Philippines’ MTDP, China’s TFYP, and China’s PPP Experience

Recently both the Philippine government and the Chinese government have unveiled their national development plan for the five to six years – the Philippine’s Medium Term Development Plan (MTDP) and China’s Five-Year Plan (FYP), now on its twelfth plan .

Philippine’s Medium Term Development Plan (MTDP) is the national development blueprint of the Philippines crafted by a newly-elected president, cabinet and local government officials, and allied non-governmental organizations. MTDP reflects the vast power vested upon the Philippine president in shaping the desired socio-economic-political direction of the country. Under the new leadership of President Benigno Aquino III, Philippines would have its development plan set for the years 2010 to 2016 coinciding with his six-year constitutional term of office. Since the restoration of democracy in 1986, Philippines has had crafted six non-continuous MTDPs.

According to the Philippine Gazette, the overarching theme of the MTDP 2011-2016 is good governance and anti-corruption in achieving inclusive growth, which creates massive employment opportunities and significantly reduces poverty. It also says that the MTDP translates President Aquino’s “Social Contract with the Filipino People” into effective, efficient and inclusive interventions that will guide government agencies. As such the flagship program of MTDP is the Public Private Partnership (PPP), an arrangement whereby private companies participate or provide support for the creation of public infrastructure. A PPP project results from a contract between a national or local government and a private entity or company to deliver public infrastructure-based services.

China’s Five-Year Plan (FYP) is a coordinated series of economic development initiatives crafted by the Communist Party of China through the joint session of the party’s central committee and national congress. In contrast with the Philippines where the president primarily leads in the formulation of the development plan, China’s dominant party – CPC plays a leading role in interpreting and perpetuating “Socialism and Communism with Chinese characteristics”, setting economic development strategies and growth targets, and launching reforms. Since 1949, FYP is now on its twelfth plan under the leadership of President Hu Jintao and Premier Wen Jiabao, both of whom have also overseen the implementation of the eleventh plan.

According to China Xinhua, FYP 2011-2016 seeks to address rising inequality and create an environment for more sustainable growth by prioritizing more equitable wealth distribution, increased domestic consumption, and improved social infrastructure and social safety nets. FYP reflects China’s efforts to rebalance its economy, shifting emphasis from export and investment towards domestic and local consumption, and from urban and coastal (eastern China) growth toward rural and inland (western China) development. China would also employ PPP in accelerating the delivery of public services on less developed regions.

One common theme that strikes parallelism with Philippines and China’s development plan is the presence of Public Private Partnership (PPP) on its economic strategy. With China’s amazing economic development, the demand for public infrastructure is at its peak. To resolve its conflict with the shortage of public funding, China resorted to PPP projects regularly.

In the past, the Philippines had employed Build Operate and Transfer, a variant of PPP in rolling-out infrastructure projects. I am sure that Filipino policymakers and policy pundits have studied the upside and downside of PPP being not a new concept in Philippine governance. Hence, I’d not delve on it so much. Instead I would like to share China’s own experience on PPP. In an academic paper “Public Private Partnership in China: Making Progress in a Weak Governance Environment” written in 2009, Cheng Cheng and Zhengxu Wang pointed out the following points:

1.     The emergence of PPP in China came in two phases. From the 1980’s to mid-1990’s, China witnessed the formation of an initial legal and policy framework for PPP. From 2000 to the present day, PPP in China has largely been characterized by international projects and huge investment input.

2.     PPP can help to resolve the conflict between the strong demand for public infrastructure and shortage of public funding. Since China’s 1994 tax reform, financial pressure has pushed local governments to seek private investment for the development of public infrastructure.

3.     PPP in China is facing many challenges, one of them being fragmented legal and administrative frameworks which result in a complex regulatory regime.

4.     State dominance is another obstacle, due to which the power of private parties in PPP is often impaired.

5.     While there are also growing webs of intimate relationships between the private sector and local government, there are characterized by personal ties and reciprocal favouritism.

6.     State monopoly also limits public participation. With the state control over society, the public is blocked frompolicy-making.

7.     The development of civil society in China has resulted in an expansion of public expression, particularly through the Internet, as well as other forms of  public participation.

8.     Ineffective governance and corruption in China often impede the development of PPP as well. Frequent changes and inconsistencies in policies also weaken the government’s credibility.

9.     The role of PPP will continue to expand as China’s economy continues to grow. A more comprehensive and integrated regulatory regime is anticipated, anchored by a comprehensive Build Operate Transfer (BOT) law.

10.   It is a long way still for PPP in China to develop into a new form of governance and a new relationship between the government, the private sector and the public.

11.  Further development of PPP in China will depend more on comprehensive institutional improvement, particularly in terms of public accountability, legislation and government capacity.

PPP is a double-edged sword that can either serve the people or serve the vested, selfish interest of the few at the expense of national patrimony. Solid legal and institutional framework and good governance (“Daang Matuwid” in the words of President Aquino) are needed to ensure that PPP will serve its most noble purpose in serving the people. I wish my home country’s MTDP great success and may it be its sparkplug in regaining its erstwhile Southeast Asian premier stature.

 

J. Sun E.

Sun, a Filipino based in China, writes PH.CN on ProPinoy, a weekly column on Philippines-China relations, politics, history, and current events. He studied Political Science, History, and Foreign Languages in Philippines and China. Follow him on Twitter @phdotcn

  • One major difference between the two countries is that while China uses PPP’s domestically, it also bids for PPP contracts overseas as in the case of the North Rail project from via state owned enterprise CNMEG.

    Despite the Arroyo gov’t complying with their request for an additional $300million notching the total contract price up to $1.8billion (despite protestations by the North Rail Corp CEO), the project remains stalled.

    The MRT and NAIA 3 contracts are also problematic. Clearly PPP’s have had a spotty record in the Philippines in delivering infrastructure.

    The administration of P-Noy has to prove that it is a viable model for development.

  • UP nn grad

    Common between Pilipinas and China is that the business interests can NOT take advantage of PPP without the collusion of government officials. On occasions, the businessmen are secondary and it is government officials which initiate and drive the cost-overruns or the short-changing which result in public structures that do not conform to engineering standards.