PPP not a peep

Editorial

What has happened to the flagship Private-Public Partnership (PPP) program of Noynoy through which his administration’s economic agenda was supposedly anchored?

It has been two years since Noynoy had assumed the presidency and announced the ambitious PPP program which would infuse something like P450 billion into the economy within the first three years of his term.

Up to now only one of the projects, the P1.96-billion Daang Hari-South Luzon Expressway, has been awarded while the rest seems to plod along in terms of planning, with the economic managers of Noynoy committing to complete the bidding for about eight projects worth P50 billion until next year.

Thus as a contributor to the economy, the PPP is way behind schedule and its projected knock-on effect for growth has become inconsequential.

A review on the Philippines made by DBS Bank of Singapore particularly noted that the economy had relied mostly on domestic demand, particularly consumer spending, to push up growth.

DBS says that with the progress on the PPP projects remaining slow, gross fixed capital formation and construction remain below potential.

Thus, the view is equivalent to saying that the government’s overall contribution to making the economy grow is practically nil thus far under the Aquino administration.

Last year, the economy grew a negligible three percent which was precisely the result of the Aquino administration’s failure to deliver on its supposed stimulus package which should have greatly come from the PPP projects that was worsened by underspending the budget, which Aquino’s economic managers tried to rationalize as being the result of efforts to weed out anomalous contracts and processes.

Those who have been for government moves on these big-ticket projects, however, cannot figure out why it is taking so long to pull these projects out of the pipeline and into the bidding room.

DBS says increasingly, the PPP story looks to be delayed. Even if the projects are bid out early in 2013, the subsequent ramp up in construction and investment looks likely to only materialize in the later half of next year.

What is fueling growth, according to DBS, is mainly household consumption, which has remained strong despite remittances from Filipinos working overseas slowing down in the previous months, hitting a 15-month low of 4.2 percent last June.

OFWs send to the country an average of $20 billion in money transfers every year, which their relatives here mostly spend, thus feeding the growth of shopping malls all over the country.

The more solid and lasting sources of economic growth such as industries and agriculture have been unreliably fluctuating the past two years under Noynoy.

While government spending is a positive contributor to the economy, adding an average of 1.3 percentage points to gross domestic product (GDP) growth in the first half, DBS said the growth potential has been limited as a result of the delayed PPP scheme.

Government is playing catch up on spending from the pullback in the release of the budget last year and which is now the source of revitalized public spending.

State spending rose 5.9 percent in the second quarter, according to DBS, which will contribute to a projected five percent growth this year.

Experts have estimated that the economy needs to grow consistently at a minimum of eight percent a year just to reduce the poverty level in the country.

Had the Aquino administration met the PPP timetable, growth would be near the useful level for which most Filipinos mired in poverty are waiting.

The bottom line is that government has been moving too slow if at all in Noynoy’s vow to fight off poverty.

It’s all hype,  this talk of Noynoy delivering a tiger economy before he steps down.