SMC chief not keen on hybrid infra financing
MANILA, Philippines - Tycoon Ramon Ang has added his voice to the growing number of businessmen raising concerns on the government’s hybrid approach for infrastructure projects.
Ang, president and chief operating officer of diversified conglomerate San Miguel Corp. (SMC), said the company’s plans to bid on some infrastructure projects such as plans to develop the five regional airports have been put on hold due to the change in the government’s approach.
“For the past 30 years, the PPP is working. Why change it?” Ang said, in what may be the most vocal observation against the hybrid approach versus the public-private partnership (PPP) scheme for infrastructure projects implemented by past administrations.
Under the Dutertenomics’ hybrid approach, the government will build the projects and later on auction the operations and maintenance to the private sector.
Funding for the projects to be developed by the government will come from a mix of sources such as bilateral loans, official development assistance (ODA) and government funds.
This, however, potentially takes away opportunities for Filipino businessmen, some of whom already got excited with the Duterte administration’s vow to usher in the so-called golden age of infrastructure in the country and its move to welcome unsolicited proposals.
Ang believes utilizing ODA for infrastructure projects would make the country more indebted than necessary.
It also has added costs and may displace Filipino workers and products from the country, he said.
“For example, if you give ODA projects to mainland China, mainland Chinese companies will bring in workers, bring in equipment, cement, steel, gravel, etc. What will happen to Philippine companies,” Ang said.
“That’s what China did in Africa, India, Sri Lanka, Malaysia and Vietnam,” he added.
He lamented there are many infrastructure projects in the pipeline that are now stalled because of the policy changes.
“For the last 30 years, public bidding has been working. Why change it?”
The Philippines will be buried in debt with increased ODA funding, he said.
“We will be buried in debt again,” he said.
But government officials said this is the fastest approach as the traditional PPP project usually takes 29 months before it takes off while unsolicited proposals would at least require a 20-month lead-time.
Furthermore, officials said the government can borrow at lower rates through grants and concessional loans and later on harness the private sector’s expertise in managing, operating and maintaining such infrastructure projects.
Dutertenomics is an P8 trillion plan focused on improving infrastructure in the country.
Many in the private sector have been raising concerns on the hybrid approach for PPP. Among these is First Metro Investment Corp. (FMIC), the investment arm of the Metrobank Group.
“There is quite a concern on that. Money is one issue. ODA money comes from counterpart and the real problem is technical competence. There is lack of competence on the part of (some) governments,” said FMIC chairman Francisco Sebastian.
Business titan Manuel V. Pangilinan has likewise said there are concerns among businessmen on whether the government has the capacity to execute these large projects.