His Excellency Benigno S. Aquino III, fellow Cabinet Secretaries, our

development partners, and members of the private sector, good morning. My

presentation will focus on the Public-Private Partnership (PPP) framework and

the PPP Center.

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Guided by President Aquino’s 16-point agenda as outlined in his “Social Contract with the Filipino People,” the Philippines’ national development objective is to achieve inclusive growth and reduce poverty.

Therefore, the focus of government actions and interventions shall be along the following broad directions:

(1) Attainment of a sustained and high economic growth that provides productive employment opportunities to more Filipinos;

(2) Equalization of access to development opportunities; and

(3) Implementation of effective social safety nets.

These broad directions will be reflected in the 2010-2016 Medium-Term Philippine Development Plan or MTPDP, and the Medium-Term Public Investments Program, or MTPIP.

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The MTPDP and MTPIP will guide both government and the private sector to

identify investments in strategic infrastructure, both economic and social.

There are clear reasons why the government needs to invest in strategic

infrastructure, especially those that support tourism, agriculture, agro-

industrial processing, growth centers, and the needs of an increasing

population. From the government’s point of view, the benefits are the

strengthening of competitiveness, the improvement of access to basic and

social services and the enhancement of the scope and quality of economic

and social infrastructure.

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In the Government’s ongoing planning process, the President’s 16-point

agenda is being fleshed out in the MTPDP and the MTPIP for 2010-2016.

From these plans, we will be able to determine the priority programs and

projects for the medium term.

Regarding economic and social infrastructure, these two plans are further

concretized in the three-year rolling Comprehensive and Integrated

Infrastructure Program, or CIIP, that specifies priority projects to be

implemented by the government using purely public resources and through

government’s partnership with the private sector, which we call Public-Private

Partnerships.

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A PPP is a contractual arrangement between government and the private

sector to deliver public infrastructure and/or public services. The project shall

be structured so that the private sector gets a reasonable rate of return from

its contribution while risk allocation is optimized between the parties. This will

minimize costs and realize the project’s developmental objectives.

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The implementation of PPPs will utilize existing legal frameworks, most

notably Republic Act 7718, also known as the BOT Law, including its

Implementing Rules and Regulations (IRR), and Republic Act 9184 or the

Procurement Law.

In addition, the government, in the immediate-term, will amend the Joint

Venture or JV Guidelines in order that all JV projects shall pass through the

NEDA-Investment Coordination Committee (ICC) approval process to ensure

transparency, consistency in development policy decision, and

appropriateness of risk allocation among parties.

JV Guidelines amendment, by the way, only requires the approval of the

NEDA Board and Office of the Government Corporate Counsel (OGCC).

The government hopes to collaborate further with the private sector on

needed legislative and administrative improvements in PPP in the Philippines.

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The government sees the private sector as a partner in Philippine

development. We believe that through PPP, both the interests of government

and the private sector will be met.

The private sector could provide financial support and its expertise in

implementing government projects more efficiently. These projects which

deliver public services can be accelerated and at the same time provide

financial returns for private sector participants.

With PPP, government’s resources shall focus on its core responsibilities,

such as project prioritization and development (for example, right-of-way

acquisition, resettlement, and others), regulation and supervision, among

others.

Opportunities for channeling and rationalizing government resources to other

pressing development challenges, such as provision of basic social services

and general government requirements, will be realized with successful PPP

implementation.

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We all know that PPP is not a new strategy. What is new is how we in the government will do things to

facilitate optimal private sector participation.

The sponsoring government unit initiates the PPP approval process by submitting all necessary documents

to the appropriate approving PPP authority, such as the NEDA Board, NEDA-Investment Coordination

Committee, Regional Development Councils and local development councils.

The sponsoring government unit shall submit PPP priority projects that are in mature stages of project

preparation. Qualified submissions include those with completed feasibility studies; well-planned and

budgeted Right of Way Acquisition (ROWA) Plans; draft concession agreement; proposed risk allocation

between the Government and the private sector; and the valuation of direct and contingent government

support. The sponsoring government unit should have prepared a clear implementation plan, as well as the

organizational and administrative requirements.

The PPP Center and the NEDA Secretariat will provide templates of contracts and risk allocation matrices.

In a memo dated 11 November 2010, the President directed all Government Line Departments to establish

a PPP Unit that will be responsible for developing PPP Proposals. Likewise, the right-of-way-acquisition

(ROWA) plans shall be prepared in consultation with the Local government units (LGUs) and communities,

in coordination with the Department of Budget and Management (DBM).

In the same memo, the Department of Finance (DOF) was instructed to issue a standard Letter of

Performance Undertaking, which will define clearly the appropriate legal language of the Government’s

commitment for the solicited PPP project. Also, the Department of Budget and Management (DBM) shall

issue a multi-year budget strategy covering Government’s support for each solicited PPP proposal, for ICC

and NEDA Board approval.

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For the national PPP program, these projects will be driven by priorities based on the MTPDP and MTPIP

as well as CIIP. We will have a list containing strategic projects. We will also streamline the government

approval process, without compromising safeguards for transparency and accountability. In this process,

the NEDA Secretariat plays a key role to the NEDA Board and the Investment Coordination Committee or

the ICC for the approval of priority PPP projects.

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For PPP projects, the government will focus on the solicited mode. Priority projects identified in the MTPDP

and the MTPIP and the Comprehensive Infrastructure program (CIIP) will undergo the solicited mode and

will be processed within 6 months, from submission for NEDA-ICC approval up to competitive selection.

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The PPP Center will assist the sponsoring government unit in developing projects that can be funded and

implemented through a solicited PPP approach. Let me clarify that the PPP Center, while attached to

NEDA, is separate from the ICC process, thus distinguishing the project facilitation process from NEDA’s

mandate of project appraisal.

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The government recognizes that the amended BOT law provides for the unsolicited mode for PPPs;

nonetheless, the same requirements for submission, and the processes involved, for NEDA-ICC approval

applies for unsolicited PPP proposals.

In endorsing unsolicited PPP proposals, Sponsoring Government Units will have to qualify according to the

amended BOT Law and apply the same rigor of a NEDA-ICC appraisal. Furthermore, such projects will

require a Swiss Challenge. As such, this will entail a longer project approval period of nine (9) months or so.

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Going back to the PPP Center, the government transferred the BOT Center

from the Department of Trade and Industry to the NEDA, and renamed it as

the PPP Center, through an Executive Order.

The advantage of the new PPP Center is its proactive role in assisting the

Sponsoring Government Units in solicited PPP project development. The PPP

Center’s role also extends to monitoring the progress of the PPP project.

Other functions of the PPP Center are:

Initial appraisal of the PPP potential of the project at pre-FS stage

Advisory and technical assistance and facilitation in all stages of the PPP

life cycle…

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Monitoring and evaluation of the development, approval and implementation

of the PPP program, particularly to facilitate resolution of PPP-related policy

and project concerns

By effectively integrating the PPP into the Government’s planning,

programming and budgeting processes and policies, Government can

realistically plan and provide resources for good projects where the private

sector’s participation will be made whole.

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To fast-track the implementation of every PPP project, the government will

institute support mechanisms for both the implementing agency and

investors.

An initial amount of PhP300 Million has been set aside for the Project

Development and Monitoring Facility Fund or PDMF Fund, which will ensure

the bankability of proposals. This fund shall be managed and administered by

the PPP Center for the preparation of business cases, pre-feasibility studies,

and feasibility studies.

Further, the Government has proposed a PhP15 Billion Fund under the 2011

Budget for PPP projects of Department of Public Works and Highway

(DPWH), Department of Transportation and Communication (DOTC) and

Department of Agriculture (DA).

The Government is also considering the creation of a fund to support

infrastructure development.

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I would like to end my presentation by saying that Government, in order to

fulfill its role of providing public goods and services, cannot do it alone.

Government welcomes you, the private sector, to partner with us. Let us

take advantage of the available investment opportunities that provide us with

mutually reinforcing benefits as we participate in the Philippine development

process.

We hope you will not pass up an opportunity like this.

Thank you very much and good morning.

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