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How USAID influences PH national policy: Technical aid to advance US interests : Page 2 of 3

Posted on 28 October 2016

in its frequent PPP prescriptions.

USAID’s unwavering confidence, in fact, seems to have helped pave the way for former president Benigno Simeon Aquino’s passage of the PPP Act, which constitutes a comprehensive privatization program. This controversial Act brings together key policy prescriptions in a manner unprecedented in the Philippines and possibly the world. For instance, the Act provides generous regulatory risk guarantees (of the kind in force in the Lesotho hospital PPP), even creating a permanent public fund for this purpose in the national budget. It grants tax exemptions for PPP projects such as those connected to the construction and/or operation of power plants, toll roads and mass transportation. Moreover, the Act establishes an alternative dispute resolution (ADR) system, giving investors a venue outside the courts to resolve cases filed by consumers and other stakeholders. This measure has the effect of narrowing the mandates of regulatory bodies and institutionalizes procedures of “justice” biased in favor of investor interests, resulting in diminished social accountability.

A 2006 USAID-funded technical report foreshadowed elements of the recent PPP Act. Entitled, “A Proposed BOT [Build-Operate-Transfer] Bill to Enhance Public-Private Partnership in Infrastructure Development,” the report emphasizes the necessary role of government subsidies in enhancing the viability of PPP projects from the perspective of potential private sector partners. It also asserts the necessity of operational components that “facilitate smooth implementation with hardly any contractual dispute requiring court intervention emerging.” [6] This report became the basis for the bills to amend the BOT Law submitted to the 14 th and 15 th Congress. By the time the PPP Act was passed, the government subsidy proposition had returned in the form of the Contingent Liability Fund (section 24) and Viability Gap Funding (VGF) (section 3). The VGF provision commits the government to the subsidization of the difference between contract-stipulated and actual profits in the event that the latter prove to be less than the former. [7]

In terms of actual PPP projects, USAID activities have recently centered on two in particular: the Bohol Water and Sanitation (BWS) project and the Laguna-Lakeshore Expressway-Dike (LLED) project. Of these two, the LLED is by far the larger. In fact, had it moved beyond the bidding phase, it would have been the largest PPP project undertaken during the Aquino administration (with a budget of US$2.73 billion).A measure of its influence, the USAID COMPETE year-two report states that “the LLED Project was not on the original list of the government’s PPP projects [. . .]. But now, it is No. 1 on the list and the biggest PPP project to date.” [8]

The project reportedly entails the eviction of tens of thousands of families [9] and this displacement has already been underway. [10] The rush to complete the project, moreover, resulted in systematically ignoring serious ecological and safety hazards despite concerted attempts by scientists and community organizations to bring this to the government’s attention. [11][12]

The LLED stands as a striking example of the manner in which so-called “development projects” such as those promoted by USAID and its PPP agenda are driven by priorities

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