Philippines: Progress, but also controversy

In many ways, 2015 has so far been a year of significant breakthroughs for the Philippines’ burgeoning public-private partnership (PPP) market. Among the developments reported by us have been: the commencement of the country’s largest highway PPP; the launch of the first prison PPP; approval for rail and road projects worth $5.2 billion; and a collaboration with the US designed to lure greater participation from US firms in projects in the country.

All this serves as confirmation of the Philippines’ status as the nation in Asia Pacific which has perhaps pushed the hardest in its determination to get a significant PPP pipeline flowing – and adequately justifies its sixth-placed ranking. But why, you may wonder, has the country fallen three places from the lofty third position it claimed in 2014?

This is largely the result of some stutters in procurement. Notably, bidding for the Cavite-Laguna road – one of the country’s most significant projects – was thrown into confusion towards the end of last year when Philippines business group San Miguel was disqualified from the process by the procuring authority before appealing over the head of the authority to the President’s office. The firm’s appeal was successful, leading to an offer that it could re-bid for the project.

Without going into the rights or wrongs of the decisions made, what really matters to investors is the perception. It’s one thing to have put considerable time and effort into creating a framework for PPPs and then to get deals flowing – as the Philippines unquestionably has done. But it’s another thing to win investor confidence that procurement processes will tend to proceed smoothly from start to finish without controversy. The Philippines may still have a bit of work to do.