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Unsolicited projects for favored business interests to rise under Pres. Duterte?

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By Arnold Padilla / IBON Features

When President Duterte said last month that “all projects of the Philippines would be something like a Swiss Challenge”, media attention has focused on the Swiss Challenge and its implications. But what the presidential statement implied was that in order to supposedly fast track his ambitious Build Build Build program, the administration may encourage more unsolicited proposals and negotiated contracts.

And there lies the real and bigger problem. Unsolicited proposals and negotiated contracts are the worst form of public procurement of infrastructure under the public-private partnership (PPP) scheme. These negotiated deals are the most prone to bureaucratic corruption and to patronage for favored business interests.

Close ties

San Miguel Corporation (SMC) president Ramon Ang, for instance, is among the closest to Malacañang. He is publicly known as one of the (unofficial) major campaign contributors of Pres. Duterte and patron of the Chief Executive’s controversial anti-drug campaign. SMC, a Php255-billion diversified conglomerate and known to cultivate close ties with whoever is in power, is currently implementing theunsolicited Php62.7-billion MRT-7 while awaiting government approval of two more unsolicited mega infrastructure projects.

Based on the revised (2012) Implementing Rules and Regulations (IRR) of the Build-Operate-Transfer (BOT) Law, unsolicited proposals are “project proposals submitted by the private sector, not in response to a formal solicitation or request issued by an Agency/LGU (local government unit) and not part of the list of priority projects as identified by Agency/LGU, to undertake Infrastructure or Development projects.”

A third party could challenge the offer of the original proponent of an unsolicited proposal through what is called the “Swiss Challenge”. In order to bag the contract, the original proponent should match the counter-offer of the third party. In practice, however, all unsolicitedprojects concluded in the Philippines since the 1990s were clinched by the original proponent except in the case of the controversial NAIA Terminal 3 where the challenger (Philippine International Terminals Co. Inc. or PIATCO) won but the contract was declared null and void by the Supreme Court (SC) due to irregularities.

At the start of its term, the Duterte administration’s economic managers already announced that the government is open to unsolicitedproposals aside from its so-called hybrid PPP – i.e. mobilizing official development assistance (ODA) to build infrastructure and later bidding out its operation and maintenance (O&M) to the private sector. Ang, however, called hybrid PPP as “complicated” and expressed preference for unsolicited proposals for supposedly faster delivery of projects.

Following the President’s pronouncement of openness to unsolicited projects, the latter flooded the government, with project proposalsreaching a total of as much as Php3 trillion in the first year of the Duterte administration according to a news report last year. But most of these are just concepts or ideas, with actual proposals under evaluation by the Investment Coordination Committee (ICC) reaching only three as of the latest (January 2018) projects status report from the PPP Center.

But these three unsolicited proposals are among the just five PPP projects that the PPP Center said could probably be rolled out this year. Two of these unsolicited proposals have SMC as the original proponent – the Php700-billion New Manila International Airport and the Php338.8-billion Manila Bay Integrated Flood Control, Coastal Defense and Expressway Project. The third one is the Php51.17-billion East-West Rail Project of Megawide Construction Corp.

A separate news report said that SMC has an unsolicited proposal to the state-run Philippine National Construction Corp. (PNCC) to expand the Metro Manila Skyway and the South Luzon Expressway (SLEX) for Php554 billion.

Combined, the indicative cost of SMC’s reported unsolicited proposals (Php1.59 trillion) already account for 53% of the cost of all unsolicitedproposals (Php3 trillion) reportedly being pitched to the Duterte administration. To get a better grasp of how huge these two projects are, note that the total amount of all (16) PPP projects that have been awarded since the Aquino administration is “just” Php323.06 billion.

Beyond transparency and corruption

Even PPP advocates while recognizing that the presence of unsolicited proposals is on the rise warn governments to use them with caution and within a strict regulatory framework. In a review of unsolicited projects worldwide, a study commissioned by the Public-Private Infrastructure Advisory Facility (PPIAF) of the World Bank noted that among the common concerns on unsolicited proposals are: (1) lack of transparency in selection and implementation of projects; (2) avoidance of competition; (3) avoidance of due diligence processes; (4) opportunities for corruption and political patronage; and (5) acceptance of poor quality projects (design and/or execution) that do not even meet minimum requirements of any sort, in the name of expediency. The World Bank reportedly prohibits the use of unsolicited proposalsin projects that they fund.

Beyond transparency and corruption issues, however, the greater impact of unsolicited proposals involve how such procurement method further weakens the mandate and capacity of the state to design and implement a rational infrastructure program that is responsive to the long-term needs of the people and the economy. Unsolicited proposals also represent how corporate interests that are mainly driven by profit motivation take over infrastructure development and operation, often at the expense of the country’s overall development and social agenda.

Ideally, infrastructure projects are determined by and consistent with the development plan of a country, meaning projects are initiated and prioritized (including in terms of resource allocation) by government based on such plan. Government’s role goes beyond identification, resource mobilization and construction, and extends to operation and maintenance of the infrastructure.

This has been the practice in many countries including the Philippines until the advent of neoliberalism in the 1980s and its rapid expansion in the 1990s. Government’s role has been reduced to listing down of infrastructure projects and soliciting private investors to build and operate them through bidding or direct negotiation. This is already problematic by itself as it essentially privatizes the infrastructure and distorts its economic and social purpose as commercial viability becomes the primary consideration.

Tailor-made public infra for private interests

Unsolicited proposals thus further detach infrastructure development from specific public needs and interests. With the private proponent initiating the process of identification and conceptualization, unsolicited projects are often not reflective of priority infrastructure needs. In addition, unsolicited proposals reinforce the undue concentration of infrastructure development in urban centers and more developed regions at the expense of poorer regions or areas that need more infrastructure, but where commercial prospects or interests are less for private sector proponents.

There are cases where big business proposes infrastructure projects that are not just meant to supply public needs (and directly profit from it) but are also tailor-made to bolster its other private commercial interests. One example is the unsolicited proposal jointly submitted by SM and Ayala groups to build a Php25-billion 8.6-kilometer elevated toll road that will supposedly help decongest traffic along EDSA. But the project will actually benefit the two conglomerates’ property development interests as the proposed toll road would also increase access to the SM Mall of Asia complex and Ayala’s Makati business district. SMC is questioning the SM-Ayala proposal because it will allegedly duplicate the existing SMC-operated NAIA Expressway and affect traffic volume (and profits).

But while SMC is questioning the need for the SM-Ayala’s unsolicited toll road, the wisdom of its own unsolicited New Manila International Airport is also questionable. Under its proposal, SMC will build a massive Php700-billion airport spanning thousands of hectares along Manila Bay in Bulakan, Bulacan with six parallel runways and an initial 100-million passenger capacity (thrice of NAIA’s). But it will also just duplicate the recently awarded Clark International Airport Expansion Project (a solicited PPP deal bagged by Megawide) whose further expansion has lower social (as a new infrastructure, the Bulacan airport could potentially displace more communities) and financial costs (e.g. there are three separate unsolicited proposals to develop Clark airport from JG Summit, Megawide, and Manny Pangilinan’s group with costs ranging from Php187 billion to Php337 billion).

For SMC, the agenda is not just to build and operate an airport that would be an alternative to the highly congested and inefficient NAIA. What SMC wants to build is an “aerotropolis” or a metropolis revolving around an airport. Aside from the 1,168-hectare airport, the plan includes a 2,500-hectare city complex which gives the giant conglomerate additional potential profits from property development as well as a toll road that will link with NLEX, on top of running the airport.

No guarantees

According to the BOT Law and its IRR, unsolicited projects are not entitled to direct government guarantee, subsidy or equity. Nonetheless, like solicited PPP projects, they are still eligible for other perks including investment incentives under the Omnibus Investment Code and performance undertaking (i.e., a government guarantee that it will assume responsibility for the performance of an agency’s obligations under the contractual arrangement including the payment of monetary obligations, in case of default) such as what SMC’s unsolicited MRT-7 project enjoys. They even enjoy “security assistance”, or the deployment of police or military forces in the vicinity of the project site to provide security during the implementation of the project up to completion.

The BOT Law requires as well that proposals be innovative and offer a new concept or technology. But it is unclear what is particularly innovative in an airport in Bulacan or an MRT along Commonwealth Avenue to pass as unsolicited projects. Indeed, a 2012 assessment ofunsolicited projects prepared for the PPP Center (with support from the Asian Development Bank or ADB) concluded that “most (unsolicited)proposals did not really offer new technology”.

What is clear is that there are no guarantees that the country’s chronic infrastructure crisis, which is being used to justify more unsolicitedproposals and negotiated deals, would be solved with more unsolicited projects. On the contrary, undue public burden could increase as numerous but disjointed or impractical networks of roads, airports, and other infrastructure are built through self-serving unsolicitedprojects by big business interest.

2017 SONA: Change is not always for the better

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By Sonny Africa

Among Pres. Rodrigo Duterte’s idiosyncrasies is preferring a vulgar stream-of-consciousness approach in his speeches. This is even for the annual state of the nation address (SONA) at the opening of Congress which is undoubtedly the government’s highest-profile policy speech of the year. The president’s choice is a matter of style but then this also means that his SONAs shouldn’t be analyzed the way other presidents’ SONAs are – that is, as a coherent comprehensive statement of the administration’s policies and priorities.

Having said that, Pres. Duterte’s 2017 SONA can still be interpreted against everything else he has been doing in the past year. What becomes clear is that he continues to build his image and behave as a benevolent paternalistic strongman.

This is dangerous, anti-democratic, and anti-development especially in the specific conditions of the country. The Philippines’ political institutions are underdeveloped with a strong patronage-clientelist streak. The military and police are abusive and violate human rights with impunity. Oligarchic and business elites abuse their economic power with the backing of the government.

Authoritarianism was unfortunately prominent in the president’s SONA and in his press conference afterwards. He played up the need for a forceful – even militarist – approach to dealing with the country’s problems.

The president repeatedly highlighted the importance of the military and police and strengthening them with tens of thousands of additional troops and hardware. He took a combative stance against millions of Filipinos – “anarchic” Leftists occupying the streets, the National Democratic Front of the Philippines (NDFP), Lumad schools, Moro who will “side [against] government”, and poor alleged drug users and pushers. He defended martial law as an expedient way to deal with peace and order problems, never mind that this is excessive and unnecessary. And he again pitched for the death penalty for “deterrence” as well as “retribution”.

The president also trivialized human rights and due process. These were portrayed as a hindrance to tackling the menace of illegal drugs, criminality and corruption. The military and police were also assured of impunity with the president declaring: “I have your backs.” And yet these are such basic liberal democratic values.

The president, in discussing his tax reform program, was appreciative of a sycophant Congress yet threatening to those uncooperative. He commended the 246 members of the House of Representatives (HOR) who supported his anti-poor and pro-rich tax reform bill. But, with the measure now in the hands of the Senate, he also threatened the chair of the Senate Ways and Means Committee for being critical especially of the tax program’s anti-poor aspects.

The president’s SONA had precious few fragments of reforms. The most prominent was prioritizing the environment over mining and other destructive activities. Also potentially important was the exhortation to set up mineral processing and manufacturing industries in the country, notwithstanding ambiguity if these would be genuinely Filipino or just foreign firms setting up shop in the country. The budget for assistance to overseas Filipino workers was doubled to over Php1 billion. He also dramatically told the sick to go to any hospital and just say that the president would take care of their expenses.

And yet the 2017 SONA was actually dismissive of the serious socioeconomic problems the country is facing. There was no acknowledgement that the economy actually shed almost 400,000 jobs in the first year of the Duterte administration and that poverty remains deep and widespread among tens of millions of Filipinos. There was no sign that the president grasped how neoliberal Arroyonomics and Aquinomics resulted in rapid growth, profits and wealth for a few amid poverty and joblessness for the many.

There was, if anything, oversimplification to bolster the drive to authoritarianism: “The economy surges when there is peace and order.”

This is blind to the long-standing and deep structural inequities that keep the economy underdeveloped. Landlords and rural elites take the greatest part of what landless peasants and farmworkers produce. Capitalists exploit workers through low wages and scant benefits, and charge consumers the highest prices they can. Domestic agriculture and industry are stifled to preserve foreign capital’s markets and sources of raw materials.

Indeed, the talk of “investor confidence” and “protecting local and foreign investors” is a virtual defense of these inequities. A declaration to uphold a bias for the disenfranchised and propertyless poor in the economic sphere would have been much more welcome. The impression instead is of growing authoritarianism as the political framework to press the neoliberal economic agenda against growing protest and opposition.

These are alarming developments in the state of the nation. The tens of thousands of rallyists outside the Batasan complex and many thousands more across the country are however vivid expression of people asserting their social and economic rights. The administration would do well to heed their grievances and demands. They are the real forces of change that, looking beyond particular administrations, play the long game of bringing the nation forward to a democratic and developed future for the people.—IBON Features

Do Filipinos think Duterte has brought change?

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The Rodrigo Duterte government turned a year old last June 30.

Students and other ordinary Filipinos were asked if the reforms the President promised when he was still a candidate and new in office are already being felt.

Watch this video and learn what they have to say.

(Video by Gabby Endona of UP-CMC for Kodao Productions/Featured photo by Mark Kevin Reginio) Read more

Activists storm US embassy on 119th Independence Day

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Activist groups from all over the country marched to the United States embassy in Manila on the 119th Philippine Independence Day celebrations to demand for the pull out of foreign soldiers.

Groups led by Bagong Alyansang Makabayan said there is no genuine independence in the Philippines as long as foreign intervention is present in the country.

The activists also scored US military presence in the ongoing battle in Marawi City between government troops and ISIS-supported Maute and Abu Sayyaf groups. (Videography by Ivan Dexter Tolentino, Jola Mamangun and Esther Anne Cabrillas / Editing by Jo Maline D. Mamangun) Read more

US intervention in Marawi violates Philippine sovereignty–CPP

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THE Communist Party of the Philippines (CPP) today denounced American military presence and “armed interference” in the ongoing operations of the Armed Forces of the Philippines (AFP) in Marawi City against the Maute and Abu Sayyaf groups.

As the battle in Marawi enters its 21st day and as the country commemorates the 119th anniversary of the declaration of independence from Spanish colonialism, the CPP said Philippine independence remains false with American military intervention. Read more

‘Difficult but successful’ round of talks ends in Rome

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ROME, Italy—The National Democratic Front of the Philippines (NDFP) and the Government of the Republic of the Philippines (GRP) concluded their “difficult but successful” round of formal peace talks a week after it opened, five days of which were spent in “exacting” negotiations.

The parties said they achieved advances on six major issues listed on their January 18 common agenda:

  • Breakthrough in the discussion of socio-economic reforms and achieving understanding on its first four items, including agrarian reform and rural development;
    • Signing of the ground rules on the work of the Reciprocal Working Committees (RWC) on Socio-Economic Reforms (SER);
    • Exchange of drafts and initial discussions on political and constitutional reforms;
    • Signing of supplemental guidelines on the Joint Monitoring Committee (JMC) for the Comprehensive Agreement on Respect for Human Rights and International Humanitarian Law;
    • Submission by the GRP of its proposal for a bilateral ceasefire and the parties’ agreement to discuss it on February in The Netherlands; and
    • Agreement to a fourth round of formal peace talks in Oslo, Norway in the first week of April.

The parties likewise talked about the release of the 392 NDFP-listed political prisoners with the GRP again committing to facilitate the release of three remaining NDFP consultants Eduardo Sarmiento, Emeterio Antalan and Leopoldo Caloza through presidential clemency or other legal means.

The GRP and the NDFP also discussed the possible implementation of socio-economic projects in relation to the Joint Agreement in Support of Socioeconomic Projects of Private Development Organizations and Institutes of March 16, 1998.

“The parties have been constructive and solution-oriented. And it is very clear to us as Third Party Facilitators that both sides are genuinely committed to work towards achieving peace,” Royal Norwegian Government Special Envoy to the Philippine Peace Process Elisabeth Slattum said.

“Well, it has been difficult but successful. That is the only way I can describe this round,” NDFP chief negotiator Fidel Agcaoili said.

Agcaoili clarified though that he expected the successful conclusion of the negotiations on the supplemental guidelines on the JMC, the tentative agreement on the PCR, the movement on the discussion on SER as well as on its ground rules.

“Free distribution of land”

As expected, negotiations on socio-economic reforms took center stage in the Rome round of talks.

“The RWCs-SER agreed in principle to the free distribution of land to farmers and farm workers as part of the governing frame of CASER (Comprehensive Agreement on Socio-Economic Reforms),” the parties’ Joint Statement on the Successful Third Round of Formal Talks Between the GRP and NDFP in Rome, Italy said.

Earlier, the RWCs-SER reaffirmed their earlier agreement on the Preamble and the Declaration of Principles (Part I) as the framework of the CASER.

They also identified points of agreement on Bases, Scope and Applicability (Part II) and reaffirmed their approval of Part II entitled Desired Outcomes.

The committees also reached a common understanding on the general features of the agrarian problems in the Philippines, incorporated in the Part IV of the discussions which included land distribution issues.

“While our discussions in the past days have been exacting, we were not deterred from exploring new ways and other platforms to advance the talks,” GRP panel chairperson Silvestre Bello III said in describing the success of the round.

The CASER ground rules “display our seriousness to tackle the agreement on socio-economic reforms,” Bello said.

Joma “recovering well”

The eight page Joint Statement however is silent on the announced plan of the GRP to request the United States government to delist NDFP Chief Political Consultant Jose Maria Sison from its terror list.

Sison was absent in a formal peace talks closing ceremony for the first time in 25 years,

“We would like to inform you that the chief political consultant of the NDFP, Prof. Jose Maria Sison, was hospitalized last night,” Slattum said.

“But we can assure you that he is recovering well.  And I think I speak for everybody when I say we hope that he would be back on his feet in the next few days,” she added to loud applause in the hall.

Bello asked the participants and witnesses of the closing ceremony to offer a minute of prayer for the fast recovery of Sison.

Bello and GRP panel member Angela Trinidad had to leave the ceremony early to fly to Kuwait to try to save the life of a Filipino set to be executed in the said country. # (Raymund B. Villanueva)

PAHAYAG: “Di po laro ang pagbabalita, Mr. President!”

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Mawalang-galang po, mahal na Pangulo. Sinasadya ng National Union of Journalists of the Philippines (NUJP) na gamitin ang pambansang wika sa pahayag na ito upang bigyang sapat na halaga ang kaliwanagan sa komunikasyon at tiyakin na mauunawaan ng lahat ang nais naming ipaabot.

Sa inyong panayam sa midya nung Huwebes, muli mong sinabi na “nilalaro” mo kami at “mahilig” kang “magbitaw ng kalokohan.” Kung kaya, pananagutan ng mga mamamahayag ang pagsusuri sa bawat mong salita, kung totoo ba o hindi, at kami ang dapat sisihin kung ‘di tugma ang aming ulat sa mensahe na nais ninyong iparating.

Ipagpaumanhin po ninyo, subalit tuwiran kaming tumututol sa inyong pananaw. Hindi dahil ayaw naming suriin ang inyong mga salita — dahil kasama po ito sa aming gawain — kundi, bilang Pangulo ng Pilipinas, kayo po ang may pananagutan at tungkuling maging malinaw sa lahat ng inyong pahayag sa sambayanan at sa buong mundo.

May mga pagkakataon naman po para sa biro o sa kalokohan. Subalit dahil kayo ang Pangulo, ang inyong mga pahayag sa publiko ay aming itinuturing — at dapat lamang ituring — na patakaran ng inyong pamahalaan. Dagdag pa, marami rin sa inyong masusugid na tagasuporta ang nagtuturing ding atas at utos maging ang inyong mga biro at gamitin ang mga ito bilang dahilan para sa mga karumaldumal na hangarin ng mga kriminal at tiwali sa loob at labas ng gobyerno. Sa ganitong kalagayan, aming kagalang-galang na ginoo, hindi kaya mainam na huwag mo na kaming laruin at bawasan na ang hilig ninyong magbitiw ng kalokohan?

Ipagpatawad po ninyo , mahal na Pangulo, kung amin namang ibinabalik sa inyo ang inyong sinabi: Kung hindi malinaw ang inyong mga pahayag at hindi malinaw kung ito ay biro o seryoso, nasa inyo po at wala sa amin o sa taumbayan, ang problema. Seryoso po kami sa aming gawain at tungkulin naming ituring na seryoso at iulat ng tapat ang anumang namumutawi sa bibig ng Pangulo.

Huwag po ninyong baliktarin ang kaayusan ng pananagutang maging malinaw, Mr. President.

 

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Bayan protest at US Embassy supports Duterte’s ‘independent foreign policy’

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PROGRESSIVE groups led by Bagong Alyansang Makabayan (Bayan) marched to the US Embassy last September 16 to commemorate the 25th anniversary of the Philippine Senate’s rejection of the extension of the Philippine-United States of America Military Bases Agreement and to support “President Rodrigo Duterte’s independent foreign policy.”

The protest celebrated the 1991 rejection by 12 senators of the agreement despite great pressure exerted by then President Corazon Aquino to the Senate to extend the treaty.

The activists also condemned the current Visiting Forces Agreement and the Enhanced Defense Cooperation Agreement which they say allow American troops to treat the Philippine as their “playground.”

Bayan secretary general Renato Reyes Jr said the VFA and EDCA  signed by the US and subsequent Philippine administrations allow offending US troops to escape punishment for their criminal activities in the Philippines.

The Manila District of the Philippine National Police tried to prevent the protesters from reaching Roxas Boulevard but were outwitted when the march split in two and rushed past the hastily assembled police line.

‘No longer a colony’

Duterte had previously emphasized his government’s pursuit of an independent foreign policy from the US.

He recently called out US President Barack Obama on the latter’s reported intention to bring up the issue of human rights violations at their planned meeting in Laos last week.

Duterte also called on US troops to leave Mindanao.

He said he will not allow the US to further meddle into the country’s political and military affairs as it has yet to acknowledge and apologize for atrocities in Mindanao.

Duterte mentioned the massacres of Moros at Bud Dajo and Bud Bagsak during the US occupation of the Philippines which killed thousands of civilians.

Beyond words

Bayan challenged Duterte to take the matter of foreign policy beyond words.

“We support Duterte’s call for the withdrawal of US troops from Mindanao. However, he must go further if he truly wants to pursue an independent foreign policy,” Reyes said.

The group issued a list of demands for a Philippine independent foreign policy, namely:

  • Overturn laws and agreements allowing US troops to stay in the Philippines, specifically the EDCA signed by Benigno Aquino III;
  • End joint military exercises with the US;
  • Stop the country’s dependence on second-hand but expensive military equipment from the US;
  • Probe US’s role in the botched Mamasapano incident in 2015 that resulted in the death of 44 Filipino Special Action Force members;
  • Assert Philippine sovereignty against any US intervention; and
  • Denouncing American-led wars of intervention. # (Report by AL Ayroso / Featured image by Divine C. Miranda)

 

Progressives express outrage over SC EDCA ruling

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PROGRESSIVE organizations held a rally in front of the United States Embassy in Manila last July 26 to protest the final Supreme Court ruling declaring the Enhanced Defense Cooperation Agreement (EDCA) between the US and the Philippines legal.

Bagong Alyansang Makabayan’s Renato Reyes said that EDCA is an unjust agreement that is only advantageous to the US. Read more

PH should assert sovereignty vs China and US – Ibon

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AS THE Philippines claimed victory against China over the West Philippine Sea due to a favorable decision at the arbitral court on sea disputes in The Hague, The Netherlands, research group IBON Foundation urged President Rodrigo Duterte to assert national sovereignty versus China and the United States.

IBON in their 2016 Midyear Birdtalk held at UP Diliman last Saturday said that the real conflict is between the two superpowers China and US.

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