light Rail Transit, where he spends another half-hour lining up for a ticket, waiting on a crowded platform, and riding the train downtown. The train ride on the elevated railway allows him to escape horrendous traffic on the two-lane roads below.

Once the planned Light Rail Transit extension to Cavite is built, the entire trip will take Ed only half an hour for about the same fare but in air-conditioned and safer transport. “It will be a big relief once I can take a train from my shop to downtown Manila. I hope it will finally happen,” he says.

The railway extension is one of the public-private partnership projects set for bidding in the next few months as part of the Philippine government’s push to improve public infrastructure for long-term economic growth. IFC is the lead advisor on the transaction.

Last month, Philippine President Benigno Aquino III called for an accelerated public-private partnership program, after only one project (a toll road) has been successfully tendered since his administration launched the initiative in November 2010.

“There has to be more speed in giving thumbs up or thumbs down to all projects under consideration,” Aquino said. “We cannot afford to think of decades upon decades. We are missing the opportunities that are already extant.”

That the Philippines’ public-private partnerships are finally taking off is reflected in IFC’s work program: In the last few months, we have won three mandates to assist government agencies in tendering public infrastructure projects to private investors. We also have an existing mandate to develop a water project with Clark Development Corporation in the free-port zone north of Manila.

“IFC’s new mandates come at an exciting time as the Philippines ramps up its infrastructure investments at a scale not seen since the 1990s,” says Jesse Ang, IFC Resident Representative. “We have built a reputation of taking public-private partnership projects to successful tender, backed by our work in the privatization of
Manila Water in 1997.”

Under these partnerships, private investors contribute financing and expertise to public projects, mostly in infrastructure, easing the government’s burden.

IFC’s mandates are:

Light Rail Transit System: We advise the Department of Transportation and Communications on improving and extending Metro Manila’s heavily used Light Rail Transit Systems so they can carry an additional 300,000 passengers per day.

Ninoy Aquino International Airport Expressway: We assist the Department of Public Works and Highways in the tender of the Ninoy Aquino International Airport Expressway that would link three adjacent domestic and international airport terminals as well as two existing expressways south of Metro Manila. The project is expected to mobilize $350 million in private investments over the next three years.

Corn Post-Harvest Processing and Trading: We help the Department of Agriculture to identify and build a business case for a public-private partnership project for corn post-harvest storage and trading facilities that would reduce corn growers’ losses, improve their competitiveness, and ultimately, increase the country’s food sufficiency.

Water Supply and Sewerage: We have assisted Clark Development Corporation in promoting public-private partnership to ensure sustainable and efficient delivery of water supply and sewerage services to businesses located within the 4,400-hectare developed portion of the Clark Special Economic Zone and in its expansion to the zone’s undeveloped 23,000 hectares. The developed portion serves more than 700 companies and hosts the Diosdado Macapagal International Airport, which is seen as the future international gateway for the country.

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