PH beats neighbors in PPP readiness, study says

The Philippines beat other developing economies in an Asian Development Bank-commissioned study on Public-Private Partnership (PPPs) readiness, coming up behind Japan and China.

The country ranked higher than Indonesia and Thailand in the 2011 Infrascope study conducted by the Economist Intelligence Unit (EIU) for ADB. The study was meant to measure "the readiness and capacity of a country to carry out sustainable, long term PPP projects," ADB said in a press statement released with the report.

Of a possible score of 100, the Philippines got an overall score of 47.1, slightly behind China with 49.8. Other Southeast Asian nations in the study were Indonesia (46.1), Thailand (45.3) and Vietnam (26.3)

Australia topped the 16-nation study with a score of 92.3, followed by the UK (89.7) and the Republic of Korea (71.3). The top three countries as well as Japan and Gujarat sub-state in India were used as benchmarks for the study.

"The Philippines has a long history with PPP projects, and benefits from a good legal framework. However, there are some institutional weakness, and limitations on dispute-resolution and financing," the EIU report said.

The report said "the overall legal framework (for PPPs) is good" but there is a need for specific guidelines on how PPP investors are compensated. "Compensation is currently dealt with by the government on a case-by-case basis," EIU said.

The report also said the bidding process on PPPs is well-structured, but that dispute resolution is a problem since "disputes are usually left to parties to solve between themselves." Arbitration also presents problems because "the courts themselves are not truly independent, although the situation is improving."

EIU noted "emerging economies such as Pakistan, Bangladesh, Kazakhstan, Thailand, Indonesia and the Philippines, are moving swiftly to put in place the necessary laws and structures to attract more private investment."

This, as the ADB called for a shift to PPPs to meet the $8 trillion that Asia needs to invest in infrastructure projects in the next decade.

"Public financiers like ADB must undergo a complete change of mindset and shift their focus from sovereign projects to PPPs," Woochong Um, Deputy Director General of ADB’s Regional and Sustainable Development Department, said.

He said the commissioned study "will help our developing member countries address the areas of PPPs that need to be strengthened."

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