House convenes technical working group to review BOT Law

By Paolo Romero, The Philippine Star

Posted at Jul 21 2011 07:18 AM | Updated as of Jul 21 2011 03:18 PM

MANILA, Philippines - The House committee on public works convened Tuesday its technical working group to review Republic Act 7718 or the Build–Operate–Transfer (BOT) Law to help boost the Aquino administration’s Public-Private Partnership (PPP) program.

Chaired by Ang Kasangga sa Kaunlaran party-list Rep. Teodorico Haresco, who is among the proponents of the law, the review was also attended by members of the Congressional Policy and Budget Research Department (CPBRD).

As consultants representing their respective sectors, members of the academe, and members of public and private sector were also present.

Haresco said the current BOT Law, despite its amendments, is still quite restrictive.

“The current law finds its basis in the 1987 Freedom Constitution, some of whose provisions were protectionist against unfair foreign control,” he said. “But in this time of globalization, the rules have changed. Foreign Direct Investments (FDI) are essential to economic development.”

He said in recent decades, the sources of foreign capital have increased, while access to it has eased. “Before only the US and Japan were the sources of capital. Today there are at least two dozen rich nations looking to find viable investments for their surplus capital,” he said.

The lawmaker also pointed out that overseas development assistance (ODA) funds are a “vital source” of public infrastructure funds, and that the global economic climate is currently favorable for developing economies.

“Fifty three percent of FDIs are flowing into the developing economies in Asia and Latin America. We should position our country to take advantage of this,” he said.

Haresco said he intends to establish a “mutually equitable” rate of return for private investors involved in public infrastructure projects, citing the importance of providing investors with an adequate amount of income over a decent period, but without overburdening the publics the project serves.

RA 7718, as recently amended by RA 6957, is seen by many as the only comprehensive law that currently regulates one of the Aquino administration’s key economic programs, the Public Private Partnership (PPP) scheme.

One of the tasks of the technical working group is to finalize a further amendment to the BOT Law, provisionally known as the Public-Private Partnership Act, as crafted by the CPBRD based on numerous previous consultations with experts in the private and public sector, and the academe.

Among other things, the amendment proposes the formation of a Project Development Facility (PDF) fund to be used to prepare project proposals and feasibility studies. The PDF would be administered by a newly created PPP Center and the National Economic and Development Authority (NEDA) and tapped by local government units and other government entities lacking the capability to prepare to prepare evaluator documentation themselves.

He said equally important is a revised taxation scheme for PPP projects. The amendment stipulates that in lieu of taxes, 5% of the project’s gross income shall be remitted to the National Government.

Of this, 3% will be paid to the National Government, and the remaining 2% will be distributed to the provinces, cities, municipalities and barangays affected by the PPP project, Haresco said.