DOTC is being anti-Filipino?

DOTC has announced the bidding for the construction of the new P4.8 billion Panglao Airport in Bohol, and none of the five groups allowed to participate are Filipino companies. Only Japanese firms can bid to be prime contractor for the new Bohol-Panglao airport project.

Rappler’s Lala Rimando explains that “this is an offshoot of the tweaks in the Public-Private Partnership (PPP) project design by the Philippine transportation department under its former chief, now Interior Secretary Mar Roxas. Instead of upcoming airports being financed, built and operated by private firms — as what pure PPP projects are — he spun off the project design task to the likes of Japan International Cooperation Agency (JICA).”

There were hopes that other aspects of the projects, including their building and O&M can be offered to Filipino companies. Apparently not.

It turns out these airport projects, including Panglao, are “tied” projects. Only companies from Japan can benefit from all aspects of the projects’ execution. By letting JICA do the project study, DOTC closed the door not just on Filipino construction companies, but on other international companies as well.

The problem with tied projects like these is that they are normally overpriced. We never really know if the companies constituting the cartel from the donor country have agreed among themselves how to cook the deal to our disadvantage. True foreign assistance should provide the project at the least cost to the beneficiary, who after all, still has to pay for the project’s cost.

Take that Palawan airport which DOTC awarded to a Korean company Kumho, (even if it gave a less advantageous bid), is in a conflict of interest situation with DOTC’s project consultant and is in financial rehab. All those violate our procurement law and bidding guidelines, but DOTC told the Senate they are following Korean ODA bidding rules.

I recall that then DOTC Sec Mar Roxas shifted gears from PPP to ODA for DOTC infra projects and he justified it by saying the financial arrangements are advantageous to government. He also said ODA provides the large sums of money needed for these big ticket items, freeing the Treasury to reallocate funds to other projects.

But Mar disregarded the fact that our financial system was excessively liquid at the time, making it necessary for the BSP to spend quite a bit of money to mop up all that liquidity from the market. In other words, we had funds looking for projects locally.

PPP would have been the ideal way to use up all these idle funds available at record low interest rates and no currency fluctuation risk which even “concessional” ODA loans carry. We would have also been able to provide local construction companies enough big projects that will eventually improve their ability and credibility to export their services in the region.

 Unfortunately, Mar didn’t seem to have enough faith in the Filipino. He probably feared his lily white reputation would be tarnished if he started to deal with Filipino construction companies. He would rather be able to say his projects are ODA financed and follows donor country rules so he cannot be blamed for any corruption.

I asked my friend in the local construction industry, Lito Madrasto about this situation and he said he too was disappointed. “In fact, locals can fund, design, procure, construct, install and operate and maintain at a much lower cost using the PPP or BOT and its variants modality.

“In almost all the PPP projects tendered, the costs committed by locals are way below the estimates of foreign consultants, and all winners even offered premiums to the Philippine government. To date, such premiums have reached P54.5B over and above the committed costs of the PPP projects.

“Furthermore, history has shown that all ODA-funded projects are grossly over designed and thus over priced. One wonders who benefits from such over pricing. If over design is proven, should it not follow that over pricing has occurred. As such, shouldn’t government people involved in its processing and approvals be charged for plunder?

“It has been noticed that it’s basically the DOTC that shifted towards ODA funding away from the BOT or PPP modality. No wonder their PPP projects are delayed and those that proceeded are enmeshed in legal challenges.”

Lito explained that only multilateral financial institutions such as the World Bank and the ADB require competitive international bidding… not JICA, the KOICA, the USAID and the like. They fall under what is termed as “Bilateral Arrangements” where the lender can push for exclusivity such as “tied loans”.

Lito said “this has been the issue that the Philippine Constructors Association or PCA has been fighting government ever since the ’80s. This practice allowed by the government is the main reason why local industries are unable to grow and develop to become global players.”

Oh well… I guess Mar was just trying to play it safe by doing what seems like the safest thing to do. He didn’t care that we were already in a position to fund our own projects. He refused to acknowledge we are no longer dependent on ODA for big ticket infra investments.

Mar didn’t also didn’t think it was important for Filipino firms to gain not just the financial rewards of doing such projects, but also the experience and confidence. We have to credit PGMA for using Filipino companies to construct that LRT1 extension from Balintawak to Trinoma in record time and at a good cost.

In a sense, Mar isn’t so much anti-Filipino as just being scared to think boldly. His haciendero roots never gave him the need to think creatively for survival. He is like P-Noy who is just as scared to go outside his comfort zone of kabarkadas.

But we need a President and Cabinet Secretaries who can think creatively and will not be afraid to tap the great reservoir of talent and capabilities that today’s Pinoys already have. Maybe the next one will be better.

Ayala  

A reader sent this comment on my column on Ayala last week.

Hi Boo,

Contrary to what that executive from Ayala Land Inc. (ALI) boasted in Singapore, and quoted in your column, we do have a strong government agency that regulates all land development and private subdivisions in the Philippines. 

That is the Housing and Land Use Regulatory Board (HLURB) under the Office of the President of the Philippines. Its current chairman is VP Jejomar Binay.  That guy should visit the HLURB to be properly informed. It is one of the very efficient government offices.

Not even the giant ALI can violate PD 957 as amended which is the Subdivision and Condominium Buyers’ Protection Decree and which is implemented strictly by the HLURB.  

PD 957 as amended sets all the rules and regulations governing all subdivisions commercial or residential, including their streets and open areas, which in fact belong to the government. From the planning to the permits to the inspection to the complaints if any. 

To suggest that Ayala can make these rules and regulations or violate them at will is pure fiction derogatory both to the HLURB and Ayala itself. 

All plans and designs for subdivisions have to secure the prior approval of the HLURB all the way. And all operations are monitored by the HLURB. Any buyer or resident can complain to the HLURB for violation of subdivision rules if any.  There are penal provisions for such violations.

To claim that Ayala is the virtual government in Ayala’s subdivisions and can do what it wants is pure hogwash. This guy should be fired by ALI. He is destroying the very good image of Ayala and its many subdivisions and their residents. 

As a licensed realtor I have been involved in Ayala projects and subdivisions for more than 20 years. It is my profession. I know how Ayala subdivisions are carefully regulated not by the Ayalas but by the HLURB. This guy simply does not know what he is talking about. 

Ayala is in fact very careful to comply with all government regulations and rules of the HLURB and PD 957.  Make no mistake about it.

 Warning

A reader sent in this warning.

Condoms don’t guarantee safe sex.

A guy was wearing one when he was shot by the woman’s husband.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco