Talking shop

If the amount of words coming out of the Philippines on PPPs over the last six months was a fair reflection of the value of tenders being launched, we would probably be looking at the world’s leading market for private infrastructure investment right now.

But it doesn’t, so we are not.

But last month, we started to see for the first time some concrete details emerge on the government’s blossoming love affair with the build-operate-transfer model.

Bidding dates are due to be announced on five PPPs in the coming weeks and the government’s investment promotions department is in the middle of a whistle-stop tour around the world’s major finance hubs to spread the good word.

Undersecretary for Investment Promotion at the country’s department of trade and industry Cristino L Panlilio told top names at Halcrow and Mott MacDonald in London the country’s PPP programme is "ready for take-off" and is keen to "open the floodgates to European investment".

So while projects in the UK and Europe overcome their own problems with private finance, what makes the Philippines so special?

Well, for one, the political and economic situation.

Unlike the Middle East and North Africa, the Philippines got its revolution out of the way 25 years ago. With a recently-elected government with a strong political base, it will now concentrate on attracting foreign investment and spurring the economy, said Panlilio.

The stock market has also begun to correct itself after signs of a bubble last year, and the economy is now growing by over 7% per year. Add to this a population of 93 million and a strong English-speaking business environment, and things start to make sense.

The fact its government’s first peso-bond was 13 times over-subscribed and raised $1bn instead of $500m proves this.

As it stands, three PPP schemes have feasibility studies complete, with capital expenditure requirements and traffic volume estimations both pinned down.

There is also a foreign exchange guarantee in place as well as a promise that local government interference will not be tolerated.

So far Asian banks – Japan in particular – have seemed most interested in the country’s plans but Panlilio and his team are clearly taking a global view.

Considering they want to procure 73 projects by 2015 they probably need to.