The Philippine economy can expect to benefit from revived infrastructure spending in the latter half of this year after a four-month delay in enactment of the P3.662-trillion national budget weighed on “fiscal impulse” this semester, S&P Global Ratings said in a report released last week. HSBC Private Banking also said separately that the second half should see infrastructure spending pick up, but still kept its earlier projection that overall economic growth will slow this year from 2018.

Key growth driver

In the May issue of its Asia-Pacific Monthly Snapshots report, S&P said it expects Philippine gross domestic product (GDP) growth to edge up from a three-year-low 6.2% in 2018 to 6.3% this year — retained from its April estimate but down from 6.4% in January and 6.6% in November last year — as well as 6.5%, 6.6% and 6.7% in the succeeding three years, also retained from projections given last month.
Source: bworldonline.com

Catching up

The National Economic and Development Authority (NEDA) also reported that the Cabinet’s economic development cluster (EDC) had mapped out a spending catch-up strategy for the rest of the year. “A catch-up plan is imperative. The EDC estimates that the government underspent by close to P100 billion during the first five months of the year due to the delayed passage of the 2019 budget. That is around P750 million to P1 billion a day,” a NEDA statement then quoted its director-general, Socioeconomic Planning Secretary Ernesto M. Pernia, as saying. “To reach our full-year growth target of 6-7”, the economy will need to expand by an average of 6.1% over the next three quarters. This target is still within reach, should the private sector sustain its current performance and government be able to speed up the implementation of its ongoing programs and projects, and jump-start new ones.”
Source: bworldonline.com

40% foreign-owned builders are now eligible for infrastructure projects

The Government Procurement Policy Board (GPPB) has approved a resolution raising the foreign equity requirement for infrastructure projects to 40% from the current 25%. Under Resolution No. 06-2019, the GPPB adopted Executive Order No. 65 S. 2018, which provided that contractors with 40% foreign equity may be awarded contracts for the construction and repair of locally funded public works. The Office of the Deputy Executive Secretary for General Administration (ODESGA) said that the resolution, intends to increase the foreign equity cap to “ease restrictions on foreign participation in certain investment areas or activities.”
Source: bworldonline.com

The need for a better procurement process

Ensuring that planned infrastructure projects are not plagued by delays and cost overruns is the intention of all stakeholders. However, seeing this through to actual realization will require an alignment and rethinking of existing government procurement requirements and processes. Improvements in the manner of evaluating contractors and suppliers should be put in place to prevent projects being awarded to those who are not financially capable to complete them. Contract awards currently done primarily on the basis of lowest bids without the benefit of proper in-depth financial condition analysis render the procurement process, and therefore government project completion, vulnerable to delays, cost overruns, even non-completion.

The solution? A financial condition analysis tool driven by technology that identifies contractors and service providers who have the financial capability to take on government projects that they bid for thus avoiding cost overruns, schedule delays, poor quality, and ultimately failed projects. Many companies who previously failed to perform have set back many government projects and ended up in the Blacklisted Companies list. The reality is these companies could have been flagged at the outset and prior to contract award if the financial condition analysis tool was made a pre-requisite.

Ready to implement a transformational change in your procurement process? Schedule a call with us here and we will walk you through how to leverage and make use of what today’s technology offers through CreditBPO.