May 8, 2022 | 5:37 pm
Introspective By Romeo Bernardo
(Part 2)
I point to two critical challenges,
which can gain so much from a well-structured and implemented public-private
partnerships (PPPs) environment:
1.) Boosting healthcare: Significantly adding healthcare capacity
should be a top priority. We need both “beds” and “heads” — hospitals and
healthcare practitioners — if we truly want to future-proof our healthcare
system. With around 100,000 beds, our bed-to-population ratio of 1.0 remains
under the World Health Organization (WHO) standard of 3.0. To reach a ratio of
at least 1.25 by 2025, the country needs to increase its capacity by at least
54,000 beds. This is a massive undertaking that government cannot do alone. If
we want to increase hospital bed capacity, we need to attract more private
sector investments, through incentives and other mechanisms such as PPP
arrangements, so we can entice more private players to be involved.
However, the other half of the
challenge is the glaring gap in the country’s pool of doctors, nurses, and
allied professionals. For example, we have around 0.4 doctors per 1,000
population, well below the WHO-prescribed standard of 1:1,000. The next generation
should be encouraged to pursue training in healthcare-related fields. The
government should explore incentivizing universities and medical schools to
lower tuition costs and increase class sizes. PPPs can also be harnessed to
establish more medical schools and training facilities, further empowering
Filipinos all over to take on the call of service as healthcare providers.
Part and parcel to the government’s
plan of strengthening Philippine healthcare is the implementation of Universal
Health Care (UHC). Private healthcare providers should be encouraged and
incentivized to establish primary healthcare facilities, in coordination with
LGUs, to support the roll out of UHC. Furthermore, as the private sector
continues to innovate with new mechanisms in line with UHC, the government
should also be flexible in its regulations, able to adapt and evolve with these
new business models. The private sector is eager to support UHC and, like how
we dealt with the pandemic, cooperation and collaboration with the government
are key if we want to see UHC through.
Finally, PhilHealth plays a vital
role. To ensure PhilHealth’s future success and build resilience in the
healthcare system against the future unpredictability with the pandemic, there
are clear opportunities that should be addressed now, particularly on improving
technology and systems for claims processing, fraud detection, and collections
and reimbursements. The private sector can help by lending its collective
wealth of technical knowledge and experience with global best practices. Should
PhilHealth need to outsource certain functions or consult on what are the best
strategies as it reforms, the private sector is readily available to help and
provide support where needed.
2.) Addressing our
learning crisis: The
pandemic has aggravated a Learning Crisis that has been creeping upon us for
decades but has been highlighted in recent years with our dismal placings in
several international assessments of learner competencies, and, most recently,
with the World Bank’s staggering data showing us at the bottom of the heap in
almost all categories. Using data from PISA, TIMSS, and SEA-PLM (Program for
International Student Assessment, Trends in International Mathematics and
Science Study, and Southeast Asia Primary Learning Metrics) the World Bank
(2021) estimates that 90% of 10-year-olds cannot read a simple story.
There are three areas with great
opportunities for a strong Public Private Partnership to make a difference:
A. Improving the voucher system to accelerate
school opening and learning recovery: The
government has been successfully running large scale education subsidy programs
in high school. In SY 2021-22, about a million private junior high students are
ESC grantees while in senior high, about a million students are voucher
recipients.
The positive impact is clear cut. In
August 2020, an ADB study concluded that the programs promote the efficiency of
the mixed public-private education system, enable greater choice, empower the
parents and the learners, and promote diversity of providers.
But there is much
more potential to expand and refine these programs such as (1.) increasing high
school slots; (2.) redesigning programs towards the adoption of a universal
voucher across eligible grade levels; (3.) adding grades 1-6; (4.)
differentiating the grant amount using parameters such as socio-economic
status, school location, SHS tracks or strands; (5.) quality assuring all
participating schools and (6.) prioritizing disadvantaged students such as
children with disabilities and indigenous peoples.
In higher education, the government
is spending massively by subsidizing state colleges and universities offering
free tuition for all. As has been pointed out by the Philippine Institute for
Development Studies (PIDS), the government’s think tank, this is sub optimal:
there is not enough financial support for the truly needy students (tuition is
only a portion of the cost), leakages to the non-poor, and inimical effects on
private institutions, many of which are much more efficient in providing
education than their public counterparts. To address these shortcomings, a PPP
model wherein a portable voucher is provided exclusively to the poor that would
allow them to enroll in the post-senior high school of their choice, whether
public or private, can be adopted. This is more efficient in using taxpayer
money, and by empowering students to choose, provides a market test of the
quality of public provision.
Additionally, vouchers need not be
limited to college, but can also be deployed for other post-senior high school
training programs more attuned to the needs of our country, e.g., digital
skills.
B. Improving digital connectivity and
21st century teaching and learning: Improved availability of good digital connectivity
in urban centers has partially addressed the inability to do face to face
classes in the last two years. However, this has widened the digital divide in
terms of access to remote education platforms.
A possible PPP
solution to this would be for the government to tap the technological and
management expertise of telcos to expand their reach into those areas.
Financially supporting their infrastructure and facilities roll out in areas
that would not otherwise be commercially viable and providing subsidies to poor
users using, for example, the CCT (conditional cash transfer) mechanisms would
help solve this pressing problem.
But technology alone cannot solve the
learning crisis. Guidance by trained and well-supported teachers is also needed
for students to maximize the benefits of digital connectivity.
C. Education Commission 2: If Education Commission 2 is passed into law, it
would be a golden opportunity for the public and private sectors to work
together to reboot our educational systems.
Ideally, the reboot should be
informed by a holistic, data-driven assessment led by PIDS, the government’s
think tank. Its review should cover legislative, policy, and administrative
gaps, including the assessment of budgetary requirements to support public and
private education sectors equally. The private sector could take the lead in
providing technical assistance for a truly reimagined education system focused
on improved learning for all.
Healthcare and
education are just two areas that can flourish and create meaningful social
impact through PPPs that are designed properly and implemented under the right
enabling environment. I remain steadfast in my belief that there is a golden
opportunity for us to build on the trust and collaboration gains created between
government and the private sector during our collective response to COVID’s
challenges, and channel these towards structured, well-designed, and
longer-term contractual PPPs.
However, unlike the partnerships done
during the pandemic — which are one-shot endeavors — contractual PPPs typically
require long-term commitments, including significant capital from proponents
and financiers. Thus, given the complex nature of such arrangements, such
contractual PPPs need to be commercially viable, sustainable, and predictable.
Allow me to provide some
recommendations to ensure that such a vibrant environment for contractual PPPs
will emerge:
1. Institutionalize Public-Private
dialogues for each of the government’s priority sectors, and supplement these
with a Steering Committee, Secretariat, and regular cadence. While these may
sound mundane, a continuous series of regular monthly dialogues with clear
accountabilities and next steps will be much more effective than the current
approach of ad hoc and irregular meetings when crises arise. The T3 (Task Force
T3 [Test, Trace, Treat]) experience validates this arrangement.
2. Place the spirit of partnership
and collaboration at the center of joint initiatives. Partners should recognize
the strength of the private sector and the limitations of government, and vice
versa, and seek to bridge these gaps through cooperation. We note that the
government has had difficulty in the building and operation of projects,
especially those that are complex and require high levels of technical
expertise (e.g., IT projects, massive infrastructure initiatives, etc.). The
private sector can certainly fill in these gaps, but under the appropriate
environment of trust and genuine partnership.
3. Respect the
basic principle of risk allocation. Parties that can best manage particular
risks should be the primary ones to carry these. Thus, on the issue of Material
Adverse Government Action (MAGA), such risks should not and cannot be borne by
the private sector, as this may result in unviable projects that do not
generate interested qualified bidders.
4. Respect the sanctity of contracts.
Business thrives in an environment of predictability and consistency, with
internationally recognized mechanisms existing to resolve disputes between
parties. Robust PPP arrangements would greatly benefit from this environment of
respect for private partners, their contracts, and the decisions of
international arbiters in cases of disputes.
5. Design globally competitive PPP
contracts. Connected to the above, arrangements that are investment-friendly
attract the highest quality local and global players that can best meet the
requirements of government and the public at the least cost, while promoting
healthy competition. The amendments to the Public Services Act that allows 100%
foreign ownership in key infrastructure projects are a step in the right
direction. However, the proposed amendments to the BOT (build, operate,
transfer) Law’s Implementing Rules, covering exclusions to what constitutes
MAGA, uncertainty in determining “reasonable” rates and returns, and removing
arbitration as a dispute-settlement mechanism, among others, are a worrying
development.
To close, the COVID-19 pandemic
appears to have ushered in unprecedented levels of trust and a much tighter
partnership within the private sector, and between the private sector and the
government — the bayanihan spirit coming to life. I believe
that there is no other more opportune time than this post-pandemic period to
build on these gains and create an environment where public-private
partnerships, broadly defined, become a critical vehicle for addressing our
several development challenges in the delivery of needed public services and
infrastructure, both hard and soft. The government’s limited fiscal resources
at this time require that it spend these more wisely, and leverage the same
with private financial resources, and technical and management know-how.
I am grateful for
valuable inputs from Fred Ayala, Paolo Borromeo, Bill Luz and Paolo Monteiro.
Mistakes all mine.
Romeo Bernardo served as finance
undersecretary during the President Cory Aquino and President Fidel Ramos
administrations. He currently sits on the boards of the Foundation for Economic
Freedom, the Management Association of the Phil. and the FINEX Foundation.
romeo.lopez.bernardo@gmail.com
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