MANILA, Philippines — Despite the uncertainties brought on by the protracted pandemic, the Philippines attracted private sector financing for $2.3 billion (more than 120 billion pesos) of public infrastructure projects in 2021, the Bank said. world.
The World Bank‘s 2021 Annual Report on Private Participation in Infrastructure (PPI) released on May 3 showed that in low- and middle-income countries, public-private partnership (PPP) projects rebounded in 2021 to reverse all-time lows in 2020 when investor appetite waned. at the start of the COVID-19 pandemic.
Around the world, private investment in infrastructure in poor and developing countries rose 49% to $76.2 billion last year.
“While the recovery in private investment is a positive sign, significant challenges remain. Overall liabilities are still 12% below the previous five-year average, an indicator that the recovery from the deep recession triggered by COVID-19 is still underway,” the World Bank said in a statement.
The World Bank said the East Asia and Pacific region – to which the Philippines belongs – saw the largest private sector commitment last year, amounting to $28.1 billion. , up 69% from 2020 commitments.
Indonesia and Vietnam, with $6.9 billion each in PPP deals closed last year, lead the region.
“In terms of investment commitments and number of projects,  was the highest in Vietnam in the past five years,” the World Bank noted. “The steady pace will likely continue in the coming years, supported by Vietnam’s first-ever law on public-private partnerships, which came into force in early 2021.”
“This law has demonstrated the government’s commitment to attracting high-quality PPP projects and should contribute to the efficiency and long-term stability of future PPP project implementations,” the World Bank said.
A previous World Bank PPI report noted that the Philippines attracted PPP projects in the water and sanitation sector in the first half of last year.
But now, in the Philippines, the private sector was preparing for the implementation of the revised Implementing Rules and Regulations (IRR) of the Build-Operate-Transfer (BOT) Act, which protected the government from arbitration, as well as “anti-market” measures of contingent liabilities arising from PPP projects.
Contingent liabilities included material adverse government action (Maga) clauses, force majeure, breach of government warranties, as well as breach of contractual obligations, the amended IRR said.
Late last year, the Cabinet-level inter-agency Investment Coordinating Committee (ICC) directed agencies and local governments to implement costly PPP projects to ensure the financial capacity of private developers by setting minimum capital requirements.
The Development Budget Coordinating Committee (DBCC) had projected that the stock of contingent liabilities or the total amount generated by PPP projects would reach 456.2 billion pesos in 2021, up from an estimated 311.8 billion pesos in 2020.
It was in addition to the “flow” of 60.4 billion pesos of contingent liabilities or the amount that “can materialize in a specific time frame given the risk factors of a project” among 18 national PPP contracts signed between 2008 and 2020.
The Duterte administration had previously avoided PPPs, especially unsolicited projects, because it did not want disadvantageous provisions such as government guarantees, grants and Maga clauses.
But the current pipeline of flagship infrastructure projects under the ambitious “Build, Build, Build” program included 20 unsolicited PPP projects worth 1.5 trillion pesos, which will be funded from the deep pockets of tycoons.
UK-based think tank Oxford Economics said in a separate April 29 report that as China‘s further COVID-19 shutdowns as well as Vladimir Putin’s destruction of Ukraine would weigh on the outlook for global construction activities,” programs such as Hong Kong’s $25 billion strategic infrastructure plan, the ‘Build, Build, Build’ program in the Philippines, and Indonesian Presidential Regulation No. 109 of 2020 will continue to support the sector.
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