Amendments to the Build-Operate-Transfer (BOT) Law

The final implementing rules and regulations (IRR) of the Public-Private Partnership (PPP) amendments was recently signed on March 21, 2024. The IRR, drafted by the National Economic Development Authority (NEDA) and pertinent government agencies, follows the effectivity of the measure on December 23, 2023, 15 days after it was signed into law. the IRR of the PPP Law shall take on April 6, 2024, 15 days after its publication last March 22, 2024. The full copy of the IRR of the PPP Law can be accessed through this link.

In its ceremonial IRR signing, NEDA Secretary Arsenio Balisacan said that “the PPP Program is a major government initiative—in light of the tight fiscal space, it is an essential component of the President’s transformation agenda under the Philippine Development Plan (PDP) 2023-2028… We are in a hurry to get strategic investments to increase our economy’s growth potential. The momentum for reform and action is strong, and we are pulling out all the stops for investors who wish to do business in one of the most promising economies in the region.”

Last December 5, President Ferdinand Marcos Jr. signed into law a measure seeking to amend the Build-Operate-Transfer (BOT) law as Republic Act (RA) 11966, An Act Providing for the PPP Code of the Philippines. This was among the priority bills identified by President Ferdinand Marcos Jr. and the members of the Legislative-Executive Development Advisory Council (LEDAC) in early July.

RA 11966 or the PPP Code will provide an updated framework for public-private partnerships in the country. Under RA 11966, industry players can expect clearer rules and guidelines on PPP proposals, joint ventures, and other related agreements. Among the newly signed law’s salient provisions include:

• Institutionalization of the PPP Center and the PPP Governing Board as the overarching policy-making body for PPP projects.

• Local government units will be allowed to engage in PPP projects as long as there is no national government undertaking.

• Exemption of PPP projects from temporary restraining orders and preliminary injunction, except if issued by the Supreme Court and concerns a constitutional issue.

• Increases the approval threshold of the National Economic Development Authority-Investment Coordination Committee (NEDA-ICC) PPP projects to PHP 15 million from PHP 300 million previously.

With the signing of the PPP Code, options for funding infrastructure projects have widened. Recently, Department of Finance Secretary Ralph G. Recto floated the possibility of lodging the Mindanao railway project under PPP, after the withdrawal of official development assistance (ODA) funding from China due to lack of progress in signing the loan deals. With this, the Department of Transportation (DOTr) may consider asking the NEDA for further review on the said railway project.

Industry players speak of the PPP Code’s invaluable contribution to many facets of the economy, such as on transportation, agriculture, and urban development, among others. Particularly, as the government dropped ODA from China in funding three major railway projects: the South Long-Haul Project, Mindanao Railway Project, and Subic-Clark Railway Project, the Department of Transportation (DOTr) is looking into PPP schemes as a way to fund the projects. DOTr Secretary Jaime Bautista noted that “We highly value partnering with private business in actualizing our transport projects,” also citing the success of previous PPP projects, the Clark International Airport, Mactan-Cebu International Airport, and the LRT-1. The Department of Agriculture Undersecretary for Policy, Planning, and Regulations Mercidita Sombilla also highlighted the importance of PPP projects in spurring industrialization in the agriculture sector. Meanwhile, infrastructure developer Aboitiz InfraCapital (AIC) also believed that the passing of the PPP Act is a step in eliminating urban development bottlenecks and pushing for smart and livable cities.