Application of Critical Success Factors in Public-Private Partnerships of Local Governments in the Philippines Case Study of The Marketplace, Mandaluyong

City

A Group Research Paper Submitted in Partial Fulfillment of the Requirements in the Course Public Administration 199.2: Research Methods in Public Administration II

by

Barrera, Jaimie Katrina L. Borja, Jobert Kenneth E. Calibara, Jan Ariane A. De Lara, Jhosel V. Eugenio, Paul Mckey E. Indunan, Norbert Peter R. March 2014

Dr. Maria Faina L. Diola Faculty-in-charge and Adviser

Abstract The study focuses on possible critical success factors (CSF) needed for a viable PPP public market such as in Mandaluyong City. The researchers have decided to pursue research on this topic because of an observed boom in Public-Private Partnerships in the country whereas there is a lack of studies regarding the matter. The study aims to explore a set of possible factors that local governments in developing countries such as the Philippines can consider in implementing Public-Private Partnerships. Two sets of questionnaires were used, answered by individual key informants from different stakeholders involved in the Mandaluyong public market public sector, private sector, vendors and customers. The researchers also conducted review of documents, study visits and observations of the Mandaluyong Marketplace. The results of the study concluded that the CSFs were present and helpful to the success of the Mandaluyong Marketplace. It is recommended that the study be further improved by future researchers and studies in order to contribute to the success in the actual practice of Public-Private Partnerships (PPPs) in the Philippines.

Chapter I Introduction

Background and Context of the Study

Public markets, commonly known in the Philippines as palengke, are considered to be important institutions in Filipino communities. Throughout history, the market is known to be a center of a communitys trade. The exchange between and among diverse cultures enhances not only the flow of products but also information in the market. These exchanges are seen through the Philippines pre-colonial accounts, where natives negotiate by bartering different goods to foreign traders up until at present times, where paper bills and coins act as currency for exchanges (Scott, 1987; Beyer-Bagatsing, 2008, p. 3).

In his article The Death of the Palengke, Pabico (2002, p.1) described the market as a meeting place of Filipinos just like the park or the church. Spitzer and Baum (1995, p.8) supports this view, stating that the public market is responsible not only for supporting inexpensive retailing opportunities for small entrepreneurs but also for creating dynamic places and instilling community spirit and cultural exchange.

The local government legislatures, with its power to enact ordinances can establish markets and slaughterhouses and authorize the operation thereof by the city government; and regulate...talipapas or other similar buildings and structures. (The Local Government Code of the Philippines, Article 3, Section 458, Clause 5, Item 2). This specific provision states the

mandate of local government units in management and operation of public markets. But in practice, the markets are now owned and operated by various types of businesses and organizations and not just local governments. In its daily operations, the public market ensures the community of regular supply of fresh, safe and nutritious produce at affordable prices.

The introduction of supermarkets and hypermarkets in the country narrowed customer share and public attention to public markets (Pabico, 2002, p.1). In response, local government units resorted through different means, such as local financing or privatization in revitalizing their public markets. However, a noticeable trend is the employment of the Public-Private Partnership (PPP) mode in these revitalization programs, such as in General Santos (CDIA, 2012, pp.2-4), Dasmarinas (Business World, 2011), Cagayan de Oro (PPP Center, 2012) and Quezon City (Public Information Agency, 2013). With the problems associated with local governments unavailability to maintain a public market, they resort to PPPs to reduce and share the financial costs and risks involved. With the rise of this kind of agreements between the public and private sector, along with multiple stories of success of local government units (LGU), it is believed that the PPP mechanism is a suitable solution to fiscal problems to resolve constraints in public service delivery specifically with the establishment of public markets.

A notable example is the case of the Local Government of Mandaluyong, in partnership with Macro Funders and Developers, Inc. (MFD), a business consortium organized specifically for this project. In August 29, 1991, the contract for the development, financing, construction, and operation of the commercial center was awarded to MFD. The winning bid is a seven-storey commercial complex located on a 6,700 sq. m. lot along Gen. Kalentong street in Mandaluyong. Now known as The Marketplace, it consists of a Public Market and street-front stores, food stalls,
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commercial shops and department stores, a two-storey parking area, bowling lanes, movie houses and a multi-purpose hall. This project has garnered both local and international attention because of its success in the 1990s where the concept of Public-Private Partnerships specifically the Build and Transfer (BOT) Scheme was new to the country (Celestino, 2002, p.6).

This research paper focuses on possible critical success factors (CSF) needed for a viable PPP public market such as in Mandaluyong City. The researchers have decided to pursue research on this topic because of: a) an observed boom in Public-Private Partnerships in the B. Aquino administration; and b) public markets is a sector that is not given much attention in research studies, both in academic and government settings. Past studies regarding PPPs have considered CSFs for projects in developed countries, such as hospitals (Chung, 2009, p.1), fire stations (Jacobson and Choi, 2008, p.638) and heritage sites (Wu and Kuo, 2006, pp.2-3), among others. However, little research has done examining contexts of developing countries, much more focusing on a vital community institution such as public markets.

In conducting this research, it is the researchers aim to explore a set of possible factors that local governments in developing countries such as the Philippines can consider in implementing Public-Private Partnerships. This study will benefit future researchers, public administrators, businesses and communities as a basis of their studies and practices in similar PPP projects - knowing the motivations of stakeholders of past PPP projects, how these have been implemented and how these can be used as measures in evaluation of the projects extent of success or failure.

Statement of the Problem

The studys research problem can be stated as follows: Are the Critical Success Factors in Public-Private Partnerships identified in past studies present and helpful in assessing the success of Mandaluyong Marketplace (MP)?

The subquestions are the following: 1. Are the perceived CSFs in past studies applicable in the MP case? 2. What are other applicable CSFs that can be considered in the Mandaluyong experience? 3. To what extent have these CSFs been integrated during the course of the project? 4. What could be considered as enabling factors and hindrances in achieving the CSFs in the Mandaluyong PPP? Are these factors rooted in economic, political, social, cultural or institutional contexts?

Goals and Objectives of the Study

The study aims to: 1. Explore the viability of previously identified Critical Success Factors as applied in practice, specifically in the case of the Mandaluyong Marketplace. 2. Provide applicable CSFs that can be considered in the Mandaluyong experience. 3. Measure the extent to which these CSFs were integrated in the project. 4. Identify the enabling factors and hindrances in the Mandaluyong PPP project and explain its connection in the achievement of the CSFs.

Significance of the Study

The Public-Private Partnership has been identified as one of the key strategies of the government to improve the provision of infrastructures and delivery of public service. Hence, this study takes this focus by providing a look into of the achievements of the PPP market in Mandaluyong City and how stakeholders such as the government, the private sector and the community perceive the partnership.

This study could give other local government units an idea of engaging in PPP projects as it attempts to provide a tool in assessing the costs and benefits of this kind of partnership using the lens of critical success factors. Moreover, the public could also gain a better understanding on this type of partnership.

On the other hand, this study can encourage the private sector to explore opportunities with the government since they will have an overview on the possible benefits of engaging in PPP, specifically for public market projects, similarly by examining critical success factors adopted in the study.

Scope and Limitations

Upon consideration of the critical success factors from the literature reviewed, the study will use the following set of critical success factors: 1) Strong Private Sector Partner, 2) Risk Awareness and Commitment, 3) Good Governance, 4) Political and Social Support to assess the

performance of the PPP public market and the experience of the stakeholders in handling the said project.

As the study is focused only in a single case of a Philippine local government, it is not expected to generate a conclusion that can be applied to all scenarios: either to all public markets or all forms of PPPs, in the Philippines or other countries. Future researchers can enrich this study by focusing on other PPP public markets in the country or the implementation of PPP in other forms of infrastructure.

Assumptions

The identified Critical Success Factors in past studies - strong private sector partner, risk awareness and commitment, good governance, political and social support are applicable in the Philippine setting specifically in the case of the Mandaluyong PPP public market.

Chapter II Review of Related Literature

Traditional Public Market in the Philippines

As mandated by the Local Government Code of 1991 (Article II, Sec. 17), all local governments (municipalities and cities) are expected to operate their own public markets, slaughterhouses and other local government enterprises in their respective areas of jurisdiction. In most LGUs, the local government owns and operates a public market, usually located in the poblacion or town center (Danao and Molave, 2003, p.130). For bigger municipalities and cities, it is not unusual for them to operate more than one, some operating these markets in every barangay or group of barangays. Some barangays feature a talipapa (Rubino, 2003), a scaledown version of the public market in their communities, established in exchange for licensing and inspection fees, amongst others.

Most public markets in the Philippines are divided into a wet and dry section. The wet section features fresh produce, some of it were frozen to be preserved, such as chicken, pork, beef, fish and seafood. The dry section would feature other produce such as vegetables, eggs, fruits, spices, canned goods and other grocery products (HLURB IRR of Application for Market Location Clearance Rule 1, Section 1, 3: 3.6-3.7). In large public markets, most LGUs have allocated ample space for traders that sell a variety of products such as clothing, flowers, school supplies, accessories, kitchenwares and even electronic gadgets like cellphones and radios (FAO, 1991, pp.8-11). Others would also feature food stalls that sell street foods and carinderias that serve homemade budget meals (Garcia, R., personal communication, February 20, 2014).
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Most public markets are criticized due to a variety of allegations such as manipulation of weighing scales (Cuizon, 2013), lack of sanitation (Pontius, 2008), traffic and discipline problems and loose oversight on products (Jucaban, 2007) sold, such as reports on the spread of botcha (Andrade, 2012), seafood infected with red tide meat (Sotelo, 2012) or smuggled vegetables from China (Arquiza, 2003). With the advent of shopping malls and supermarkets around the country, most public markets have faced stiff competition due to the increase in the number of private sector-owned markets and supermarkets. Some are being demolished for private developments, relegated to less-convenient locations, or damaged by fires or other disasters (Pabico, 2002).

To address these concerns, local governments have initiated renovation, relocation and redevelopment of their public markets. Most of them are either funded through rental income, local government budgets or loans from government banks or assistance from international funding agencies. Local governments such as in Ozamiz (Festin, 2009), Pasig (Alcazaren, 2009), General Santos (CDIA, 2013) and Calapan (Virola, 2010), among others, have taken this route in redeveloping their public markets.

Public Private Partnership (PPP) in various countries

Public Private Partnership is an agreement involving the government and the private sector to fund, implement or create a public-oriented project. A private firm and the public sector are both engaged in a contract to develop infrastructure projects or any other related services (CDIA, 2010, p.4) with the goal of financing, designing, implementing, and operating

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infrastructure facilities and services which are usually provided by the public sector (PPP Center Vol.1, 2012, p.4).

PPP as defined in a study by Mohd et al. (2011, p.1) is a cooperative venture between public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risk and rewards. In PPP, risks are assumed by the party that is best able to manage and assume the consequences of the risk involved (Austria, 2013, p.3). Sarmento (2010, p.6) further emphasized that risk transfer is a very important driver for value for money. Transferring too little risks to the private sector would make the project inefficient, but transferring too much will result in higher payments and reduce value for money.

Knowing these risks, the private partner is bound to input additional charges over a period of time through new investment and provision of specific services (CDIA, 2012, p.10) until they would be able to get a reasonable rate of return, (PPP Center Vol.1, 2012, p.4) also known as IRR or internal rate of return.1

Implementation of PPPs would also increase the area for participation of the private sector in providing the citizens with public infrastructure services (PPP Center - Vol.1, 2012, p.3) expanding from traditional infrastructure projects such as roads and school buildings up to land and property rights information (USDOT, 2007, p.27; Urban-Karr et al., 2011, p.1)

Public Private Partnership has been seen as a tool by other countries for the success of their project implementation. Other developing countries such as Brazil and India (Asian

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Development Bank, 2012) have tried and tested the PPP in their project implementation which yielded positive results. Though some developing countries were not as successful as the said countries, the Asian Development Bank stated in one of their articles (Asian Development Bank, 2012) that the government should have prepared frameworks that will allow for the openness and transparency of the public sector budgets and private sector contracts that would aid them with the implementation and management of the project by preventing possible corruption and fraud during the process.

On the 2011 Infrascope (ADB, 2011, p.1), several countries from around the world were chosen because of their outstanding behaviour in meeting the standards2 of an excellent environment for PPPs. Australia was considered to be top tier in the overall rankings with a grade of 92.3 and was classified as matured. India on the other hand was categorized in the developed standing and had been given a score 64.8 on the fourth place. By providing a background of both these countries, a comparative analysis of the frameworks and processes can be made to map out what may be the shortcomings of the Philippines with regards to the smooth implementation of PPP infrastructures.

Australia was said to be leading because of the variety of its laws and policies that covered government procurement. Projects had been undertaken in a wide range of social and economic infrastructure services, although a few PPPs occur in the energy sector. Of these projects 90% are administered at a local level, with the ruling that any government contract with a value of over $54.2 million must be considered for delivery as PPP. A notable infrastructure project stated in the report is the Gateway Tunnel in Sydney (ADB, 2011, p.19).

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India exhibited some experiences in infrastructure PPPs under its belt, particularly in electricity along with its efforts to improve the clarity of the regulatory environment and institutional capacity. Slipshod rules governed over the projects, along with the lack of documented procedures on the bidding process, and issues with standardization of contract planning. Water concessions in Jakarta faced weak risk allocation and short-term scope of domestic firms outweighs the benefits of financial and legal improvements in the country (p.22)

On the same report, ADB (2011, p.28) stated certain facts about the Philippines regarding its history and performance in PPP. The Philippines had been utilizing PPPs in the water sector since the late 1980s. The Republic Act 6957 (BOT Law) existed to provide guidance for PPP infrastructure projects, and had also been extended to other sectors, in line with the Medium-term Philippine Development Plan. Since the law was amended in 1994, a variety of PPP models had been possible, and, in 1998, a revision was made on procurement requirements, and competitivebidding processes were then introduced.

Projects are selected first by the procuring government unit, which develops an implementation plan that is then evaluated and, if approved, is then incorporated into a relevant development plan by the National Economic and Development Authority (NEDA). NEDAs Investment Coordination Committee is responsible for evaluation and final approval of projects and now presides over the PPP Center (formerly the PP Center) (ADB, 2011, p.28).

Section 20, Article 2 of the 1987 Philippine Constitution have clearly stated that The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments. In recognition of this role in sustainable
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development, Congress enacted two primary laws to implement the following, the Government Procurement Reform Act (RA 9184) for the procurement of goods, supplies and services, and RA 6957 as amended by RA 7718 or the Philippine BOT Law which provided a more focused framework in PPP infrastructure development.

The enactment of RA 6957 allowed LGUs to enter into contractual arrangements with the private sector to implement infrastructure projects through two variants Build-Operate-andTransfer (BOT) and Build-Transfer-and-Operate (BTO). RA 7718 enhances the provision of RA 6957 by broadening the list of PPP government implementing agencies such as government owned and controlled corporations (GOCCs), government financing institutions (GFIs) and state universities and colleges (SUCs); putting in place incentives for attracting private sector investments to venture into PPP projects; and allowing negotiated unsolicited proposals provided that these comply with conditions outlined in the Law. More importantly, RA 7718 provided for the inclusion of other contractual arrangements or schemes to implement PPP projects.

The implementation of PPP projects at the local level is facilitated by the Local Government Code (LGC) of 1991 (RA 7160). As much as the Code vests upon the LGU wide latitude of prerogative to enter into contracts involving its properties, this prerogative should however be used along and harmonized with other relevant legal pronouncements.

The scope of eligible projects involves several infrastructure sectors including, Commercial and Industrial Development, Education, Environmental and Solid Waste

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Management, Forestry, Health and Housing among others, as stated in the Basic Services and Facilities under Book 1, Chapter 2, Section 17 of the Local Government Code. Critical Success Factors in Public-Private Partnerships

The concept of Critical Success Factors (CSFs) was said to be first introduced by Rockart (Jefferies et al., 2002, p.354; Hardcastle et al., 2005, p.1). Rockart (1984, p.4) defined CSFs as those few key areas of activity in which favourable results are absolutely necessary for a particular manager to reach his or her own goals. CSFs must be maintained to ensure an effective and efficient work which requires day-to-day attention and operation throughout the life of the project. Rowlinson argued that CSFs are important to help firms or organizations in identifying key elements that should be focused on in order to be successful in a project (as cited in Ismail, 2010, p.4).

In general, there are two types of literature on the CSFs of PPP: 1) studies that examine the CSFs of a specific PPP project and 2) studies that assess the CSFs generally (Ismail, 2010, p.4). Although this study intends to specifically assess the CSFs of the Mandaluyong Marketplace, the review of literature will cover both types of study. Despite originating from different sectors on infrastructure building, the CSFs that will be mentioned will reflect the struggles and success that these PPP projects have encountered. By analysing the given CSFs, the researchers can utilize the information to further understand the factors key to the success of the Marketplace in Mandaluyong City.

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1. Studies that examine the CSFs of a specific PPP project

Jefferies et al. (2002, p.359) examined the CSFs of a stadium in Australia, which was built using the Build Operate Own Transfer (BOOT) mode of PPP. The construction (p.356) of the stadium was pushed forward because of Australia winning the bid to host the games of the XXVII Olympiad. The A$615 million project was capable of seating 110,000 spectators. With the private sector playing an increasing important role in the procurement process in infrastructure development, the necessity to maintain and allow growth without directly impacting the governments budgetary constraints becomes a major challenge for many countries including Australia (p.352). Despite this limitation, the authors are still successful in identifying the following key CSFs as significant and vital in order to maintain a sustainable PPP project: 1) Expertise, experience, profile and reputation of the consortium; 2) Financial capacity and innovations; and 3) Efficient approval process.

Likewise, Jefferies (2006, p.459) investigated the CSFs of the Super Dome PPP project, which was also constructed using the BOOT scheme using a single case study approach. The SuperDome was built as part of the 2000 Olympic Games infrastructure programme. It was measured to be 70,000 m2 that was built at a cost of A$280 million (p.454). The arena is able to seat up 20,000 people which is used for gymnastics, tennis, basketball, ice hockey and also concerts and exhibitions (p.455). The study mentioned the role of government is highly significant with regards to maximum risk transfer with the high bid preparation cost in publicprivate sector partnerships agreements (p.358). As addition, the following CSFs were classified as essential by the author on his findings adding to his previous study above: 1) Bidding process; 2) Negotiation process; and 3) Financial and risk capacity.
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To provide a different tone, Jamali (2004, p.414) investigated the CSFs for the post-war PPP implementation in the telecommunication industry in Lebanon and attempted to draw out lessons for improving the effectiveness and viability of PPP projects in the context of developing countries. The Lebanese economy has traditionally been dominated by the private sector. Experiencing civil unrest because of the war, PPPs were proposed as a possible solution to leverage needed technical and managerial expertise, and greater efficiency. In an attempt to assess the extent to which the PPP experience has been effective and sustainable, the record of one of the earliest post-war PPP initiatives is examined. The case was specifically selected because it represents a failing PPP initiative in a vital infrastructure sector and very few PPP failures have been openly reported in the literature (p.422). Using a case study approach, the findings (p.427) indicate that trust, openness and fairness are the basic foundational underpinnings of successful PPPs.

Zhao et al. (2010, p.1285) investigated the factors contributing to the success of two PPP power projects featuring thermal power and wind power that were developed using the Build Own Transfer (BOT) mode. From an extensive review of relevant literature and interviews with experts, the authors identified 31 success factors for the power projects. Then a questionnaire survey was conducted to investigate the relative importance of the success factors specific to the individual thermal and wind power. The results revealed common CSFs for the two projects, which include: the necessity for the project, the expected debt paying ability of the project and the financial capacity of the contractor.

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2. Studies on general assessments of CSFs applied on PPP

The studies in the 1990s on CSFs for PPPs is said to focus on the CSFs for successful PPP contracts. For instance, the works of Tiong (1996), Tiong and Alum (1997), Gupta and Norasimham (1998) identified strength of consortium, financial capacity, and supportive and understanding community as CSFs for the BOT contracts they have focused (as cited in Ismail, 2010, p.5)

In Lagos State, Nigeria, Babatunde et al. (2012, p.212) conducted a study that used structured survey questionnaires which are administered to participants that were involved in the execution of PPP projects. The authors examined the types of infrastructural projects most suitable using public-private partnership (PPP) for executions with a view to strengthening the partnership between the public (government) and private sector and by also enhancing infrastructural projects delivery in Nigeria. It is recommended that the identified CSFs are to be given utmost consideration by both parties (public and private) to ensure successful implementation of infrastructural projects using PPPs and to achieve the optimum objectives of the partnership arrangement (p.223). Through structured questionnaires, a six-point likert scale for each questions, purposive sampling to identify key informants and the use of t-test, the study has concluded nine CSFs: 1) Competitive procurement process; 2) Thorough and realistic assessment of the cost and benefits; 3) Favourable framework; 4) Appropriate risk allocation and risk sharing; 5) Appropriate risk allocation and risk sharing; 6) Political support; 7) Stable macroeconomic condition; 8) Availability of suitablefinancial market; and lastly, 9) Sound economic policy.

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Several business and economic outcomes were evaluated to identify major risks and channels to draw lessons from the experiences that is affecting Asian PPPs. Reside et al. (2010, p.1) on their study provided an analysis that involves cross-country data extracted from a large global database with a focus on East Asia. One of the main messages culled from the studys empirical results suggests that political risk plays a strong role in adverse project outcomes, and that political risk usually evolves from a realization of macroeconomic risk. The data the authors used has limitations. Information on bid and tendering procedures, and the criteria for awards are not available for most projects. 1) Macroeconomic environment; openness of economy, 2) Political risk; 3) Incentive issues during planning, design and contracting phases; 4) Fiscal capacity of government; and 5) high level of technical efficiency and capacity of proponents in construction and operations (pp.28-30).

An empirical questionnaire survey was conducted to analyse the perceptions of respondents in Hongkong, United Kingdom and Australia. With the increasing interest in public private partnership (PPP), the rise for the need to investigate the factors contributing to successful delivery of PPP projects is irresistible (Cheung et al., 2012, p.45). The target survey respondents of the questionnaire included all industrial practitioners from the public, private and other sectors. These respondents were requested to rate their degree of agreement against each of the identified success factor according to a five-point Likert scale (1 least important and 5 most important) (p.48). The survey respondents were asked to rate 18 factors which contribute to delivering successful PPP projects (p.49) .The findings of the research study has shown that there are certain critical success factors which can be applicable to PPP projects irrespective of their jurisdiction, whereas there are also those which are country specific. Success factors that are highly ranked by all three respondent countries are the following: 1) Commitment and
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responsibility of publicand private sectors; 2) Strong and good private consortium; 3) Appropriate risk allocation and risksharing; 3) Favorable legal framework; and 4) Stable macro-economic condition. (p.15)

Cheung et al. (2012, p.1) have provided a set of critical success factors for PPP on their comparison between Mainland China and the Hong Kong Special Administrative Region with the purpose of exploring the CSFs necessary for possible adoption to these regions. An empirical questionnaire survey was conducted with relevant experienced practitioners in the two countries. Both mainland China and Hong Kong have been keen to deliver more infrastructure service projects through PPP, with the former aiming to meet its rapidly growing infrastructure demand and the latter uplifting its efficiency further. The proponents have revealed seven indicators on their findings (p.15): 1) Equitable allocation of risks; 2) Strong and good private consortium; 3) Judicious government control; 4) Transparent and efficient procurement process; 5) Project economic viability; 6) Adequate legal framework and stable political environment; and 7) Available financial market.

Different types of public-private partnerships (PPPs) have been practiced in worldwide infrastructure development with diverse results and a variety of problems have been encountered. With this comes an urgent need for a workable and efficient standard for improved practices in future PPP projects. Given the situation, a PPP study is done by Zhang (2005) that is based on an international questionnaire for CSFs for PPPs in infrastructure development identified 47 CSFs of PPP projects (as cited in Ismail, 2010, p.6). These have been classified into five main aspects of CSFs, specifically: favorable investment environment, sound financial package, economic viability, risk allocations via reliable contractual arrangements, and reliable concessionaire
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consortium with strong technical strength.

Jacobson and Choi (2008, p.637) adopted a qualitative analysis using in-depth interviews and observations to examine and compare principal factors that contribute to successful PPP projects. This study uses a qualitative analysis with in-depth interviews and observation. Interviews are conducted with key individuals of two projects. Success factors are derived from literature review and modified through in-depth interviews and comparative analysis. The study constructed a table comprising the critical success factors mentioned by the respondents on the questionnaire, the responses are rated depending on the degree of how the statements are expressed. Low, Medium, High are the measures that are used to weigh each of the gathered responses by the researchers. Ten success factors were investigated (pp.644-652) by the proponents: 1) Specific plan/vision; 2) Political support; 3) Commitment; 4) Expert advice and review; 5) Open communication and trust; 6) Risk awareness; 7) Willingness to compromise/collaborate; 8) Clear roles and responsibilities; 9) Respect; and 10) Community outreach.

In a comparative analysis of nine redevelopment public-private partnership projects in The Netherlands, the analysis of Nijkamp et al (2002, pp.1877-1878) revealed that clear understanding of risks, identification of roles and responsibilities, shared specific visions of each project, adequate resources to deal with unexpected problems and an entrepreneurial city viewpoint to advance urban revitalization are vital to project success.

Stonehouse et al. (1996) on their study on PPP on Toronto hospital experience identified the following CSFs: government support; shared authority between public and private
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sectors; and commitment of public/private sectors (as cited in Babatunde et al., 2012, p.215).

Studying the infrastructure sector in China, Qiao et al. (2001, p.53) have observed that China have been relatively slow in growth in this sector compared to its industrial and manufacturing counterparts. Despite the Chinese governments large investment in infrastructure projects, it is still far from enough for sustainable development. The survey targets the BOT project companies based in Hongkong and China and related local authorities in charge of such projects. The research study followed three stages: (1) comprehensive literature review and short listing of the gathered factors as to make it understandable, (2) conduct of the survey questionnaires to the respondents, and lastly (3) detailed study of the three BOT projects in China to provide confirmation on the result findings (p.54). With this issue in mind, the proponents of the study identified the following CSF to attract foreign investments into infrastructure projects to bring a new age to Chinas infrastructure development: stable macroeconomic environment; technical innovation and technology transfer; available financial market; political stability and social support; good governance; and projects technical feasibility. The application of BOT projects has a relatively short history in China as it may not be well understood and sometimes may not be well received by investors and government agencies handling it and may affect the accuracy of selecting CSFs (p.60).

Hardcastle et al. (2005, p.1) used questionnaire survey research to examine the relative importance of eighteen CSFs for PPP in United Kingdom construction projects as these partnership in UK are increasingly used in public facilities and services provisions through the Private Finance Initiative. The authors group the CSFs in PPP projects under five major groups with lists of sub-factors under each group.
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Table 1: Principal Factors of CSFs for PPP Projects in UK and their Components Hardcastle et al. (2005, p.4-6) (1) Effective procurement Transparency in the procurement process, competitive procurement process, good governance, well organized and committed public agency, social support, shared authority between public and private sectors and thorough and realistic assessment of the cost and benefits. Favorable legal framework, project technical feasibility, appropriate risk allocation and risk sharing, commitment and responsibility of public and private sectors and strong and good private consortium. Government involvement by providing a guarantee, multi-benefits objectives and political support. Stable macroeconomic conditions and sound economic policy. Availability of suitable and adequate financial market.

(2) Project implementation

(3) Government guarantee

(4) Favorable economic conditions (5) Available financial market

Despite the number of prior studies that have investigated the CSFs of PPP projects, studies on CSFs for PPP implementation on public markets in the Philippines remain scarce or inexistent. Moreover, the unique characteristics of PPP to a particular country require a study on CSFs specifically for PPP in the Philippines. Hence, this present study fills the gap by investigating the CSFs for implementation of PPP on public markets in the Philippines specifically stating the experiences of Mandaluyong City.

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Table 2: Summary of CSFs for PPP Projects Critical Success Factor Source (Reside et al., 2010) (Babatunde et al., 2012) (Cheung et al., 2012) HK, Australia, UK (Zhang, 2005) (Qiao et al., 2001) (Hardcastle et al., 2005) (Reside et al., 2010) (Babatunde et al., 2012) (Cheung et al., 2012) HK & Mainland China (Jefferies et al., 2002) (Jefferies, 2006) (Tiong, 1996); (Tiong and Alum,1997) (Zhao et al., 2010) (Zhang, 2005) (Qiao et al., 2001) (Hardcastle et al., 2005) (Cheung et al., 2012) HK, Australia, UK (Cheung et al., 2012) HK & Mainland China (Jacobson et al., 2008) (Jefferies et al., 2002) (Tiong, 1996); (Tiong and Alum,1997) (Zhang, 2005) (Stonehouse et al., 1996) (Reside et al., 2010) (Babatunde et al., 2012) (Jacobson et al., 2008) (Tiong, 1996); (Tiong and Alum,1997) (Qiao et al., 2001) (Cheung et al., 2012) HK, Australia, UK (Jacobson et al., 2008) (Zhao et al., 2010) (Stonehouse et al., 1996) (Reside et al., 2010) (Babatunde et al., 2012) (Cheung et al., 2012) HK, Australia, UK (Cheung et al., 2012) HK & Mainland
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Economy (condition, policies)

Fiscal/financial capacity

Strong and private consortium

Technical efficiency/expertise

Commitment of public and private sector

Risk

China (Jacobson et al., 2008) (Jefferies, 2006) (Zhang, 2005) (Babatunde et al., 2012) (Cheung et al., 2012) HK, Australia, UK (Cheung et al., 2012) HK & Mainland China (Jacobson et al., 2008) (Jefferies, 2006) (Jamali, 2004) (Babatunde et al., 2012) (Cheung et al., 2012) HK & Mainland China (Jefferies et al., 2002) (Jefferies, 2006) (Hardcastle et al., 2005) (Jacobson et al., 2008) (Tiong, 1996); (Tiong and Alum,1997) (Qiao et al., 2001) (Babatunde et al., 2012) (Cheung et al., 2012) HK & Mainland China (Jacobson et al., 2008) (Stonehouse et al., 1996) (Qiao et al., 2001) (Hardcastle et al., 2005)

Legal framework

Open communication and trust

Procurement/bidding process

Social Support

Political support/ good governance

Notes: this table is a summary of all the presented CSFs culled from various sources as devised by the authors for this study.

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Research Framework Figure 1. Conceptual Framework

(Adopted from Wai, 2011, p.758)

Based on the literature review, application of CSFs contributes to the success of PPP projects. The framework suggests that a strong private sector partner, risk awareness and commitment, good governance, and community engagement will be helpful with the Philippine local governments in making successful PPP projects.

The researchers grouped the CSFs from the past studies into four, based on their similarities. The strong private sector partner is composed of their fiscal capacity and technical capability as they play an important role in the success of PPP projects which has a positive impact on governments budgetary constraints as well as their skill and knowledge can fill in the limitations of the public sector to provide technical expertise (Jefferies et al., 2002, p.352;
26

Hardcastle, 2005, p. 5). Risk awareness and commitment between both parties is defined by their vision and commitment, risk assessment and distribution, and goals and performance measurement as this pertains to the motivation of both parties to accomplish their specific goals and objectives (Jacobson and Choi, 2008, p.478). Good governance that refers to the management of the public sector to implement such PPP project is described through legal and institutional framework, and transparent and competitive bidding (Hardcastle, 2006, p.4; Qiao, 2001, p. 56). Community engagement that means consensus-building and achievement of full participation and support from all stakeholders (Jacobson & Choi, 2008, p.651) consists of political support and open communication.

Figure 2. Operational Framework

27

Note: the above figure was solely created by the proponents of the study.

Operational Definitions

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Public Sector is the portion of society controlled by national, state or provincial, and local governments their agencies, and their chartered bodies that provides basic goods or services that are either not, or cannot be, provided by the private sector. (Rouse, 2010) This refers to the local government of Mandaluyong and the Philippine national government.

Private Sector is a particular subdivision of a country that is composed of individuals and companies rather than the government that are mostly profit-oriented and not owned and controlled by the government (Rouse, 2010). This refers to Macro Funders and Developers Inc, the partnered private sector of the PPP market in Mandaluyong.

Customer is considered as a client or direct recipient of a service (HM Government, 2007, p. 14) that pays for some of the services provided by an agency or a producer. (Cassel, 2006, p.2) These are the people who purchase products from the public market and avail its services.

Vendor is defined as the supplier or organization that is paid for the goods and services they provide. (Skjott-Larsen et al., 2007, p.20). These are people who sell products and stall tenants from the public market.

Helpfulness is the indicator used to measure the extent into which the CSFs have been able to contribute to the success of the MP.

Critical Success Factors are those few key areas of activity in which favourable results are absolutely necessary for a particular manager to reach his or her own goals. (Rockart, 1984, p.4) and also viewed as principal elements that contribute to the success of public-private

29

partnerships (Jacobson & Choi, 2008, pp.642-643).

Strong private sector partner should be competent and financially capable to pursue the project (Cheung, 2012, p.53).

Commitment of Government and Private Sector refers to the roles, engagement and obligations of both parties to accomplish agreed goals and visions through active participants and involvement in the projects. (Jacobson & Choi, 2008, p.648)

Community Engagement refers to consensus-building and initiative to achieve support from all stakeholders while making them knowledgeable with the issues to be able to participate for the communitys development (Jacobson & Choi, 2008, p.651).

Fiscal Capacity is the ability of the private sector to shoulder the financial costs of a PPP project.

Goals and performance measurement provides the background of the desired results from both parties and the evaluation of their overall performance.

Good governance is considered as the management of government in a manner that is essentially free of abuse and corruption, and with due regard for the rule of law. (OECD, 2006, on good governance) Institutional Framework is a system of formal laws, regulations, and procedures, and informal conventions, customs, and norms (FAO, 1997), that administer in the studys context, the PPP projects. These are composed of national and local agencies, committees, offices and councils

30

involved in implementing the PPP market in Mandaluyong.

Legal Framework is a set of identified rules and regulations, laws, procedures and documents that guide the operations of businesses, politics and society (Macmillian Dictionary). This can be identified through the review of the official documents, laws and ordinances in Mandaluyong regarding PPP.

Open Communication is perceived by the frequency of the scheduled meetings and its results between stakeholders that paves the way for them to discuss their concerns as well as to conduct assessments and updates about the project.

Political support is observed by the quality of the provision of the approval from the city council and the continuity of government assistance on the pre-planning stages upon completion of the project.

Risk awareness and commitment is the proper assessment of factors and implications of pursuing the project and the will to do one's share in the partnership as appropriately distributed to the party best able to manage, control, and have complete understanding of it to fully maximize it for the public benefit. (Jacobson & Choi, 2008, pp.651-652; Forrer, 2010, p.479; TUAC, 2010, p.3). This will be measured thru the allocation of uncertainties and conflicts between the government and the private sector.

Risk Assessment and Distribution refers to effective risk management through the appropriate allocation of resources, risks and rewards.

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Technical Capability refers to the technical expertise, knowledge and skill of the private sector in handling PPP projects.

Transparent and competitive bidding refers to inviting all duly prequalified infrastructure contractors to participate in a public bidding for the projects so approved. In the case of a buildoperate-and-transfer arrangement, the contract shall be awarded to the lowest complying bidder based on the present value of its proposed tolls, fees, rentals, and charges over a fixed term or the facility to be constructed, operated, and maintained according to the prescribed minimum design and performance standards, plans, and specifications (Sec. 5 of Build-Operate-Transfer Law, RA 6957).

Vision refers tothe development of an agreement addressing mutual objectives, opportunities, and goals between the parties involved (Corrigan et al., 2005; Tang et al., 2006 (as cited in, Jacobson and Choi, 2008, p.648).

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Chapter III Methodology Unit of Analysis The researchers conducted a case study of The Marketplace PPP project in General Kalentong St., Mandaluyong City. The market was chosen for the following reasons: 1. The Marketplace is the first PPP project that have been implemented at the local level in the Philippines; 2. The project has received various commendations and international recognitions by the following cities/countries and organizations who have visited the Marketplace: Beijing and Shanghai, China; Calcutta, India; Brazil; Mexico; Tokyo, Japan; United Nations and the Asian Development Bank (Mandaluyong Local Government). It has also received a Galing Pook Award that recognizes excellent local government practices; 3. A preliminary study by Celestino (2002) was already made involving the project, which could be a basis for a more extensive study involving the same case; and 4. The researchers have originally considered several PPP public markets as the primary subject of the study. However, only The Marketplace cooperated for the research.

Data Collection Methods

From January to March 2014, the researchers used a set of qualitative methods to gather relevant information regarding the study. This includes the following:

1. Review of Documents
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The researchers reviewed the following documents: Local ordinance Ordinance No. 146, S - 1995 (An ordinance regulating the Administration and Operation of the Mandaluyong Public Market)

Contracts Memorandum of Agreement (MOA) between Market Realty Development and Credit Funders Corporation, Ironcon Builders, Macro Funders and Development Corporation, and the Municipality of Mandaluyong, Metro Manila - June 1992. Contract of Lease between the Municipality of Mandaluyong and Market Realty Development and Credit Funders Corporation and Ironcon Builders - August 29, 1991. Agreement between the Municipality of Mandaluyong and Market Realty Development and Credit Funders Corporation - August 29, 1991.

Resolutions Resolution No. 181, S-1991 (Resolution Ratifying and Confirming the Agreement and the Contract of Lease made and entered into by and between the Municipality of Mandaluyong represented by Hon. Mayor Benjamin S. Abalos, and Market Realty Development and Credit Funders Corp. and Ironcon Builders. Resolution No. 1205; S - 2006 (Resolution Confirming the grant of exemption to the Macro funders and Development Corporation, Developer/Operator of the Marketplace shopping mall, from the payment of real estate taxes during the period of its operation)

Financial reports
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 Financial statements of Macro Funders and Developers Corporation from 2008-2012

2. Key Informant Interviews The researchers interviewed the following persons: Mr. Jimmy Isidro - Chief Public Information Officer, Mandaluyong City Government He is primarily accountable in the development of plans and strategies in relation to public information that supports projects and programs of the City Mayor. Atty. Ernesto Santos - Vice President of Macro Funders and Developers, Inc. and consultant in Mandaluyong Housing and Development Board He was appointed as the overall in-charge of the PPP project/Marketplace. He worked as the Mandaluyong City Administrator during the term of Mayor Benjamin Abalos. Mr. Joseph Randy A. Garcia - Officer in charge of the Mandaluyong public market Vendor - Vegetable Vendor for more than 40 years Customer - Randomly selected consumer from Mandaluyong City The customers and vendors are the expected end-users of the public markets as they are the ultimate beneficiaries in the form of stall spaces and market goods.

3. Research Instruments The study used two sets of questionnaires: The first one is composed of questions classified under each CSF to further understand their integration before, during and after the project. This was used in the interview of the key persons in public and private sector. The second one measured the stakeholders perception on other possible CSFs and on the identified CSFs ranking as well as the level of success of the PPP project. This was
35

answered by one representative from the public and private sector as well as one vendor and customer.

4. Study visit and observation of the Marketplace

Selection criteria for choice of end-users

The end-users (vendor and customer) were purposively selected based on their experiences and knowledge about the public market and the construction of The Marketplace. Also, they must be currently selling and purchasing goods and services in The Marketplace.

36

Analytical procedure / flow

Figure 3. Data analysis flow

In preparation for the qualitative analysis of the key informant interviews, transcriptions of the interviews and discussions were made. The data collected was then arranged into a
37

comprehensive matrix. The researchers used thematic coding as responses were reduced into typologies.

The findings from the interviews, documents and discussions were integrated to produce a summary of the projects performance as measured using the CSFs. Each CSF was then examined according to information from stakeholders as well as documents. In addition, a ranking of these CSFs were obtained by adding the responses given by the stakeholders as well as the reasons for their answers.

The stakeholders then ranked the CSFs, from 1-4, 1 being the highest, based on their opinion/judgement on what is the most important factor that is key for the success of a PPP project. Meanwhile, the rate or score of the CSFs, from 1-4, 4 being the highest, are based on how it was achieved or performed in the project (Mandaluyong PPP Market).

The researchers will interpret the data using the stakeholders responses by utilizing a simple measure that denotes the degree of how they expressed the helpfulness and level of presence of the critical success factors to the Marketplace. For example, the end-users fully support the project, hence, the degree is high since the project will pursue. The standards used are the following: Degree High Medium Low Interpretation High Helpfulness Medium Helpfulness Low Helpfulness

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Ethical Concerns The names of certain key informants such as vendors and consumers were withheld to preserve their privacy as well as a response to concerns that they may be politically incriminated due to the answers during the data gathering.

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Chapter IV Results and Discussion

A. History and Context The loss of Mandaluyong local government of their public market in August 1990 (UNDP, 2012, p.1) has brought a huge problem for the local government. Only the foundations and posts of the market was left after it has been razed by fire which has been immediately demolished after the said event, leaving nothing behind for the vendors and consumers to continue their daily business in the area (Santos, E., personal communication, February 17, 2014). The local government has decided to put up tents at the sidewalks as temporary stalls of vendors (Celestino, 2002, p.4). The blocking of too many vendors and customers at the sidewalk has caused traffic congestion and sanitary problems. Complaints from both vendors and consumers also arose regarding the inconvenience of buying at the streets since the people and the cars are both occupying the road and theres no proper sewage system provided in that temporary location (A customer3, personal communication, February 27, 2014). There was an urgent need to build a new public market but having loans from commercial banks would cut a huge portion of their annual budget for its payment (Santos, E., personal communication, February 17, 2014). Interest rates during this time are quite high, averaging up to about 18% yearly (UNDP, 2012, p.1), due to the war in the Middle East. Some banks were willing to provide a loan for the city government but they insisted for the latter to put up the property as collateral, which is prohibited under the law (SP Res. No.1205, S-2006). Looking for a private organization to fund this project will be nearly impossible since the economy was in a dire situation at that time, more so to have it funded for free when the return on investment from a public market is very low. The citys former mayor, Benjamin Abalos, together with the City Council and officials then decided that a shopping mall shall be built above the public market due to several

40

considerations: Since return of investment from this type of project is expected to be recovered for a long period of time, the construction of multi-storey shopping mall would be more attractive for potential private sector partners. The city mayor is very eager to have their own shopping mall within the jurisdiction of the city since most shopping malls are located along Epifanio de los Santos Avenue (EDSA). He believed that the existence of a shopping mall on the location was very strategic since the place was along a major artery of the city which is also the intersection of Sta. Ana, San Juan and Sta. Mesa to Mandaluyong (Santos, E., personal communication, February 17, 2014). The said Mayor (Benjamin Abalos) was also the major key player who pushed for the construction of the infrastructure project using the Build-Operate-Transfer Scheme. During that time, the BOT law was just passed in the legislature and there are no implementing rules and regulations created yet to support this law. No government agency was capable to lend them a hand in the execution of this project, not even the Commission on Audit, Department of Finance nor the National Economic and Development Authority was able to help. Still, the local government continued to implement the project despite the lack of legal frameworks, improvising their own through city ordinances and contracts (Celestino, 2002, p.5). For several weeks in May 1991, an Invitation to Prequalify for the BOT Project was then published to major newspapers while the former mayor has also scouted for interested bidders. These has created a list of 13 possible contractors of the said project but was then reduced to five in the second conference after the first conference was held. During the first conference, the BOT Law was then explained wherein the private sector partner would be the one to responsible for all the expenses in the construction of the public market and multi-storey shopping mall after which they have to give the ownership immediately of both to the government. These conditions had made several investors to back out from the project (p.6). When the last Pre-qualification round and the actual bidding were held, only two
41

companies showed their interest where in the Market Realty Development and Credit Funders Corporation won. To increase the financial capability of the company, it has merged with nine various companies composed of businesses within Mandaluyong and other cities in Metro Manila forming a consortium they called Macro Funders and Developers Incorporated (MFD) (p.6). At the actual completion of the project, the total cost reached Php 600 million, a 60% increase from the original proposed investment of Php 377 million. However, the city government provided financial incentives, such as exemption from real estate taxes for the whole lease period, since the building was immediately transferred to the government, exemption from city taxes for two years, and a longer lease period of forty years. Also, the city provided assistance to MFD for scouting and assisting potential tenants for the shopping mall (Santos, E., personal communication, February 17, 2014). The public market is reopened to the public by the year 1994 and just after two years the Marketplace Shopping Mall was introduced. This has caused several spill-over effects that raised property values in the vicinity, created new businesses and jobs, and brought in new sources of revenue for the city government. In addition, the project has received numerous commendations from national and international organizations, such as the Galing Pook Award from the Department of Interior and Local Government (Galing Pook Foundation, 2001, p.36), the World Bank and United National Development Program (UNDP, 2012, pp.1-6), among others. B. Summary of Responses Table 3 summarizes the responses to the interviews and discussions regarding the presence of CSFs and its indicators in the Mandaluyong PPP market, held with the representatives from the city government and the private sector. The approach used in extracting data through interviews was triangulation.

Table 3. Summary of Interview Responses and Discussion Regarding the Presence of CSFs

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and its Indicators in the Mandaluyong PPP Market Critical Success Factors Strong Private Sector Partner Indicators used to observe the CSF Fiscal Capacity
(ability of the private sector to shoulder the financial costs)

Mandaluyong (Public Sector) The LGUs contribution was land only. The private sector was seen as the source of funds, and their financial capability was the most important requirement for choosing them. The characteristics that the LGU is looking for a partner is their ability to finance, market and brand the project. Their experience, assets and managerial ability were given importance by the government. To construct a public market at the ground floor with a commercial center on the upper levels. The centers design must be conducive to the area, accessible, clean and visually pleasant. However, the LGU has no budget even for the reconstruction of the public market. The local government sees minimal risk in entering a PPP since they already have a public market if ever the private partner backs out as long as the floor reserved for

Macro Funders and Development Corporation. (Private Sector) The private consortium took over all risks. A white knight investor entered to provide stable funding for the project.

Technical Capability
(technical expertise, knowledge and skill of the private sector in handling the project)

The private sector emphasized expertise in construction, property development and retail operations.

Risk Awareness and Commitment

Vision and Commitment

(objectives, opportunities and goals between two parties involved)

Having done so in the past, the consortium wanted to help the city government in times of crisis. Their engagement was more of a serviceoriented approach than profit focused, with the private consortium ready to do sacrifices for the completion of the project.

Risk Assessment and Distribution

(effective risk management through appropriate

The private sector, though hesitant, was willing to shoulder all risks in exchange for benefits and concessions from the city government. Risks were both financial and
43

allocation of resources, risks and rewards)

the market is constructed. Investors might be hesitant to continue the project due to big capital requirement. The goals of the project are to give quality service to the people, to improve the communitys quality life, to make the city of Mandaluyong a symbol of a strong economic performance and the establishment of a strong investment confidence. Ordinances, Investment Code, Incentive Code and other supplemental laws that are needed in the construction of the market including the created business transactions of the stakeholders. Revisions in the current framework are dependent on the changes in the stakeholders needs and situation. The bidding process have been done three times. Every step of the process was guided by the rules of the Commission on Audit and the National Government.

technical, for the project was done in a time where the country was in crisis.

Goals and Performance Measurement

(desired results from both parties and evaluation of their overall performance)

It was more of helping the city government with its developmental goals. Private sector were only given broad requirements for the construction of the project, local government as much as possible did not interfere with the operations of the mall. Contracts between the city government and the private sector, consent from the city council, tax exemptions and incentives. No major problems encountered with the city government at present. City is active in assisting the mall operator and tenants for their business needs. Three rounds of project biddings are gone through, only two bidders remain in the last round. Nine companies eventually formed part of the consortium to assist the winning bidders.

Good Governance

Legal Framework
(a set of identified rules and regulations, laws, procedures and documents that guide the operations of businesses, politics and society)

Transparent and Competitive Bidding

(inviting all duly prequalified infrastructure contractors to participate in a public bidding for the projects so approved)

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Institutional Framework
(national and local agencies, committees, offices and councils involved in implementing the PPP market in Mandaluyong)

No government agency was capable of lending the local government a hand in the execution of the project.

The private sector is considered as the mall operator. Along with the city government giving assistance via the provision of tax incentives and attracting prospective tenants to the mall.

Community Engagement

Political Support
(approval of the city council and continuity of government assistance)

There was no opposition to the project. All stakeholders were very supportive to the project.

There were significant opposition from vendors and several politicians. Mayor Abalos engaged and negotiated with them in order to win their support to the project. Discussions were held between the government, private sector and the affected stakeholders.

Open Communication
(meetings and discussion between the stakeholders regarding the project)

Group discussions are held to inform and provide an update to vendors and residents near the area about the project. There was a process of consultation among the people done in different cell groups.

Table 4, 5 and 6 summarizes the answers of the different stakeholders (individuals from the public and private sector, vendors and customers) regarding their opinion about the Critical Success Factors and the framework hypothesized by the researchers.

Table 4. Summary of the Questionnaire Responses of the Stakeholders about the CSFs

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Do you agree with the provided CSFs in response to the success of PPPs? CSF 1.Strong Private Sector Partner 2.Risk Awareness and Commitment 3.Good Governance 4.Political and Social Support Suggestions for other CSFs (if any) Public Yes Yes Yes Yes Transparency, Strong Political Will, Check and Balance/ Oversight among the implementors, Financial assistance not only from the private sector but also from the government, Incentives, Relaxation of government regulations on PPPs Private Yes Yes Yes Yes None Vendor Yes Yes Yes Yes None Customer Yes Yes Yes Yes None

All of the stakeholders agree that the provided CSFs contribute to the success of the PPP projects. Only the public sector suggested other CSFs which are transparency, and check and balance or oversight among the implementors to avoid corruption; strong political will to pursue
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the project; incentives to the private sector since a BOT project is too costly; financial assistance not only from the private sector but also from the government; and relax the government regulation on PPPs so that investors can easily engaged in a PPP project. The suggested CSFs can also be classified under good governance. Table 5. Stakeholders Ranking of Critical Success Factors RANKING (1 being the highest, 4 being the lowest) CSF 1.Strong private sector partner 2.Risk awareness and commitment 3.Good Governance 4.Political and Social support Public 1 Private 1 Vendor 2 Customer 2

2 3

2 3

1 4

3 4

The public and private sector have the same CSF rankings-- strong private sector partner, followed by good governance, political and social support, and risk awareness and commitment, respectively. Whereas, the vendor ranked good governance first and strong private sector partner second. However, the customer placed risk awareness and commitment first and strong private sector second in their list, having the third and fourth CSF ranked were the good governance and political and social support.

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Table 6. Stakeholders Rating of Critical Success Factors RATING (4 being the highest, 1 being the lowest) CSF 1. Strong private sector partner 2. Risk awareness and commitment 3. Good Governance 4. Political and Social support Public 4 Private 4 Vendor 4 Customer 3

3 4

4 4

4 4

2 1

Both strong private sector partner and political and social support are thrice rated as by the public and private sector, and vendor. However, the customer gave one (1) and three (3) on the political and social support and the strong private sector partner, respectively. The vendor and customer rated risk awareness and commitment four (4) but in the point of view of the public and private sector it is only one (1), the lowest. Good governance is rated as four (4) twice by the private sector and the vendor, three (3) by the public sector and two (2) by the customer.

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C. Analysis of data using Critical Success Factors (CSFs) 1. Risk Awareness and Commitment

Risk is defined as any factor, event or influence that threatens the successful completion of a project in terms of time, cost or quality. (European Commission, 2003, p.50). A key principle of pursuing a project is that risk should be allocated to the party best able to manage, control and have complete understanding of it to fully maximize it for public benefit (Forrer, 2010, p.479; TUAC, 2010, p.3). Commitment is referred as responsibility and motivation that is vital for negotiation and planning to accomplish specific goals and objectives agreed upon by the respective stakeholders (Jacobson and Choi, 2008, p.478).

Vision and commitment

Creating a shared vision is one of the first steps in successful partnerships. This vision includes the development of an agreement addressing mutual objectives, opportunities, and goals between the parties involved (Corrigan et al., 2005; Tang et al., 2006 (as cited in, Jacobson and Choi, 2008, p.648) A clear and specific agreement provides an increased confidence understanding and awareness of the participants with their common concerns and goals along with the right to fully participate on the whole process (Tang et al., 2006, Spackman, 2002 (as cited in Jacobson and Choi, 2008, p.651); Jamali, 2004, p.421).

Commitment of the public sector is considered as one of the most important element to make any PPP successful. This, together with the participation of all the stakeholders, will make a project more appealing to potential private sector partners (CDIA, 2010, p.29). Commitment
49

from both parties is essential to ensure the attainment of the ultimate goals of the PPP projects (Romancik, 1995) (as cited in Ismail, 2010, p.11).

With commitment and vision, viable solutions can almost always be found and challenges overcome (CDIA, 2010, p.16). Unifying the vision and commitment towards the project is very important. Lack of unity between vision and commitment can negatively affect the timely outcome of the project (Jacobson & Choi, 2008 p. 649).

What could be noticeable about the MFD and the Mandaluyong local government is how they framed their respective visions for the project. For the local government, their vision for the project was actually borne out of necessity: the need to have a new public market built as soon as possible. Indirect effects, though recognized, were not the main focus on their part.

MFD, on the other hand, has a more conscious realization of their role as a white knight that will help the local government in times of crisis. It could be noted that prior to the Marketplace project the members of the consortium were already active investors in the city and is involved in different civic projects, most notably a park and a fire station they constructed across Marketplace in the 1980s. It could be seen that the members of MFD is conscious that being successful in the project would not just be a good contribution to the local government and the community but to them and Mayor Abalos on a personal level, reflecting the Filipino practice of pakikisama.

A clear understanding of the vision and commitment between the parties involved shown to be an important factor into the success of PPP projects as reflected to the related literatures

50

and the experience of Mandaluyong City. With the local governments vision to provide the new public market to the community in the quickest time possible, along with the members of MFDs consciousness on the severity of the issue and their close relationship with the Mayor has developed a consensus to construct the project (which is the Marketplace) that will cater to each of the stakeholders interests, concerns, and goals.

The public sectors goal was to construct a public market at the ground floor of the commercial complex with a shopping mall on the upper levels. In contrast, the private sectors objective was to help the local government of Mandaluyong in the time that they were experiencing a financial crisis. On the other hand, vendors and customers just wanted to have a decent place wherein they can continue their livelihood and the exchange of goods and services.

Table 7. Summary of Stakeholders Goals, Concerns, and Interests Stakeholder Interests Concerns New public market has to be clean and modern No money to finance the market Goals

Local government of Mandaluyong

To build a public market as early as possible

To build a new public market at no cost to the city government To help the city government while at the same time opening up a new business through the shopping mall To have a new market where they can resume business

Private sector

To invest in the city and recover its investment

If the project would be sustainable in the first place

Consumers and vendors

To resume business as much as possible To have a decent public market where they can buy

Long delay in reconstruction of the market

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their necessities Risk Assessment and Distribution

An effective risk management is significant for a successful PPPs (Ameyaw, 2013, pp.162-163). Successful PPPs build on the experience of each partner to meet clearly defined needs and provide value for money to the general public through the appropriate allocation of resources, risks and rewards (Babatunde, 2012, p.216). Discovering the appropriate balance of risk allocation ensures a greater accountability for the services delivered and their conformance to public expectations (Forrer, 2010, p.480).

The government prefers transferring risks associated with gaining assets and service delivery to the private sector that are generally more efficient and experienced in managing these risks. At the same time, the government should be reasonable to take up risks that are beyond the control of private sector participants (Cheung, 2012, p.54).

In the MP project, the perceived risks by both parties at that time were: 1) the need for significant amount of capital at a time when borrowing costs are high, 2) physical location of the site and 3) legal and political encumberances. As the BOT Law was new at that time, the partners are clueless on the things they have to do and what mistakes they might commit later on.

Since the local government was clear with its situation that it cannot and would not shoulder the construction of the public market, it has insisted to transfer all financial costs to MFD in exchange of local incentives and the assumption of political and regulatory risks. Atty.

52

Santos reiterated to the possible private sectors that the local government wont give any amount of money and their proposal was BOT, an agreement that the private sector shoulders all the costs.

Table 8. Goals and Responsibilities of the Local Government of Mandaluyong (LGM) and Macro Funders and Development and Cooperation (MFD) Local Government of Mandaluyong Acquisition/installation of tables, equipments, and individual electric and water the public market and operational Macro Funders and Development Corporation

the necessary Develop, finance and construct the proposed stall facilities, commercial complex at a total estimated cost utilities to make P377,468,932.00 slaughterhouse

Operate, maintain and supervise the public Supply/provide/install the following facilities: market and slaughterhouse. twin escalators twin elevators air-conditioning facilities generator sets completion of the arcade and entrances leading to vital places like parking, toilet, driveways and other common areas drainage and sewerage facilities electrical and technical connections and facilities fire control facilities cinema, arcade, bowling alley, multipurpose hall 2-level parking area Contribution of land where the MP project Complete construction of the slaughterhouse will be built and public market within nine months. and the rest of the Complex within 24 months. Exempting MFD from real estate taxes Turn over the ownership of the public market throughout the lease period and other local and commercial complex to MFD upon its taxes and fees (payment of Mayors Permit, completion. building permit and other fees for 2 years) Ensuring that the agreements signed between Manage the commercial complex component, LGM and MFD will gain legal authority both including the assignment of stalls to sub53

at the national and local level, including the leases, maintain, undertake minor and major defense of these agreements should it face repairs at its own expense. legal scrutiny Assistance in scouting for tenants and Ensure the existence of a fire and other forces businesses for the mall component, as well as insurance from a reputable insurance for their legal and regulatory requirements company. Grant franchise to MFD to operate and Determine rates of rentals that may be maintain the facility including collection of collected from subleases, manner of payment tolls, fees, rentals, and charges. of these rentals, the period, and the fees and charges that may be collected. Review the detailed engineering plans, Sole responsibility with any and all contracts specifications, bill of materials, and entered with third parties for labor and PERT/CPM Network prepared by MFD. materials used in the project, provisions for generator and other facilities. Exercise technical supervision of the project: Prepare the detailed engineering plans, construction, operation, and maintenance of specifications, bill of materials, and the project in accordance with plans, PERT/CPM Network to be presented to LGM. specifications, scheme, and the rentals and fees collected. Secure permits and licenses from other Liability with unjustified delays in the government agencies if necessary to completion of the project: (1) payment of implement the project. liquidated damages at the rate of one tenth of one percent of the value of the uncompleted portion of the project, (2) confiscation of performance bond, (3) nullification of the franchise to operate, manage and maintain the project. Deposit with a commercial bank (to be approved by LGM) an amount of fifty million pesos to assure adequate financing.
Note: These also serves as the basis for goals and performance measurement on page 63

It could be seen in the contracts signed by the LGM and MFD that the roles and obligations of the partners were clearly defined. The private sector has the utmost responsibility to deliver the project within a set timeframe, while the local government ensures that the project will have legal standing and that technical assistance will be provided through-out the project.
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There was constant negotiation and discussion between the LGM and MFD on the aspects of the formal contract between them, realizing that several aspects of the partnership has not been encompassed in the bid documents and guidelines. One major point of discussion was about a clause transferring the whole Marketplace building to the local government, in which a director of MFD expressed that they will have nothing for them. The LGM responded that transferring ownership to MFD would mean that they would have to shoulder around Php 1 million worth of real estate taxes every month, as compared to none if ownership of the building resides with the local government.

The local government and MFD signed the contract of lease on August 29, 1991. However, several aspects of their agreement, such as local tax incentives, were clarified and legalized by subsequent agreements later on, the most recent would be a resolution formally granting MFD a real estate tax exemption in 2006.

In the case of funding for the project, it could be concluded that the LGM had wisdom in passing all financial risks to MFD, else it had to fill in the Php 200 million increase in cost of the project.The MP project has been highly successful in appropriately distributing risks between the parties and ensuring their compliance to the responsibilities they have assumed. As the contract is clearly written and thoroughly discussed, it has ensured that loopholes or points of conflict between the LGM and MFD will be minimized as much as possible. Furthermore, the arrangement has been adequate in distributing risks according to the strengths of both parties. It could also be considered that their agreements has adequate checks and balances, with clauses in the contract stating possible repercussions if the parties does not comply, especially Macro
55

Funders as private sector partner.

Goals and Performance Measurement

Effective performance management is concerned mainly with ensuring the quantity and quality of service delivery, value for money, resource utilization, and performance improvement and the assessment of the performance of the parties involved with regards to what is agreed in the contract (ESCAP, 2011, pp.72-73; European Commission, 2003, p.91).

No matter the successful implementation of PPPs, the needs still arises for the continuous evaluation of the performance of the project success factors such as cost, time, quality and clients satisfaction (Babatunde et al., 2012, p.214).

It is important to recognize that the different participants in PPP projects have distinct goals and requirements that must be met in order for them to be able to participate in an effective partnership. While certain goals are complementary; others are not, and as the number of players increases, so too will the complexity of establishing a fair playing ground for the various participants (European Commission, 2003, p.31). Successful concessions rely on a series of checks and balances. A well-crafted agreement uses checks and balances to create codependence and transparency, while enabling all the parties involved to achieve their goals (p.34).

When it comes to the creation of goals and Key Performance Indicators (KPIs), it is interesting to note that the Marketplace consortium only provided general construction

56

guidelines in its contract. According to Atty. Santos, the local governments goal back then was just to have a public market of its own and that whenever the mall would be constructed or not would not impact them adversely as long as the market, which is in the first floor of the building, was already built. More so, having to meddle on the operations of the mall itself would be disrespectful to the private sectors expertise and it will make no sense since the city would not be receiving a share in the malls net income.

But then, on the part of the private sector, it had to create its own indicators for itself since they have to make a profit eventually. Since commercial complexes are a market-sensitive business, MFD has to keep up with competition by ensuring the buildings safety and cleanliness, more so ensuring that there will be a good mix of tenants and that rental rates would be competitive. MFD, not having a formal background on actual mall operations, has resorted to hiring consultants to assist them in the development of the business for the first few years.

As the city government framed the success of the project with the presence of a new public market and commercial complex, the goals and performance measurement provided back then centered about broad technical specifications, to which MFD has to comply with. The presence of a construction time frame, requirement of project management tools such as PERTCPM, and the requirement of a Php 50,000,000 performance bond ensures that the private sector partner will comply with its commitment. In addition, the nature of the project gives enough motivation for MFD to comply else they will lose their performance bond and their chance to recover their investment, more so lose their face to the local government and to Mayor Abalos. These would result to the lack of confidence of the public sector to partner again with MFD on other projects of the local government.
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The goals and performance measurement is important for it can be considered as the heart of the project itself, translating the projects vision into specific points of action that has to be achieved. In the case of the MP project, the goals were broadly defined in a way that it has avoided putting too much strain to the private sector partner and gives leeway to pursue the project as it sees fit. While there is emphasis on specific deliverables, the projects performance was defined more by what could be its overall impact to stakeholders.

2. Strong Private Sector Partner

The government in contracting out the PPP projects should ensure that a private sector is sufficiently competent, with common goals with the public sector and financially capable in operating and managing the project, as these factors contributes to the successful implementation of the project (Cheung, 2012, p.4; Hardcastle, 2005, p.5). The need for a strong private sector partner in financing projects can be traced with the need for government to utilize its scarce resources in other areas. With private sectors skills and management expertise, and the collaboration the public sector, resources and innovation to public needs are effectively and efficiently fulfilled, limit public risks, and provision of quality services (Babatunde et al., 2012, p.214-215; CDIA, 2010, p.1; Leiringer, 2003) (as cited in Babatunde et al., 2012, p.215).

Fiscal Capacity

PPP projects involve huge financial cost, therefore, it is considered to be best fit for the private sector to bring in their expertise and financial capability in ensuring that these projects

58

are effectively executed (Babatunde et al., 2012, p.220). Private sectors are said to be more concerned on the benefits and profits that can be derived from partnership (p.222). PPPs have developed in part due to financial shortages in the public sector along with public inefficiencies as this issues are seen to be covered by the additional resources and operating efficiencies existing in the private sector (European Commission, 2003, p.14; Terry, 1996; Alfen et al., 2009) (as cited in Ismail, 2010, p.1). By this reduction in the financial burden of the government in the provision of services, the realization of the project and the citizens will not be deprived of vital services (Krtalic, 2010, p.5; Kopp, 1997; Trujillo et al., 2002) (as cited in Sharma, 2011, p.154).

In the conceptualization of the project, it could be noted that the local government has given more emphasis on financial stability than technical expertise, since the local government has no funds to shoulder construction costs once the project fails. While there were many companies who were interested with the project back then, almost all backed out when they learned about the BOT scheme and the need for them to shoulder all costs at a time when interest rates were high and the economy was unstable. The local government gave emphasis that the winning bidder must be financially solvent and will be willing to shoulder all costs, including cost overruns.

In the end, MFD won the contract by offering to invest up to Php 400 million, unknowing that unexpected costs would come up later on, especially during construction. This has inflated the total project cost to up to Php 600 million, in which the local government would have shouldered the balance if it has failed on passing all financial risks to MFD. But as recognition and incentive of MFDs investment, the local government has granted them certain tax and nontax incentives, such as a longer lease period (40 years), exemption from real estate taxes
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throughout the lease, exemption from local taxes for 2 years, and assistance in scouting for tenants to the Marketplace. There were no specific targets on income of the mall since the local government doesnt see it as its concern even if MFD would lose its investment.

When it comes to the MFD consortium, the presence of a white knight in the name of Mr. Ernesto Yu has contributed much in keeping the company financially stable and committed to its contract. Mr. Yu, owner of a major personal care company, provided capital infusion for the project in lieu of taking a loan from commercial banks. At certain points when the other members of the consortium backed out with their shares, Mr. Yu was willing to absorb them, making him majority owner of MFD eventually compared to his initial involvement in the past.

The financial shortcoming from the public sector (specifically the local government in the case study) in constructing infrastructure for the public welfare is really prevalent in every PPP. It is common knowledge that the public sector will resort with partnering with the private sector just to be able to successfully provide the infrastructure to the community and allocate its scarce resources in other social services. It should not stop with just finding a technically competent private partner, thus the public sector should also ensure that the the project will also provide the agreed upon conditions/benefits and the fulfillment of the provision of quality services to the community.

Technical Capability

Technical soundness is classified as a key element that local governments should consider for a successful project. This includes reliable engineering and technical assessments

60

just to name a few (CDIA, 2010, p.17). Projects are formulated and structured in terms of their technical design and financing. This is critical, as it will serve as the stepping stone that will guide the entire PPP process with: (1) visualization, (2) selecting technical alternatives, and the (3) establishment of risks (p.22) Technical knowledge is essential for any potential private sector partner to know and understand as this help establish the projects scope and final goals. This will aid in the evaluations of in varying interests of the parties involved in the project. Technical assessment of the private sector is essential to thoroughly understand their intentions, capability to undertake the project with regards to their possessed skills (p.31). Technical expertise (ESCAP, 2011, p.27) features (1) definition of technical and output specifications, (2) formulation of security and safety standards, (3) technical evaluation of proposals and bids, (4) assessment of capacity to deliver, operate, and manage the project, (4) establishment of quality control during construction, (5) formulation of appropriate performance measures and development of monitoring systems.

The local government had confidence that potential bidders for the MP project will have technical expertise as they felt that the local government lacks knowledge and expertise in pursuing such a project and imposing detailed specifications might turn off potential investors. Only general provisions were included in the projects contract, with most other aspects such as the buildings design, number of stalls in the mall component and leasing and assignment to tenants, among others, were left to MFDs discretion.

On the other hand, the design of the public market below was the responsibility of the local government. They were the ones assigned to design and determine the number of stalls to be given, the zoning of products and services of stalls, and other aspects such as collection of
61

rentals or product safety inspection. MFD, as part of its BOT contract, constructed the stalls and the provision for electricity, water, communication and drainage lines, as well as a slaughterhouse.

The members of the MFD consortium were composed of businesses and individuals who were involved in architecture, construction, retail and financial sectors. The pooling of assets and expertise of the MFD members has helped in such a way that it has generated savings on the costs of materials as well as avoiding high capital outlay and financing costs.

Aside from financial capacity of the private sector, it is also important to note that the technical aspect of these kind of partnerships is key to the overall structure, design, and monitoring of the project. Many investors may be disheartened if the technical capacity level is set very high. However, the public sector has all the right to demand these qualifications because of their mandate of providing quality services to the public. On the Mandaluyongs case, the technical burden is not solely transferred to the private and instead shared by the two parties. Certain concerns arose with this arrangement, as there have been shortcoming in having a performance standard and measurement criterias that is considered vital for technical concerns.

3. Good governance

Good governance refers to the management of government in a manner that is essentially free of abuse and corruption, participatory in nature with all the stakeholders, transparent with the decisions made and implemented, accountable with every actions, efficient with the resources used with due regard for the rule of law, and exhibits public interest through all the action of its
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entities (OECD, 2006, on good governance; International Federation of Accountants, 2013, p.11; UNECEU, 2008, p.14). When it comes to good governance, the public sector are obliged to perform for the betterment of its people. Good governance encourages better decision making and efficient use of resources (p.11).

In the case of PPP, good governance, even though not specifically stated may mean the transparency and competitiveness of the procurement process done by the government (Hardcastle, 2006, p.4), formulation of an acceptable and favourable legal frameworks allowing the full development of a program or project and giving guarantee to investors (p.5), and creation of institutions that would help the in implementation of the project/ program (Qiao, 2001, p. 56).

Legal Framework

Favourable legislation on regulation was seen by the National Treasury PPP Unit of South Africa (2007, p.20) as a vital contributor for a successful PPP project implementation of a country, especially those that provides an independent, fair and efficient legal framework (as cited in Babatunde et al., 2012, p. 215).

Studies of Jones et al. (1996), Tiong (1996), and Jefferies et al. (2002, 359-360) have identified good governance through favourable legal framework one of their critical success factors in assessing infrastructure and/or PPP projects (as cited in Babatunde et al., 2012, p. 215). A favourable legal framework allows a PPP project to be developed without undue legal restriction on the private sector involvement (Hardcastle et al., 2005, p.5) and the existence of an established and stabilized legal framework may influence positively the pursuance of PPPs in a
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country that is just starting out (Cheung et al., 2012, p.55).

The existence of a well planned and formulated legal contracts and agreement between the private and public sector with appropriate governing rules and regulations would be very helpful in the application of the PPP scheme (Cheung et al., 2012, p.53), especially for developing countries like the Philippines.

At the national level, the local government of Mandaluyong is empowered by the Local Government Code of 1991 to pursue its own infrastructure projects, especially public markets (RA 7160, Sec. 17, b. 1. viii). The local government is also empowered to pursue public bidding for its own operational requirements (Sec. 37). Furthermore, RA 7160 allows local governments to employ a variety of financing sources, including Build-Operate-Transfer projects with the private sector (Sec. 302). In addition, at the time of the MP project, Republic Act 6957 was passed providing a framework for BOT projects in all levels of government, including local governments.

Specific laws must be passed on PPP to enable the smooth flow of operation of these projects in the country (Hardcastle et al., 2005, p.5), which in the case of Mandaluyong was the creation of local ordinances and resolutions. During the time that the shopping mall and public market was being built, no IRR have been released yet for the BOT law leaving the government no choice but to provide themselves the legal capability to work using the BOT scheme.

At the local level, the MP project had to pass through the SanggunianPambayanso as to gain legal and regulatory approval. This has resulted to Resolution No. 181, S-1991 confirming

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authority to the contracts signed between the local government and MFD. However, this has not been made smoothly, as the contracts had to face scrutiny by the councilors and various stakeholders. There were rumors of 100 market stalls allegedly given to VIPs so as for the agreement to gain approval by the Local Council, but the researchers have decided not to delve into this due to the difficulty of confirming this allegation, more so deciding that this does not fall under the scope of the study.

Transparent and competitive bidding

This refers to the process of inviting all duly prequalified infrastructure contractors to participate in a public bidding for a project. In the case of a build-operate-and-transfer arrangement, the contract shall be awarded to the lowest complying bidder based on the present value of its proposed tolls, fees, rentals, and charges over a fixed term or the facility to be constructed, operated, and maintained according to the prescribed minimum design and performance standards, plans, and specifications (Sec. 5 of Build-Operate-Transfer Law, RA 6957).

Good governance in a public private partnership is also expressed through a transparent and competitive bidding process (Babatunde., 2012, p.215). Based on a study by Hardcastle et al. (2005, p.4), an effective procurement process must demonstrate transparency and be competitive throughout the whole procurement process and this would enhance the projects value for money.

In a survey done with the BOT project companies and government authorities involved in

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such projects in China, competitive bidding system was ranked first in the tendering phase (Qiao et al. 2001, p.56) while Babatunde et al. (2012, p.222) found in their study that the public sector gives more importance in transparency during the bidding process compared to the private sector participants (p.222). The MP project was offered to potential bidders and investors through the usual bidding procedures as provided by the Local Government Code. The public bidding was then announced through publication in major newspapers satisfying Section 5 of RA 6957 also known as BuildOperate-Transfer Law.

A pre-qualification conference was held in May 1991 in which thirteen interested companies participated (Celestino, 2002, p.5). A presentation of the project was made, as well as questions and clarifications regarding the project structure and financial costs. Upon learning that the local government would not shoulder any cost of the project and that they will be compelled to finance the project as required by the BOT scheme, only five companies remained for the second pre-qualification conference.

The actual bidding was held using a two-envelope process in which both technical and financial bids were evaluated. Only two companies participated in this round, in which Market Realty Development and Credit Funders Corporation won with a bid of Php 377 million. Later on, the winning bidder assigned its rights to the project to MFD in order to accommodate nine other entities who were investing in the project.

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Institutional Framework

Every government should create an agency that would handle the communication and coordination between the public sector and the private partner to avoid any possible misunderstandings and delays in the process. PPPs such as BOT projects requires the full cooperation of the public and private sector involved in the partnership (Qiao, 2001, p.55). Even though selecting suitable project agencies was considered last for some cases (p.56), having an institution or governing body that would guide the private partners and other government entities in entering PPP in funding programs and projects is said to be an essential factor to be considered (Babatunde, 2012, p.222).

The institutional framework is created to make sure that the PPP project is running with no hidden agendas by assuring its transparency and competitiveness with providing legal frameworks to ensure liability of the institution to the delivery of public services (Hardcastle, 2006, p.4).

At the time of the MP project, the BOT Law was recently passed and the Implementing Rules and Regulations (IRR) has yet to be released. The local government of Mandaluyong resorted in consulting several government entities such as the Commission on Audit (COA), Department of Public Works and Highways (DPWH) and the National Economic Development Authority (NEDA) on what measures they can employ for the project, to which the agencies gave no clear responses. This has forced the local government to pursue the project on its own, creating its own institutional frameworks parallel to existing laws as much as possible. The project, with its extraordinary nature, was handled directly by the Mayors Office instead of
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another city government department.

The lack of institutional framework to backed up the initiative of the Local Government of Mandaluyong at that time for a PPP Public Market showed the need for the urgency with the delay and inadequacies with certain laws, provisions, and rules that was existing in the 90s. It is important to point out that despite this situation, the local government had devised a way by using existing laws like the Local Government Code of 1991 to provide the public with the much needed service they had been requesting to the local government of Mandaluyong. Despite this, it should be noted by the future local government that will venture to PPP how important the existence of an updated, transparent, and competitive institutional structure will benefit them on the overall success of their respective projects.

4. Community Engagement

Corrigan et al. (2005) stated on their study that consensus-building and the initiative to achieve support from all stakeholders is important to make people aware and knowledgeable with the issues to motivate them to participate for the communitys development. As the realization of the publics role in this process reduces the probability of oppositions to the project and the partnership. The better the communitys comprehension on issues and participation in every step of the process, the better the generation of support and solutions that they contribute to help in the communitys development (as cited in Jacobson & Choi, 2008, p.651).

The Marketplace project was not immune to criticism and protest from various stakeholders and people with vested interests. The main points of opposition back then was: 1)
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the skepticism of the existing public market vendors about the project and 2) unexpected issues during project construction and delivery of stalls to tenants. Before and during the conceptualization of the MP project, the vendors were skeptical of the project and were insistent that it will be no use to them and that makeshift tents would be enough for them to resume business. It came to a point that the vendors resorted to a candlelight vigil during the Undas to protest against the project. It was not helpful as well that a certain councilor was maneuvering against the project and was blocking its approval in the city council.

What is noticeable about the MP project is not just the integration of public consultation and dialogue but the openness to give incentives so as to win the support of the vendors. The vendors won concessions such as free rental fees and utilities for a certain period of time. In the end, the stakeholders switched to support towards the project as the Marketplace is nearing completion.

Political and Social Support

Political support and stability is needed to be secured first before private sector will commit in the development of projects (European Commission, 2003, p.31). With the risks involved in financing the project, partnerships require stronger political and government support to establish a strong development of trust between the private and public sectors. Political support should be realistic and practical about what PPP can achieve and how it will be implemented (p.35; p.48). Social acceptability should be considered one of the major concerns before pursuing a project (p.78) A compromise has to be reached first from the community so that maximization of the social benefit is prioritized while also balancing the level of profit of the
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private sector (p.59).

Like the Philippines, other countries that are new to delivering PPP projects have been successful in project implementation if there is an established stable political and social environment. In contrast, this kind of environment is heavily reliant with also the stability and capability of the public sector (Wong, 2007) (as cited in Cheung et al., 2012, p.47). Social support is considered by Hardcastle et al. (2005, p.4) important as public opinion against PPP projects can slow or prevent its further development, or might also help the process to run smoothly depending on the situation.

Open Communication and Trust

Trust and open communication is important to problem identification and conflict resolution (Chan et al., 2004) (as cited in Jacobson, 2008, p.650) as these factors contribute to attainment of mutual goals, strengthening relationship, resolve issues and challenges (Jamali, 2004, p.420)

It could be said that Macrofunders (private sector) and the local government had a good relationship with one another. Since the members of the MFD consortium had already built relationships with the local government in the past, they had not encountered an major problems since they already knew one another on a personal level.

It can also be noted that Atty. Ernesto M. Santos, the project head of The Marketplace is also currently a member of the board of directors of Macro Funders. As he has extensive

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knowledge of the project and with his position in the government before, he has helped the MFD to relay concerns to the Mandaluyong local government. When it comes to the members of the consortium, there is no significant problem to be encountered since Mr. Yu already owns 95% economic interest in the MP project, and in turn 95% voting share in the board of directors.

Open communication of both the public and the private sectors had been really exercised well because of regular conduct of meetings with sector groups in the community like the jeepney, tricycle drivers, and especially the market vendors. As the success of the project will not shed some light if the public do not agree with its creation and implementation. With the technicalities of the partnership, open communication not only with the private sector but also to the community is needed to clarify misunderstandings, make the community participate with decision-making, and gather criticisms and suggestion for the betterment of the overall management and implementation of the project.

Table 9. Summary of Indicators Used Indicators Vision and commitment Source (Corrigan et al., 2005) (Tang et al., 2006) (Jacobson and Choi, 2008) (Tang et al., 2006) (Spackman, 2002) (Jamali, 2004) (CDIA, 2010) (Romancik, 1995) (Ismail, 2010). (Ameyaw, 2013) (Babatunde, 2012) (Forrer, 2010) (Cheung, 2012)

Risk assessment and contribution

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Goals and performance measurement

(ESCAP, 2011) (European Commission, 2003) (Babatunde et al., 2012) (Babatunde et al., 2012) (Terry, 1996) (Alfen et al., 2009) (Krtalic and Kelabuda, 2010) (Kopp, 1997) (Trujillo et al., 2002) (CDIA, 2010) (ESCAP, 2011) Local Government Code of 1991 (National Treasury PPP Unit of South Africa, 2007) (Babatunde et al., 2012) (Jones et al., 1996) (Tiong, 1997) (Jefferies et al., 2002) Local Government Code of 1991 (Celestino, 2002) Build-Operate-Transfer Law (RA 6957) (Babatunde et al., 2012) (Hardcastle et al. 2005) (Qiao et al., 2001) (Babatunde et al., 2012) (Hardcastle et al., 2005) (Qiao et al., 2001) (Corrigan et al., 2005) (Jacobson and Choi, 2008) (Babatunde et al., 2012) (Cheung et al., 2012) HK & Mainland China (Hardcastle et al., 2005) (Wong, 2007) (Chan et al., 2001) (Jacobson et al., 2008) (Jamali, 2004)

Fiscal Capacity

Technical capability Legal framework

Transparent and competitive bidding

Institutional framework

Political support

Open communication and trust

D. Analysis for Stakeholders CSFs Rankings and Ratings

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Varying responses were taken down from the interviewees on how would they rank which CSF is the most important and rate the Mandaluyong Markets use and/or achievements of these CSFs.

A strong private sector partner was ranked as the most essential among the four CSF in implementing a PPP project both by the public and private sector. They both also followed this by good governance as second, then political support and lastly, risks awareness and commitment.

The public sector respondent pointed that it was the private partner that would save the mall when problems arises and the MPs achievement in choosing a good partner is a one. They both proudly stated that until today, the MFD are still doing a great job in operating the shopping center.

The government respondent also stated that good governance plays a vital role in the achievement of the MP that we have today and it was attributed mainly of the incentive and support they are giving to the private partner. This was also the same reason given by the MFD elaborating the incentives that the local government has awarded them like occupancy and building permit that is free for their first two years of business in the city. Now that the public market and shopping center are already built, what is left for the LGU to do is to provide adjustments in the incentives, limiting their participation in the management of MP. Thus, the private sector ranked this success factor second only. MFD never had any trouble in asking the help of the local government anytime. The LGU has even provided a visible traffic enforcer in front of the mall to manage the heavy traffic daily, and thus rated this CSF a 1.
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Third most important CSF for the LGU is political and social support because of the need of understanding between the councillors, mayor, departments head, and government employees. It was definitely successfully done by the MP project due to the continuous support and pagtangkilik of the people in the market. Same reasons were cited by the private sector and gave this a rating of 1 also.

Every project has risks and it was something inevitable according to the public sector respondent. Since the project is now complete and there are no more risks, this justifies how he ranked his last CSF. The private partner doesnt see this also as a major factor to be considered currently. They have not done much to distribute the risks since these problems were encountered but they are able to cope up eventually. They have rated this with a 4 also.

The vendor in the other hand have ranked good governance first in what CSF must be highly be considered in assessing the success of the market which are then followed by strong private sector, risks awareness and political and social support. She have rated all the CSF a score of 1 for she believed that all have been met by the project. She was happy to what the governments have done to their market, emphasizing the drainage system and cemented stalls that they have now.

Risks awareness and commitment was the first CSF for the customer, ranking the strong private sector partner second, good governance third and political and social support last. Everything must be considered when entering a contract as huge and risky as this for her and at the same making sure that both agreed to finish the arrangement in the PPP without sacrificing

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the welfare of the people and wasting the companys financial resources also. All CSFs were rated by a score of 2 except the political and social support. She sees that the company that the Mandaluyong government tied to was financially capable enough to fund such construction of a shopping center and until now operate it continuously probably because they are getting their desired benefits or long term return of investment in the project. To the only CSF she rated lower than the others, she thinks that the implementation of the PPP project in the public market would still be pushed through even without the consultation from them. And even so they have conducted some consultation with the public market vendors and residents of the city, those plans would most likely be vague for the mind set of those people and rather go with the flow.

E.

Researchers Assessment on the Degree of Helpfulness of the Critical Success Factors to the Marketplace

Table 10. Comparison of Theory and Practice as Observed in the Mandaluyong Marketplace Critical Success Factors (CSFs) Operational Definitions Theories as found in literature Level of presenc e in MP project Comments

Risk awareness and commitment

Vision and commitment

Mutual objectives, opportunities and goals between the parties involved Clear and specific arrangement

High

Shared objective of building the public market as soon as possible Government clear of its stance not to give financial investment to project

High

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Commitment of public sector Commitment of private sector Risk assessment and distribution Appropriate allocation of risks and rewards Private sector takes up risk connected to management of assets Government takes up risks outside of control of private sector Goals and performance measurement Effective performance measurement Continous evaluation of performance Checks and balances present Strong Private Sector Parner Fiscal capacity Huge financial cost imperative for PPP to take place PSP should be

High

Not committing would mean to face sanction from citizens Even if they have to shoulder cost overruns and delays As observed in the contract

High

High

Medium

MFD operates the mall, LGM operates public market

High

Such as legal and technical concerns

Medium

Performance written in broad guidelines, not much detailed specifications MFD and LGM evaluate their own areas of operation, not crossing each others authority As seen in contract Not enough government budget, high lending rates Presence of white
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Medium

Medium High

High

financially strong PSPs concern with benefits and profits PPP should reduce financial burden of government Technical capability Reliable engineering and technical arrangements PSP has capacity to deliver project according to specifications Good governance Legal Framework Favorable legal framework without undue restriction to private sector Well planned contracts with appropriate rules and regulations Transparent and competitive building Institutional framework Bidding must be transparent and competitive Creation of agency that handles the PPP High

knight that provided necessary funding As seen in negotiations for the contract LGM doesnt paid a single centavo, even earns up to Php 20 million in revenue While the project was thoroughly designed, some events were unexpected (such as soil condition) MFD consortium consists of businesses from construction, finance and retail industries Present in both national and legal governments

High

Medium

High

High

High

As seen in contracts and resolutions

High

Followed guidelines of Local Government Code of 1991 Project directly held by the Mayors office, no existing institutional
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Medium

project

support from national government at the time of the project High Mayor Abalos has political will to push the project Stakeholders skeptical, if not against project Local government compromised to gain support of stakeholders Consortium members operate not just on a professional but personal level, communication open between LGM and MFD

Community engagement

Political and social support

Political support and stablility Social acceptability Openness to criticism, dialogue and compromise

Medium Medium

Open communicatio n and trust

Trust and communication in problem identification and conflict resolution

High

Table 11. Researchers Ranking of Critical Success Factors for the Marketplace Rank 1. Strong Private Sector Partner Basis The most important factor that contributed to the success of the Mandaluyong Public Market is its Private Sector Partner. Without them, the project could not have materialized. It is essential that the private partner has the technical and financial capability in order for the project to be successful. The private partner must not only be profit-oriented but is also willing to help develop the community. The government is the one who initiated the project and is very aggressive in pursuing it. It has genuine intentions for the welfare of the people of Mandaluyong. The government was willing to compromise and give benefits to the private sector in order for the project to push through.

2. Good Governance

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3. Risk Awareness and Commitment

4. Community Engagement

Risk is an inevitable burden for any PPP project. Both parties were aware of the risk involved in the project and are fully committed in addressing them. Roles, responsibilities and obligations of the parties are properly established in order to identify the accountable party. This is also important in creating a good relationship between the parties. Risk is an inevitable burden for any PPP project. Both parties were aware of the risk involved in the project and are fully committed in addressing them. Roles, responsibilities and obligations of the parties are properly established in order to identify the accountable party. This is also important in creating a good relationship between the parties.

The researchers rank strong private sector partner as first, followed by good governance, risk awareness and commitment, and community engagement which is based on their perception of what is the most critical success factor in the case of Marketplace.

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Chapter V Conclusion and Recommendations

This part of the study presents the conclusion agreed upon by the researchers upon analysis of the data gathered. To facilitate presentation, the research questions presented on Chapter I will be answered:

Main research question

Are the Critical Success Factors in Public-Private Partnerships identified in past studies present and helpful to the success of the Mandaluyong Marketplace? The results of the study concludes that the CSFs were present and helpful to the success of the Mandaluyong Marketplace.

Subquestions

1.) Are the perceived CSFs in past studies applicable in the MP case? The perceived CSFs (as presented in Part I-Conceptual Framework) can be considered applicable in the MP case even if there was no strong consciousness of these concepts in the course of the project. The key informant interviews, documents and data presented in Part IV showed that many aspects of CSFs are present and was consciously established in order to make the project successful.

2.) What are other applicable CSFs that can be considered in Mandaluyong experience?
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Several CSFs (or operationalization of these factors) mentioned in past studies were not considered during the formulation of the conceptual framework and may be reconsidered for examination in connection to the MP project or other related studies, such as macro-economic conditions, or the operationalization of transparency or fiscal incentives, among others.

3.) To what extent are these CSFs integrated during the course of the project? While there is no strong consciousness of the concept of CSFs throughout the MP project, many aspects of Critical Success Factors were present and integrated in the course of project execution, such as contracts, assessment of risk and responsibilities, financial and technical feasibility, citizen participation and legal frameworks.

4.) What could be considered as enabling factors and hindrances in achieving the CSFs in the Mandaluyong PPP? Are these factors rooted in economic, political, social or other contexts? The following table presents these enabling factors and hindrances. Detailed explanations and insight can be referred to in Part IV-C and in Annex (Interviews and Key Informant Questionnaire) Table 12. Enabling Factors and Hindrances in Achieving the CSFs Contexts Economic Enabling Factors Presence of a financially strong consortium and the will to accept financial risk Willingness of local government to provide both monetary and non-monetary assistance Hindrances

Macro-economic conditions (high interest rates, recession) Lack of financing options (loans or sources of capital)

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Technical

Acceptance of expertise of both parties, presence of enough leeway for the private sector to fulfill its commitments Private sector consortium (MFD) composed of parties involved in sectors important in commercial complex operation

Lack of enough expertise in design or operation of a shopping mall

Political

Government has full support and political will to pursue the project Consciousness for the need for innovation instead of pursuing traditional strategies or relying to the national government to fill up needs Opposition from people with vested interests as well as affected stakeholders

Social / Cultural

Good relationship among members of the MP project Open communication and trust between the local government and MFD Positive operationalization of the concepts of hiyaand pakikisamain ensuring that MFD will comply with its commitments

Presence of pwede na iyan mentality among those in opposition as they wanted to have the market built as soon as possible General lack of trust of people in government decisions

Legal / Institutional

Presence of legal frameworks both at the national and local level Initiative of local government to build its own institutional frameworks in lieu of those absent at the time of the project

Lack of institutions that could provide support at the time of the project

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Recommendations

The following are the research groups recommendations based on the results of this study: For researchers and future studies As the study is not expected to generate a conclusion or generalization that could apply to all scenarios of PPP projects in the Philippines or in other countries, there is room for future researchers to pursue studies that can enrich the topic of Critical Success Factors (CSFs). Some possible themes are: 1. Application of CSFs in other PPP public market projects in the Philippines. 2. Application of CSFs in other forms of infrastructure using the PPP scheme, both at the national and local level. 3. Exploration and comparison of CSFs in different forms of PPP such as BOT, BOOT, BLT, concessions, Joint Venture (JV), etc. 4. Exploration and comparison of CSFs in PPP projects and government-led public works (PW) projects. 5. Conduct of a survey of local practitioners and experts about their perceived CSFs that can be applied in PPP projects in the Philippines. 6. Comparison of CSFs and practices in PPP projects in the Philippines with other developing countries and/or developed countries.

For the practice of public administration The study may contribute to actual practice through the following: 1. Policy proposals for amending the current Build-Operate-Transfer Law (RA 6957).
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2. Performance measures in assessing the success and impact of current and future PublicPrivate Partnership (PPP) projects. 3. Enhancing current institutional frameworks in the development and implementation of PPP projects, especially by local governments. 4. Literature, training programs or guides that can be used by interested parties in developing and implementing PPP project proposals. 5. Measures or standards that can be used in granting recognition for exemplary PPP projects.

Implications to the Study and Practice of Public Administration This study will be a contribution to the body of knowledge regarding Public-Private Partnership and the concept of Critical Success Factors (CSFs) in the Philippines, to which there is a scarcity of available studies regarding the topic. The study will be valuable for the fields of Local & Regional Governance, Public Fiscal Administration and Public Sector Organization & Management. In the practice of Public Administration, the study can contribute to knowledge and understanding of citizens and stakeholders about PPP projects. This can spark interest in the concept of PPP and how it can contribute to public service delivery. For local governments and private companies, the study can give ideas on the factors that contributed to the MP projects success and how it can be replicated or enhanced in future similar PPP projects.

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Contribution to sustainability of the the Marketplace in Mandaluyong Having identified the Marketplaces enabling factors and hindrances in achieving the Critical Success Factors, the public and private sector can enhance, develop or adjust those indicators under each CSFs in order to sustain and reach the success of the project.

The results of the study can be used to enhance existing measures, agreements or institutional set-ups for the mutual benefit of both parties. It can also be used should either of the partners pursue a similar project in the future.

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Endnotes 1. Often, the internal rate of return or IRR of a project is used to examine its viability. The IRR is the discount rate, which, when applied to the yearly stream of costs and benefits of a project, produces a zero net present value. A project is considered viable when its IRR is greater than a pre-determined cut-off rate. Both the economic and financial IRRs are calculated to establish the economic and financial viability of a project. 2. Legal and regulatory framework, institutional framework, operational maturity, investment climate, financial facilities, sub-national adjustment 3. The name of the customer was withheld because of privacy concerns

86

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Annex A Map of Research Area

The Mandaluyong Markeplace is located at General Kalentong Street, Barangay Daang Bakal, Mandaluyong City. The mall is located near the barangays of Pag-Asa, Bagong Silang, Harapin ang Bukas and Burol as well as barangays in Sta. Mesa, Manila and the City of San Juan. The mall is accessible through the intersection of Shaw Boulevard and Gen. Kalentong street. Using public transport, the mall can be primarily accessed through jeepneys from the Boni MRT Station, as well as jeepneys from San Juan and Sta. Mesa, Quiapo and Recto areas of Manila.

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Annex B Key Informant Interview - Research Questions

1.

Risk Awareness and Commitment

1.1. What motivated you to pursue the project? (Ano ang mga pangunahing dahilan kung bakit ninyo ipinatupad ang proyektong ito?) 1.2. Knowing this motivation, how have you envisioned the project to be? (Alinsunod ng mga kadahilanang ito, paano ninyo isinalarawan ang kalalabasan ng proyektong ito?) 1.3. What major risks have you considered in pursuing the project? (Anong mga problema o panganib ang inyong nakikita sa pagpapatupad ng proyektong ito?) 1.4. What difficulties have you encountered as the project contract was prepared? (Kung mayroon man, anong mga problema ang hinarap ninyo habang ginagawa ang kontrata sa proyektong ito?) 1.5. Risks assumed? (Mga inasahang panganib o 'risk?') 1.6. How were thegoals of the project identified? (Paano pinili ang mga naging layunin ng proyekto?) 1.7. Goals that wanted to be achieved? (Mga layunin na nais makamit o makuha) 1.8. How is performance measured? (Paano sinukat ang pagganap?) 1.9. Difficulties encountered in fulfilling goals/KPIs? (Mga balakid o problema na dinaanan sa pagtamo ng mga layunin) 2. Strong private sector partner

Financial Capability

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2.1. What financial considerations have you considered for the project? (Ano ang mga bagay na isinaalang-alang para sa proyekto sa larangang pangpinansyal?) 2.2. Perceived qualities of a "financially capable partner"? (Mga ninais na katangian ng isang kasosyong may kakayahang pampinansyal?) 2.3. How much is your financial contribution to the project? (Magkano ang iyong mga naiambag o naging kontribusyong pampinansyal sa proyekto?) 2.4. Financial goals of the project; how was it based, was it achieved? (Pampinansyal na layunin ng proyekto; saan ito ibinase? Ito ba'y nakamtan?) 2.5. Difficulties encountered (Mga pinagdaanang balakid o problema sa pagtamo ng mga layunin) Technical Capability 2.6. What technical considerations have you considered for the project? (Ano ang mga teknikal na kondisyong kinonsidera para sa nasabing proyekto?) 2.7. Perceived qualities of a "technically capable partner"? (Mga ninais na katangian ng isang kasosyong may kakayahang teknikal?) 2.8. What are your technical contributions to the project? (Ano ang iyong mga naiambag o naging kontribusyong teknikal sa proyekto?) 2.9. Technical goals of the project; how was it based, was it achieved? (Teknikal na layunin ng proyekto; saan ito ibinase? Ito ba'y nakamtan?) 2.10. Difficulties encountered (Mga pinagdaanang balakid o problema na sa pagtamo

ng mga layunin) 3. Community engagement

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3.1. Who were the ones most supportive of the project? (Sino ang mga pinakasumuporta sa proyektong ito?) 3.2. Are there any opposition encountered? (Politicians - national/local, community, vendors, consumers, etc.) (Mayroon bang mga sumalungat sa proyektong ito? (pulitiko, sa komunidad, mga nagtitinda, mamimili, atbp.)) 3.3. What measures were done to connect to affected stakeholders (vendors/consumers)? (Anong mga panukat ang ginamit upang malaman ang saloobin ng mga apektadong indibidwal?) 3.4. Based on this outreach, how can you assess the level of support? (Paano masusukat ang suporta ng mga nasabing indibidwal o grupo?) 3.5. Between the partners, how do you assess your level of communication and trust with one another? (Sa mga magkasosyo, paano masusukat ang antas ng komunikasyon at tiwala ninyo sa bawat isa?) 3.6. What difficulties were encountered in dealing with each other? (Ano ang mga hirap o problema ang hinarap upang maayos na makitungo/makisama sa isa't-isa?) 4. Good governance

4.1. What are the laws that empowered you to pursue the project? (Anong mga batas ang may kinalaman sa proyekto para ituloy ninyo ito?) 4.2. Is there also a legal framework present at the local level? (Meron bang 'legal framework' sa panglokal na lebel?) 4.3. Do you believe present framework is enough to deal with the project? Any suggested improvements? (Naniniwala ba kayo na ang kasalakuyang 'framework' ay sapat na upang maayos na pamalaan ang proyekto? Mayroon pa bang mga paraan upang mas mapabuti pa ito?)

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4.4. Has the consortium dealt with any legal challenge? Why? (Ang kasunduan ba ng gobyerno at ang pribadong korporasyon ay humarap na sa mga isyu o hamong legal? Bakit?)

4.5. How was the project procured? (regular bidding, Swiss challenge, etc.) (Paano nakuha o nakamit ang proyekto?) 4.6. What were the considerations considered for qualifying for the project? (Anong mga bagay ang isinaalang-alang upang makapasa sa proyektong ito?) 4.7. How was the bidding conducted? Who participated in the process? (Paano isinagawa ang 'bidding'? Sinu-sino ang mga lumahok sa prosesong ito?) 4.8. What are the difficulties encountered? (Anong mga problema ang hinarap niyo dito?) 4.9. How was the management of the projectstructured? Who deals with what aspect of the project? (Paano pinamahalaan ang pagbuo sa proyekto? Sino ang may responsibilidad sa bawat aspeto ng proyekto?) 4.10. Was there any difficulty/major problem within the members of the management?

(Nagkaroon ba ng paghihirap/ malaking problema ang mga miyembro ng namamahala sa proyekto?)

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Annex C CSF Survey - Questionnaire Good day! We, Public Administration students of National College of Public Administration and Governance in UP Diliman, are conducting a study that will explore and present the concept of Critical Success Factors in Public-Private Partnerships in the Philippines. The group decided to focus on Mandaluyong Citys Marketplace as it is considered as the First, Build Operate and Transfer (BOT) under the Local government level. With this, the group hopes to ask for your help with regards to answering this questionnaire as this will further deepen our understanding on the internal processes, disciplines and principles that the respective stakeholders of the Marketplace have used and considered on their experience on the said project. The group also provided their own set of CSFs that are extracted from scholarly literatures that will be used on their study. Please provide your clear and brief answers/explanations on the box spaces provided below. Thank you for you cooperation. Magandang araw! Kami ay mga estudyante mula sa Unibersidad ng Pilipinas na nagsasagawa ng pag-aaral na tutuklas at magpapakita ng konsepto ng Critical Success Factors sa PublicPrivate Partnerships sa Pilipinas. Napagdesisyunan ng grupo na pagtuunan ng pansin ang Marketplace sa siyudad ng Mandaluyong dahil sa ito ay ang sinasabing First, Build Operate and Transfer (BOT) sa pamahalaang local. Mula dito, umaasa ang grupo na silay makakatanggap ng tulong sa pamamagitan ng pagsagot sa questionnaire na ito na makakatulong sa pagpapalalim pa ng kaalaman sa panloob na proseso, disiplina, at prinsipyo na ginamit ng mga tao/grupo sa kanilang karanasan sa pagkumpleto ng nasabing proyekto. Inilagay nadin ng grupo ang kanilang sariling listahan ng CSF na ibinase mula sa ibat-ibang journals na ginamit sa pag-aaral ng grupo. Maaaring magbigay sana ng malinaw pero maigsing pagpapaliwanag o kasagutan sa mga naibigay na espasyo sa baba. Salamat sa inyong kooperasyon. Groups set of CSF Critical Success Factors (CSF) Definition (Kahulugan) Indicators (Batayan) Vision and commitment

Risk awareness Proper assessment of factors and implications of and commitment pursuing the project and the will to do one's share in the partnership as appropriately distributed (Jacobson & Choi, 2008)

Risk assessment and

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distribution Goals and performance measurement Strong private Private sector partner is sufficiently competent and sector partner financially capable to pursue the project (Chung, 2012) Fiscal capacity

Technical capability Community engagement Consensus-building and initiative to achieve support from all stakeholders (Jacobson & Choi, 2008) Political support Open communication Good governance Transparent and competitive procurement and bidding, well organized and committed public agency (Hardcastle (2006) as quoted by Babatunde et.al, 2012) Legal framework

Transparent and competitive bidding Institutional framework Critical Success Factors (CSF) Do you agree with Reasons/Justification Suggestions for other CSFs (if the provided CSFs in Paliwanag/Dahilan any) and justification on why it response to the is relevant to success of PPPs. success of PPPs? Mga suhestyon hinggil sa mga (Yes or No) posibleng CSF na hindi Naniniwala ba kayo nailagay ng grupo at sa mga CSF na pagpapaliwanag kung bakit ito ibinigay ng grupo? importante sa tagumpay sa (Oo o Hindi) PPP.

1. Strong private sector partner 2. Risk awareness and commitment

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3. Good Governance 4. Political and Social support

B. Rank the CSFs based on personal opinion/judgement on what is the most important factor that is key for the success of a PPP project. Also, rate or score the CSF based on how it was achieved or performed in the project (Mandaluyong PPP Market). Please do not forget to justify your answers. Paki-ranggo ang mga CSFs base sa inyong sariling opinyon sa kung ano ang pinakaimportanteng batayan sa pagtatagumpay ng isang proyekto sa PPP. Paki-lagyan din ng iskor ang bawat CSF ayon sa kaantasan ng pagkamit o pagkumpleto ng Mandaluyong Marketplace. Maaring huwag kalimutan na ipaliwanag ang inyong mga sagot.

Critical Success Factors (CSF)

Ranking (1 being the highest, 4 being the lowest)

Reasons/Justification Rating Paliwanag/Dahilan (1 being the highest, 4 being the lowest)

Reasons/Justification Paliwanag/Dahilan

1. Strong private sector partner 2. Risk awareness and commitment 3. Good Governance 4. Political and Social support

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Annex D Transcription of Interview Conducted with Private Partner Paul: Ano po yung mga naging reasons or motivations para magkaroon ng ganitong project? Atty Santos: Siguro number 1 is necessity. The previous public market was destroyed by fire in 1990. Pagkatapos, we tried na umutang sa mga bangko. Pero yung interest during that time was 18% because of the prevailing war between Iran and Iraq. Nobody on his right mind will indulge in a big project like this because of the war. Noong araw ang gobyerno nagbabalak kasi gustong gusto nila kaya may ticket ticket na kasi gusto nila gustong tumaas ng isang daang piso during that time. Kaya parang magulo. Tapos we scouted for developers to join the bidding during that time. Isa-isang pinupuntahan ni Mayor Abalos during that time. Project niya yan eh, kung saan saan kami pumupunta, inaabot kami ng madaling araw naghahanap ng developer. Ang tinatanong eh kung magkano ang mobilization fund, magkano down payment. Sabi ko wa kami ibibigay diyan kasi BOT ang proposal namin. BOT sila lahat ang gagastos eh. Tapos pati yung plano wala kaming plano, sila rin gagawa aaprubahan lang namin. Magbibigay lang kami ng idea what this project is all about. Idedescribe namin yung prject tapos sila gagawa nung plano kaya sabi ko pati plano libre kasi kayo gagawa. During that time, the law on BOT was just passed only a month ago. Walang nakakainitindi ng BOT, wala pang implementong guidelines during that time. Sabi ko kay Mayor pano yan, wala pang guidelines. Sabi niya mas okay kasi walang magsasabi na nagkamali tayo. Nakalagay dun sa law mag-refer kami sa COA. Tapos sabi ng COA asan ang voucher. Sabi namin walang voucher kasi BOT ito eh hindi kami gagastos. Wala kaming i-auaudit, wala naman pala kayo ilalabas na pera eh. There was no single government agency or instrumentality that will help you. Bahala ka on your own ah. Bahala ka gumawa ng kontrata, bahala ka makipag usap, bahala kang gumawa ng project study. Walang tutulong, we are on our own. Kaya we based our decisions and judgements on the law itself. And if you read the original law, the BOT law, ang hirap maintindihan, hindi para sa layman. Mga economic terms, nakalagay dun kailangan namin malaman yung rate ng dollar forecast. Kung yung NEDA nahihirapan sa rate ng dollar, pabago-bago eh. Kaya ako yung gumawa ng kontrata, yung project study pinagawa namin sa arkitekto namin. Saka namin sinimulan. Atfirst noh, nakipagmeeting muna kami, number 1 sa council, sa mga department heads, prospective investors pagkatapos dun sa mga market tenants. Yung mga idea ung mga drivers, salesman, tricycle drivers, para makuha namin opinyon nila and suggestions regarding this project. Number 1 na kokontra yung mga store owners. Sabi nila, mayor hindi namin kailangan ng building eh, lagyan niyo ng tolda magtitinda na kami. Buti si mayor, masyado talagang determined to have a shopping mall for the municipality. Kaya hindi niya pinakinggan mga ito. Kung nakinig siya sa mga tenants hanggang ngayon wala pa kaming building, hanggang ngayon ang hawak lang namin palengke lang. Even to build a public market during that time would cost P100,000,000. Tapos ang budget namin noon eh 450 lang and we cant afford to use P100 million out of that budget for the construction of a public market. Cause we have to defray the cost of rendering public services and transform
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that to construction. Hindi namin kaya that is why we resorted to BOT. Eh siguro kaya necessity ano, nasunog yung palengke kailangan namin ipagawa yan, we were under pressure from the tenants, from the tricycle drivers association and the consuming public to build a public market or a shopping mall immediately. The common denominator, we are to get necessary funds to build either a public market or a shopping mall at the same time. Paul: So kung in summary po, noong naimagine niyo po yung project, ang una niyo pong naging option is... Atty: Umutang, kaya may resolution yung council to borrow funds from any government financial institution or private in order to build a public market or a shopping mall. Paul: Sa ano po, para sa financial, ang naging vision niyo is that for the government is not to shoulder a single centavo. Atty: Hindi namin kaya kasi bago lang kami dun eh, although galing ako sa previous administration, si mayor bago lang, nung iniwan namin ito, 45 million lang yung budget eh tapos umabot ng 450 pero kulang pa rin. Kasi ang daming ginagawa ang daming pinapaayos. We cannot afford to use a hundre million to finance for the construction of a public market. Paul: Yung sa physical po ng public market, ano po yung naging vision niyo, yung mga design mga specifics. Atty: Number 1, multi-story building with the public market at the ground floor. During that time aabot lang ng 385 million para sa project. Eh nagbago yung plano, in-occupy lahat nung lote. Eh ang hirap ng lote dito, we cannot afford to make a portion of the area idle kaya ginamit lahat ng lote. Tapos dati yung parking namin one level lang ginawang two levels. Kaya yung cost umabot sa kulang kulang na 600 million. Mabuti itong developer namin, hindi lang yung profit incentive ang kundi what is best for the locality. Ang nangyari dito, 1st pre bidding conference, ang dami, 13. 2nd pre-bidding conference, natira lima. Pag dating ng actual bidding, isa na lang. Kya we called another bidding. Doon na lumakad na kami nakikiusap na sumali sila sa bidding. Tapos a group of private individual who were chairman or president or owners of different businesses in Mandaluyong and nereby localities, sumali. Iba-iba mga negosyo nito, meron mga nasa steel, merong nasa mga sports equipment, meron sa mga developer talaga, meron sa mga contractor, meron sa mga architectural, nagsama-sama sila. Sila nanalo, may kalaban silang isa eh ang liit ng ano. Eh kapag pinagsasama mo yung capital nitong different businesses napakalaki nito, multi-billion na. Itong si Mr. Yu, owner ng pagoda, anng daming negosyo niyan, siya naging chairman of the board. Pagkatapos, alam mo kasi ang BOT contract and ordinary construction contract. Sa BOT contract maski dalawa lang maglaban pwede, sa ordinary construction contract hindi pwede, kailangan tatlo.Saka after that, after the bidding pwede ka
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pang makipag negotiate for such other terms and conditions of the contract. For example, sa aming invitation to bid eh 50 years, naging 40 years na lang. Very cooperative naman. Tapos nag suggest si chairman, soil testing tapos yung ilog lagyan ng set piling. Payag pa rin. Tapos instead of 1 parking space level naging dalawa. Tapos yung mga provision na number 1 may public market sa baba complete with facilities, drainage system, merong centralized garbage collection system, electrical system, dalawang toilet ready no. Halos lahat ng kailangan sa isang public market ginawa nila. Ang gagawin na lang namin yung stalls. Kaya nabuo yung OSEP. Nakipag negotiate naman sila na yung sa harapan sa developer kasi pangit nga naman kung ang public market hanggang sa harapan nandun din di ba. Ang dami naming nakuha kapalit konti lang pumayag naman kami na ibigay namin yung harapan para sa ikagaganda nung building. Tapos yung 2nd floor, mga novelties, gift items, dry goods, dresses, gist shops. 2nd yung mga restaurants andunsa harapan ng kalsada. 3rd floor ganun din, 4th and 5th floor parking, 6th floor billiards saka bingo center tapos tindahan ng pagkain, tapos yung sine anjan. Isa sa mga elements nung sa contract no, number 1 the developer will provide a public market at the ground floor for free to the city government. Number 2, twin elevators pagkatapos isang service elevator doon sa side. Pagkatapos nanegotiate namin, upon the public market has been finished, the public market is immediately turned over to the city government, habang ginagawa nila yung 2nd floor, gumagawa na kami sa baba ng mga stalls. Upon completion of the whole building, ownership will be transferred to the city government, nanegotiate din namin yan. Sabi nung isang director, attorney ano pang hawak namin jan, kinuha niyo ng lahat. Sabi ko gusto niyo ilipat ko sa inyo yung ownership? Kayo magbabayad ng taxes, real estate taxes, 1 million a month. Ang dali dali niyan, ilipat ko lang sa inyo basta magbayad kayo. Sa ngayon ang taxable sa real estate ah, di lang building pati yung mga properties permanently attached, yung mga elevators escalators pati yung mga computers, real estate tax na. Oh sige, are you willing to pay more than 1 million a month, more or less mga 14 million a year. Upon the office of instuctor, we draftef a contrct lease. Sila ngayon lessee na lang kami ngayon lessor, kami may-are ng building. Pagkatapos the public market will be exlusively operated by the city government, kami magfifix ng rental. Tapos yung developer, bahala sila dun sa stalls sa harapan sa 2nd floor hanggang sa 6th floor sila mangongolekta ng rentals. Tapos it is renewable every 40 years. At such terms, such conditions are favorable for both parties. Yan ang essential element ng kontrata. Paul: SO parang ang nangyari po is that when it come po to the risk, lahat po ba ng risk napunta sa private sector partner? Atty: Hindi naman we share it also kasi to be successful , kasi BOT built on trust yan eh. There is trust and confidence existing in both parties. Kasi kung wala trust and confidence saka napakaformal ng relationship, hindi magsusucceed yung joint venture. BOT is joint venture eh, we own the land sila naman gagawa nung building. Wala kaming pera for the construction, here come the developer who will finance and develop and operate the building. Kaya kailangan ng mutual trust and confidence to exist between the parties.
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Paul: So ano po yung mga risk na inasahan niyo? Atty: Nasolve naman namin eh, number 1 itong lote namin is kadikit ng ilog. Yun pala kalahati ng lote tambak lang, noong araw sapa ito eh. Dun sa ilalim may mga butas dun, mga seepage. Noong naghuhukay kami doon kada hapon tinatanggal namin pag dating kinabukasan may tubig nanaman. Eh di change of plan nanaman, hindi pwede maghukay, kailangan magcement piling. Pagkatapos, delikado yung tabi na yun eh, kailangan ng cement piling sa ilog kundi magkakaroon ng erosion. Pag dating dito sa tabi yung kabilang building, bumababa, hindi kami pwedeng maghukay nanaman. Kaya makikita mo yung upa grayish eh. Kaya naghanap kami ng equipment eh, dadalawa pa lamang ang meron niyan sa Pilipinas, yung umiikot, naghuhukay tapos nilalabas yung nahuhukay na lupa. Tapos iikot uli, lalagyan ng chemicals, pinatitigas yung tabi. Nahintay namin yun for 6 months kaya ang daming delay. Tapos may mga demanda sa amin na sinakop daw namin yung ilog. Hindi naman lumiit yung lupa, sa katunayan nagkaroon ng lupa, dahl ganito yung flow ng tubig. Dito sa amin nagkakaroon ng erosion, sa kabila napupunta yung lupa. Yan yung depensa namin sa public ports. Kinukuha lang manin yung nawala sa amin. Nanalo naman kami dun. Tapos may konsehal na nagpapasikat sa mga vendors, hindi kailangan ng building, ang kailangan nila makapagtinda. Kaya isang meeting dito, si Senador Gonzales, naging senate president, sabi niya kung lahat ng gagawin natin pagkatapos may asong tahol ng tahol, huwag kang lingon ng lingon hindi matatapos yung gagawin mo. Ibig sabihin, kung lahat ng criticism pakikinggan mo, hindi mo matatapos ang binabalak mo. Kaya noong todos los santos, yung mga vendors nagtirik ng kandila sa sidewalk. Galit na galit si Chairman, nadramatize yung opposition nila sa construction. Tapos nung matapos ayun tuwang tuwa sila. Nagkaroon sila ng market na well-planned. Incidentally, ako nagplano nung public market, walang gusto gumawa eh. Yung mga haligi diyan, hindi nakaplano sa public market kundi para sa building. Yung mga architects and engineers namin suko eh. Ang lalaki nung mga haligi sa baba eh, walang gusto gumawa eh, maski yung contractor namin ayaw eh. Kasi yung sukat niyan very irregular eh. Makikita mo paikot-ikot eh. Next question. Paul: Nahirapan po ba kayo makipag negotiate doon sa contract with the private sector partner Atty: Nagkaroon kami ng ano, after the bidding nagkaroon ng negotiation for such other terms and conditions. Hindi naman mailalagay sa bid documents lahat ng requirements eh. Yung iba lumilitaw kaya discussion, give and take. Sila nga nahingi yung harapan, justified naman eh. Sakanila yun, pagkatapos napapaupahan. Next question. Paul: Paano po minemeasure yung performance nung private sector, nung sa government when it comes to the project. Atty: Performance nung developer? Successful naman saka sa side ng gobyerno hindi na
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masyado namin pinakikialaman kasi nakikita naman namin na okay eh. Yung mga necessary requirements for maintenance nagagwa nila pagkatapos cleanliness. Tapos every two weeks niyan may shoot, nung sabado yung mocha girls, yung pumalit sa sex bomb. 90% ata ng nanonood lalaki. Jaimie: So based on observation lang po yung... Atty: Oo, di naman kailangan. Masusuya naman yung developer kapag kunukulit. Kasi ganito, tinulungan namin sila na maghanap ng kliyente nung bubuksan na. 6 months bago buksan, nakikipagmeet kami sa mga prospective businessman na gusto kumuha ng pwesto dito. Ano yung mga benefits na makukuha nio sa gobyerno kapag nagbukas kayo dito. Libreng mayors permit. Libreng construction permit. Pati developer libre yung mayors permit for the 1st two years. Tapos real estate taxes, kasi sa batas, freedom to pay real estate taxes must be expressly provided in the contract. Kaya gumawa kami ng resolution, expressly giving the developer not to pay real estate taxes. Sayang din yun 12-14 million, tapos tataas pa yun sa dami ng equipment na ginagamit eh. Kaya 20 million a year nakakatipid sila. That is in return sa mga benefits na nakukuha ng city. What are the benefits? Number 1, we are given a public market for free. Number 2, employment opportunities. Mga isang libo siguto na employ dito, mga sales clerk, sa amin siguro may 200 eh, sa side ng market place, security guards, janitors, collectors. Tapos yung mga negosyo jan eh no, minsan dalawa tatlo. Yung mga restaurant mga labinlimang employees. Tapos yung recreational sports facilities, meron. Mayroon kaming billiards, bowling. Pagkatapos multi-purpose center meron din na pwede gamitin ng mga taga labas. Minsan nagkakaroon ng med mission dyan. Jaimie: Kumbaga sir wala talagang nakaspecify na ito dapat yung performance nila so basta naging kontento yung government. Atty: Ang ano namin, basta successful . Wala naman hinihingi sa amin. Siguro mas maganda na sila mag manage kasi kapag government mag manage baka magkanda lugi lugi. Kaya mas maganda mag mange ang private sector sa government kasi ang government may over employment. Ang gagawin yung sa isa, tatlo ilalagay diyan. Hindi marunong magtipid. Kapag private nagtitipid yan para kumita. Tapos a new commercial district was generated. Dati public market lang ito, hindi pinapansin ang kalentong noong araw eh. Noon ang presyo ng lupa dito mga P6,000 per square meter. Ngayon nasa P60,000 na per square meter. Marami ng building diyan na ginagawa , yung mga ordinary building kinoconvert sa multi purpose building kaya commercial center na din ito. Tapos yung kalsada napagawa, tinaasan yung kalsada di gay noong araw na konting ulan lang lubog na, baha na unpassable na. Tapos nagproprovide ng ncome sa city hall ito, may kita kami dito yung mga business established diyan tapos sa palengke kumikita din kami kaya additional income sa part ng government.

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Paul: Kumbaga yung mga incentives na binibigay niyo sa developer bumabalik din sila. Atty: bumabalik, mga indirect benefits. New commercial district, employment opportunites, recreational and sports facilities, may boxing pa diyan eh. Si Pacquiao minsan nag train dito eh. Jaimie: Tanong ko lang po ulit sir, sino po yung private sector na partner? Atty: Nagform sila ng panibagong corporation no, yung Macro Funders and Development Corporation. Jaimie: Bali yun po yung sinasabi niyong pinagsama samang heads ng mga businesses dito sa Mandaluyong. Paul: So kung ano po, sa performance eh wala naman po talagang objective na mga measure na nabigay doon sa mga developers, wala ba kayong na encounter na difficulties? Atty: marami din, yun nga sinasabi ko sa inyo water seepage. Jaimie: so bali sir most of the difficulties na naencounter niyo , mga problema, phyically lang. Atty: Problema din yung financial no, gumastos ka ng almost 600 million. Hindi naman biglaan na iproproduce yung 600 million. Nangongolekta ako eh hanggang sa kalahati wala ng ibibigay yung iba. Yung chairman na lang ang nagbibigay. Paul: Yung sa operations itself wala naman kayong problema? Atty: Wala naman, Proper coordination. Minsan, city government nagbobowling diyan. Paul: So thru out time, naestablish na po yung relationship. Atty: alam niyo yung park sa tapat? Ang nagpagawa niya, yung chairman ng macro funders without any inkling that time na sila magmamay-are at magpapagawa ng building na ito. Walang pera ang government, humihingi lang ng tulong from private entitities. Nauna na yan, 2 or 3 years ago before the construction. Paul: So next po na part, strong private sector partnership. Yung sa financial capability, ano po yung naconsider niyo noong naghahanap kayo ng private sector partner. Atty: Alam mo yang sa bidding, two requirements, pre-qualification muna. Kapag nagqualify sila, they will particiapte in the actual bidding. Kapag hindi nagqualify, cancelled sila. Ano
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tinitignan sa qualifications, number 1 financial capacity nung prospective bidder. Number 2, organization tapos experience, ano yung mga projects nila present and past. Paul: So may standard po ba kayo noon na kailangan na may capital na ganito, or may kailangan na minimum spending. Atty: Wala naman minimum capital, kaya lang talaga financially sound. Wala naman sinasabi sa amin na kailangan. Kapag inembistigahan, they have the capacity to finish the construction of the building. Jaimie: Sir sino po yung nagdetermine noong time na yun, kayo kayo po ba? Atty: Kami kami lang. Ideally ito, chairman abalos, ako taga implement lang. Dahil sobrang aggresive nung mayor namin that time, napapasunod ako eh, nagiging agressive na rin ako eh. Kasi kapag ang head mo kinakabahan, matatakot ka din di ba? Dahil over aggresive, nagiging aggresive na din ako. Kasama ako sa nag-iinterview, pagkatapos dun sa pre-bidding conference ako naghahandle. Paul: Ano po yung parang naging goals nung project when it comes to finances, una is that yung city hall wala dapat ibibigay na pera. Atty: Oo nga kasi BOT. Ngayon ang lupa dito P60,000 from P6,000. Kaya ang dami ng changes eh no, makikita niyo. Napagawa na yung kalsada through the initiative of Senator Gonzales. Paul: Tapos po, yung ano po ba, sa side po nung private sector partner, parang may target po sila na kumita by a certain year? Atty: Walang ganoon, hindi masyadong greedy itong investors namin eh. Ang number 1 goal nila tulungan si mayor, kaibigan nila si mayor eh. Kasi naprepressure na sila kasi for one year wala pa kaming makuhang developer eh. Jaimie: Sir just to clarify, bali ang nangyari sir, noong nagbuild yung developer binigay agad sa city government. Atty: Upon completion of the market, turn over agad yung ownership kaya pumasok kami diyan, pinagawa na namin yung mga stalls. Upon completion of the whole building, turnover na rin yung ownership kasi sakanila yung building eh, sila gumastos sila nagpagawa. Jaimie: Saan sila nakinabang kung ibinigay agad nila.

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Atty: Naka ano sila, nakalibre sa pagbabayad ng real estate taxes Jaimie: Bali ang ano nila, ang privelege nila doon nung pinagawa nila iyon, ang owner upon completion itratransfer sa city government, magiging owner city government, sila yung magooperate. Atty: Nilease namin, kaya naging lessor kami sila naging lessee. Jaimie: kumabaga sir magbabayad sila ng rent sa city government? Atty: Hindi na, libre. Jaimie: Ah libre na sila. Atty: Oo, ako naghahandle ng mga seminars, kada hingi ng participant ako pinapadala. May nagtanong sa akin, di ba atty santos one sided iyan, puro pakinabang ng developer, binigay niyo lahat wala kayong kita. Sabi ko kumita kami diyan, di kami gumastos ng 100 million for the construction of a public market, hindi ba kita na yan. Hindi pa nagsisimula yung operation ng mall eh kumikita na kami ng 100 million. Saka hindi ordinary public market yan, concrete lahat iyan. Nasa ilalim ka ng 2nd floor ng building eh. Kaya makikita mo doon ang lalaki ng haligi, tapos may drainage facilities, mayroong electrical facilities pagkatapos centralized garbage collection system. Meron kaagad dalawang CR. Hindi pa nagooperate, hindi pa kumikita, mayroon na kaming kinita. Paul: Parang nasave niyo na po and you can spend it on other more important ano. Atty: Paano mo masasabing one sided yan, yung mga indirect benefits hindi niyo ba nakikita? A new commercial district was created because of this construction tapos napagawa yung kalye. Yung basura dati alam mo kung saan tinatapon, sa kalye, iniipon dun, walang centralized garbage collection eh. Eh kami meron dun eh. Inaakyat sa mezanine yung basura, dadaan yung truck tapos may hihilahin tapos mahuhulog lahat nung basura sa truck. Tapos sila pa ang gumastos doon sa pagbli ng parking space sa baba. 5 million 5 hundred thousand. Eh di ba malaking pakinabang na iyan. Ang magpapark yung mga pupunta sa palengke, eh di lalakas yung palengke. Kapag hindi mo inanalyze, sasabihin mo one sided eh. Kumita kami diyan, mga indirect . Diyan mo makikita hindi materialistic yung developer para bilhin yung space dun, 400 square meters lang. Inalis namin yung mga nakatira doon. Tapos si Mayor Abalos involved din, yung iba binigyan ng unit sa condominium yung iba binigyan ng lote dun sa land for the landless program para lang umalis sila. Ang laking bagay noong parking, kung walang parking diyan saan sila magpaparkm sa kalentong. Tapos hindi materialistic yung ano, ang unang provision niyan 1 level lang ng parking naging dalwang level tapos inoccupy yung buong lote, walang tinira. Ano
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pang benefit ang hahanapin mo di ba. Tapos ang maganda diyan , we have our own shopping center. Kasi lahat ng shopping center nadoon sa highway lahat eh. Kami lang andito sila nagcocompete sila doon. Eh kalentong is a major artery, galing kang san juan pupunta kang sta. ana, galing kang sta. mesa pupunta kang inner mandaluyong dadaan ka diyan. Paul: When it comes po dun sa finances of the project, ano po yung mga difficulties in financing it. Atty: Ang difficulties wala ng maicontribute yung iba, buti nasave kami noong chairman namin, bilyonaryo itong chairman namin eh. Jaimie: Bali sir parang galing na sa sariling bulsa ni chairman yung ibang pera? Atty: During that time, hindi ka pwedeng umatang eh. Pagkatapos, uutang ka iplepledge o imomortgage mo itong property. Hindi pwedeng imortgage itong government property by a private entity. Mabuti sinagip kami, noong kinakapos yung iba. Yung iba kumbaga pass na eh no. Kay Mr. Yu na ako kumukuha ng pera, kung minsan yung pera diyan sa allied bank kinukuha ko eh, tapos magtatawag atty kuha ka na lang ng pera. Sabi ko pinagbayad namin sa supplier eh, para mabilis ang... Paul: Kumabaga po, sa share holder na yung difficulties kasi po yung iba hindi na makapagbigay ng investment nila. Atty: kapag may problema may nasosolve, yung water seepage. Ang lalim ng hukay nito umabot ng 30 meters. Saka di naman tinipid sa materyales. Kasi yung architect ng gumawa ng shoemart sa sta. mesa, yan ang architect namin dito. Hindi namin binabayaran, stocks binabayad namin kaya automatic shareholder siya. Kaya nakatipid kami doon. Kasi 5% ng overall cost ang napupunta sa architect eh. Ako naman inassign to over look the project hanggang sa kinuha nila ako. Syempre sayang din yun,Additional income eh, nagtratrabaho ako mula alas singko hanggang alas otso, 3 hours lang. Paul: So yung role niyo po dito is in private capacity. Atty: Private, tapos pag punta ko naman doon sa ano, public officer. Ganyan talaga ang mahirap kailangan magtrabaho ng doble. Enjoy naman ako, Vice-president ako dito eh. Paul: So may shares din po kayo dito? Atty: Binigay lang sakin ni ano, 100,000 para lang maging director. Hindi ka pwede maging director kapag wala kang shares
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Paul: So ano po, sa next na partt yung technical capability po. Ano po yung, kasi nag-eevolve po dun sa discussion natin is that the city government did not expect naman talaga. Pero meron po kayong kinonsider, yung mga nabanggit niyo po na mga kailangan elevator, parking ganun. So during po the construction, nabanggit na po yun explicitly na may mga ganun pong standards? Atty: Yung ibang technical, for example elevator escalator, kasama sa kontrata yan, ibang kontrata na yan eh. Sila na mag-iinstall Paul: So meron po kayong nirequire sa kanila na for example na size nung stall should be like this. Atty: ay hindi sa kanila na iyon. Pero yung palengke sa baba ako nag-ano ng mga sizes. Kasi, ano yan eh, di na linya ng government yan eh. Pero pag-aaralan niya what is fitted, at the same time, 6 months before naman nakikipag usap na kami sa mga prospective investors na magoopen ng mga business dito, anong size ang gusto niyo. Para mailagay namin. Jaimie: so bali mo kinustomize po niyo yung mga stalls, kumbaga parang yung sa sinabi niyo sa akin dati na binilang niyo kung ilan yung vendors. Atty: Oo, mahirap yung. Kasi sa public market, hindi ko sinasabi na marunong ako kaysa sa iba, nagtiyaga lang ako. Kung yung iba ang gagawa magkakamali, kasi ang unang gagawin mo dyan, isurvey mo muna mga applicants, pag-applyin mo muna para malaman mo kung sino-sino bibigyan mo at ano-anong section ang pagbibigyan mo. Ang daming section niyan eh, RTW, general merchandise, grocery, vegetable, canteen, chicken, fish, pagkatapos meat section, rice, novelties. Kung basta bastang gagawa ka lang, ang pinakamadali yung wala kang tenants pa. Maski anong gawin mo, ilagay sa different sections okay lang eh saka ka mag-aapply. Ito hindi kasi kaialangan i-fit sa pangangailangan ng ano eh, ang stall owners dito eh 700, ang nadevelop ko 500 lang. Nagrereserve pa ako ng 100, yung pagbibigyan para sa mga VIPs. Yung mga konsehal na wag na kayo makialam dito bibigyan ko kayo. Noong araw pakialamanan, sila nagbibigay ng tenants eh, wag kayo makikialam. Kapag hindi napaganda pwesto niyo, murahin niyo ako sabi ko. Maganda ibibigay ko sa inyo. Kaya walang reklamo, kaya ayun kanya-kanyang bentahan ng pwesto. May isang pwesto na ibebenta ng 100,000/200,000. Paul: So noong ano po, naghanap ng private sector partner, cinonsider niyo rin po na kailangan may experience in operating a public market. Atty: Ito halo-halo eh, yan si Mr. Yu developer, maraming negosyo yan, plus siya yung may pinaka mraming pera. Yung iba, nasa steel industry eh di sa bakal, yung isa nasa construction industry, yung isa naman nasa sports, yung isa nasa architectural. Yung mga experience nila,
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pinagsamasama namin. Sabi ko kay mayor, baka di natin matapos yan 300 million, during that time ah, almost 400 milion na. Ang sabi niya sakin, huwag ka mag-alala. Basta tayo maukha yung ating public market. Tiyak naman tatapusin nila, kapag di nila tinapos eh di sila kikita. Walang return of investment. Basta tayo may public market, nasa baba yan eh. Pag nagawa yung pinabubungan ng 1st floor, pwede na tayo magsimula, matutuwa na yung mga tao. Ang dami namin na encounter, number 1 nagkaroon kami ng kaso, inooccupy namin yung ilog, tapos yung iba, yung konsehal, critic eh, inaano yung mga ano magrally Paul: Pwede po ba namin makuha yung name nun? Okay lang ba malaman sino siya? Atty: Huwag na baka ano pa, hindi na konsehal eh. Yabang eh, noong kumakandidato, ang slogan niya the most qualified candidate for councilor, nagalit yung congressman. Sinusulsulan yung mga ano na huwag ituloy. Mag ground breaking pa lang kami, may mga karatula na ayaw namin ng mall. Hindi naman para sa kanila yung mall eh, gusto nila palengke lang. Ang ano namin, it is complementary yung mga nasa palengke pwede umakyat dito mamili. Yung mga nandito pwede pumunta sa baba para mamili ng mga iluluto nila. Yung iba jan eh, kapag wala magawa nagbibinggo dito eh,mga tindera. Saka nakakatulong din eh. Paul:kinasuhan po ba kayo nung councilor na yun? Atty: Kung minsan labanan kami sa council Paul: Parang nung nagformality na na iaapprove na ng city council. Atty: Formality, inquiry, ako yung nandoon, ako sagot ng sagot. Paul: Hinarang po niya? Atty: Humihingi sa amin ng mga papeles, humihingi ng ano, sabi namin sumulat ka parang maging formalized. Tapos pinakita ko kay Chairman, fishing expedition ito oh, humuhingi ng mga dokumento para ilaban sa atin Peter: Bakit daw siya kontra sa mall? Atty: Nagpapapopular eh, biruin mo parang nakuha mo yung 500 na stall owners jan. Pinipilit kami na tolda lang ikabit namin. Pero ito naing parang landmark na, ang daming bumibisita dito. Different countries ah, Asian Development Bank, United Nations, City government ng New York, Bangladesh, Beijing, Shanghai,Calcuta, Tokyo, Cambodia. Pinakamahirap maintindihan Cambodians, parang ibon ang boses eh. Ano ako ng ano eh, puro repeat ng repeat. Pagkatapos ung mga different LGUs in the country nagpupuntahan dito. May mga konsehal, mayors, vice
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mayors. Peter: Yung mga tenants ano po yung nirereklamo, yung mga may ayaw na tao dito, ano yung inirereklamo nila sir. Atty: Ang gusto nila tinda kaagad, lagyan daw namin ng tolda yung ano, magtitinda na sila. Peter: Nagmamadali na sila na... Atty: Oo syempre, wala naman sila pakialam dun sa mall di ba? Hindi nila naiintindihan, wala silang interest dun sa mall eh. Kami naman during that time, si mayor, ang interest niya is to be proud na magkaroon kami ng sariling shopping center of our own. Kaya nabago ang kalentong eh no, gumanda, because of this building. Paul: So ano po, clarify ko lang po, when it comes to technical contribution, hindi niyo na po sinabihan yung private sector na may specifics, parang general na lang po Atty: alam mo sila, they wont invest 600 million kung wala silang mga consultants na may expertise. Hindi mag-iinvest yan, mga negosyante yan eh. Si Mr. Yu almost 500 million, half a billion pesos. Nag-away pa yung mag-asawa eh. Sabi ko sayo Ernie huwag mo na ituloy yan eh., hindi tuloy natuloy yung pinapagawa naming bahay sabi niya. Inuna pa ito kaysa yung gagawing bahay. Peter: Sir anong pangalan, Mr. Yu? Atty: Ernesto Yu, sa pagoda. Alam mo kung bakit masasbing successful ito eh no, nagpagawa siya ng dalawang mall sa Bulacan, although half the size pero kapag pinagsama mo, almost the same size na. magkahiwalay, dalawang mall. Ibig sabihin, wala naman silang negosyong mall, dito lang siya nag negosyo ng mall. Ibig sabihin successful, nagpagawa siya ng dalawang mall eh, sa bulacan sa meycauayan. Peter: Siya po yung chair ng macro funders? Atty: Oo. Tapos yung ibang stock holder, noong makita nilang katakot takot na investment pala ilalagay dito, nagsauli na. Binili lahat ni Mr. Yu, kaya practically siya may may-ari. Kasi ito, kumbaga sa ano, malaking investment ang kailangan pagkatapos matagal bago mo marecover. Yung mga kasama niya gusto kaagad-agad kasi mayroon silang mga projects na dapat pagkagastusan. Binawi yunginvestment nila, binayaran ni Mr. Yu. Long term ito eh, kaya mahirap ang BOT, yung pera malakihan na eh. Kami ang first BOT under the local level, kami kauna-unahang gumawa under sa batas ng BOT na wala pang implementing guidelines.
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Dumating guidelines nakakalahati na kami eh. Tapos yung kauna-unahang Galing Pook Award, sumali kami doon. Yung mga nag-iinterview sa amin ang babagsik, sila Pimentel eh yung matanda, Maceda ganyan. Tapos sabi ko kay Mayor, ikaw na lang sumagot. Pare puro mayors aattend doon, saka kung ako umattend doon tatanungin at tatanungin ako ng mga niyan. Samantalang ikaw kayang-kaya mo yan. Ayun, maghapon kami doon, Saturday yun. Kami ang the best infrastructure project, tapos interesado laht nung mga mayors. Kaya ito, number 1 eh no. Dati ang BOT nasa central bank eh, yung isa dun si Fabella, ininterview ako ni Fabella dito, nakagawa tuloy ng organ. There are four BOT projects eh no, yung tatlo international, sa Europe, Super highway in Malaysia, tapos yung reiver project sa Pakistan. Puro mga BOT yan. Tapos the fourth, Market Place shopping Mall. Tapos it is being discussed and lectured in all the regions in the Philippines. Madalas naiimbita si Mayor. Yan si Mayor,maski tulog yan kapag tinawag, tuloy-tuloy na ang discussion. Ako naman lagi akong kasama, kaya paulit-ulit na discussion, minememorize ko yung sinasabi ko. Kapag dating sa mga seminar ako na lang eh, Cagayan de Oro, Cebu, Makati tapos Davao. We were the first LGU na nafeature kami doon sa Report kay Boss. Nagsimula kami ng alas 7, natapos kami alas 5 ng hapon. Tuloy-tuloy, kinuhanan kami ng picture, interview. Pagdating doon sa report kay Boss, 15 minutes lang. kasi meron pang kasama, yung sa national eh. Tapos yung kay Erap, nafeature din kami doon, yun naman matagal isang oras yun. Paul: Yung ano po, balik lang po tayo dun sa opposition opposition. Ano po yung mga ginawa niyo para ma-address yung mga nag-oppose doon sa project. Atty: Alam mo noong nakikita na ginagawa na, pinag-apply ko sila. Kanya-kanyang applyan oh. Kasi kapag di ka nag-apply disqualified kayo. Before that, may tumawag na kumpare kay Mayor, dito sa public market hindi ka mamaka 10%, galit sa iyo lahat. Sabi niya, bakit? Eh yung project na ginawa mo dito. Ngayon pinag-apply ko, tapos initerview ko isa-isa para malaman ko kung ano negosyo talaga. Para alam ko kung ilan ilalagay ko sa canteen, ilan ilalagay ko sa rice, ilan ilalagay ko sa dry goods, sa genereal merchandise, vegetables. At the same time, andaming umattend eh no, dadalin ko kay Mayor ngayon yan. Lelecturan ni mayor yan ganito, kaya nakaharap namin lahat ng tenants. Kapag dating ng election, siguro 95% kay Mayor na. Paul: So si mayor na po yung mismong nag-approach sa kanila. Atty: Hindi, inano ko muna sakin. Pagktapos ng lecture sa akin, dadalhin ko naman kay Mayor. By group eh, kung minsan sampo, kung minsan dalawampu. Paul: Kung baga po, yung mga vendors, binigyan niyo po ng incentive. Sila na po mismo makakita sa... Atty: Wala kayong babayaran isang taon at kalahati, palakpakan oh. Nangangako siya ang
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mapeperwisyo, yung developer. Isang taon kalahati walang bayad, libre tubig libre ilaw walang rentals. Paul: Sino po sumagot noon, yung developer? Atty: Eh siyempre kami nagpagawa, developers. Kung minsan andito ako developer ako, kung minsan government ako Jaimie: Paano po nabawi, I mean, naisip po ba nung developer na bawiin yung... Atty: Ang primary consideration hindi profit eh, kundi yung makatulong kay mayor, nasusubo na eh napapahiya si mayor eh. Isang taon ng lakad ng lakad, isang taon kami hindi makapagsimula eh.Pagkatapos ng sunog, nagwawala na yung mga ano eh, hanggang sa prinopopose nila na tolda na lang. Hindi matinag si ano. Ang success niyan, number 1 kay mayor. Aggressive talaga eh, ako alalay lang ako. Super alalay, kung ano sabihin niya, implement ko naman. Saka kapag ang leader mo talagang aggressive eh no, mapapasunod ka eh. Kapag nakikita mong kinakabahan/natatakot, natatakot ka na rin. Noong sinabi ko, nako ang laki niyan 400 million, baka hindi matapos yan ah. Huwag ka mag-alala, yung market nasa baba, tiyak tapos yan, bahala na sila kapag hindi nila tinapos, hindi nila mababawi yung investment nila. Peter: Sir ano yung benefits na nakuha ng developer aside from... di ba nilease niyo po yung building tapos sila na yung nagcocollect ng rentals po. Atty: Sila, they will operate, they will collect all the rentals. Peter: Tapos magbabayad na lang sila doon sa bayad ng building po. Atty: Wala, walang bayad eh. Hindi kagaya ngayon, nagbabayad ang developer sa government. Kami ang lakas ng loob namin eh, walang babayaran kasi nabayaran na kami doon sa public market, 100 million eh. Kumbaga sa ano, hindi pa kumikita sila, may building na kami. Ginagawa pa lang yung 2nd floor, mayroon na kaming public market. Peter: So wala pong binabayaran yung developer... Atty: Wala, except doon sa mga ordinaryo. Business taxes, mga sign board. Jaimie: So until now po, hindi po nagbabayad yung developer sa rentals, sila po ang kumukuha. So bali po ang nagiging purpose na lang po is may mga businesses pa rin po na kahit papano nagbabayad ng taxes.

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Peter: So yung mga business po ang mga nagbabayad sa government? Atty: Oo, yung mga business taxes, mayors permit. Ako nagbabayad lahat ng taxes dito eh na pag-aari ng kompanya. Saka itong chairman namin, kapag may nabakante siya nagtatayo ng negosyo. Kaya nakita niyo, merong ano diyan oh, Childrens Play Ground. Nilagyan niya ng mga gamit lahat, businessman ito eh, aggressive eh. Kumpleto yung andoon oh, mga laruan ng mga bata, may mini-train, mga rides. Sanay sa negosyo. Pagkanabakante, siya nagtatayo ng negosyo eh. Siguro may mga sampong negosyo diyan, sakanya. Kaya hindi nababakante eh, hindi siya natatakot na may bagsak, kukunin niya. Yung McDonalds ngsara, nilakihan pa niya. Nakamura pa siya. Kumbaga ang gumasta ng improvement yung negosyante, narecover niya yung ano, tinuloy na lang niya, kaya nakamura pa siya. Paul: Between the communication between the private sector and the government. Atty: Maganda ang relationship. Alam mo mahirap kapag hindi nagkakasundo ang negosyante saka gobyerno eh. Paul: So wala pa kayong na-encounter na nagkaroon ng tension between... Atty: Wala naman. Ako naman mediator ako eh. Kapag may problema, mayroon kailangan sa gobyerno, ako naglalakad. Kapag ang gobyerno naman ang may kailangan, ako rin ang nag-aano. Paul: Punta na po tayo doon sa part 4 po which is Good Governance. Yung iba naman po nasagot na, for example yung law Atty: Ngayon eh, nagkaroon ng amended BOT law no. Pagkatapos ngayon, originally BOT was under central bank, napunta sa DTI. Inabsorb naman ngayon ng NEDA, PPP center. Ang BOT is a from of PPP. Kami ang kauna-unahang gumamit ng PPP under the local level. Ano yung mga different PPP, mayroong Corporitization, Joint Venture, BOT, BFT... sampo yan eh. Yung sa amin, Build-Lease-Operate and Transfer no, BLOT, combination yan eh. Kaya hindi ka naman limited sa BOT. BOT yan ang general term, pwede kang gumawa ng mga derivative basta it defines the relationship of a developer and a government where the govenment owns the land pero walang financial capability to develop the land kaya you need a developer who will develop, finance and operate the project after the construction. Mayroon pang ano, Build Own Operate, mayroong BLT, Build Lease Transfer. Pwede kang gumawa ng mga derivatives, hindi ka limited sa mga ano lang. Minsan pwede ka mag-isip ng mga ano eh, basta meron kang lupa, sila magfifinance, PPP yan. Paul: Sa city level po ba, kasi po nabanggit niyo po yung mga ano, ano po bayung mga naging resolutions, legal frameworks at the local level regarding the project.
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Atty: Unang una resolution jan is authirizing the mayor to negotiate for a loan to fiancen the construction of a public market and a shopping center. Tapos yung final no, authorizing the mayor to conduct a public bidding regarding BOT. General terms lang yan eh. Si mayor noong araw eh no, naisip niyang kung market lang, hindi rin gaganda. Kailangan commercial center and a public market. Sabi ko sakanya, parang hindi maganda yung combination ng public market at saka shopping mall eh. Alam naman natin na ang dumi ng public market eh. Kapag mahusay yung mag-ooperate ng public market eh, complementray yan. Yung nasa itaas bababa iyan para bumili ng pagkain. Yung mga nasa baba, pagkatapos mamili aakyat yan para bumili ng mga dry goods. Kaya magkakatulong yan basta mahusay mag-ooperate ng public market malinis yan. Tapos karamihan ng mga projects ngayon, siguro mga 16 projects, a combination of a public market and a shopping mall. Yung iba naman transport systems, terminals. Kaya nanalo kami doon sa 1st galing ppok awards. Paul: Sa inyo po, meron po ba kayong masasabing, kunyari po nangyari yung BOT project later on, kunwari recent. Ano po yung parang mga masusuggest niyo po in behalf of the private sector na sana ganito yung nangyaring legal frameworr or sa batas may mga ganitong mga nakalagay or so on. Atty: Kami naman eh no, sabihin ko lang, maski yung mga nagpupunta dito na naglelecture ako, we cannot say that we are very proud to develop a best contract. Sabi ko this is not the best contract, marami rin kaming maling nagawa, pati yung mga mali nilelecture ko para malaman nila na itong mga mali, macorrect naman sa kanila. Wala kang guide eh, wala kang sample na pagbabatayan. Ito yung first BOT contract under the local level eh. Kaya on your own, mangangapa ka eh. Ang ginawa ko puro substantial compliance. Doon sa BOT law, walang guidleines. Sino magsasabi sa amin na may mali. Walang pagdadaanan na agency eh, hindi kagaya ngayon, dadaan kang BOT center. Noong may BOT center nag-ooperate na kami. Ngayong may PPP center, tutulungan ka kapag nag-apply ka. Authorized na ang government finanial instituions to give credit to BOT projects. Paul: Nabanggit niyo po yan, parang sa financing, umutang po ba sa government yung... Atty: Ang nangyari doon, yung mga stockholders, kanya-kanyang utang under their individual capacity. Hindi ka papautangin na ipapamortgage mo yung lupa eh. Kanya-kanyang pea hanggang sa hindi na nila kaya. Eh si Mr. Yu hindi umuutang maraming pera yan eh, ang daming negosyo niyan eh. Kaya larga ng larga hanggang sa matapos. Peter: So yung operation ng mall po dito rin office ginagwa po, or may iba pa silang office? Atty: Yung mall dito, yung dalwang mall dun may office din doon pero nadadala din dito yung
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ibang trabaho eh. Paul: So sa specifics po ng mga naging mga mali, pwedeng maimprove, may mababanggit po ba kayong mga specific conditions Atty: Alam mo kasi no, yung oroginal BOT wala masyadong incentive to be given to prospective developers. Yung amendment nagbigay na ng mga incentive. The local governments eh no, are authorized to give incentives to prospective investors to encourage them. Alam mo kung bakit hindi ma-encourage? Ang daming capital na kailangan eh. Pagkatapos long term investment, hindi mo makukuha kaagad yung capital, mababawi. Yung return capital matagal, ang laking investment ang kailangan pagkatapos hindi mo marerecver yung capital kaagad. Yun ang disadvantage. Kaya pagdating mo sa bagong BOT law, LGUs are authotized to give incentves. Walang limit ang incentives bahala ka. Kasi ang pera naman, ang revenue manggaling sa LGU. Number 1, free from paying real estate taxes. Number 2, free from paying mayors permit and business taxes. Tapos yung iba yung fees, regulatory fees, building permit, inspection fees, yung sa elevators escalators. Eh sa building permit ang laki na ng matitipid eh. Yung mga ano, including the developer and prospective investors na magtatayo ng kanya kanyang mga stalls, libre. Walang babayarang taxes eh for the first two years. At any rate,lahat naman niya hindi sa national mapupunta eh, sa local government. Sabi ng national goverment, bahala kayo, kayo naman ang mawawalan eh. Kung hindi mo bibigyan ng ganon, they will not be encouraged eh no to enter a PPP contract. Kung gobyerno eh national, kung PPP nagbibigay ng pera eh. Investment eh, hindi sol ng developer. Lahat ng kontrata makikita mo, merong ibibigay ang gobyerno na kapalit. Skyway, mga port, kasi kung hindi mo aalalayan ng ganoon, walang papasok na ano eh, tapos credit pa. lahat ng government financial instituions, allowed eh. May pondo sila, SSS, GSIS, mga government banks, DBP. Almost all ata eh, 50% ibibigay nila. Kaya kami, number 1 na mali ko eh no, to be free from paying real estate taxes, it must be specified in the contrafact. You cannot defray the payment of real estate taxes by means of inference or interpretation in the contract. Kailangan specific, mayroong law on taxation di ba, to be exempted kailangan specified yung exemption. Kaya sabi ko sa iba, kung balak niyo bigyan ng incentive ilagay niyo sa kontrata. Hindi namin nilagay yun eh. Kaya inano ko sa concil na magkaroon ng resolution. Eh kung ganid ang gobyerno, bakit pa bibigyan eh nakalipas na. Eh give and take. Kami naman kapag gumamit ng multi-purpose center wala naman bayad. Tapos no, halos one year, tumutulong kami sa paghahanap ng prospective investors ng negosyo dito. Tapos naglelecture kami kung ano makukuha sa gobyerno. Inoffer namin two years exempted, mayors permit, mechanical inspection permit. Libre lahat para magbukas. Tapos security, kasi kapag may negosyo na magulo, unsecured eh no, hindi pupunta diyan yung mga investors. Kaya secured na secured ito, kapah may problema tawag agad kami sa police station, dadating kaagad. Paul: Parang part din po yun ng government responsibility po for the project. Punta naman po tayo doon sa bidding process, yung mga specifics.So yung nangyari po is a regular bidding, tama
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po ba? Atty: Nakatatlong bidding kami eh. Hindi attractive eh kaya yung huli isa na lang, kaya disqualified na. Paul: Yun po si Mr. Yu? Atty: Hindi, iba pa. Paul: So sa bidding po sino po yung mga nagparticipate? Atty: Ang dami. Si Fernando sumasali nga sa amin eh, magulang din eh. Ang gusto ang capital niya labor wala siyang ilalabas na pera. Sa construct, pagkatapos Iron Corn builders. Itong market realty. Labing apat lahat yan eh. Di ko na matandaan. Paul: Hindi na po kilala. So parang may na encounter kayo na obvioulsy hindi sila qualified. Atty: Sa pre-bidding conference, questions and answers yan eh. Ano nature ng project, magkanong mobilization fund. Ang sabi ko wala kaming pondo wala kaming ilalabas diyan. BOT ito. Hindi nila alam kung ano ang BOT eh. Kaya pagdating ng 2ns pre-bidding conference, humungi sila ng 2nd, lima na lang.During that time eh no, one month pa lang nakalusot yung BOT law. Hindi pa naabot sa mga investors. Hidni attractive saka walang nagpapautang na government and private financial institutions. Paul: Clarify ko lang po, sa 3rd bidding ang natira na lang po ay yung consortium ni Mr. Yu... Atty: Saka may kalaban din. Talong talo eh. Ginawan ko ng write up itong mga ano, although wala silang negosyong mall, eh nagsamasama yung mga expertise nila. Paul: Si Mr. Yu po yung front nung bid, then yung mga sumali po ba sumali din sila sa pre-bid, tapos later on naconvince na lang sila na sumali sa consortium. So since dalwa na lang po sla na naglaban, pano po yun may mga binuksan po bang mga documents para sa technical... Atty: Kasi yung system, 2-envelope system. Yung isa pre-qualification. Eh di qualified eh no. Yung isa, yung amount ng bidding. Ang pinagkaiba sa ordinary construction contract at BOT contract, sa ordinary construction pababaan di ba? Sa BOT mas magastos mas maganda eh. Ibig sabihin eh gagastusin nila yan eh, wala kaming ilalabas eh. Mas malaking amount na binibid nila mas favorable sa amin. Mapapaganda ito kapag malaki ang ano, almost 400 million naging 600 million.
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Paul: So parang, sa technical naman po, yung dalawa, pumasa naman po sila? Or sa financial na sila nagkaiba? Atty: Yung kalaban nila nasa constructon business eh. Ito naman, dalawang stockholder nasa construction business. Yung isa negosyo niya bakal, dun kami kumukuha ng bakal. Yun namang isa architectural kaya siya gumagawa nung ano, mga arhitectural plans. Paul: Natatandaan niyo po ba kung magkano yung inoffer noong dalwang bidders? Atty: Yung isa almost 400 million, yung isa 385 million. Paul: So yung 400 million yung kinomit nila to spend Atty: Kasi yan yung estimated cost of the project eh. Later on umabot ng 600 kasi nagdagdag ng floor, inoccupy lahat ng space. Paul: So ano po, patapos naman na po tayo, clarify ko lang po, yung mga difficulties niyo po sa bidding is hindi po attractive sakanila yung project. Atty: Hindi attractive kasi newly passed yung batas and walang guidelines. Walang BOTcenter. Paggawa ng kontrata wala kaming mapagtanungan eh. Peter: Sir part kayo ng macro funders and development corporation? Director kayo , may stocks kayo dun? Atty: Although ipinahiram lang sa akin yung isang daang libo, ang nagbigay si Mr. Yu para maging stockholder ako. Requirement sa Sec, you must own 1 stock eh. Pero meron kaming signed contract na sakanya yung 100,000. Pinangalan lang sa akin para maging director ako. Paul: So dun na po tayo sa last two questions when it comes to management. So sa management po, the company is organized as a corporation, so the corporation in a way does not own any assets kasi leased lang po sa kanila it di ba? Atty: Alam mo naman eh yung attributes of ownership sa batas eh no, if all the attributes of ownership eh nasa iyo, ikaw na rin ang owner eh. A no yung mga attributes, you manage the business, your entitled to the fruits of the business. Walang nakikialam sa iyo, practically ikaw nagpapatakbo ng negosyo. Practically owner ka din, pangalan lang na lessee yung nilipat sa iyo. Lahat magagawa mo eh, hidni ka naman pakikialaman ng gobyerno maski ano buksan mong negosyo diyan basta hindi against moral, against the law, pwede mo buksan eh. Kaya lang may
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mga regualtions yan eh, number 1 kapag binggo approved by PAGCOR. Kasi binggo sugal na yan eh. Requirement saka approved by council resolution, sugal yan eh. Iyan ang poor mans game eh, kapag mayaman casino, kapag mahirap/masses binggo. Tapos may misa diyan. Kaya dadating ang simbahan kada linggo, libre sa multi-purpose hall. Kaya maglaman ng 800 na tao iyan eh. Provided pa yung chairs and tables. Lahat ng activities, medical missions, lectures, seminars pwed walang bayad. Paul: So corporation po siya so the government does not own any shares? Atty: Wala, BOT kasi eh . Si mayor nagpapasok din diyan ng mga stock holders. Para ganahan yung iba na mag-invest diyan. Yung isang kamag-anak niya pinapasok niya, dalawang milyon. Paul: So andito pa po sila? May mga dumagdag na lang later on sa mga original proponents. So currently po, si Mr. Yu, siya po yung majority share holder. Tapos meron pa pong mga iba? Atty: Hindi lang simple majority, great majority.95% binili niya lahat. Paul: So prang token na lang po iyong ba. Atty: Token na lang, Binenta na sakanya yung stocks nila. Kasi napasub o sila, ang laki pa lang capital ang kailangan, tapos ang tagal ng retuen of capital. Samantalang kapag inenegosyo mo sa ibang project iyan eh, kikita ka kaagad eh. Sa ordinary construction 1 year lang eh, itong construction nito 4 years eh. Paul: So sige po, actually tapos na po tayo sa interview part.

Annex E
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Transcription of Interview Conducted with Public Sector Isidro: It was the time of mayor that COMELEC Chairman Abalos that conceptualized the public private partnership with a business group. Nagkaron pa nga ng issue non kasi nagkaron ng sunog iyong lugar kasi akala pinasunog para magkaron ng market but the thing of the past and yon nga kasi Mandaluyong is a small city. Small municpality din. With just around 11.25 square kilometers with a population then of ngayon 326,000 by night but by day is 1.4 million. During that time with the good chairman around 1986 when he became OIC don nagsimula ang public market which co-venture with the private group that the ground floor which composed of the wet and dry which will be managed by the local government and the commercial will be managed by the private firm which now have a contract of 30 years. Jamie: So first question po what motivated you to pursue the project? Reasons talaga po Isidro: Unang unang walang pera ang siyudad nang mga panahon na iyon so were attracting businesses. And if only the government can do it alone palagay ko di kaya that time so were innovationg something out of nothing so iyon ang nag-trigger kay chairman o kay mayor Ben Abalos to venture in a different investor in the city. That started all the growth of the city including nang pagpasok na nga megamall, pagpasok ng Shang Grila, pagpasok ng ADB, pagpasok ng San Miguel doon na, kasi talahiban ito noon. Mayor Ben Abalos always states that we are not so blessed like Makati because they have the Ayalas. We are not so blessed like Taguig because they have The Fort. Were blessed with mental hospital and correctional for women. And imagine if youre blessed with that resources pano ka mag-momove. When Chairman Abalos took over the City ang pera ng city is 46 million lang. Noong umalis sya as mayor ang naging pera ng siyudad is 700 million. So iyon iyong ano when Benjur Abalos take over as the city mayor then from 786 million ngayon ang kita ng Mandaluyong is 2.7 billion. So imagine the leap. Pero it started again with the innovated approaches Jamie: So pano po ba so going back to NT market.. so knowng na ito po iyong mga motivations so pano niyo po inexpect iyong magiging itsura ng market place? Isidro r: It was designed in a way thats conducive to the area. If you were in kalentong, you cannot design like a mega mall type there so siguro iyong architects namin they believe and think na dapat conducive with the area. Jamie: So punta naman tayo sa risks po sir so pano nyo po cinonsider iyong mga ano po ba iyong mga naisip nyo na habang di pa po nagsastart yong project? Ano po iyong naisip nyo na magiging problema nyo? Isidro: Syempre baka umatras yong mga investors. Iyon ang una. Pero as a matter of principle hindi nagkaroon ni minsan hindi nagkaroon ng kaba si former mayor Ben Abalos na aatras iyong investors e. Why? because the confidence is there and if kung hindi man siguro matuloy na totally magawa iyong the whole floors may maiiwan saamin na first and second floors I think we can manage to develop it. Jamie: So sa mga difficulties po niyo, pano po ba nakapagprepare? Isidro: Sa totoo lang ang naging tsismis lang noh sabi ko nga sayo before the market started nagkaron ng sunog sa area. So theyre thinking na sinunog para magkaron ng market but its not
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the way it is. Siguro its a providence from God nagkatumbok tumbok na. First if there is a change, there is a resistance. Always in ano yan..in any management doing, theres always a resistance to change. At hindi mawawala yan at even don sa mga tao sabi nya naku e mawawalan kami ng bahay. Pero hindi nila alam the birth of that market place can lead into number 1 is change in zoning kasi babaguhin mo from residential to commercial e so tataas yong value ng lupa. Tataas yong value ng property. Maraming magkakaroon ng idea to invest. Iyong mga tao sinabi lang namin kung lehitimo silang taga-Mandaluyong at kanila iyong lupa na tinitirikan, hindi sila mawawala sa Mandaluyong. And thats the promise na hanggang ngayon ay tinutupad namin. Jamie: Di ba sir residential area iyong dating market place san po sila nilipat? Isidro: Actually iyong area kasi na iyon is owned by the government. Nong nasunog how can you ililipat sila so binigyan na lang naming sila ng mga tamang kabayaran for the relocation pero iyong iba andyan. Nasa tapat. Iyong iba nasa taas. Iyong ibang totally na ano nawala na. Hindi naman ganon karami. Jamie: Ano po iyong major goals talaga while doing iyong market project po? Isidro: Number na major goal is to have a quality service to people, to have a quailty and decent life to the peopleand to make Mandaluyong a symbol of strong in terms of economy. Don naming tinitingnan. Investment confidence palagay ko iyong pinakakasi when you do or plant a seed or a building sinasabi mo sa investors dito pwede. Why? Component yan e. Component of good peace and order, component of good environmental concern and component of quality of life. Jamie: So itatanong ko lang po iyong sa difficulties, meron po bang nag-oppose nong project during that time? Isidro: Sabi ko nga sayo sa una ang opposition iyong mga nakatira pero ano e nong nagkasunog paano pa sila mag-ooppose. Iyon lang naman yon. Katulad nong isang project naminawarding ng sementeryo. Nong una ayaw nila kasi bakit huhukay daw kami ng ano. Bat daw naming iaayos. Pero nakita nila nong natapos yong lahat ng project naming sa sementeryo. When they see the objective that we want to give dignity to the dead well gusto na nga ng lahat na don magpacremate. Don lahat magpalibing. Actually may konting cost pero unlike Loyola unlike private palagay ko sabi nga don sa UP NCPAG nong naglecture kami ni Mayor doon, Its more fun to die in Mandaluyong. Not to live e to die. Jamie: Noon pong ginagawa nyo po iyong project, meron po bang mga performance measures na ginamit or chineck? Isidro: Its the private firm that does the performance measure of it. Ang sa amin kasi when we do an agreement with them, we see it in results. So results based kami. Na magagawa ba kasi in terms of management hindi kami nag-mamanage right now. A private firm manage it. Iyong palengke sa baba, iyon ang amin. Kami nag-mamanage. Jamie: Punta na po tayo sa second part po strong private sector partnership. So sa financial considerations, pano niyo po tiningnan kung kaya ba nong private firm? May mga standards po ba tayo?
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Isidro: Tiningnan naming iyong capability nila in a way. They submitted papers that see to it that they can finance it, that they can have a marketing on it, that they can have a branding on it all the aspects of a good business practice iyon ang tiningnan namin. Jamie: Pero don kunyari po sa asset po, meron po ba kayong tinitingnan na kelangan ganito yong meron silang assets? Isidro: Tiningnan yan don sa study kasi meron yang contract e pasok lahat yan don sa mga anon g contract. Under BOT law, may batas naman. So lahat ng mga requirements were ano naman nasagot naman noong kumpanya. Jamie: Di ba nagkaron po ng bidding at that time po para po kunin yng private sector, pano po nangyari yong bidding? Pano po yong process? Isidro: Hindi ko lang matandaan pero ang alam kong nangyari dito out of that, isa lang naman ang naging interesado e. Iyong kumpanya na yon gang talagang nagpush. Iyong nanalo na yon. Kasi yong iba, theyre thinking ano e noon walang maniwala na parang ganon e. Di ba? Ang hirap di katulad ngayon na nakita nilang nagsulputan na madali na. Nag-aagawan pa yan. Sinong maniniwala sa isang talahiban? Sinong maniniwala sa isang damuhan? Na hindi ang alam lang na pag taga-Mandaluyong ka taga-loob ka. Di ba? Na niloloko niyo ba kami? Parang nasisiraan ka ng ulo. May ganon e. But the bidding itself is done in a nmer 1 under the rules of the Commission on Audit. Kung ano iyong procedures. Done in the bidding procedure by ano crafted by the local and national government. Siguro makikita nyo na don yong procedures. Jamie: Bale don po tayo sa financial contribution, meron po bang nilabas nap era po ang government? Isidro r: Lupa lang. Jamie: So after po non, wala na po talaga? Isidro: Kaya nga sabi ko pag natayuan ng poste yan hindi naman mag-succeed yong taas ng building. Mahiwalay sya sa dalawang building. We can develop kasi meron nang nasimulan. Wala kaming lugi. In a way, wala kaming lugi. Jamie: So nagkaroon po ba ng problema habang finifinance po yong project? Isidro r: Wala. Wala talaga. Jamie: So kung baga po prang sinalo po talaga lahat ng private sector? Isidro: Yes. Sabi ko nga investors confidence e that leads to a smooth transition of whatever project result. Jamie: So meron po ba kayong mga technical conditions or considerations sa kanila non? Isidro: Meron siguro kaya lang yong detailed nyan wala sa akin. Kasi detailed na yan e Jamie: Bale sir question lang din. Kanino po kaya namin pwedeng malaman?

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Isidro: Iyong isang tao na pinapaano ko sainyo. Si attorney Santos. Ako kasi Im talking of a city aspect. Jamie: Bale skip na rin po naming yong technical capability. Sa community engagement na lang po tayo. So sino po iyong mga specifically yong most supportive during sa projeact na yon Isidro: All. All the stakeholders. The three barangays: the Pag-asa, the Harapin ang Bukas, the Daang Bakal, basta yong nakahilera don. Jamie: So don sa mga stakeholders po nong project na yon, yong apat na barangay, city council, si mayor lang talaga pati yong private sector. So wala naman po talagang nag-oppose na politician? Isidro: Wala during that time. Ako tingin ko based sa kwento its an experimental thing that anon a nangyari. And sabi ko nga we are first BOT Galing Pook Awardee. So it speaks for itself ika nga. The criteria that the Galing Pook has made palagay ko hindi na namin kailangan magkwento kasi andon lahat. Kung papano. Andon yong feasibility study. Andon lahat. Peter: Sir, pano nyo na-convince yong mga tao di ba at first nag-ooppose sila. Pano nyo sila naconvince na okay yong project? Isidro: Hindi number one the lot is sa government. Yong lupa sa gobyerno. E naka squat dyan. So sinabi namin o sige pwede na kayong lumipat ganyan ganyan. E sabi ko nga hindi naman siguro palagay ko kagustuhan na rin ng Diyos na magkasunog. Kaya lang naibintang nga samin. Kaya napabilis e. Jaimie: Yung sa consultation po sir, ano po yun, parang may process or kumbaga... Isidro: May proseso yan, may mga small group, may mga cell group may mga big groups. Jaimie: So yung mga ganoon, kay Atty. Santos na lang namin itatanong. Pung na po tayo sa Good Governance since kay Atty. na po yun. Ano po ba yung mga laws na nag empower ng mga projects po, I mean yung legal framework po. Isidro: Actually, mayroong ordinansa din yan. Siguro kunin niyo na lang din kay Atty. Na kay Atty. kasi yung main ordinance eh, hindi ko siya masyadong kabisado. But that time, the council led then by Chairman Abalos thinked of an investment code that can give financial relief to the investors for the city. Even hanggan ngayon naman nirerevise namin yung aming incentives codes eh in terms of ano. Jaimie: Sa tingin niyo po okay na lahat noong legal framework na mayroon. Isidro: Yes, ngayon nirerevise lang namin yung aming investment code to fit to the situation. Kasi syempre, like Quezon City may investment code ka nga pagkatapos ngayon ang kalaban mo naman Chamber. Kaya nagtataas ka ng tax ,sila hindi mo cinoconsult. Yun yung mga nagiging problema. Jaimie: Bali sa bidding po si Atty na rin ang tatanungin namin. So yung consideration nga po for qualifying, yung kanina nga rin po, so over all sir wala naman po talagang naging problema.

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Isidro: If I may say, hindi siya tatagal ng ganyan na andoon pa rin yung nagmamanage kung magkakaroon ng problema. Wala nga kaming nakitang problema then kaya nga meron pa kaming niluutong project sa mga gobyerno right now. We are coming up with tie up with pagibig for a housing that we have the lot and they will build the building , the employee will pay the pag-ibig. Yung mga ganoon eh, may mga ginagawa kaming mga ganoong progrms ngayon. Kaya sabi ko sayo hidni ganoon kalaki ang Mandaluyong, ang liit liit lang ng lupa namin, we must maximize. Ang strength namin tao, pero ang weakness namin lupa. Kaya nga kung hindi namin inayos yung sementeryo, baka nakalibing yung mga tao patayo, hindi pahiga. Peter: Sir may feedback mechanism po ba kayo from customers and mga vendors, yung mga reklamo nila ? Isidro: Ang nagiging problema lang ngayon is the issue ng mga vensdors na nagsiside walk kasi dapat pumasok ang vendors sa loob. Which is yun ang aming ginagawa. We conducted a marketing plan on it. We have a bagsakan ng bayan every madaling araw so that lumakas yung market. But in terms of commercial, malakas ang commercial nila. And then, ang magandang naitutulong sa amin ng market is yung mga sidewalk vendor na hinuhuli namin, sabi namin kung gusto niyo doon na lang muna kayo sa loob ng market ilibre pa namin kayo ng 3 months na walang bayad so that we can help you in your livelihood projects or programs. That is the, yung ginawa namin iyon, doon na nagsimula yung birth ng another market place 2 na kami na ang nagpatayo. Jaimie: Saan po? Isidro: Dito sa may Acacia lane Martinez, yung bagong palengke. Four-story na kami nagpatayo, kami na ang nagfinance. Sabi nga sa amin ng COA sira ulo talaga kayong mga taga Mandaluyong kayo, bakit libre niyo binibigay. Eh sabi namin, paano namin maitataas yung third part ng aming aim na quality of life kung hindi kami manglilibre kaya nga may pera ang gobyerno. Sa ibang bansa nga libre health care, libre ganito. Kami hindi kami nagpapabayad ng stall para kumita, sasabihin niyo mali ginagawa namin. Anong gobyerno mayroon tayo. Yun ang nagiging problema namin minsan, tumutulong ka na nga kalaban mo pa sarili mo, gobyerno yung COA. Because ang thinking nila ang gobyerno nagpunta diyan hidni para magpalugi, pero ano nga ba ang objective ng gobyerno? Hindi ba magbigay serbisyo? Eh kasi ang serbisyo sa kanila hindi kasama ang pagtataas ng kalidad ng buhay. Eh siyempre turuan mo silang mangisda, huwag mo muna pagbayarin ng anim na buwan o tatlong buwan. Kung kumita eh minomonitor namin kung maganda na ang buhay, masama hindi. At yung iba doon, sa market place 1, yung sa ilalim, ganoon ang ginagawa namin. Kaya wala masyado sa amin nagtitinda sa side walk, kasi sinasabi namin bawala kayo dyan. Sasabihin sa amin, bakit papatayin mo kami. O sige, gusto niyo doon kayo sa loob. Mayroon kaming pwede nilang puntahan. Kasi kung wala iyan, wala kaming area. Kaya nagagamit namin siya sa pagbabago ng buhay ng tao, pagsasaayos ng kalye namin. Kaya maganda yung ano, in terms of governance, makikita mo how strategic it is doing the right thing for those na sasabihin sayo na papatayin mo naman kami, tatanggalan mo kami ng kabuhayan. Kasi nasa mali kang lugar, nasa sidewalk ka eh. At saka kasi, ikaw bibili at kung tamad ka, pupunta ka pa ba sa loob eh di doon ka na lang sa labas. Sabi namin sa mga tao, kapag bumili kayo sa labas, eh ano na kayo. Anything na aming ipapasa, whether it is economics, or simpleng ordiances dapat magsusuit sa general objective namin na welfare of the people, that is quality of life.
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Peter: Sir nagsusubmit ba ng financial staments sa inyo yung market mall? Isidro: Sa ngayon kasi ang management is to them, ang financial statements na amin yung nasa baba, yung sa palengke. Ang general rule is that after the agreement is finished, they will turn over the whole. Yung investment nila for the building yun ang kinikita nila eh. Ang nagiging kita lang naman ng local government is the business tax, the real property tax. Pero yung income from rent, kanila iyon. Ang sa amin, ang kinikita naman is yung rental ng mga stalls sa baba sa wet and dy section Peter: Sir so after 30 years kayo nag magooperate nung malll mismo? Isidro: Yes, we will take over. Jaimie: Sir pero parang may nabanggit po din si Atty. Santos noong ininterview namin na renewable daw po yung contract so kapang nirenew po yung pwede po na sila po ulit ang... Isidro: When you say its renewable, it is up to the local government kung iaapprove namin o hindi. Nasa provision lang ng contract. Kasi when you talk of contract you are agreeing both parties. Peter: Pero compared naman po sa financial po, doing well naman po ba yung market? Isidro: I think so kasi kung hindi, sinira na nila for the last how many years. At saka the taste of the pudding is in the eating. Ang McDonals hindi magtatagal ang Jollibee laging andoon kung hindi kumkita mga iyan. Kasi market nila iyan eh, kasi sa aminyung mnamarket namin sa baba, sa palengke, gumagawa kami ng mga marketing ads pero okay naman siya. Jaimie: Bali sir, kumikita naman po talaga yung public market? Isidro: So far. Jamie: Kasi issue lang po, mas mahina daw yung kita nung nasa loob ng public market as compared sa... Isidro: Yes, because kasi andoon sila sa ano...kaya nga minamarket namin eh. Gumagawa kami ng advertisements sa labas. Dito ka bumili malinis dito, tama ang timbang. Yung mga ganoon ba. So we do advertisements. Peter: Occupied namn po lahat nung stalls Isidro: Yes Jaimie: Sir tapos na po yung interview.

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Annex F Pictures of Market Place Mandaluyong

Market Place Mall Entrance

Market Place Parking Area

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Childrens Recreational Area

Shopping Mall Elevator, Escalator and Stairs

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Mandaluyong Public Market Entrance

Clean Comfort Rooms on inside the Public Market

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Stalls with Lighting

Signage inside the Public Market

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