(First of three parts)
It had been over a year since Filipinos shed themselves of an unpopular leader and, in a massive show of unity, elected a well-loved albeit inexperienced Chief Executive.
However, the national optimism had become guarded. The Cabinet had been wracked by factionalism, while administration allies busied themselves with investigations of the sins and excesses of the previous leader.
In the meantime, the Philippine economy, running on sheer momentum the past year, had been slowing down. Confidence remained relatively high in the business community, but new investments were coming in trickles.
All this was happening amid a weak global economy that, having just hurdled a major crisis, was facing another downturn that threatened to throw major economies into another deep recession.
The year was 1987, and the country’s leader was President Corazon Aquino—but it could very well have been a description of the country’s current situation under her son, President Benigno Aquino III.
Promise of PPP
When Mr. Aquino gave his first State of the Nation Address (Sona) in July 2010, he unveiled his administration’s centerpiece economic program.
Under the program, the government and the private sector would jointly fuel the local economy, which has consistently failed to maintain the 7-8 percent growth rate needed to lift a substantial portion of the population out of poverty.
Billed as the Public-Private Partnership (PPP) Program, the scheme called for the administration to identify and give priority to big-ticket infrastructure projects—of the scale large enough to generate jobs for the country’s almost 3 million unemployed citizens—and for private investors to be invited to fund their construction and operation.
“We have so many needs: from education, infrastructure, health, military, police and more. Our funds will not be enough to meet them,” the President said in his Sona. “Our solution: public-private partnerships. Although no contract has been signed yet, I can say that ongoing talks with interested investors will yield fruitful outcomes.”
He identified projects put forward by interested investors like a toll expressway from Metro Manila to Cagayan Valley (said to refer to the P13.6-billion, 456-kilometer North Luzon East Expressway proposal of the San Miguel group) “without the government having to spend a single peso.”
The President also mentioned leasing a Philippine Navy property on Roxas Boulevard for an initial $100 million, plus rental income (said to be a proposal of the Megaworld group). The projects were expected to allow the government to “meet its needs without spending” while earning revenues simultaneously.
On paper, the plan looked perfect. Members of Mr. Aquino’s economic team—with Finance Secretary Cesar Purisima as its most vocal member and de facto head—threw themselves with vigor to the task of marketing the program that would serve as the cornerstone of the economy for the rest of the administration’s term in office.
Unveiled with much fanfare at a large conference of international investors in November 2010, the President was effusive in his praise for the would-be PPP funders who had expressed their enthusiasm to participate in the program.
That was almost a year ago. Since then, some of the enthusiasm has been replaced with questions about the administration’s seemingly unsure footing in making its hype connect with reality.
Parallel to the absence of any implemented PPP projects (10 of which were “launched” last year), observers also noted a sharp drop in government expenditures—spending that was critical in sustaining economic growth this year.
The result was a sharp decline in the country’s economic activity in the first half of the year (with gross domestic product [GDP] eking out low 4.9-and 3.4-percent growth rates in the first and second quarters, respectively).
This paled in comparison with the blistering 7.3-percent GDP growth recorded in 2010, which was partly due to massive election spending in the first half but was also fueled by an increase in private sector spending in the second half, on the back of widespread confidence in the country’s prospects due to the new administration.
Outspoken economist Solita Monsod said part of the economic slowdown could be attributed directly to the decision of economic managers to tighten government purse strings while failing to move with more urgency on the PPP Program.
Being a former economic planning chief of the first Aquino administration, she is only willing to accept this administration’s anticorruption drive as a limited excuse.
The economic team has—“no question about it”—good intentions in wanting to weed out potential and actual corruption from the PPP scheme and the spending program, Monsod said.
“But if it takes you one year to do it, there’s something wrong,” the University of the Philippines professor said. “You can accept that for three months, and you can accept that for six months. But after six months, that’s already wasting [time].”
“That’s already inefficient,” Monsod added. “That’s already incompetence.” To be continued