Wallace Business Forum with BCDA’s Vince Dizon

By Rita Estella

Last August 20, the Wallace Business Forum held an online discussion on the BBB projects and COVID-19 response initiatives of the government, which was brought to light by guest speaker Vince Dizon, President and CEO of the Bases Conversion and Development Authority (BCDA). He is also the newly-appointed chief implementor of the government’s COVID response team, taking the lead in the discussions. The webinar brought in panelists from both the public and private sectors.

The government’s thrust has always been on infrastructure spending to pump up the economy. The dramatic increase in spending from 2001 to 2019 is ten times more compared to the 2017 to 2019 figures. From P100B in 2001–2010 to P378B in 2011–2016, the Duterte administration has already spent over P932B for the infrastructure projects for 2017–2019. The administration, according to Vince, has roughly completed 105 projects and some are nearing completion before the end of 2022. There are about 92 that were approved by the previous administrations, and 13 are new projects of the current administration.

Accordingly, the government needed to streamline over 1000 projects to about 100 projects to re-start the BBB program. These are now known as flagship projects of the Duterte administration. The proposed framework for the BBB projects should satisfy the following criteria: available fiscal space for infrastructure to be completed in 2020–2022, project readiness, implementation and capacity of line agencies, economic growth and job impact of the projects, interest and risk level of the private sector, and the inclusion of health and digital economy projects to address emerging needs from COVID-19 and the new normal.

The most impactful projects are on Transportation (airports, highways and road systems, subways, railways and ports); Water (irrigation systems); ICT (broadband, LTO Command Center, Motor Vehicle Recognition Program); and Healthcare (DOH projects, Virology Science and Technology).

The government infrastructure spending is at an all-time high of Php 4.1 trillion pesos. 2.2 T of this expenditure is under the Official Development Assistance (ODA), or simply put in as grants/government aid designed to promote economic development and welfare for developing countries. 1.6 T is under the Private Public Partnership Program (PPP) and only 226B is under the Government Appropriated Budget (GAA).

Given the current economic condition brought about by alleged corruption in the government and 17.3% unemployment rate in the country, can the Philippines pay this huge debt? Sad to say, the private sector’s risk appetite in getting into PPP programs is at an all-time low. The private sector is asking for more risk-sharing from the government in this very difficult time. Government incentives and performance requirements need to be clearly set out in the contract. These should be output-based and relatively easy to monitor.

The private sector is also looking at the volatility of exchange rates. If they bear these risks at 100%, this will ultimately be reflected in the price of their service, which will be passed on to consumers. There is also the bigger question if the rules of the game (contract undertakings, tariffs, etc.) would be respected once there is a change of hands in the government.

The country still retains a sound financial rating. It could not be denied, however, that we are in a truly precarious situation as compared to previous years. Unemployment continues to rise with more SMEs closing their businesses. Airline and tourism are not expected to recover for the next 2 to 3 years. Restaurants and hotels are barely thriving. The number of OFWs returning home continues to rise and chances of overseas deployment of Filipino workers remains bleak.

The BBB program is set to address the unemployment issues and to pump up the economy, but the pandemic is unwavering and people continue to struggle in the light of more jobs being furloughed. The health system is saddled and fails to support the population at large. The BBB program, according to our economic managers, will sustain the country’s long-term economic growth but without the private sector’s participation, getting these projects started and completed remains to be the big question.

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About the author:

Rita is the Vice President of John Clements Consultants’ outsourcing services, Staffbuilders Asia. She also manages Speednet, Inc., a fully owned John Clements subsidiary that offers messengerial/courier and mailroom services. Aside from these, she is also in charge of the Mystery Shopping Program under Shop N Chek Philippines. Rita holds a Bachelor’s Degree in Psychology from the University of Santo Tomas.