Daylight?

Michael Alan Hamlin

Posted on November 26, 2010

The Philippines seems to have successfully taken the first step towards fast-tracking infrastructure investment and development through a public-private partnership (PPP) framework that officials say is anchored on integrity, honesty, transparency, and predictability. Delegates to the “Infrastructure Philippines 2010” business forum last week generally expressed optimism in the framework and confidence in the administration of President Benigno S. Aquino III.

The Philippine government used the two-day forum to attempt to position the Philippines as a premiere location for infrastructure investment. Organizers originally expected around 300 delegates to attend the event. During Mr. Aquino’s presentation, they estimated a crowd of more than 700. The large audience-composed of senior executives of global financial firms, construction companies, and business executives-suggests that efforts by government to present a revitalized image of the country to investors are starting to pay off.

(Disclosure: My firm was retained to help disseminate this message.)

For Mr. Aquino, the gathering was “a celebration of just how quickly things are turning around. The darkness is dissipating and what has brought all of us together today is a palpable sense of optimism in the country’s future and the affirmation that the Philippines is open for business,” he said. Mr. Aquino and senior government officials presented the PPP framework-which provides regulatory protection for investors-and 100 projects that will be bid out to investors beginning next year. The regulatory protection provides a commitment to investors that contractual obligations will be met.

“We want to see more activity in Infrastructure development,” said Department of Finance (DOF) Secretary Cesar Purisima in explaining the rationale for the initiative. “The key to achieving sustainable development and creating maximum economic impact on individual Filipinos is to open up opportunities for private capital markets to participate in infrastructure investment. International financial institutions and private capital building together will enable the government to focus its own scarce resources on critical social services and long-term development.”

The Philippine Economic Team put together the new set of rules following a series of meetings in New York, London, Tokyo and Kuala Lumpur with investors and firms that are active in PPP projects. Supporting the Philippines in crafting PPP framework are the Asian Development Bank, The World Bank, the International Finance Corp., Japan Bank for International Cooperation, Japan International Cooperation Agency, and others.

Government and private-sector speakers alike noted that Investor confidence in the Philippines has improved significantly since national elections in May. Prospective investors applauded government efforts to improve the regulatory environment, institutionalize transparency and integrity in public governance, and set clear directions for accelerating PPP projects.

According to World Bank country director Bert Hofman, “the Philippine potential for PPP is high and prospects are good. We are ready to provide support for the country’s priority projects in such manner as the government requires.” Asian Development Bank country director Neeraj Jain was also up beat. “This great potential also comes with challenges. But the good thing is the government’s economic team knows what the challenges are, including how to promote the country when everyone else in the region is trying to take a share in the same pool of private funds. And they are not underestimating these challenges either,” Jain said.

“The good news is that the country has started the process of positive change, and the world is taking notice. The government intends to further strengthen the Philippines’ image by implementing initiatives that will dramatically streamline the process of infrastructure project development, review and approval, financing, risk allocation in project structuring, project execution and monitoring,” said Department of Trade & Industry Secretary Gregory L. Domingo.

“In many developing countries, PPP has been utilized as a tool for delivering urgent projects in critical development areas such as power, water and sanitation; transportation such as roads, bridges, tollways, ports and airports; as well as in social services like education and health,” said National Economic Development Authority (NEDA) Director General Cayetano Paderanga. “A credible government and an investment-friendly climate make the Philippines a prime spot for private capital markets looking to invest.”

Infrastructure Philippines 2010 was a partnership project of the DTI, the DOF and NEDA. Priority projects identified by the Department of Transportation and Communications Secretary Jose de Jesus include airport, highway and rail developments as well as tourism infrastructure across the archipelago. But a first step is just a first step, and investors will be looking to see how quickly the Philippines moves forward.

“Early and big wins are key,” Conor McCoole, managing director and head of project finance in Asia for Standard Chartered Bank, told me on the sidelines of the conference. Dawn may be breaking on the Philippines’ investment horizon. Let’s hope it turns to day.

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand . Write him at mahamlin@teamasia.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2010 Michael Alan Hamlin. All Rights Reserved.)

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