The Asian Development Bank (ADB) and Australia, with support from Canada, are helping the Philippines clear obstacles to public-private partnerships (PPP), paving the way for increased private investment in infrastructure.

Grants of $1.5 million from ADB and $7 million from the Government of Australia, through the Australian Agency for International Development (AusAID), will be used to support strengthening government capacity to develop, competitively tender and monitor implementation of PPP projects.

Matching the support from development partners, the Government of the Philippines will provide the equivalent of $8 million. The Philippines National Economic and Development Authority is the executing agency for the project which is slated to run from April 2011 to July 2013.

"The government recognizes the need to improve the systems and capacity for preparing bankable PPPs. The goal of the project is to boost the public sector's ability to promote and carry out successful PPP projects that will, in turn, provide better services to citizens and contribute to inclusive economic growth," said Neeraj Jain, Country Director for ADB's Philippines Country Office.

Underinvestment in infrastructure is a major development constraint for the Philippines, with private funding falling sharply in recent years due to insufficient public sector capacity to effectively develop projects. An unpredictable policy environment, right of way land acquisition issues, financing gaps and a lack of clarity regarding government support have all undermined the development of PPPs.

The government is now seeking to expand PPPs to address infrastructure gaps, and has requested the development partners to help tackle current constraints.

"In addition to building public sector capacity over time, this package will also support the

Philippine government to fast-track its PPP reforms," said Titon Mitra, Minister Counsellor for the Australian Agency for International Development. "Achieving some 'quick wins' by taking a select few 'bankable' PPP projects to market by open, competitive bidding will underscore the Aquino administration's reform credentials and help attract foreign investors back to the Philippines."

The technical assistance project will help the government develop a stronger policy, legal and regulatory environment for PPPs, and raise the capacity of the PPP Center tasked with promoting and supporting implementation of PPP projects. It will provide support for the government's Project Development and Monitoring Facility which has been set up as a revolving fund to support the government agencies develop bankable and well-structured PPP projects. The project will also help improve private sector access to long-term financing for infrastructure projects, and help pave the way for credible risk guarantee mechanisms to reduce uncertainty for private investors.

Jon Lindborg, PPP Advisor at ADB's Southeast Asia Department, noted that "ADB welcomes this opportunity to support the government's PPP initiative and sees substantial scope to increase competitively tendered PPP projects in the Philippines over the next several years".

Australia is a long-standing development partner of the Philippines and one of the country's three largest bilateral grant aid donors. In the current financial year, the Australian Government will provide an estimated Php5 billion in development assistance to the Philippines, focusing on economic growth, basic education, and national stability and human security.