Philippines asks private investors for $3.4bn infrastructure boost

Contracts designed to ease Manila's fearsome traffic jams as Aquino promises protection against 'regulatory risk'

MANILA // Investors were asked today to pour in US$3.4 billion to upgrade roads, railways and airports in the Philippines by the country's president, Benigno Aquino, who simultaneously promised them protection from business black holes.

Most of the 10 contracts are designed to ease fearsome traffic jams in and around Manila, while giving much-needed momentum to Mr Aquino's top economic strategy of improving the country's creaky infrastructure.

Mr Aquino sought to reassure potential investors concerned about the Philippines' notoriously poor business environment, which has seen governments not honour contracts and investors lose millions of dollars.

"The government will provide investors with protection against regulatory risk," Mr Aquino told an investor conference held near Manila's $640 million airport terminal, which was expropriated from a private consortium in 2004.

Mr Aquino pledged a level playing field, transparency in contract awards, and a state shield to ensure contracts that empower investors to collect user fees are enforced, even at the government's expense.

"If private investors are impeded from collecting contractually agreed fees, by regulators, courts or the legislature,then our government will use its own resources to ensure that they are kept whole," he said.

The 10 projects unveiled by Mr Aquino's cash-strapped government are worth a combined $3.414bn, and will be formally offered at the end of next year under so-called "build-operate-transfer" terms.

They include four rail upgrade and extension projects and three toll roads in and around Manila.

Investors will also be asked to build airports in two tourist destinations, while another contract is to run a passenger terminal now being built in a key business destination in the southern Philippines.

Mr Aquino pledged to help Philippine businessmen compete in the big-ticket tenders, saying that over the next three years the central bank will relax caps on the amount a single bank can lend for a single project.

The country's public works and highways secretary, Rogelio Singson, said the Philippines urgently needed to upgrade and add to its narrow, crumbling and insufficient roads to boost the lagging tourism sector and lower the cost of doing business.

He said: "We are choking to almost a standstill. Most of our circumferential and radial roads [in Manila] were proposed in the late 1960s and they are not even complete as we speak."