112817 Philippines Infrastructure FIL 1

Investing in Transportation Infrastructure in the Philippines

Caitlin MacLean

Nov 27, 2017

In June 2017, the Milken Institute convened a Financial Innovations Lab® in Manila to produce recommendations on new or improved financing models for investment to prevent the Philippines’ deteriorating transportation infrastructure from hampering the country’s future growth. Lab participants identified the lack of a national plan for infrastructure, lack of government capacity to develop public-private partnerships, and project development delays as specific barriers to investment. To tackle these barriers, they suggested the following policy solutions:

  • Creation of a national infrastructure prioritization plan and a government initiative that facilitates investment from the private sector
  • Improvement of the procurement process and a “decision tree” approach to help determine which projects to make public, private, or public-private
  • Standardization of contracts and permits
  • Creation of an improved right of way authority to develop of best practices to facilitate land exchanges and to ensure fair compensation for landowners
  • Government funding for canceled or delayed projects
  • Creation of more effective tax exemptions for infrastructure investors

To find new ways to finance public-private partnerships and to attract more private capital from local or foreign sources, the lab participants offered the following financial solutions:

  • Structuring new private equity funds
  • Project bonds by conglomerates to help finance infrastructure projects
  • Using secondary market funds and reselling debt to new investors
  • Tax increment financing to redirect future tax revenues from elsewhere to pay off infrastructure contract debt