Gov’t partnerships with private sector seen to boost transparency in public works projects

By Aubrey Rose A. Inosante, Reporter

TAPPING PRIVATE and development partners for state infrastructure projects may help improve efficiency and transparency as the Philippine government continues to deal with the economic fallout from a corruption scandal linked to public works.

Public-Private Partnership (PPP) Center Executive Director and Undersecretary Rizza Blanco-Latorre, who took office on Dec. 11, said teaming up with private entities for infrastructure projects could be a “feasible” option for the government.

“(The) PPP option enables the public to harness private sector expertise while at the same time ensuring that project delivery is performance-based, has optimal risks allocation, and holds private partners accountable throughout the project lifecycle, she told BusinessWorld in a Viber message on Dec. 19.

The Marcos administration is facing governance concerns as a wide-scale controversy involving anomalous state flood control and infrastructure projects linked to Public Works officials, lawmakers, and contractors has highlighted the systemic corruption that continues to hamper the delivery of public services, weighing on the Philippines’ economic prospects.

In the third quarter of 2025, Philippine gross domestic product (GDP) growth slowed to a more than four-year low of 4% as the graft scandal stalled both public and consumer spending.

Analysts have said that minimizing the government’s monopoly over infrastructure projects could be a key to curbing corruption.

Under the PPP model, the government can grant subsidies, tax breaks, guaranteed revenues, or asset transfers to attract private sector partners to help fund, build, and operate projects.

“The PPP Center has established relevant project development and project management interventions, as well as capacity building support, to enable concerned implementing agencies to pursue the said PPP option,” Ms. Blanco-Latorre said.

The PPP Code enables projects usually funded by the national budget to be carried out through the model and also allows for both solicited and unsolicited proposals.

A solicited proposal refers to projects that are identified by the implementing agency from the list of their priority projects, for which bids are invited from the public, while an unsolicited proposal is submitted by private sector proponents without formal solicitation from the government.

“We reiterate, though, the critical need to diligently structure these projects as PPPs to ensure the viability of private sector participation, manage implementation risks, and truly secure the best deal for government and the public,” she said.

PPP Center data as of Dec. 19 showed that the project pipeline consists of 251 projects valued at P2.81 trillion, while 290 projects worth P3.61 trillion are under implementation.

Acting Budget Secretary Rolando U. Toledo said that both private and development partners could help the government plug infrastructure gaps, with public spending now undergoing greater scrutiny.

“Strategic use of PPPs and concessional financing can help restore credibility and accelerate delivery given the additional layer of review that is being undertaken here by the oversight agencies,” he said in a statement sent to BusinessWorld via Viber message on Dec. 20.

Proposed projects are reviewed through inter‑agency deliberations to assess viability, while ongoing projects are regularly monitored for performance, he said.

“Given the downturn in public infrastructure spending brought about by the flood control issues, it is important that private construction steps up to cover the gaps we are now facing in the infrastructure development.”

Mr. Toledo added that PPPs have “big potential” as private sector interest in undertaking projects has increased since the passage of the PPP Code. However, this also heightens the need for stronger preparation, transparency, and accountability mechanisms at all stages of project delivery.

GOVERNANCE RISKS
Infrastructure investment is a “critical” contributor to GDP as it directly contributes to output and has multiplier effects that can boost economic growth, Asian Development Bank (ADB) Country Director for the Philippines Andrew Jeffries said in an e-mailed statement on Dec. 18.

“There remains a need for public investment at scale to address critical infrastructure gaps — particularly in transport, energy, and digital connectivity — to strengthen the Philippines’ competitiveness as a destination for private investment,” he said.

“The greatest risk with a sustained reduction in public expenditure is if critical investment needs are not met, in turn depressing the country’s overall competitiveness and productivity. Regardless of the source of funds, execution and governance risks need to be managed to ensure the quality of infrastructure spending.”

Mr. Jeffries said the government should prioritize investments in social infrastructure where commercial returns are not attractive for private sector players.

“Private sector investment can increase efficiency and help in effective technology transfers. Multilateral development bank financing can be a source of long-term stable financing and best practices, and help deliver strong governance,” he added. “As the Philippines approaches upper middle-income country status, the private sector will need to play an increasingly significant role in driving innovation, job creation, and growth.”

The ADB is ready to support Philippine infrastructure development through both financing and policy support, Mr. Jeffries said.

“This support includes the ability to provide large-scale financing coupled with strong oversight of procurement, financial management, and project implementation. ADB’s support goes well beyond infrastructure project lending, however, and includes policy support and technical assistance to improve regulatory frameworks and the ease of doing business,” he said.

Improving the enabling environment for private investments and PPPs is also part of the ADB’s key support areas for the Philippines, he added.

“At the same time, recent issues also underscore that PPPs are not a substitute for strong public sector planning, governance, and oversight. In practice, the feasibility of an expanded PPP role will closely depend on sustained improvements in upstream project preparation, transparent and competitive procurement, and credible regulatory frameworks,” he said.

“Without these foundations, transferring more responsibility to private firms could shift — rather than reduce — project risks and costs.”

Nigel Paul C. Villarete, a senior adviser on PPPs at technical advisory group Libra Konsult Inc., said that it is necessary for a developing economy like the Philippines, whose spending requirements far exceed its capacity to generate revenues, to open the door for increased private sector participation in infrastructure projects while having the appropriate safeguards in place.

“While we do have a sizeable and increasing chunk of private sector investments, our annual development expenditures are still mostly public. But the possibility of boosting private investments in nation-building remains available and even necessary,” he said in a Viber message on Dec. 20. “We’re not placing or changing priority from one to the other — we’re just making use of available financing opportunities to support the main public fiscal spending, which should continue as the main source.”

However, the government must rebuild investor trust by implementing reforms, he said.

“As always investor confidence is key. No one will shell out money when uncertainties remain, more so when these include possible corruption issues. That’s why clear and proper rules and guidelines are necessary, [with] ambiguities minimized or even completely erased,” Mr. Villarete said.

“We also need to understand that private sector financing will be attractive when the private sector is allowed to generate an attractive rate of return. This is where the balance comes in. PPPs must be both attractive and safe for all sectors.”

Mr. Toledo also acknowledged that improving investor sentiment is key to ensuring the economy’s recovery amid the corruption mess.

“The main risk is if investors’ confidence remains low and therefore, it would not provide the needed boost to the GDP growth,” he said.

“Over the short term, growth outcomes will still depend on the government’s ability to instill confidence through its efficient spending and credible policies in addressing corruption.”