June 8th, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) thanked President Marcos for issuing a certification for the immediate passage of the Public-Private Partnership Act, which the House tax panel chair and principal author of the measure says will unlock “trillions of private sector resources and direct them towards infrastructure programs.”
“The banking sector has 23.4 trillion in financial resources to lend, and some 1.4 trillion in capital expenditures earmarked for this year among the largest companies in the Philippines. So, we have plenty of resources in the private sector. We could use them, now,” Salceda said.
“So, the certification of urgency is really crucial. And, as we’re studying the emerging version from the Senate, we think this will be a quick bicameral conference committee, if that’s even needed,” Salceda said.
“We are following closely which amendments will be introduced in the Senate, because they’ve just concluded sponsorship. But I anticipate they will get this done during SONA week,” Salceda added.
“We look forward to discussing the provisions with our Senate counterparts when they’re done. And, with the certification of urgency, we expect few if any procedural issues left. This will pass the Senate days after SONA, if they keep at the current pace,” Salceda said.
Salceda explains that the new PPP Act “will modernize the PPP framework of the country.”
“We operate PPPs primarily under the Build-Operate-Transfer Law, a 33-year-old law that no longer responds to the complexities of the PPP landscape. PPP contracts have evolved past the law,” Salceda said.
“A lot of the more successful PPPs – including those in Clark and BGC – come from the more flexible provisions and framework under other laws, such as the BCDA Law. LGUs are also undertaking some experimentation, in the absence of a clear law allowing or preventing them from certain modes of PPP. We’re learning from these. But without a more comprehensive framework, it’s also Wild West out there, and that risks the fiscal health of local and national governments,” Salceda said.
“I particularly want to emphasize issues on modes of payment and determining the liabilities of public and private parties. That will ease uncertainty and make PPPs less risky for both government and the private sector.”
Salceda adds that “the BOT law also does not provide for the most controversial questions of PPP policy, such as materially adverse government action, approval thresholds, local PPPs, and among others.”
“So, this law will lift investor uncertainties over these key issues. And it will help us manage contingent liabilities as well as delays in project implementation. Let’s settle the law, and it will hit the ground running.”
PPP Act to optimize “local autonomy”
Salceda adds that the PPP Act “fully respects local autonomy and optimizes it”
“LGUs have 711 billion in fund balances, making them in many respects more cash-rich as a share of total expenditures than even the National Government is. They are awash with cash. So, much of the fiscal capacity of this country, especially after the Mandanas ruling, is with the LGUs,” Salceda said.
“And if you leverage that capacity with private sector funding, you can achieve wonders. The iconic Cebu–Cordova Link Expressway, the longest bridge in the country, is your model for what LGUs and the private sector can do under PPP. With the discipline of a working framework, these projects will rise everywhere.”