A makeover of the Public-Private Partnership (PPP) program via the adoption of a novel “hybrid” formula has led to the fast-track implementation of two road projects in Luzon in barely nine months of the Duterte administration.

Finance Secretary Carlos Dominguez III said that under this hybrid PPP formula, the government selects, finances and builds big-ticket projects through competitive public bidding and, upon completion, auctions off their operation and maintenance (O&M) to the private sector.

“There were two road expansions that were done in the north of Manila, which we decided that we were going to just do the projects ourselves and by deciding to do that, we have already started it in less than nine months,” Dominguez said at a recent “DuterteNomics” forum in Manila.

Public Works Secretary Mark Villar said at that forum that these two projects are the Plaridel Bypass Road, which will link the North Luzon Expressway (NLEX) in Balagtas, Bulacan with the Maharlika Highway in San Rafael, Bulacan; and the Central Luzon Link Expressway (CLEx), which will connect Cabanatuan City in Nueva Ecija to Tarlac.

Both projects are now under construction.

Dominguez said that had the government utilized the traditional PPP scheme, in which private contractors build and then operate and maintain the bidded-out projects, the DPWH would have to wait almost 30 months to get these projects going because of the cumbersome requirements involved.

Adopting a hybrid formula is the fastest and most cost-effective way of utilizing the PPP mode in partly implementing the Duterte administration’s unmatched infrastructure buildup over the next five years, he said.

At the “DuterteNomics” Forum held at the Conrad Manila Hotel last April 25, Dominguez said that, “The reason we are reversing the process in the past administration — they did the PPP from the beginning. When we examined the length of time it took to negotiate the PPP [projects], the average time was 29 months before you start the project.”

“So we’re saying, you know, we can do it a bit faster, and secondly we can also borrow money cheaper. And we can PPP the project at any stage: we can PPP it in the middle or we can PPP it at the end,” he said.

Dominguez also pointed out that the government has been in discussions with large foreign retirement funds that typically don’t invest early because they don’t want to take on the construction risks.

“In that way, we think we can even attract more funds. Or the private sector can attract more investors in the PPP project if we do it towards the end,” he explained.

“So we can borrow money cheaper, we can save time in the negotiations, but eventually we will either sell the project or go into an O&M method,” he said.

Some of the Philippines’ biggest names in the business sector attended the forum, among them, Jaime Zobel de Ayala of the Ayala Group and Tessie Sy Coson of SM Investments Corp.

Besides Zobel and Coson, the event was also attended by Danel and Sandro Aboitiz of Aboitiz Equity Ventures, Edgar Injap Sia II of Double Dragon Properties Corp.; Kevin Tan of Megaworld Corp.; and Michael Tan of the LT Group Inc.

Budget Secretary Benjamin Diokno said at the forum that the government’s infra buildup will require some P8 trillion over the medium term.

Diokno said this massive infra spending begins this year, when the government intends to spend 5.4 percent of the GDP on infrastructure, which will later rise to 7.4 percent in 2022.

“We plan to have an infrastructure budget which will start from about 5.4 percent this year, 2017, to about 7.4 percent in 2022. So we’re going to ramp up our infrastructure spending to achieve what we call the ‘golden age of infrastructure,’” Diokno said.

The government will fund this ambitious infra buildup primarily through three sources–its proposed comprehensive tax reform program (CTRP) now pending in the Congress, commercial loans and official development assistance from countries such as Japan and China.

Dominguez said unsolicited proposals are also welcome from the private sector, which would have a better grasp at identifying potential problems and offering better solutions to prospective PPP projects.

Undertaking the construction of PPP projects via the hybrid mode would prove cheaper in the long run, he said, considering that the government can borrow at lower rates through grants and concessional loans and later bank on the private sector’s expertise in managing, operating and maintaining the projects.

The “DuterteNomics” forum series presents to the public the government’s ambitious “Build, Build, Build” agenda consisting of big-ticket infra projects, among them the NLEX-SLEX Connector Road, the Bonifacio-Ortigas Road Link, Mindanao Railway, New Clark City, and the Mega Manila Subway.

“Dutertenomics,” is President Duterte’s economic strategy to dramatically raise funds–in large part through his proposed tax reform program–and spend big on infrastructure, human capital formation and social protection to sustain the growth momentum, attract investments and create jobs, achieve economic inclusion and transform the Philippines into a high middle-income country by 2022, by which time poverty incidence will have been reduced to 14 percent.

If “DuterteNomics” is sustained over the medium term, the government envisions the Philippines to be a high-income economy in one generation or by 2040.

Dominguez pointed out that the Philippines lost out on competitiveness “in the decades when we neglected our infra while our neighbors rapidly built up theirs. For an archipelagic country, poor infrastructure is debilitating. It raises the costs of transporting good between islands.”

“That is the reason our food price regime is high. Our congested roads and ports discouraged investors who need to operate on just-on-time deliveries. Our high power costs and unstable supply discouraged investments in manufacturing,” Dominguez said.

He said that Malacanang’s plan to accelerate spending on infrastructure and on human capital by upgrading the country’s educational and health care systems, along with its goal to lower income tax rates to sharpen the Philippines’ global competitiveness, would require additional revenue measures that could only be generated via the CTRP.

Now is the time to move decisively in carrying out this “grand effort,” Dominguez said, given the convergence of positive factors that are conducive to high and inclusive growth, such as the economy’s low-interest rate regime, excess liquidity, benign oil prices, investment-grade credit rating, a young, vigorous work force and the strong support of countries like China and Japan.