Private investment helps to drive infrastructure growth in the Philippines. The government's support of public-private partnerships (PPPs) opens the door for the participation of local and international investors, with an estimated US$50 billion of PPP projects in the pipeline.
Opportunities are set to grow. New rules make it simpler and more predictable to set up and manage these projects. Understanding how the rules work is critical.
To explore other jurisdictions, visit our Guide to PPPs in Asia.
'The PPP Code ... will enhance public-private collaboration and lay the foundation for ensuring the realisation of high-quality infrastructure projects and services in the country.' - Benjamin E. Diokno (then Finance Secretary), Department of Finance
The Philippine government has long recognised the indispensable role played by the private sector in national growth and the value of PPPs in engaging the private sector in public projects. The first build–operate–transfer (BOT) agreement took place in 1989 between the National Power Corporation and Hopewell Energy Management Ltd for the construction and operation of a power station in Navotas, even before specific legislation on PPP arrangements was enacted in 1990.
On December 5, 2023, President Ferdinand R. Marcos, Jr. signed into law Republic Act No. 11966, also known as the Public-Private Partnership Code of the Philippines (the PPP Code).
This codifies the numerous fragmented regulations on PPPs and provides a uniform legal framework for PPPs, including:
- the BOT projects under the BOT Law
- the joint venture (JV) transactions pursuant to the guidelines (NEDA JV Guidelines) issued by the National Economic Development Authority (NEDA), and
- the local PPP projects.
The PPP Code aims to establish a standardised process for handling PPP projects and explicitly revokes the power of government-owned and controlled corporations, state universities and colleges, and other government agencies from issuing guidelines regulating PPP projects and supersedes local ordinances that conflict with its provisions, ensuring consistency and alignment with national policy.
The number of PPP projects in the Philippines has grown consistently in recent years. Although the Duterte administration was seen to favour infrastructure projects financed through foreign loans and Official Development Assistance (ODA), the present administration reportedly inclines towards the strategic utilisation of PPP initiatives under its Build Better More program. An estimated PhP9.14 trillion worth of 185 flagship projects under the Marcos administration may soon commence following the signing of the implementing rules and regulations of the PPP Code (PPP Code IRR).1
Key features of PPPs in the Philippines
- The new PPP Code sets a single, clear set of rules. This removes confusion and speeds up projects.
- Private investors generally carry most commercial risks. PPP arrangements typically involve risk-sharing mechanisms between the public and private sectors. Financing availability, supply risk, and demand risk are typically allocated to the private sector. The government typically handles political and certain legal risks.
- Foreign investors can join most PPPs. Foreign investors are generally permitted to participate in most PPP projects under the PPP Code, which does not impose nationality restrictions as a general rule. However, for sectors classified as public utilities at least 60% of the capital stock entitled to vote must be owned by Filipino citizens, in accordance with constitutional and statutory requirements.
- Recent legislation has amended the definition of 'public utility', resulting in a more limited scope. There is strong government backing for PPPs. A large pipeline of major projects is open to private investment.
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