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Former JICA Rep shares about infrastructure development in the Philippines

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by Therese R. Olviga

Professor Susumu Ito discussed the opportunities and challenges of infrastructure development in the Philippines in a seminar held on March 29, 2019 at the UPLB Graduate School Multipurpose Hall. Professor Ito of the Chuo University in Tokyo is a former chief representative of the Japan International Cooperation Agency (JICA) to the Philippines. Titled "PPP vs ODA: Opportunities and Challenges of Infrastructure Development in the Philippines," the seminar was sponsored by UPLB Graduate School and the College of Public Affairs and Development.

Professor Ito raised the issue that while the Philippines has been deemed to be among the fastest growing economies in Southeast Asia, public investment in infrastructure development seemed to be low. "Infrastructure is important in economic development. It paves way for faster economic growth," according to Prof. Ito. Adequate infrastructure in the form of roads and other transportation systems, airports, and communication helps in bringing about a more efficient transfer of goods, services, technology, and/or information.

To address this huge gap in infrastructure development, the current administration of President Rodrigo Duterte initiated the "Build, Build, Build" (BBB) Program, which seeks to accelerate infrastructure spending in the country. Prof. Ito mentioned that the BBB Program involves 75 flagship infrastructure projects, which includes the construction of roads and bridges, railway and urban transport, air and water transport, water supply and irrigation, among others. He added that with the limited amount of resources the country has, the government must think of ways to finance these projects. Public-Private Partnership (PPP) and Official Development Assistance (ODA) are among the options.

Professor Ito defined PPP as a "long-term contract between a private party and a government agency." In the Philippines, there was a unique and drastic PPP policy shift in 2010 under the Presidency of Benigno Simeon C. Aquino III. Under his administration, the Executive Order No. 8 entitled "Reorganizing and Renaming the Build-Operate-and-Transfer (BOT) Center of the Philippines and Transferring its Attachment from the Department of Trade and Industry to the National Economic and Development Authority and for Other Purposes" was signed and the partnership between public and private institutions has been tagged as a powerful means to help push forward the development of the country.

Meanwhile, ODA, as defined in Republic Act 8182 also known as ODA Act of 1996,  is a "loan or a grant administered with the objective of promoting sustainable social and economic development and welfare of the Philippines." The Philippines can get ODA resources from governments of foreign countries with whom it has diplomatic, trade relations, or bilateral arrangements or which are members of the United Nations. Since late 2016, the Duterte administration has expressed its plan to shift from PPP to government funding via General Appropriations Act (GAA) or ODA, or a mixture of both. The reason for such, according to Finance Secretary Carlos Dominguez III, is for faster implementation of projects. It was also believed that it will be cheaper to build via government funding.

The shift from PPP to ODA has triggered debates on which among the two is the better option. Some say that PPP is better because of the risk-sharing, the injection of private capital, and the value for money. Some critics, on the other hand, says ODA is better since it facilitates faster and cheaper construction of infrastructures. Some other issues that were raised regarding PPP and ODA include construction of substandard infrastructures, the selection of whom to get loans from in the case of ODA, the user fees related to the projects, and the maintenance and sustainability of the infrastructures to be built. Professor Ito, however, emphasized that it should not be "PPP vs ODA" but "PPP and ODA". The issue now is how to promote complementary relations between the public and private organizations.

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