By Diego Gabriel C. Robles, August 18, 2022; Business World
THE NATIONAL Economic and Development Authority (NEDA) has been directed by President Ferdinand R. Marcos, Jr. to review certain provisions of the revised rules of the Build-Operate-Transfer (BOT) Law.
“We have already received the President’s directive to review the implementing rules and regulations (IRR) of the BOT Law. We are presently awaiting the convening of the committee to review the rules,” Socioeconomic Planning Secretary Arsenio M. Balisacan said during the Economic Journalists Association of the Philippines (EJAP) forum on Wednesday.
The previous administration came out with the revised guidelines for the Republic Act (RA) No. 7718 in April.
“We have received several private sector stakeholders’ comments expressing their concerns over specific provisions of the IRR. Of course, careful review of the rules requires that we perform a balancing act: encouraging private investment to promote job creation, technological innovation, and product competition while protecting the public interest,” Mr. Balisacan said.
He said the President is aware of the issues raised by the private sector on the revised rules.
Business groups and some economists have raised concern over the rules, saying it compels private proponents to shoulder more risk while relieving the government of responsibility for delayed deliverables.
However, the NEDA chief declined to give details on changes to the IRR, but said discussions might revolve around the Material Adverse Government Action (MAGA) clause and arbitration issues.
“There are many other things but some of the revisions, I believe, are useful [and] are very good, and they should be kept. But I would like to see how that will move forward,” Mr. Balisacan added.
According to Section 12.22 of the BOT Law’s revised IRR, the government cannot be taken to court for arbitration.
Additionally, it defines MAGA as “any act of the Executive branch, which the project proponent had no knowledge of, or could not reasonably be expected to have had knowledge of, prior to the effectivity of the contract; and that occurs after the effectivity of the contract, that: specifically discriminates against the project proponent; and has a material adverse effect on the ability of the project proponent to comply with any of its obligations under the contract.”
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that “the risk and income sharing should be fair for both the government and the private sector participants so that the costs, as well as the financing required, would be predictable.”
He also noted the importance of the sanctity of contracts and clear settlement procedures in case of disputes.
Makati Business Club Executive Director Francisco Alcuaz, Jr. earlier said there is a need to cancel or defer the implementation of the revised IRR.
“The new IRR takes the ‘partnership’ out of public-private partnership by putting all the risk with (the private sector) and taking away provisions that would allow (for) a fair, predictable return,” he said.
The NEDA is still waiting for Mr. Marcos to sign the executive order (EO) before starting the review of the BOT rules.
“We have to have the presidential authority to review it,” Mr. Balisacan said, adding the review may take place as early as next week.
The NEDA, along with the Public-Private Partnership Center, is already conducting its own consultation with private sector stakeholders.
“We have to look at economics; all the angles to make sure that, in the end, it is socially beneficial, it is economically beneficial, [and] it’s financially viable… In the end, it’s all about viability and it’s the government’s objective. In the end, we don’t want projects that [are] quite risky for government,” Mr. Balisacan told reporters on the sidelines of the forum.
The Marcos administration is looking to attract more investments in infrastructure through public-private partnership.
“In light of the fiscal bind we find ourselves in, the use of public-private partnerships (PPPs), has emerged as an essential mode of financing the infrastructure that the economy needs. We expect the infrastructure push to support present and future growth drivers such as the manufacturing, tourism, IT-BPOs, and creative sectors,” Mr. Balisacan said.