MANILA STANDARD EDITORIAL: BUSINESS RISKS IN INFRASTRUCTURE
MANILA, NOVEMBER 23, 2010 (MANILA STANDARD) The Philippines does not lack foresight in infrastructure planning. The previous administrations dating back to the time of deposed President Ferdinand Marcos have crafted grand plans to build modern roads, dams and airports. The National Economic and Development Authority keeps records of those plans, but many of the ambitious infrastructure projects have not taken off largely due to a lack of political will.
Those same projects failed to go beyond the feasibility study stage because of bureaucratic red tape and the costs they entailed. The private sector could have taken the responsibility of building the projects from the government, but the risks were just too much due to the unpredictability of the regulatory environment.
President Benigno Aquino III, just like his predecessors, has invited the private sector to join his administration in building toll roads, state-of-the-art airports, and efficient railway systems in and out of the metropolis.
The private sector, led by leading conglomerates San Miguel Corp., Ayala Corp., the SM Group and Hong Kong-based First Pacific Group, have initially expressed their interest to pursue the major infrastructure projects in last week's forum. The success of these projects, however, will be measured on how much the government can guarantee a fair return on investments to risk takers.
President Aquino, for one, faces the challenge of depoliticizing the regulatory decisions on fare and toll increase petitions. Toll road and railway operators expect higher but reasonable charges to sustain their operations and eventually recoup their investments, but government regulators tend to sit on petitions for rate increases due to public outcries and pressure from Malacañang to defer any adjustments.
An unpredictable regulatory environment will likely deter investments in infrastructure projects that the Philippines sorely needs. President Aquino must keep in mind that his much ballyhooed infrastructure program will remain in the drawing board unless his administration can ensure a decent return to those who will take the risks to build the infrastructure the country needs.
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Chief News Editor: Sol Jose Vanzi
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