THE SENATE COMMITTEE on economic affairs on Tuesday opened its inquiry into the official development assistance (ODA) funding under the Build, Build, Build program, with participants claiming that the ODA financing may have slowed the completion of flagship infrastructure projects.
Foundation for Economic Freedom (FEF) fellow Alan T. Ortiz pointed out that the current Philippine administration no longer has the “luxury of time” to complete its flagship infrastructure projects within President Rodrigo R. Duterte’s term given that it has only executed nine ODA loans agreement in the past three years.
Finance Assistant Secretary Maria Edita Z. Tan of the International Finance Group said nine loan agreements have been executed by the Duterte administration for ODA-funded projects under the Build, Build, Build program. Five were funded by Japan, two by South Korea, and two by China.
Meanwhile, National Economic and Development Authority (NEDA) Assistant Secretary Jonathan L. Uy said the government is targeting 56 of 75 flagship infrastructure project for possible ODA funding.
“By its very nature, Build, Build, Build is very ODA-driven and from past experience as head of the Philippines assistance program, ODA is naturally designed to be not fast. Case in point, the nine contracts that have been signed so far took three years. That is the rule of thumb: three years from concept to signing. Another year for financing, and then you’re left with one year in a six-year administration to start implementing and do the groundwork,” Mr. Ortiz said.
“Our appeal as a private sector think tank is for a new sense of urgency to take over the typical thinking of our bureaucracy… This administration is at its midpoint (and) technically has two years left, not three… My dear bureaucrats, you only have two years to get the other 37 contracts to be signed and for the ground to be broken… I’m all for Build, Build, Build, but you don’t have the luxury of time,” he added.
Bases Conversion and Development Authority (BCDA) President and CEO Vivencio B. Dizon said ODA financing was “not necessarily slow,” citing the gains made the government when it came to the Japan-funded Metro Manila Subway project and the North-South Commuter Railway (NSCR) project.
“With respect to PPP (Public Private Partnership), we would like to reiterate that the government’s priority is to fast-track Build, Build, Build… We also want to find other sources of both financing and implementation will allow us to catch up and implement Build, Build, Build,” he said.
“The administration understands the need to subsidize infrastructure to the greater public and that’s why we’re taking the lead in building infrastructure through government expenditure rather than the shared capital risk arrangement with the private sector at this time,” Mr. Uy said for his part.
Mr. Uy also told senators during the hearing that the government as of January is targeting to complete 28 projects before 2022.
Committee chair Senator Sherwin T. Gatchalian also weighed in on the interest rates offered by China, Japan, and other lending institutions when it came to ODA funding.
Ms. Tan said Japan offered lower interest rates at 0.10%. She also pointed out that China’s 2% to 3% rates were lower than those offererd by multilateral lending institutions, such as World Bank and Asian Development Bank (ADB). But despite the favorable rates of Japan, the Department of Finance (DoF) official raised the need for the Philippines to diversify its sources of ODA funding.
“We have to diversify. We have the technology to consider, we have the currency to consider because some of the currencies could be volatile,” she said.
“In the case of JICA (Japan International Cooperation Agency) and other ODA, we look at the terms and the comparative advantage. We look at some strategic concerns as well, like what type of projects you want to give to an ODA partner. Because you cannot give everything to just one. Much as you would want to give it to Japan, you shouldn’t do that… There’s always currency risk. And the other one is you should not be limiting yourself to just one source of technology. There should be a good match between your requirements and what they’re providing,” she added. — Camille A. Aguinaldo

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