Amid a backdrop of increased infrastructure projects, President Ferdinand Marcos Jr. expanded the Public-Private Partnership (PPP) Governing Board last month, by adding a representative from the private sector. But a fiscal administration expert said that corruption risks would only be heightened in this new system.
The expansion, through the Executive Order (EO) 30, was in line with Marcos’s Medium Term Fiscal Framework, aiming for economic recuperation in the post-pandemic year. The private sector board member will get to vote on bids for the National Economic Development Authority’s (NEDA) 194 projects that will eat up more than P9 trillion of the national budget over the course of Marcos’s administration in a “friendlier” PPP setup.
“Sa PPP, you have to look kung kanino ina-award ‘yung mga resources, projects, kasi in some terms, mayroon itong monopoly, and the private sector will always look for returns. The public should watch out for kung sino ang ia-appoint once they have the power to approve,” said Herisadel Flores, a fiscal administration professor at the UP National College of Public Administration and Governance.
While the Philippine economy might have a shot at growth, an expanded PPP Board has the risk of cronyism, Flores said. This is proven by the installation of Guillermo Luz, associate director of Ayala Corporation–the same conglomerate that was part of Marcos’s entourage at his victory party.
The PPP Governing Board is chaired by NEDA Director-General Arsenio Balisacan, while Finance Secretary Benjamin Diokno serves as the vice chairperson. The remaining four seats are occupied by Budget Secretary Amenah Pangandaman, Justice Secretary Boying Remulla, Trade and Industry Secretary Alfredo Pascual, and Executive Secretary Lucas Bersamin. All of them are appointed by the president.
The private sector representative will also be appointed by the president and must come from a “reputable” banking, business, or infrastructure company.
Flores said while the private sector is a stakeholder in PPP projects, giving them voting power runs the risk of rent-seeking or the practice of policy manipulation for personal interests. The Ayala Corporation, for one, is a known supporter of the Marcos family that continues to win multiple bids.
Since the Duterte administration, the Swiss challenge has replaced public bidding, creating more avenues for corruption. Under this mechanism, an unsolicited proposal may be submitted to NEDA which will be offered to other firms for counter proposals. But the problem arises once it is awarded with the firm cutting corners by inflating the budget from their unrealistically low bid, therefore copping more return. The winners are usually big-ticket corporations.
“In our current climate, you have to ask kung tama ba na i-privatize itong mga basic services. Maraming mahihirap, malaki ang population, and obviously under PPP, tataas ang presyo ng services,” Flores said.
This issue remains vital as the purchasing power of the peso continue to bottom out since 2008 amid the skyrocketing of prices.
Think-tank IBON Foundation said in their PPP primer that overreliance on PPP only burdens the public.
“[T]he people to whom the government is responsible face negative impacts ranging from reduced accessibility of formerly public services to outright displacement,” IBON wrote. During the 2022 People’s Summit, the foundation urged the government to realign expenditures to serve other local industries instead.
UP Philippine General Hospital’s (PGH) proposed Cancer Center, the first PPP project approved under the Marcos administration, for example, will give the winning bidder the autonomy to set fees despite the expected influx of chemotherapy patients after the pandemic. This is cloaked by the plans to divide the center into charity and paying wards, giving an impression of public policy continuity.
The current price of a chemotherapy session ranges from P20,000 to P120,000 in public hospitals. Under the 2022 Implementing Rules and Regulations of PPP Law, the winning firm has the autonomy to increase this fee. As the principal project, the PGH Cancer Center set a precedence for all other remaining rollouts of PPP contracts, possibly copying the same scheme for service charges.
“The government has to ask kung cost beneficial ba itong mga projects. And sana, alam ng mga government officials kung ano ang mga projects at kung talagang kailangan ba,” Flores said. ●
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