The need for PPPs for the SMEs too

Why should all the PPPs be for large scale companies? Here’s an interesting idea to have also PPPs for SME particularly if we want to increase job creation in the countryside.


Let small firms get a piece of PPP action, gov’t urged

Setup will generate more jobs, expert says


Friday, December 21st, 2012

Setting up public-private partnership (PPP) agreements on a local level will enable small and medium-scale contractors to acquire a piece of the government action and ease the worsening employment situation in the country, a labor expert said Thursday.

By doing so, the government will also reawaken entrepreneurship in the grassroots, said Rene Ofreneo, a professor at the UP School of Labor and Industrial Relations (Solair).

According to government data released this week, the jobless rate in the Philippines rose in October to 6.8 percent, or about 2.8 million unemployed people, from the 6.4 percent recorded in the same month last year.

“The PPP should be repackaged, in which there is more localization,” Ofreneo said.

By localization, he meant dividing the major projects into small community ventures.

Ofreneo noted that most of the contractors that bagged the PPP projects were huge Manila-based firms.

He cited the Department of Education’s project to build a close to 10,000 classrooms across the country.

Ofreneo said it awarded the contract to design, build and maintain 2,157 new classrooms in Region 1 for P3.45 billion to BF Corporation and Riverbanks Development, a group led by former Metropolitan Manila Development Authority Bayani Fernando.

For P12.83 billion, the contract for the 7,144 classrooms in Regions III and IV was given to the consortium of Citicore Investment Holdings and Megawide Construction Corp.

“How can small firms compete against these big corporations? The PPP should not just be for the rich and huge companies, but also for the people,” Ofreneo said.

He explained that localized PPP projects would have a “multiplier effect” in the grassroots level, increasing the income or the purchasing power of the people.

He said that with this kind of setup, the benefits to the common folk would outweigh the issues on economic efficiency.

The government would encourage dynamism. By transforming the PPP, small and medium enterprises, cooperatives, and even OFWS who have pooled their savings, may come in,” Ofreneo said.

He said some of the PPP infrastructure projects, like classrooms, farm-to-market roads and community centers, do not necessarily have to be carried out by giant corporations.

The professor said it would be even better if the government would couple this with a cash transfer for work—a type of conditional cash transfer program similar to what the government has been doing to boost education and nutrition in poor communities.

“Cash for work should be done mainstream as a strategy to address unemployment,” he said.

Ofreneo suggested that the program be done in areas hard hit by recent tropical storms.

While the recent NSO data do not show reasons why employment rises or declines, climate change is one of the factors often observed and cited by economists, Ofreneo said.

The professor also proposed a revival of the country’s industrialization in labor-intensive manufacturing and agriculture sectors.

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