Philippines' private-public partnership projects continue to face delays

Since the PPP initiative was unveiled in late 2010, only one project out of 22 identified thus far was auctioned off last December.

DBS Group Research noted:

The private-public partnership (PPP) projects continue to face delays as the administration sought to reduce the incidence of corruption. Since the PPP initiative was unveiled in late 2010, only one project (the Daang Hari-Southern Luzon Expressway Link) out of 22 identified thus far was auctioned off last December.

Meanwhile, prequalification (only prequalified investors are allowed to submit offers for PPP) has been completed for the School Infrastructure Project and an invitation for prequalification has been announced for the LRT Line 1 Project (extension and management of the line).

The PPP projects are largely related to transport connectivity (including roads and airports) and were supposed to help cushion the impact of an external slowdown this year. However, delays in the bidding out of projects mean the positive impact on the construction industry may only materialize in late 2012 or 2013.

In 1Q12, headline growth reached an impressive 6.4% YoY, but overall investment growth remained weak. Gross fixed capital formation (GFCF) rose by just 2.8% YoY as the construction segment rose by an anemic 0.3%. Notably, private sector construction was down by 9.9% and the total construction figure would have been negative if not for a 62% surge in public construction.