CHAPTER I

INTRODUCTION

Public-private partnership (PPP) are means by which the public and private sectors can

work together as they provide a contractual and formalized framework needed for easier

cooperation between all parties (United Nations, 2007). It is said to be designed by and exists

between public organizations and corporations, companies, or non-governmental organizations

working in coalition in order to achieve mutually beneficial results. PPP provides a forum

wherein the parties involved can develop their strategies to remove barriers in efficient trading.

Through the involvement of private parties even though there are competencies in trade and

transport and different interests for their businesses, public-private partnerships can help in

developing the most efficient and properly regulated supply chains (The United Nations Trade

Facilitation Network, 2005). It also enables the participants of the certain system to transfer the

various risks inherent in a project to those who are best equipped for management. PPPs have

been increasingly popular in the third way government policy and as a means of infrastructure

provision, with better efficiency promised from the private funding of public infrastructure

through the transfer of risks to private parties (Graeme, 2004). It influences the investments

made in the state in the transport and communications infrastructure base of gateways and

corridors. It is also being used for enabling private provision of facilities wherein it involves

ownership, regulation and structure which creates impact on the performance of firms or

industries.

The North Luzon Expressway (NLEX), one of the main road arteries in the Philippines

sets a new standard for convenience and safety for motorists and travelers (Manila North

1
Tollways Corporation, 2009) and probably those that ship goods bounded for central and

northern Luzon and vice-versa. The problem with the NLEX is that prior to its rehabilitation and

expansion, the original road bounded in the north was constructed over 30 years ago has been

widely criticized for being too narrow and the cause of many avoidable accidents and deaths

(Net Resources International, 2005). It is for this reason that the Manila North Tollways

Corporation (MNTC), together with Leighton Asia and the Philippine National Construction

Corporation (PNCC) undertook a joint project for the rehabilitation and expansion of the NLEX

(Leighton Holdings, 2010).

The rehabilitation and expansion of the NLEX were done and are being continued

through foreign assistance, foreign aid. Considering that the Philippine government alone could

not undertake such project, acquiring assistance through loans and employing partnerships with

private entities, in this case MNTC and Leighton Asia, was resorted to. Foreign aid is the

international transfer of capital, goods, or services from a country or international organization

for the benefit of the recipient country or its population. Aid can be economic, military, or

emergency humanitarian (Williams, 2010). It is the form of assistance from international funding

organizations, or other countries for that matter, to countries which are in need for the creation of

their respective projects. In the case of MNTC, they employed assistance from the Asian

Development Bank (ADB) and other foreign funding organizations in order for the expansion

and rehabilitation of the NLEX to take place in the form of loans. Apart from ADB, funding the

expansion and rehabilitation of the Philippine North Luzon Expressway (PNLEX), Leighton

Asia was the company to whom MNTC awarded the contract in order to undertake the said

project (Leighton Holdings, 2010).

2
 The present study would concern itself with the process the PNLEX Project undertook in

its rehabilitation and expansion, the dynamics between the relationships of the parties involved

(i.e. ADB, Leighton Holdings, MNTC and PNCC) in the management and decision-making

process of the project, the present condition of the said project and the issues concerning the

partnership of the parties as regards to the PNLEX Rehabilitation and Expansion. In line with

this, the roles and interests of each party in the partnership would be analyzed and assessed.

Furthermore, the present results of the project would also be considered as to the manner it

contributes to the entire road transport sector as a whole.

Background of the Study

Philippine North Luzon Expressway Rehabilitation and Expansion, managed by the

MNTC, is a project planned from 2000-February 2005 that comprises the rehabilitation,

expansion and operation of 83.7 km of the existing NLEX, including the construction and

rehabilitation of 14 interchanges, 24 bridges and 31 overpasses from Manila via Balintawak exit,

to Clark Special Economic Zone via Sta. Ines exit, and the operation of a 8km expressway in

Subic Special Economic Zone, completed in 1996 (ADB, 2008). This is a project financed by

numerous foreign agencies but primarily by the ADB, a 1966-established international

development finance institution whose mission is to help its developing member countries reduce

poverty and improve the quality of life of their people (ADB, 2010). It is also said that the

project provides the capacity required to meet current and expected traffic growth (ADB, 2008).

This project would not have been successful if it werent the help of the foreign aid. This

aid was given to us in order to help us develop the means of transportation for those living in

North Luzon who wanted to travel to Metro Manila and vice versa. But, when we talk about

3
foreign aid, we talk about the loaning of money from a foreign agency and having additional

debt from our previous ones because of the other projects they have funded. Aside from paying

back the amount of money loaned, what the foreign agency has given to the Philippines can be

rewarded through using the money appropriately and presenting reports on how it has improved

the society.

The MNTC employed the help of funding agencies namely, the ADB ($70m), Export

Finance and Insurance Corporation of Australia, International Finance Corporation ($55m),

Export Credit France (COFACE) ($30m), Multilateral Investment Guarantee Agency (MIGA)

($52.5m), the World Bank via the International Finance Corporation (IFC), the Swedish Export

Credit Agency SEK and commercial banks Calyon, West LB, DZ Bank, Mizuho, ABB, and

NordBank (Net Resources International, 2005). These are the foreign agencies that are involved

in funding the upgrading and widening of the NLEX considering the Philippine government not

having sufficient funds in undertaking such projects.

These banks rendered aid to the project of the MNTC in the form of loans. It is notable

that the ADB assisted in the project by giving loans worth USD 70million, the largest among the

financiers of the project. Within this amount, USD 45 million is a part of a complementary

financing scheme and USD 25 million is a private sector loan, all of which are fully disbursed

(ADB, 2008). The ADB, being a reputable international institution as regards giving aids to

developing countries, is geared towards economic growth. In the process, it finances projects of

the private sector, in this case the MNTC, in its goal to improve the road transport services.

As the demand for infrastructure grows, governments are increasingly looking to public

private partnerships as an innovative way of financing infrastructure projects. The Philippine

4
Government recognizes the essential role of the private sector as the main engine for national

growth and development. In line with this, relevant incentives will be provided to promote

private resources for the purpose of financing the construction, operation and maintenance of

infrastructure and development projects normally undertaken by the Government. Along with the

MNTC, they have improved the PNLEX through negotiating with its public and private sectors

in the Philippines and request for help in its process of rehabilitation and expansion that shall

help lessen the troubles of the people who travel in this road. Such regulatory risk insurance

could take the form of make-up payments from the government to PPP investors, other

guaranteed payments, and adjustments to contract terms. Part of the contract is the negotiation on

the protection and mechanisms in certain aspects based on its preparatory process,

responsiveness to the sectors needs, and high implementation. MNTC holds the concession

rights to toll the NLEX in the Philippines. It is known to be an organization that has articulated

its mission as providing high quality public service through improved tollway infrastructure and

systems. Established in 1995 as a result of a joint venture arrangement between a private firm

and the Philippine government, its major initiative is the NLEX.

While it may be true that it was the MNTC who participated in acquiring loans to

upgrade the PNLEX, it is still important to consider the importance of the office that bears the

contract in undertaking the said project, Leighton Asia. Furthermore, the undertaking of such

project would not be possible if not for the participation of government institutions thus, the

participation of the Philippine National Construction Company as regards the management of the

funding, rehabilitating and expanding PNLEX would also be taken into account.

5
 Apart from foreign aid, evident in the said undertaking of the project is the presence of

partnerships between the ADB, Leighton Asia to whom the contract on the said project was

given to, MNTC and the government office of PNCC. It is through the partnerships of these

companies that the present rehabilitation and expansion of the PNLEX is actually taking place.

From this partnership, each of the parties involved are assumed to receive benefits from

participating in such partnerships and the process within which they attain these benefits and the

actual process of decision-making and management of such project. The PNLEX is displaying

improvements with regard to its form as reflected by the recent developments on the toll plazas,

interchanges and road lanes (Leighton Holdings, 2010).

Theoretical Framework

There will be two types of theory that will be used as a guideline in conducting such

complex relationships. The first type would be a general theory and the other one would be a

specific theory. Under the general theory, the Reciprocity Norm will be used and as regards to

the specific theory, there will be two theories under it, those are the partnership theory and the

other one would be the investment model.

Reciprocity Norm

As what have been mentioned, the general theory would be the Reciprocity Norm, and as

a theory, it simply states that there is a common social norm, in which if a certain individual or

entity gives something or help in any means to another individual or entity, the recipient of that

help is obliged to return the favor. Its description as a norm includes the idea in which the initial

giver can actually ask something in return (instead of waiting for a voluntary reciprocal act). In

addition to that, the initial giver, according to the norm can also ask for more than what was

6
given. This theory also touches on the concept of liking, wherein it assumes that an individual

likes another individual who likes him or her, and dislikes another individual who dislikes him or

her too (Reciprocity Norm, 2002).

Figure 1.1: Reciprocity Norm

Source: (Reader, 2001)

Investment Model

According to this model or theory, the relationships that a particular individual or group

is into depends mostly on how each party is satisfied, in which this satisfaction is influenced by:

The rewards and costs and what the parties see as a fair balance; comparison with other potential

alternative partnership; the degree of effort or amount that the individual or group has invested in

the relationship or partnership (Investment Model, 2002).

Furthermore, this model or theory proposes that investment can be financial, temporal, or

emotional. It also contains the idea of the so-called sunk cost effect, in which it suggests that a

particular individual or group of people stays in a relationship for the reason that they have

already invested a lot in it (Investment Model, 2002). Thus, it follows that in making a particular

person or group of people stays in a relationships, make an individual or group of people to

invest heavily in it.

7
 Party A Party B

Figure 1.2: Investment Model

Partnership Theory: Life Cycle of a Partnership

Partnership theory implies that partnerships are basically created for purposive goals to

build relationships and get things done, which can be tangible or intangible output. In such

processes, there will be different challenges at different circumstances on the stages of a

partnership (Partnership Theory, 2005). Thus, each participant in a particular partnership should

be ready and resilient enough to face such challenges that might emerge in their relationship.

The following are the four key stages in the life of a partnership: Initiating is the first

stage in the life of a partnership. This stage recognizes who started the partnerships, why the

partnerships have been started, what kind of partnership would this be -is it a long-term or a

short-term arrangement. The second stage is the so-called Starting stage: This stage includes

reviewing on what is happening in the area, and looking at the ideas and projects of the

8
partnerships; knowing the partners that are involved, which may include their styles for working

and preferred means of communicating; there is the existence to share their understanding of

problems, projects and activities to meeting their goals; setting up a temporary arrangement for

making decisions, staffing, administration, project management; and creation of a business plan

that includes training and support along with project development, funding, staffing, constitution

and partnership agreement (Partnership Theory, 2005). The third stage is the Doing stage: this is

the stage where actual developing and starting of projects occur; concentration on the partners

and the people that are involved along with the projects, training, support and socializing; and

the involvement of outside potential entities into the primary partnerships, within which these

entities have an investment in projects or programs to the partnership. The last stage of life cycle

of a partnership is Following Through or finishing: This is the stage where parties reflect on what

is working and what is not working so that they could improve or remedy some aspects; and the

last part of which has something to do with the question, is the partnership is still essential, , is

there still a need for it, does it give benefits or detriments, Is there any progress that happening

(Partnership Theory, 2005).

Figure 1.3: Partnership Model

9
 Conceptual Framework

The study is all about the dynamics of the partnership between the Asian Development

Bank, Manila North Tollways Corporation, Leighton Holdings and Philippine National

Construction Corporation in the management and decision-making process in the rehabilitation

and expansion of the existing Philippine North Luzon Expressway (PNLEX). Hence, this study

which would assess and analyze whether the entire project or even a component of it works for

the benefit of the many, serves the interest of those who avail the services of PNLEX and,

whether the partnerships as regards funding and managing the project produces developments in

line with its present condition. This could be done by assessing each important element in the

study i.e. the dynamics of the Philippine government in such partnerships, the private-public

relationships which includes the major corporations, MNTC, PNCC and Leighton Holdings and

a financial institution which is the Asian Development Bank as well as the whole process it

underwent and the agencies who took part of its development and the results that the project

actually produced would be taken primarily into account by this framework.

Figure 1.4 shows that the center of the conceptual framework is the main project called

Philippine North Luzon Expressway Expansion and Rehabilitation, in which the whole

partnership is mainly working on. Other important entities MNTC, Leighton Holdings and

PNCC will also be touched by the theories present in here. The general theory, which is the

Reciprocity norm, is the invisible pattern that guides the whole processes of this partnership. As

regards to the specific theory, namely Partnership theory and Investment model, these theories

would be the ones responsible for identifying the significant and various processes that every

entity undergoes in this partnership.

10
 It is in this investment model where one can find an explanation as to why these entities

are still in the relationship or partnership. The simple reason, which is supported by this model,

is that the entities (MNTC, Leighton Holdings, PNCC and ADB) have already invested heavily

in the PNLEX project. Furthermore, one can still find the relevance of this model because of the

three factors that it takes into consideration: Alternative simply suggests that in pursuing the

main project -which is the center of the framework- are there still other entities that the

Philippine Government or MNTC could have partnered instead of the current ones; the second

factor is the effort, in which this touches on the degree of investment that the parties involved in

the relationship or partnership have already spent in. the third factor or element, which is

satisfaction simply deals on the notion that, are the entities involved in the partnership satisfied

with each others performance. Taking all these into consideration, one can derive why the

entities or parties involved choose and are still in the partnership to pursue what they had already

begun.

In the Life Cycle of a Partnership, one can see the flow of relationship, or flow of the

processes in pursuing the project PNLEX and Expansion and Rehabilitation Project. As regards

to the initiating stage, which concerns as to who started the project, basically it started when the

Philippine Government recognized the importance of the private sectors in their role as the main

engine for national development, especially that of the MNTC, and also made the institution

responsible for collecting tolls in order to regain capital and settle the loans to the ADB; hence,

their relationship was set on the first stage; and that this kind of partnership would be a long term

kind of Public-Private partnership. As to the second stage, the starting stage, this includes

reviewing on what is happening and finalizing as to who are involved in the partnership. The

11
main entity concerned here is the Asian Development Bank, the primary agency funding the

PNLEX Rehabilitation and Expansion. ADB partnered with the Philippine National Construction

Corporation in order to undertake the said project in the Philippines. PNCC, is chiefly concern

on collecting revenue in order to enhance the delivery of services in the PNLEX route. The third

stage of this cycle, which is the doing stage refers to the actual developing and starting of the

project really occurs and the involvement of outside potential entities into the partnership comes

in, and in this where the private company contractor comes into the picture, the Leighton

Holdings. The last stage, which is the finishing stage is where the reflecting part comes in, that

the parties involve analyze which part is working or not, or which part is essential or not, does

the partnership progresses or not. This last stage is where the assessment part of the whole

partnerships comes into the picture.

12
 Asian
Development
Bank

Alternative Effort

Initiating Starting

Manila North Philippine North Philippine

Toll Ways Luzon Expressway National
Corporation Construction
Corporation

Finishing Doing

Leighton
Holdings

Satisfaction

Figure 1.4: Conceptual Framework

13
Statement of the Problem

Main Problem:

Does the partnership between the ADB, MNTC, PNCC affect the management of the

funding and undertaking of the PNLEX Rehabilitation and Expansion?

Sub-problems:

1. What kind of partnership does ADB, MNTC, PNCC have on the PNLEX rehabilitation

and Expansion?

2. What kind of management is made in the funding and undertaking of the PNLEX

Rehabilitation and Expansion Project?

3. What factors in the partnership affect the management of the PNLEX Rehabilitation and

Expansion Project?

Thesis Statement:

The partnerships between the ADB, MNTC PNCC and Leighton Asia significantly affect

the management of the funding and undertaking of the PNLEX Rehabilitation and Expansion.

Significance of the Study

The present study is focused on the dynamics of the partnerships between the ADB,

MNTC, Leighton Holdings and PNCC and how it affects the management and decision-making

processes with regard to the funding of the PNLEX Rehabilitation and Expansion. Moreover, by

the end the research, the study would be beneficial to the following people.

14
 Beneficial to travelers passing through the NLEX

The very nature of NLEX, being one of the main road arteries in the Philippines shows

that those travelers availing the service of this road system is paying the government rent for the

use of this service through toll rates. By possessing knowledge as regards how the transactions

between parties handling the PNLEX Rehabilitation and Expansion are occurring, motorists

would understand the current trend on increasing toll rates. The loans given by international

funding institutions, such as the ADB, are the ones being used in financing the said project. With

the study, motorists would understand the whereabouts of the system and how the policy on toll

rates came to be. In addition, particular users of PNLEX i.e. bus operators, drivers and

passengers would also be benefit. The study can explain the contribution of the PNLEX to the

development to the road transport sector as a whole thus, making them understand the reason

they pay toll fees, as well as travel fares, that constantly increase.

Beneficial to ADB, MNTC, PNCC and Leighton Holdings

This is for the reason that their partnership would be assessed as regards the management

of the PNLEX project. The present condition of the project and its development, including

possible future prospects on PNLEX would portray the dynamism in the partnership of these

parties. Thus, after the assessment of such dynamism, conclusion could be drawn as to whether

the partnerships between these parties are efficient to undertake and manage projects such as

those of the PNLEX and whether or not the funding of international institutions would actually

reflect the development and results of the project.

15
 Beneficial to policy makers

Through the findings to be presented as regards the partnerships of the mentioned

companies participating in the PNLEX project, the policy-making body could affect laws which

could serve the both the interests of the consumers of the road service, particularly the motorists,

and the former. Furthermore, effective policies as regards toll rates could be passed in order to

present a justified amount on the toll rates being paid by the motorists. The funding of PNLEX

comes in loans so in order for the government to pay these loans, it would require collection

from those who use the PNLEX.

Beneficial to the academe

The future researchers who would want to deal with the system of management and

decision-making process between government agencies and private enterprises would likewise

benefit. Seeing that the government resorts to partnerships with private companies and in this

study funded by international funding institutions i.e. ADB, future researchers could create an

expansion on the study of partnerships and funding via other foreignfunded projects and see

the relation of their partnerships as regards the undertaking and management of such projects.

Scope and Limitations

The study is focused on the dynamics of the partnerships between the ADB, Leighton

Holdings, MNTC and the PNCC as regards the funding of the PNLEX Rehabilitation and

Expansion. The extent of the partnership between these parties would cover the decision-making,

the efficiency of the partnership, its impact on the PNLEX Rehabilitation and Expansion and, its

contribution to the development of the transportation and the road sector as a whole. In line with

this, the study would cover the role and participation of ADB as the biggest financier of the
16
project. Furthermore, the study would cover the relationships between private entities,

particularly between Leighton Holdings and MNTC, with government agencies, PNCC. As such,

the study would cover the present condition and the developments of the PNLEX project as far

as the partnership and funding of these parties are concerned. The study would also cover the

benefits each party receives in participating in the management and decision-making process of

the PNLEX project. Furthermore, the study would likewise cover the contribution of each

partnering agency to the success of the project and the development of the transportation and

road sector as a whole.

Given the coverage of the present study, the limitations are as follows. The study is

would not cover the co-financiers of the ADB as regards the PNLEX Rehabilitation and

Expansion is concerned. Other project sponsors namely the First Philippine Infrastructure

Development Corporation and Egis Projects would not be considered as part of the study.

Furthermore, the study is limited the partnerships between ADB, MNTC, Leighton Holdings and

PNCC only. Other actors that may seem to affect their decisions as regards the management of

the PNLEX project would not be included in the analysis. Thus, the assumption is all other

things are constant.

Definition of Terms

Upon the course of the research study the terms, dynamics, partnerships, ADB, MNTC,

Leighton Holdings, PNCC, funding and PNLEX Rehabilitation and Expansion would be defined

and understood as follows.

17
 Dynamics. This refers to the transactions, relationships and whereabouts of the

partnerships between ADB, MNTC, Leighton Holdings and PNCC. Dynamics would refer to the

characterization of the partnerships between these parties involved.

Partnerships. This refers to the mutual agreement between the ADB, MNTC, PNCC and

Leighton Holdings with regards to the undertaking, management and decision-making as regards

the PNLEX Rehabilitation and Expansion project is concerned. This would also refer to the joint

efforts of each party in contributing to the development and success of the PNLEX project.

Asian Development Bank (ADB). This refers to the primary agency funding the PNLEX

Rehabilitation and Expansion. The ADB would be viewed as an international funding institution

that partnered with public and private offices namely, MNTC, Leighton Holdings and PNCC

respectively, in financing the PNLEX Expansion and Rehabilitation.

Manila North Tollways Corporation (MNTC). This would refer to the private office

managing the toll rates in the PNLEX. It would also be referred to as the institution that acquired

the loans for funding the rehabilitation of the PNLEX. In such case, it would also be viewed as

the institution as is responsible for collecting tolls in order to regain capital and settle the loans to

the ADB.

Leighton Holdings Asia. This refers to the institution that possesses the contract for the

upgrading of the PNLEX. It refers to the institution to that started the first phase of the upgrading

of the said road. It could be used interchangeably with Leighton Holdings and Leighton Asia

Philippine National Construction Corporation (PNCC). This refers to the government

office that partnered with MNTC, Leighton Holdings and ADB concerning the PNLEX

18
Rehabilitation and Expansion. In the study, it would be understood as an institution that takes

part in the decision-making not only within the partnership but also within state premises.

Funding. This refers to the allocation of funds in order to undertake a specific project.

The ADB is designated for this function. It would finance the PNLEX Rehabilitation and

Expansion through loans which would be handled by all parties present in the existing

partnership.

Philippine North Luzon Expressway (PNLEX) Rehabilitation and Expansion. This

refers to the existing project the partnership between ADB, MNTC, PNCC and Leighton

Holdings is intended too. In the study, being a foreign-funded project, it would be the

determining variable in assessing the dynamics of the partnership between these parties. The

assessment of the dynamics of the partnership would be reflected to present condition and

developments of this project.

Rehabilitation and Expansion. Rehabilitation and Expansion refers to the process of

enhancing and improving the PNLEX. It refers to the addition of lanes, counter flows, exits, sky

ways, bridges and toll gates that is suppose to guarantee better services to be delivered by the

PNLEX i.e. faster and more convenient travel time for motorists.

19
 CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

Public-Private Partnerships

The National Council for Private-Public Partnerships (NCPPP) defines a PPP as a

contractual agreement between agencies of both the public and private sector. Through this

agreement, the skills and assets of each sector divides the function of delivering service for the

use of the general public. In addition, each party shares in the risks and rewards potential in the

delivery of the service and/or facility (NCPPP - How PPPs Work, 2011). PPPs are part of the

new government model, integrating the public sector with private sector management strategies.

They create greater flexibility within the public sector that allows for governments to better tailor

their service provision to the unique needs of their constituents (Goldsmith & Eggers, 2004).

With the control on current fiscal budgeting, the ability to provide services at the lowest cost and

its alternative means to become increasingly important (Goldbach, Goldman, et al., 2004).

Partnership in a general sense is known to be all about running a business trade by 2 or

more natural persons built by simple foundations, unlimited liabilities, and no minimum capital.

A partnership is formed when two or more natural persons join together in a joint company to

carry out business activities together. It is not possible for a juridical person to participate as

member of the company. The company is a legal entity and has company assets. All members of

the company are individually and jointly liability without limitation. These agreements are

created to handle and transform certain situations in the society where development activities

initially formulated and owned by both companies. These activities help to transform the state

because it unites both bodies in the partnership and it also affects its external environment by

20
helping to implement their policies. External agencies can support these local processes of

creation and ownership by engaging in partnership. As part of a shift away from development

aid towards more reciprocal international cooperation, partnerships are guided by a sense of

shared purpose, common values and mutual trust (Ballantyne, 2003).

The term partnership denotes a cooperative enterprise based on joint rights and

responsibilities. To succeed, such a relationship requires clearly stated objectives, specific roles

of participation, mutually shared benefits, and an acceptable centralized authority to administer

the cooperative arrangement (Kendrick, 1982). It may help achieve their business goals by

combining both labor and economic resources, however, it soon becomes independent from each

other and there is a possibility of a restraint of trade agreement among the partners if both

negotiated conditions are followed.

When we talk about public-private partnerships, there must also be a strong commitment

on the part of the government because it serves as the key to the success of a PPP. They can be

useful in assisting governments to develop community projects which by themselves may not be

financially viable. In the United States, their Congress has declared the Foreign Assistance Act

of 1961 which aims for the encouragement and sustained support of the people of developing

countries in their efforts to acquire the knowledge and resources essential to development and to

build the economic, political, and social institutions which will improve the quality of their lives

(Committee on International Relations, 2003).

The use of PPPs has been implemented by almost all developing countries since 1990.

Differences across regions and sectors have nevertheless been significant and provide valuable

policy lessons from the PPP experience. And as observed during the 1990s, most of the toll road

21
concessions involved expansion or rehabilitation of existing roads rather than the construction of

new networks (Thomsen, 2005). The basic system of PPP governance needs to encompass

behavioral rules, which could include appropriate sanctions and penalties within the contract.

Breach of rules could involve mediation but improved PPP governance may be better achieved

through an independent, oversight authority (Johnston & Gudergan, 2011).

In this type of partnership, there is also the search for infrastructure finance which refers

to the economic finance used in supporting structure for various groups of the society that

focuses mostly on networks, physical structure, provision of homogenous goods or services,

positive effects on economic growth, and those that may be necessary for various economic

population group (European Investment Bank, 2008). As the need for investment in

infrastructure continues to grow, private sector financing for infrastructure projects has

developed around the world. Given that there are new types of investment vehicles and risk for

pension funds to manage such as exposure to leverage, legal and ownership issues,

environmental risks as well as regulatory and political challenges such caution may well be

justified. However, if governments are willing to help infrastructure developers receive the

needed amount of finance through potentially important sources of financing in order to continue

with the plans and programs, certain steps can be taken. Transport and energy, like other

infrastructure investments, are intermediate goods: the make possible other accounts that

increase productivity and enhance the welfare of poor people, and they contribute to economic

growth that may expand economic opportunities available to poor and provide additional

resources for poverty reduction (Asian Development Bank, 2005). Previous transport projects of

22
ADB struggled to show a direct link between project activities and poverty reduction. Most are

still being implemented in the Philippines.

The government of the Philippines has embarked on an ambitious fiscal reform program

(Nathan Associates Inc., 2007). Like in other countries, it has distributed its yearly budget mostly

on infrastructure because it is what entertains the society and the business partners of a given

society, the economic professionals from foreign countries. Professionals of this job is given the

role of providing support for infrastructure projects with appropriate interventions including

financing projects through sovereign and non-sovereign modalities, structuring and financing of

Public-Private Partnership (PPP) projects, reviewing policy, institutional and regulatory

frameworks for improving the enabling environment for project structuring and financing (Asian

Development Bank, 2010).

In an interview, it has been said that there are many states that do not have sufficient

funds to maintain their roads; much less add needed capacity (Florian, 2008). One of the most

important business sectors that a society have is the business infrastructure which includes

buildings, transportation, energy, water, telecommunications, and waste management as business

as well as the cross-cutting construction and environmental business when it is defined narrowly,

if focuses on the construction industry, which is a vital and important sector of the economy

(Grigg, p. 1, 2010). This just implies that infrastructure is indeed a vital point to be considered in

planning to have a sustainable future of the people and its society. The growing reliance on

external assistance to address domestic concerns is an emerging fiscal reality in many developing

countries, and the Philippines is no exception (Panao, 2010).

23
 Foreign Assistance in Partnership Projects

Foreign Aid, also known as Official Development Assistance (ODA); the transfer abroad

of public resources on concessional terms (with at least a 25 percent grant element), a significant

objective of which is to bring about an improvement in economic, political, or social conditions

in developing countries. It does not include military expenditures or military aid, trade or

investment financing, public funding for cultural exchanges, expenditures on foreign intelligence

gathering or covert action, or government-to-government loans at market rates of interest

(Lancaster, 2000). Foreign aid is, by denition, such an instance: it provides goods or nance at

below market prices to governments or population groups (Tanzi, 1998). Aid disbursements are

typically handed free to local authorities that then distribute them, with considerable discretion,

among their fellow citizens (Treisman, 2000). For any of the four reasons slowing growth and

investment, diverting tax receipts, biasing the provision of public goods or fostering ination

corrupt countries may become poor performers and nd themselves relying increasingly on

international aid (Tavares, 2003).

Historically most aid has been given as bilateral assistance directly from one country to

another. Donors also provide aid indirectly as multilateral assistance, which pools resources

together from many donors (Radelet, 2006). Now, It has been widely viewed from the

perspective of the donor countries over the recipients since aids are released upon the discretion

of the donors (Riddell, 2007). Aid can be considered effective to the extent that it assists

countries to develop and to overcome poverty. Foreign aid is postulated as one possible source

of capital that will fuel faster growth among the low-income economies and enable high-in

(Barrios, 2007). However, aid does not aim to transfer as much money as politically feasible

24
from the wealthy to the poor nations nor foster society-wide transformation from poverty to

wealth. And so the transferring of money is then updated by the Official Development

Assistance (ODA) which records the amount of international aid received by a country. If aid is

not channeled to productive uses or to poverty reduction, it may be going somewhere else. One

possibility is that aid is channeled to uses that promote corruption (Alesina & Dollar, 2002).

Government officials themselves admit that peace and development efforts in Mindanao

cannot take place without the generosity of overseas development donors. But still, aid is good

on the assumption that everything it provides makes a difference to the recipient country

(Riddell, 2007). These aids could come as bilateral aids, wherein the government of the donor

country is directly involved in the release of the aid, or as multilateral aids, wherein the aids are

funded by international funding institutions active towards attaining development (Riddell,

2007).

It may be possible to conclude that without foreign aid, the country would not be capable

enough to withstand the rise and fall that will interfere with their plans, and that there is only a

half-percentage probability that they would not fulfill a sustainable development which meets the

needs of the present without compromising the ability of future generations to meet their own

needs. It contains within it two key concepts: (1) The concept of needs, in particular the essential

needs of the world's poor, to which overriding priority should be given; and (2) The idea

of limitations imposed by the state of technology and social organization on the environment's

ability to meet present and future needs (Sustainable Development Timeline, 2007).

The sustainable means of transportation is a must thing to have or do, since its real

visions are to change the people and the way how they live, the second one is to change

25
technology and the last one is on changing prices. These things are the rationale of sustainable

transport which is equated to its solution to the socio-political setting of the Philippines, and the

problem is mainly on how to attain this because of the impediments such as, it would require first

a large amount of money and might take a lot of years to achieve, but of course, considering

these impediments as a threat in not committing to sustainable transportation is a downbeat

because to do nothing will result to an even greater problems in the long run (Black, 2010).

Moreover, this could not be seen as an impediment as compared to the benefits that this

sustainable transportation could give.

Based on how the means of transportation is developed in the Philippine society, seeing

that transport infrastructure plays an important role in integrating the island economies of an

archipelago such as the Philippines (World Bank Group, 2010), and that there is an alliance of

organizations that started the public transport accessibility initiative as part of other programmes

promoting disability mainstreaming in different policy areas in the country (Alcantara, 2008),

the Philippines have ample state capacity to cope with the limited state of conflict. The nation

was given the rationalization of fiscal and investment incentives along with the indexing of

excise taxes to inflation as part of the measures needed to strengthen its fiscal situation for the

sake of having an enhanced tax administration, including a crackdown on tax evaders and

enforcement of anti-corruption programs in tax and customs agencies. Soon, exports will grow

in line with the global recovery and, on a net basis, are expected to contribute modestly to GDP

growth (Jain, 2010).

26
The Politics of Infrastructure

Investing in infrastructure has become a new topic for pension funds in recent years. It is

necessary in the infrastructure section because it increases capacity, reduces costs, and improves

quality. Inadequate infrastructure gives rise to congestion and delays, and to the cost of unmet

demand, while excessive investment will unnecessarily add to costs (Forsyth, 2005). Institutional

investors are trying to spread their investments across a much wider spectrum of investments

than in the past (Inderst, 2009). They are on the search for creating new sources of return and

better diversification of investment risk. Infrastructure feels more tangible and real than a lot

of other complex products and derivative strategies presented to pension funds these days,

having also difficulties in detecting the underlying value. In addition, infrastructure is made for

the long term, and there seems to be a natural fit with the long-term liabilities of many pension

plans. For some people there is also a connotation to sustainable or socially responsible

investing, which is an increasingly popular route chosen in particular by public and industry-

wide pension plans.

A number of recent studies attempt to measure the productivity of public capital. Some

estimates indicate that government investments are a potential well- spring for economic

progress, while others indicate that public infrastructure has a negligible effect on private sector

output (Oakley, 1995). This article investigates political institutions and processes underlying the

decisions for public infrastructure spending. We apply the framework of strategic models of

fiscal policy and develop an empirical model to analyze the substantial differences in public

capital across American states. Institutions such as term limits, citizen initiative, and

budgeting procedures were significant determinants of state public capital stocks and the flow of

27
new public investments during the 1980s (Oakley, 1995). The results further suggest

that political conditions such as legislative stability and voter volatility are systematically related

to infrastructure differences across states.

New Keynesian models revive the case for government spending for infrastructure--

roads, water and sewer systems, communications high- ways, and the like-to stimulate the macro

economy. The newness in the New Keynesian argument is that the effect of government

spending comes through the supply side rather than the traditional Keynesian argument that the

effects of fiscal policy derive from the demand side of the economy (Oakley, 1995). Central to

this change in perspective is the idea that public investments are different from public

consumption expenditures. A temporary surge in public spending for infrastructure causes a

multiple expansion of output, even in an economy with fully utilized private re- sources, if the

productivity of public investments is sufficiently high.

If one would be taking into consideration the public spending on public infrastructures -

roads, water and sewer systems, communications high-ways, and the like - and has a goal of

stimulating the macro economy, there is a need of an application for a framework of strategic

models of fiscal policy and a development of an empirical model for analyzing. Moreover,

institutions such as term limits, citizen's initiative, and budgeting procedures can served also as a

factor on the aspect of public spending for infrastructures (Oakley, 1995). Furthermore, a

Keynesian argument presupposes that the effect of government spending comes from the supply

and not of the demands, which has supported the central image that the article is conveying,

that the idea that public investments are different from public consumption expenditures.

28
 International Aspects of Public Infrastructure Investment

An initial attention was been posed regarding the issue whether existing stocks of

public capitals are suboptimal. That it has effects, one is positive, and another is negative. In

taking not of its effects, one should be reminded that a large component of public infrastructure

investment is devoted to the extension and upgrading of transport and communications networks,

within which reduces the costs on the transport aspects, as well as, the facilitation of trade of

goods within and across the country (Bougheas, 2003). Therefore, leads us to the idea that

investment on public infrastructure benefits, not only the domestic aspect, but as well, the

international aspect.

PPP in Urban Infrastructures: Reconciling Private Sector Participation and

Sustainability

The effects of globalization the shortening of distance of interaction of the people by

means of advanced communication and transportation through technologies and machines - pose

problems to the public infrastructures; since, there is a growing need to keep up with the living

standards and to create situations for sustainable development. Thus, the lack of funds and

insufficiency of services by these infrastructures gave birth to the rise of initiatives to stimulate

private parties to invest with their resources in public infrastructures; however, there was a

challenge of the part of private sector, which restraints their participation due to the conflict on

short-term return on investment with the long-term aspect that they need to realize (Enserink,

2009). Therefore, this leads us that a help coming from the private sector is important, that their

participation on public infrastructure is of great help to contributing to the sustainability of the

urban environment.

29
 The most thorough studies of the impacts of privatization have shown that well designed

schemes can bring about substantial increases in overall welfare. The private sectors technical

and managerial competence, combined with more sustainable pricing policies and better

financial discipline, provide more resources for investing in expansion and relax the investment

constraints which prevailed under public provision. In many cases the biggest gains from private

provision come through increased investments to meet increasing demand and serve previously

unattended consumers (Harris, 2003). Private participation has had overwhelmingly positive

impacts in cases where meaningful competition for service provision is introduced, in particular

telecommunications. In the absence of competition, on the other hand, private participation can

produce poor results.

Efficient infrastructure can define the economic status and growth of a state because it

creates the image of being able to gather enough resources, funds, and local and international

organizations to successfully complete a certain project. There is the need of having substantial

participation of different parties in the globalization, trading and production networks in order to

create such an efficient infrastructure. Economic integration is established to narrow

development gaps and this is done in certain states through creating PPP for the development of

economic infrastructure (Llanto, n.d.).

PPP plays a significant role in infrastructure development by serving as an option in

outsourcing public projects to private sectors, giving them the responsibility of pursuing the flow

of operations, management, and financing of a project. According to Llanto (n.d.), the most

effective and applicable approach in this type of partnership is the Build-Operate-Transfer (BOT)

approach in this case, Rehabilitate-Operate-Transfer. This is where the government is able to

30
assign certain agencies the task of identifying, selecting, and approving through accountability,

effectiveness, and transparency of the projects. BOT contracts are imbued with public interest

and should likewise be accessible to the public (Llanto, 2007). The partnership shall ensure the

efficiency and effectiveness of the project by continuously giving funds and create progress on

the project given. The importance of the BOT law in strengthening PPP is seen through the

implementation of the law in seeking the potential of the infrastructure development in the

Philippines. Despite the financial constraints due to lack of investments, PPP is still established

on projects by seeing that the funding and the project construction is still ongoing.

Balancing Financial Returns, Risks, and Roles of the Partners

Public-private partnership has been defined as the collaborative efforts between the

public sector and organizations (either for profit or non-profit organizations) in the private

sectors which has the main goal of delivering and/or enhancing of services to the public, to

increase economic growth, or to supplement government revenues. Public-private partnerships

already exist in United States of America for about a hundred years ago, and the use of these

entities have accelerated during the 1980s and continued until the mid-2000s (Patterson, 2005).

Such partnerships are often characterized by shared responsibility, decision-making and tangible

output of risks and rewards. In this literature, it stated that there should be at least two parameters

that a certain partnership must have. First, there should be a strong relation that exists between

risks and rewards for the private partner -that the higher the presence of risk, the higher the

rewards is also should be present, and vice-versa. Second parameter suggests that there should be

a strong and positive association between risk and the degree of involvement of the private

partner in the development, operations, and ownership.

31
Asian Development Bank

The Asian Development Bank (ADB) is a multilateral development finance institution

dedicated to reducing poverty in Asia and the Pacific. The economic benefits and opportunities

created by the national highways increased growth and investment opportunities for the more

well-off groups by increasing asset value, reducing transportation times and vehicle operating

costs, and facilitating trade and business opportunities. There was this research claiming that

with the establishment of national highways, the local communities can now enjoy enhance the

accessibility to socioeconomic services, the travel time of the people living outside the local

communities to their destinations has been reduced, along with the reduction of maintenance

costs and increasing profits, more services available for road transportations, and decrease of

road concessions (Singru, 2007).

ADBs main instruments for helping its developing member countries are policy

dialogue, loans, equity investments, guarantees, grants, and technical assistance (Asian

Development Bank, 2007). These instruments are used to keep the funding in the Philippine state

going on and the investments that they make shall help develop the society and make the

environment more convenient and comfortable. The country strategy and program (for 2005-

2007) is designed to support high-impact projects. Key features include a strategic focus on the

most urgent development constraints and working within a results framework emphasizing

development impacts and outcomes. Implementation of reforms, especially macroeconomic

reforms, has improved, as recent ADB-supported policy-based operations have indicated (Asian

Development Bank, 2007).

32
 Infrastructure development is an essential field of ADBs assistance. It is needed to

ensure sustainable development, poverty reduction, and socioeconomic growth. One example is

the project expressway located in the southeast Hebei province that links from Beijing to

Shanghai. The ADB agreed to consider financing the expressway after discussing with the

Government an expansion of the project scope to include a poverty reduction component (Jraiw,

1998). The objectives of the said project were to improve transport efficiency in southeastern

Hebei Province, and to reduce poverty in the officially designated poverty counties in the zone of

influence of the Project by improving access to the main economic centers. The Project was

designed and implemented to meet ADB strategy requirements and community expectations

(Asian Development Bank, 2005).

Manila North Tollways Corporation

The Manila North Tollways Corporation (MNTC) is an organization that has articulated

its mission as providing high quality public service through improved tollway infrastructure and

systems. It was incorporated in 1997 and was soon granted the franchise to finance, design,

rehabilitate, expand, operate, and maintain certain roads to the north of Manila under the

Supplemental Toll Operation Agreement (MNTC, 2000). Under the agreement, all legal profit

rights, interests, and privileges from Philippine National Construction Company (PNCC), the

original franchisee for the project roads, will be transferred to MNTC upon completion of the

project roads. MNTC has the right to collect tolls on the completed project roads during the

concession period, after which the project roads will return to the government. This funds

collected during the completion will help the MNTC in the continuation of maintaining the

expressway, recover its investment, and settle the long-term loans used to finance the project.

33
The financing plan envisages funding and/or partial risk cover from commercial banks, export

credit agencies, and multilateral agencies.

As an agency in the build-transfer-operating procedure of certain Philippine projects

concerning the transportation sector, the MNTC and the Government, through the Toll

Regulatory Board (TRB), are the executing agencies of the Philippine NLEX Rehabilitation and

Expansion Project. The operation and maintenance of the Project will be the sole responsibility

of MNTC. However, MNTC should coordinate closely with other government agencies,

particularly those involved in monitoring, such as the Leighton Holdings Asia, PNCC and the

ADB. To help maintain the safety and quality of the expressway, various rules are in effect, such

as restricting the left lane to passing vehicles only and banning overloaded trucks. And because

of the benefits reaped by the country through the rehabilitation of the NLEX, other developing

countries are actually using the project as a model for government and private sector partnership.

Private sector investment in infrastructure development projects is essential since it enables the

government to use its limited resources for other vital services like education, housing,

agriculture, and health (Llanto, 2008).

Philippine National Construction Corporation

Philippine National Construction Corporation (PNCC), formerly known as Construction

Development Corporation of the Philippines (CDCP), serves as the original operator and

franchisee of both the NLE and SLE tollways, and a leading domestic construction company,

with a track record in the construction of bridges, toll roads and other civil works projects. The

company's scope of services in a wide array of construction and engineering works and phases

has even expanded since then, to include all project stages -- from feasibility studies, designs and

34
detailed engineering, procurement, construction and project management, concrete pre-casting,

steel fabrication, materials processing, and equipment rebuilding, have become a part of PNCC

service offerings (Department of Trade and Industry, 2008). It has engaged in tollway operations

and management and has entered into joint ventures with domestic or foreign entities, to

undertake projects in line with its purposes, as well as purchase, sell, own, hold, and develop

claims, properties, agricultural, and real estate development.

The company's primary purpose was to carry on the conduct of a general contracting

business with a private or government agency or instrumentality as related to construction. From

the years 2004-2007, the company has veered away from active involvement in its construction

operations, but rather focused more on the operation and maintenance of its tollways. But soon

enough, PNCC turned over the operations and maintenance and rehabilitation of the North Luzon

Tollways to the MNTC.

The law states that PNCC is presently substantially owned by various Government

financial institutions and has played a major role in the success of its endeavor through its

efficient construction, maintenance and operation of the toll facilities in the North Luzon and

South Luzon expressways as mandated by Presidential Decree Nos. 112 and 113 and its Toll

Operation Agreement with the Toll Regulatory Board. And by knowing that they have the

privilege of extracting funds from these tollways through payment of tolls, it is essential that the

PNCC be granted such powers and authority necessary to enable it to promote the convenience

of the monitoring public in the expressways.

35
Leighton Holdings Asia

Leighton Asia is one of Asias leading contractors and project developers, depending on

the ability to develop innovative, practical solutions for its clients. Since 1975, this agency has

been operating in Asia and its unique combination of local knowledge and international

experience has made it the regions leading international contractor (Leighton Holdings Asia,

2008). Leighton Asia is focused on success throughout the region and is committed to continuing

to grow and change to meet the expectations and demands of Asias communities and clients.

The maintenance of its on-ground presence, allowing it to develop local staff, enables the

company to better understand local needs and operating environments.

The company has the financial resources and industry expertise to undertake the

development and construction of large scale and sophisticated civil, infrastructure, building and

mining projects. And with its commitment to building on a strong values-based corporate

culture, it will serve to become a significant factor in the companys growing success.

Leightons well-considered business model focuses on diversification, with the company

undertaking construction, contract mining and management services in the infrastructure,

resources and property markets in Australia, Asia and the Middle East (Macquarie Private

Wealth, 2011).

North Luzon, Philippines (Case Study)

The NLEX is the main and only transport corridor from the Manila metropolitan area to

central and North Luzon. It was built between 1975 and 1977 by the Department of Public

Works and Highways, its operations serving as a toll road. It was originally known to be

franchised to a private company but was then controlled by the government, specifically to the

36
PNCC (PNCC). Certain problems have been confronted by the PNCC management, such as the

continuous maintenance of the cleanliness and progressive development of the expressway, the

growing volume of traffic, unavoidable accidents and deaths, etc. In the early 1990s, the

Philippine government passed legislation that promoted and regulated the use of public-private

partnerships (PPPs) in repairing existing infrastructure and building new projects (The National

Council for Public-Private Partnerships, 2000). With the help of PPP, a law stating a Build-

Operate-Transfer (BOT) contract was implemented and it helped in modernizing and improving

the NLEX. Certain repairs, rehabilitation, and expansion have been made until now, and it would

further continue its modernization and lessening the problems occurring over and over again

with the help of PPP.

According to the case study written by Ken Hawkes, everyone that passes through the

open section of the toll road is to be given a flat toll fee, regardless of the length of journey

(Hawkes, 2003). The closed section levies a toll based on the length of a vehicle's journey

through several toll sections. Notwithstanding the legal framework in relation to the presidential

decree, to date the NLEX remains one of the few successfully financed toll road project in the

Philippines, and in Asia. The Philippine government then had problems concerning the lack of

funds required for land acquisitions. And so, the original project was closed afterwards. Then,

knowing that the PNLEX project was of becoming effective in 2007 and helps in increasing the

currency rate of the Philippines, there had been reasons for refinancing the said project. Strong

cash flows and lessening of traffic volumes in the Northern part of the Philippines that also help

make a justifiable and more streamlined covenant package for all debt holders. With the success

of the MNTC refinancing, it is expected that more Philippine projects financed by foreign

37
currency debt will take advantage of the local currency capital markets to reduce their currency

exposure.

And recently, the Bureau on Internal Revenue (BIR) has imposed a 12% value-added tax

(VAT), granting toll way operators a franchise which allows them to charge tax fees despite the

unapproval of the Supreme Court for the purpose of lacking law exempting toll fees (Punay,

2011). The petitioners (Supreme Court) added that imposing VAT on tollway operations is

imposing a tax on tax and not a tax on sale of services since toll fees are considered users tax,

following the SCs ruling on Manila International Airport Authority versus Court of Tax

Appeals. The high court however said, What the government seeks to tax here are fees collected

from tollways that are constructed, maintained, and operated by private tollway operators at their

own expense under the build, operate, and transfer scheme that the government has adopted for

expressways. The VAT on toll fees is being imposed in accordance with Section 108 (A) of the

National Internal Revenue Code of 1997 (as amended by RA 9337), stating that the franchise

tax shall be imposed on all franchises on radio and television broadcasting companies, as well as

on gas and water utilities. These collections are urgently needed by the government to counter

the adverse effects of tax-eroding measures, as well as the impact of capital losses resulting from

the widespread damage wrought by Typhoons Ondoy and Pepeng in the latter half of 2009.

PPP and the Mandaluyong City Public Market (Case Study)

Before, there was a public market located in the heart of Mandaluyong City. However, in

the year of 1991, the market was been destroyed in a major fire. A problem had arisen due to the

numerous displaced vendors, in which some of them were been allowed by the government to set

up stalls and along the roads and sidewalks. But this temporary solution of the government had

38
resulted to a set of problems it had caused traffic congestion and sanitation problems

(Mandaluyong City, Philippines Case Study (Public Buildings), 2000). Thus, the Mandaluyong

government realized rebuilding the public market is of great importance for the better mean of

the Mandaluyong City. The will of the government is there but the only problem is the funding

of the project which amounts to P50 million and this was beyond the citys capability. The

answer to the problem is PPP. At first, the private companies are hesitant as regards to the

funding of the project due to the oil crisis and economic uncertainties during that time, but the

mayor took leadership strategy by including a larger commercial component in order to attract

investors, which actually happened. A business consortium of private companies under the

collective name of Macro Funders and Developers, Inc. entered in the partnership with

Mandaluyong City government in pursuing the project (Mandaluyong City, Philippines Case

Study (Public Buildings), 2000). The original design of replacing the public market was been

added by Market place, a seven-story commercial center, which includes a public market, street-

front stores, a parking garage, commercial shops, department stores, a bowling alley, and a

movie theater (Mandaluyong City, Philippines Case Study (Public Buildings), 2000). These

additional changes had cost the budget from P50 million to an estimated worth of P300 million.

NLEX-SLEX Connector Road (Case Study)

The project aims to close the gap and complete the north-south Luzon industrial beltway

transport axis by connecting NLEX and SLEX. This is a public-private partnership project for

investment in the sense that the local institution involved, which is the PPP Center of the

Philippines, along with the government agency (DPWH) shall request for assistance to a foreign

state that would be interested in funding the said project. The project shall promote public-

39
private partnerships in order for the Philippines to exhibit road and transportation development

facilitated by the government and its agencies.

The new road will hopefully represent an integrated expressway system that will result in

a fast and efficient movement of people and goods between North and South Luzon. It would

also link Clark airport and the Ninoy Aquino International Airport, helping decongest vehicular

traffic in Metro Manila. Lessening traffic will create a large impact on the people who travel a lot

from the North to South Luzon roads because it will decongest vehicular traffic and that it

will provide a fast alternate road to existing roadways (Business Mirror, 2012). Along with this

is the development of support facilities as well as infrastructure around Clark airport to serve

both budget airlines and so-called legacy carriers that would also play a big factor in determining

Clark airports growth (Manila Times, 2011).

Philippine-Japan Friendship Highway (Case Study)

Public-private partnership is incorporated in the said road infrastructure because it

inhibits the role of foreign loans in order to accomplish and continue the project simultaneously.

The project here establishes a connection with the Japanese nation-state in order to gain their

expenses through their funds. The Philippines shifted from the stage of high-quantity road

development and construction to the stage of seeking qualitative improvements. Therefore, it has

contributed to the regional development and the development of the economy.

The Philippine-Japan Friendship Highway is a major highway that shall connect the 3

islands of Luzon, Visayas, and Mindanao as constructed with assistance from the Japanese ODA

loans of 10.8 billion yen. The said highway located along the eastern part of the island from

40
Davao City, the largest city of Mindanao, to the north through Agusan River Basin which was

expected to be developed as a rice production area, constructed in 1979 played an important role

in regional development through its agricultural, industrial, fishing, commercial and tourism

activities (IC Net Limited, 1994).

However, it had failed to ease the troubles of the people due to the larger volume of

traffic and natural calamities such as road damage that progressed rapidly due to unsuitable

designs and inferior construction work, inadequate operation and maintenance, and incomplete

enforcement of laws against overloaded vehicles. Rehabilitation and expansion projects have

been implied here to upgrade road sufficiency and safety through 2 phases. The first phase was

to focus on rehabilitating priority sections based on the extent of deterioration of the road surface

and bridge. While on the second phase, they were to improve the roads, building bridges for the

remaining sections which were highly prioritized for rehabilitation.

The main contractors who have spent over 1 billion yen for the project here are the

following: Phase 1: MAC Builders, Persan Construction, Toledo Construction Corp., EEI

Corporation, DIMSON Inc., and J.M. Luciano Construction Inc. (Philippines); Phase II: China

State Construction Engineering Corporation (China), Shinsung Engineering & Construction Co.,

Ltd. (South Korea), and DAEWOO Engineering & Construction Co., Ltd. (South Korea).

As for the main consultants who used 100 million yen are Katahira Engineering

International (Japan) for Phase I, and the DCCD Engineering Corporation, DEMCOR Inc., the

SCHEMA Konsult Inc. (Philippines), and the Katahira Engineering International (Japan) for

Phase II.

41
 CHAPTER III

METHODOLOGY

This chapter presents the research design, the data gathering procedure and the treatment

of data the present study would employ.

Research Design

In assessing the dynamics between the partnerships of the Asian Development Bank,

Manila North Tollways Corporation, Leighton Holdings and the Philippine National

Construction Corporation, the study would be working using a comparative structural-functional

model. Using the structural-functional model, the organizational structure, inline with their

respective functions are analyzed. The analysis of each structure would determine the manner

and the patterns of interaction each party employ in the decision-making process as well as their

intended objectives in participating in the funding and undertaking of the Philippine North Luzon

Expressway Rehabilitation and Expansion.

This paper concerns the development and use of public-private partnerships in the

analysis of its dynamics in the funding and undertaking of the PNLEX Rehabilitation and

Expansion. Specifically, it reports on the understanding in the said subject through the applicable

methodology of qualitative analysis. A survey on the analysis of the perception of the

representatives of the parties involved would determine how the behaviors and the patterns of

interaction of each entity participate in a joint-project undertaking.

Data Gathering Procedure

In assessing the dynamics of the partnerships between ADB, MNTC, PNCC and

Leighton Holdings Asia, two types of data would be gathered namely, primary and secondary

42
data. These data would be gathered via gathering of first-hand information through the

authorities of each respective party.

Primary Data

The study of assessing the dynamics of the partnerships between ADB, MNTC, Leighton

Holdings and PNCC would consider the authorities inside the respective institutions as their

respondents. The authorities within the said institutions are in the best position to comment and

render baseline information on the occurring partnership and possible future prospects of the

PNLEX projects, meaning the developments that occur from the start of the project.

A sampling procedure would not be necessary considering that the partnering institutions

i.e. ADB, MNTC, PNCC and Leighton Holdings does not actually involve a population. An

interview with the respective authorities of each institution would be used in gathering the

necessary information for the assessment of the partnerships and its impact on the PNLEX

Rehabilitation and Expansion. Thus, arrangements with the respective offices of the parties

concerned would be made in order to gather credible data on the mentioned project. There would

be a dialogue between the respective authorities of each institution. The dialogue shall cover the

present state of the partnership between ADB, Leighton Holdings, MNTC and PNCC. Issues on

the beginnings of their partnerships, developments, and future prospects as regards those

partnerships are concerned would be covered. In terms of dynamism, the whereabouts of the

partnerships i.e. the benefits each party gets in participating in the project would be taken into

account. This would also include the developments that the PNLEX project has contributed to

the road and transportation sector as a whole.

43
 Secondary Data

Apart from the interview method and the use of vital documents pertaining to the

partnership of the parties involved would be employed. The documents to be accessed in the

respective offices of each party would be the basis to objectively assess the partnerships between

the parties in terms of its impact on the PNLEX Rehabilitation and Expansion. Furthermore,

since a survey would not be conducted and data could not be quantified, the documents, figures,

case studies and the previous projects conducted by each of the institutions concerned would be a

used. Vital documents bearing the expenses, benefits, returns, interests and probably deficits of

the project would be analyzed. Transcripts of board meetings between the parties involved would

likewise be requested for information on the whereabouts of the current state of their partnership

and how that affects the undertaking of the PNLEX project.

In addition, case studies and more extensive research regarding reviews of the

partnerships and or projects engaged by each institution apart from the PNLEX Rehabilitation

and Expansion would also be accessed. This is to be able to see if there are any existing patterns

in each institution when they engage in partnerships in undertaking projects intended for public

use.

Treatment of Data

The data to be gathered from the interviews and documents that would be provided by the

institutions would be analyzed and afterwards, be assessed. The partnership would be evaluated

according to a criteria that would give objective results and assessments and support the claim of

PPP as a manifestation of a road towards sustainable development.

44
 Treatment of the Primary Data

The primary data that would be employed in the present study would be the interviews

that would be conducted with the representatives of ADB, MNTC, PNCC and Leighton Asia

concerning the PNLEX Rehabilitation and Expansion. The interviews would be used to provide

perceptions and insights of each company as regards the said project and validate the claims

presented in the data and studies conducted by each institution when engaging in PPP.

In treating the primary data, the study would be adopting the model used by Levinson et

al in his study, A Framework for Assessing PublicPrivate Partnerships which covers the

following areas for assessing PPP: support for the PPP project by the government, the private

sector and the people, the satisfaction of the objectives as defined in their respective contracts or

agreements and how well these roles are defined, the extension of the project or undertaking of

new projects with similar parties, the manner the project improves the efficiency of the system,

the equity of the system, the environment and the experience of users of the project i.e. the public

(Levinson, 2006). Each of these areas would be used in assessing the opinions, insights and

statements made by the authorities of the parties concerned during the conduct of the interview.

In addition, the study would also employ the model by Thomsen in his study Assessing

the Impact of Public-Private Partnerships in the Global South The Case of the Kasur Tanneries

Pollution Control Project. In this model, the PPP was assessed in the following areas: Impact,

Efficiency, Sustainability, Participation and, Accountability (Thomsen, 2007). This would cover

both the involvement of the private sector as well as the government and all the other players

involved in the decision-making process of the PNLEX Rehabilitation and Expansion. The

coverage and results of the interview would likewise revolve and be grounded in these areas.

45
 These two models of assessing PPP would be used in assessing the PPP in the PNLEX

Rehabilitation and Expansion. The areas employed by each model would be used in grounding

the assessment of the dynamics of the partnership the decision-making, the benefits and

interests of each party and the impact of the entire partnership to the project and the

transportation and road sector as a whole, and give an objective discussion from the subjective

statements the representatives of each party will provide.

Treatment of Secondary Data

The secondary data for the present study would refer to the documents, contracts,

transcripts, reviews, journals, case studies and other printed or electronic material that concerns

any of the parties involved when they engage in PPP. The data that would be gathered would be

analyzed using the same models employed in treating the primary data.

The figures that would be gathered from the documents used by each company in their

respective PPP projects would be grounded on the same areas of support for the PPP project by

the government, the private sector and the people, the satisfaction of the objectives as defined in

their respective contracts or agreements and how well these roles are defined, the extension of

the project or undertaking of new projects with similar parties, the manner the project improves

the efficiency of the system, the equity of the system, the environment and the experience of

users of the project i.e. the public in Levinsons model. Reviews of the PNLEX Rehabilitation

and Expansion, if available, would be accessed to validate any statements given by the

representative of each partnering institution for a more objective assessment.

Using the model of Thomsen, on the other hand, the partnership would be assessed on the

standards of Impact, Efficiency, Sustainability, Participation and, Accountability. The figures

46
that would be revealed in the reports during the undertaking of the PNLEX Rehabilitation and

Expansion would likewise validate the claims of each party in their involvement in a PPP

Project.

Using these two models for treating the secondary data, the study also attempts to look

for patterns when each party engages in PPP projects. The records of each institution would

serve as a guide and basis for the patterns of interaction that may emerge during the undertaking

of the PNLEX Rehabilitation and Expansion in comparison the previous PPP projects the parties

have been involved.

47
 CHAPTER IV

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents the results and discussions through the presentation, analysis and

interpretation of the data gathered, and in doing so, answer the problems posed by the research

study. In answering the problems posed by the research study, it is important to establish a link

between the theories used and the former. The theories would serve as a guide in arriving to

answers to the problems of the present research undertaking.

The theories that were used in studying the partnerships between the international

funding institutions, principally the Asian Development Bank, Leighton Holdings, Manila North

Tollways Corporation and the Philippine National Construction Corporation, in financing and

managing the PNLEX Rehabilitation and Expansion are Reciprocity Norm, Investment Model

and Partnership Theory. Before proceeding to the discussions of the results from the data

gathered, a short recap as to what these theories are will be employed for clarity. Reciprocity

Norm implies that if one has given something to someone, that giver shall receive something in

return for what he or she has given be it either, a tangible or an intangible thing (Reciprocity

Norm, 2002). The Investment Model is a theory or model that suggests the idea where a

particular relationship between individuals or group of people mainly depends on its existence or

establishment on the satisfaction of each party, which is influenced by the rewards and costs and

what the parties see as a fair balance; comparison with other potential alternative partnership; the

degree of effort or amount that the individual or group has invested in the relationship or

partnership. Furthermore, it also contains the idea that parties, who have invested heavily in the

relationship, are the ones who are more likely to stay inside the relationship (Investment Model,

48
2002). Lastly, the Partnership theory infers the idea that partnerships are created for purposive

goals. Partnership theories have a life-cycle that contains four key stages, namely: initiating,

starting, doing and finishing stage (Partnership Theory, 2005).

The theories are utilized in order to understand the reason and the manner the whole

process of public-private partnership between the institutions involved namely MNTC, ADB,

PNCC and Leighton Holdings happens. The Reciprocity Norm is used as an invisible guide in

understanding the whole process of the said partnership. This theory is mainly used in the

process where giving and taking transpires. For instance, the theory can be used in understanding

the funding of the Asian Development Bank to the rehabilitation and expansion project on the

PNLEX in such a way that it takes into consideration what does the ADB gets in return by

funding the said project. The Investment model is mainly concerned as to why these institutions

are still in the said partnership. One of the assumptions of the theory can be used to explain such

the simple reason is that they have already invested a lot in it e.g. ADB releasing a total cost of

70$ million. As to the concept of satisfaction, which is what this theory primarily suggests as to

why parties stay in a relationship; wherein, the satisfaction of the parties are first, influenced by

what the parties see as a fair balance in terms of rewards and costs those institutions, ADB,

MNTC, PNCC and Leighton Holdings take into consideration the benefits that they get, as well

as, if their interests are being pursued with the partnership that they have agreed to be engaged

with the benefit of the PNCC with regard to the partnership is that it is able to collect revenue

that is used to deliver services, and at the same time it is also able to pursue its interest, which is

by being able to contribute to the rehabilitation and expansion of toll roads that will cater to the

needs of those who avail the road network. The other key component of this theory is on the

49
view of other potential alternative partnership. This component is applied at the initial stage

wherein the Philippine government (such as the instance where the Philippine government

partnered with MNTC) -recognized the potential of the private sector, as a partner for building a

path towards national growth and development. The third theory, which is the Partnership theory,

is chiefly used as a tool here for understanding the whole processes that the partnership had

undergone. The 4 key stages of a partnership was of paramount importance here; wherein, the

first stage initiating stage was used to explicate the relationship or process between the MNTC

and ADB (with the initial intervention of the Philippine government), where this stage is concern

primarily on who started the partnership. Starting is the second stage, where the process or

relationship between the ADB and PNCC is the primary subject here. This stage is concerned on

reviewing what is happening and finalizing as to who are involved in the partnership. The third

stage is the doing stage, where the relationship between PNCC and Leighton Holdings are taken

into account. This stage is essentially concerned on the actual developing and starting of the

project occurs. The last stage, which is the finishing stage, involves the assessment part of the

whole process.

What kind of partnership does ADB, MNTC, PNCC and Leighton Asia have on the

PNLEX Rehabilitation and Expansion?

The partnership between ADB, MNTC, PNCC and Leighton Asia in the PNLEX

Rehabilitation and Expansion is a PPP working on Rehabilitate-Operate-Transfer. Rehabilitate-

Operate-Transfer. This is the process of enhancing the PNLEX road network in order to deliver

better services that will cater to the convenience of the road user. It would be operated by private

firms for the time-being i.e. the concession period when the road network is still undergoing

50
rehabilitation and the expenses from the rehabilitation are still being recovered. At the end of the

concession period, control of the management of the PPP project would be turned over the

government thus placing complete control on the government after the contract with the private

sector has ended. The government will then operate the road network and manage the toll

collection not only to collect revenue from the returns paid by the users but complete and total

management of the system.

In the case of the Philippine North Luzon Expressway, the rehabilitation process was

done in the road network through the addition of 14 interchanges, 24 bridges, and 31 overpasses

from Manila to the Clark Special Economic Zone and; the efficient and computerized tax

collection and traffic management system. The management of the toll collection and the

maintenance of the road network for the time-being is handled by MNTC, a private firm

generating profit from the returns of the toll rates being paid by PNLEX users. Leighton Asia

also manages the project by being the contractor. PNCC is the government agency of whom the

control of the management of PNLEX, at the end of the concession period in 2037 will be turned

over to.

These partnership among the institutions is determined by the participation of each

institution in the PNLEX Rehabilitation and Expansion as determined according to their

purposes, roles and benefits derived from the said project. The parties involved benefit from the

decision-making activities of the management and funding of the Philippine North Luzon

Expressway Rehabilitation and Expansion through the fulfillment of their own roles and

purposes for the completion of the project. Table 4.1 shows a matrix of the roles, benefits and

interests of each institution participating in the PNLEX Rehabilitation and Expansion. It shows
51
that the institutions participating in the PNLEX Rehabilitation and Expansion project come from

different sectors and represent different interests for their respective benefits.

Table 4.1
Roles, Benefits and Interests of Partner-Institutions in the PNLEX Rehabilitation and

Expansion

Institution Sector / Role Benefits Interests

ADB Main financier through Interests from payment of Urban development

loans to the Philippine loans projects
government

PNCC Sector: public Collect revenue to deliver Rehabilitation and

services Expansion of toll roads;
Role: Revenue collection cater to the needs of road
and transfer of operation users
by 2037

MNTC Sector: Private Profit Profit

Role: Toll collection for
profit and payment of
loans

Leighton Private contractor Profit Transport infrastructure

Holdings i.e. road contracts

The role of the Asian Development Bank in the PNLEX Rehabilitation and Expansion is

to finance the project. It releases money to the government in the form of loans in order for the

project to possess the means to start. ADB classifies the transports sector as an operational

priority based on need expressed by its developing member countries. This shows that ADB is

52
interested in investing in urban development projects. It focuses on the transport sector to make

the best use of scarce resources, enhance its responsiveness to clients, mobilize resources, and

concentrate on development impact (ADB, 2008). With that focus and interest of ADB, it

benefits from funding the PNLEX Rehabilitation and Expansion through the payment of the

interests acquired through loans both by the Philippine government and the private sector. ADB

investments on urban development projects gains returns from the interests of their loans being

paid to them. With the loans earning interests in the duration of the project, it implies that the

return of investment of ADB through the financial assistance it releases allows them to invest on

more development projects and eventually lead towards sustainable development.

The funding of ADB would not be possible without partnering with the respective

government it aims to invest on its developmental projects. In the case of the PNLEX

Rehabilitation and Expansion, ADB partnered with the Philippine National Construction

Corporation in order to undertake the said project in the Philippines. PNCC belongs to the public

sector an agent of the government in carrying out its tasks in doing public service, thus making

PNCC a service-oriented institution. The agenda of PNCC in this project is to rehabilitate and

expand the toll road in order to cater to the needs of the road users. In line with this aim, PNCC,

being a member of the public sector collects revenue in order to deliver its desired services.

PNCC has been credited for major road projects, particularly in this case, the North Luzon

Expressway(PNCC, 2010). With the investment of ADB in the Rehabilitation and Expansion of

PNLEX, PNCC is once again the government institution tasked to undertake such project.

The role of PNCC in the PNLEX project is to serve as the government agency that will

initiate the construction of the road network, collect revenue and enhance its delivery of
53
services. Its business model includes the invitation of interested entities and expertise in toll

operations, whether local or foreign, while insulating toll revenues from undue political pressure.

Second, it aims to expand and rehabilitate toll roads to world-class levels the end goal for

PNLEX, to cater to the needs and expectations of road users while maintaining manageable toll

rates and be covered by their franchise (PNCC, 2010). In this kind of model, PNCC gears

towards enhancing the road transport sector to deliver quality services to its users. This is in line

with the preparation of the PNCC to be developed and stable enough when the management of

the road network is transferred to the government by the end of the concession period in 2037. Its

success in inter-institutional projects will imply that partnerships with the Philippine government

would lead to sustainable development in the respective sector because it is efficient and it

creates good services that caters to the general public.

Apart from PNCC and ADB, the private sector also has certain participation in the

PNLEX Rehabilitation and Expansion through the Manila North Tollways Corporation. MNTC,

being a private institution in this partnership, is a profit-oriented organization. MNTC manages

the toll collection of the PNLEX. As the services of the PNLEX continue to progress, the toll

rates for the use of the road network increase. MNTC, as the manager of the toll collection, is

geared towards making profit out of the services. However, despite the profit-orientation of

MNTC, the management of the toll collection includes the payment of the debt to ADB for

financing the project. Therefore, even if MNTC is a profit-oriented institution, it still caters to the

public and contributes to development through the its management of the toll collection. The

returns from the toll collection do not all go to MNTC. Certain portions of the returns go to the

payment of the ADB loan and certain portions of the returns got to PNCC. This implies that the

54
management of the tollways by PNCC also contributes to development because, not only does it

gain profit from participating in the partnership, but also, the shares of PNCC and those intended

to pay the loan to ADB are funds that are being used to render public services and continue the

investment on projects leading towards development.

The contractor in the PNLEX Rehabilitation and Expansion is Leighton Asia, a

subsidiary of Leighton Holdings. Leighton Holdings is another private company that engages in

transport infrastructure, in this case the road sector. Leighton Holdings participates in partnership

projects as a contractor to obtain profit and as a project development organization. In its

participation on development projects, it takes into account risk management, rehabilitation and

community matters in its corporate governance. It considers social governance by incorporating

it in their business strategy (Leighton Holdings, 2011). With Leighton Asia adopting this model

when participating in joint projects geared towards development, this implies that this private

contracting company is not solely focused on profit but also participates in the delivery of public

service in promoting public welfare and contributes to the development of the road transport

sector as a whole.

The partnership of ADB, PNCC, MNTC and Leighton Asia is geared towards sustainable

growth on the road transport sector. With the rehabilitation of PNLEX, the partnering institutions

not only ventured on a Rehabilitate-Operate-Transfer development project that will deliver

quality services to the users of the road network, it also served the arbitrary interests of every

participating institution. The purpose of contributing to the development of the road transport

sector as a whole, together with the interests of the parties involved being served affect the

funding and undertaking of the PNLEX Rehabilitation and Expansion.

55
What kind of management is made in the funding and undertaking of the PNLEX

Rehabilitation and Expansion?

The management made in the funding and undertaking of the PNLEX Rehabilitation and

Expansion is an inter-institutional management where the public sector and the private sector are

represented in the investment of ADB in projects that will eventually lead to sustainable

development. Each institution participates in the management on the development project of

ADB in accordance with their particular roles as institutions and their orientations as to whether

they are service-oriented from the the public sector or profit-oriented from the private sector. The

public sector is geared towards delivering quality services thus, in this case, PNCC seeks to

deliver quality services in the road transport sector by fulfilling its purpose of upgrading toll

roads of world class standards. This purpose of the PNCC is parallel to the purpose of ADB in

delivering quality services that will eventually lead to sustainable development.

The management of the PNLEX Rehabilitation and Expansion was first initiated by ADB

when it decided to fund the project. The goal of ADB is the creation of necessary infrastructure

that will contribute to sustainable development. The role of Asian Development Bank in the

Philippine North Luzon Expressway Rehabilitation and Expansion is that it is primarily, the main

financier of the aforementioned project. The Board of Directors of ADB has approved a loan

worth $45 million and a complementary loan worth 25$ million to the Manila North Tollways

Corporation (MNTC). The two loans that were used to finance the said project came from

ordinary capital resources of the bank (ADB, 2011). With this being established, ADB needs

partnering institutions from the country it decides to invest thus, PNCC and MNTC, manages the

56
toll collection in order to pay the loan to ADB for funding the PNLEX Rehabilitation and

Expansion.

The Rehabilitate-Operate-Transfer process employed in the management of the PNLEX

Rehabilitation and Expansion is done through the participation of the different partnering

institutions namely, ADB, PNCC, MNTC and Leighton Asia. The rehabilitation is being

managed by Leighton Asia. Leighton Asia is the contractor assigned to undertake the said

project. With that established, it manages the rehabilitation through the actual process of

enhancing the road infrastructure through the addition of roads, bridges, sky ways and

intersections. This private firm manages the creation of the road that will sooner be operated by

MNTC and the government through PNCC in order to pay the loan to ADB for funding the

PNLEX Project.

The operation process of the PNLEX Rehabilitation and Expansion i.e. the collection of

toll rates for the purposes of profit, revenue and paying the loans to ADB, is being managed by

MNTC and PNCC, respectively. MNTC manages the operation of the PNLEX Rehabilitation

and Expansion through facilitating the toll collection by establishing the toll rates that users of

the road network will pay in exchange for the service they receive. MNTC controls the toll rates

of the PNLEX depending on the costs that the rehabilitation and expansion of the road network

will incur. Table 4.2 shows the projected and actual Economic Internal Rate Returns (EIRR) of

the ADB from the collection gathered by the MNTC from the toll rates paid by NLEX users.

57
 Table 4.2

Economic Internal Rate Returns of the PNLEX Rehabilitation and Expansion

Projected Rate 25.70%

Actual Rate 11.00%

Margin 14.70%

Minimum 10.00%
Indicator Rate

Source: 2011 ADB Annual Report

The figures shown are based upon the collections made by MNTC in its toll collection

during the present concession period where it still forms part of the decision-making body in the

undertaking and funding of the PNLEX Rehabilitation and Expansion. It shows the economic

sustainability of the road project by having an actual return of 11% from the investments of ADB

1% above the minimum indicator of the ADB for project sustainability. Even if the EIRR did

not meet its projected rate of return, the management of MNTC with the toll collection made it

possible for the project to attain and rise above the minimum quota for economic sustainability

of the project. This kind of management and rate of returns may create a positive future for the

PNLEX once it is turned over to the government at the end of the concession period in 2037.

On the other hand, the management of the PNCC in the PNLEX is to collect revenue

from its share from the returns collected from the toll rates motorists pay in exchange for the

services the road network gives. The participation of PNCC in the operation of the PNLEX is to
58
initiate the expansion and rehabilitation of toll roads to global standards, and at the same time,

keep the toll rates manageable for the users of the road network (PNCC, 2010). However, the

management of PNCC in the PNLEX would only completely manifest once the Transfer Phase

of the Rehabilitate-Operate-Transfer process happens. When the management of PNLEX is

transferred to the PNCC at the end of the concession period at 2037, the system of management

of the partnership and the partnership itself would cease to exist. Once PNLEX management is

transferred to PNCC, the government has the sole control in the decision-making of the road

network but, it also possesses the sole responsibility of collecting the toll rates for revenue,

initiate and improve the road network when necessary and possibly, use government funds in

order to further enhance the road or to facilitate the payment (if any) outstanding balances to the

ADB from the loan acquired during the start of the project.

The management made in the funding and undertaking of the PNLEX Rehabilitation and

Expansion is dependent on the roles of each institutions and their specific functions in

undertaking partnership projects. ADB invests on project that are intended for sustainable

development. It calls upon the corresponding government institution to initiate the undertaking

of the project in this case PNCC. Once the project has been initiated, contractor bid resulting

for Leighton Asia getting the contract for the undertaking the rehabilitation and expansion of the

PNLEX. The management of toll collection is under MNTC, pa private organization seeking to

gain profit in its PPP participation while sharing the returns with PNCC that seeks to generate

revenue for the improvement of services and; pay the loans used for undertaking the project to

ADB through the collected toll rates. Once the transfer stage in 2037 is done and the

Rehabilitate-Operate-Transfer process is complete, the government will have complete control of

59
the decision-making and management of the PNLEX and possess all the responsibilities

necessary for managing a road network.

What factors in the partnership affect the management of the PNLEX Rehabilitation and

Expansion Project?

The partnership between and the roles of the ADB PNCC, MNTC and Leighton Asia are

all contributory to the funding and undertaking of the PNLEX Rehabilitation and Expansion.

The roles of each institution all consider a certain standard as to the manner of they are going to

evaluate the project once the concession period starts. The ADB has developed a certain criteria

that will determine the factors that shall evaluate the management of the PNLEX Rehabilitation

and Expansion. The criteria development impact, investment profitability, work quality; and

additionality, were based on the analysis of data from previous review missions and site visits for

the end purpose of having a guideline that will serve as a model, as well as, to encourage the

participation of the private sector in the transport sector. (2008 Extended Annual Report, 2008).

Overall, ADB assessed the development impact of the project as excellent. The rating is

based on the criteria of private sector development, business success, economic sustainability

and environment, health and safety performance. ADB considers its social responsibility,

stakeholders in its projects, cooperation and integration of partnerships, the strength of the

investment climate by calculating risk management, social impact of the project and the

improvement on governance (ADB, 2008). ADB being the main financier of the PNLEX

Rehabilitation and Expansion is geared towards sustainable development through its investments

in the form of loans on development projects. In the course of its funding of projects for

60
development, ADB does not only focus on the particular sector it directs its money into. It also

considers other stakeholders that would be affected by the project that it plans to pursue in order

to minimize damages thus, promoting development not only to particular sectors in this case,

the road transport sector, but also to society as a whole.

The PNLEX is the first major expressway in the country that is built, operated, and

maintained conferring to international standards by a private sector company. The project is now

being viewed by other countries as a model for government and private sector partnership for the

reason that the project on the PNLEX yields benefits to the Philippines (ADB, 2008). Table 4.3

shows the rating of ADB in terms of its performance in the PNLEX Rehabilitation and

Expansion.

Table 4.3

ADB Performance Rating in the PNLEX Rehabilitation and Expansion

ADB Criteria Remarks Rate

Private Sector Development satisfactory 3

Business Success satisfactory 3

Economic Sustainability satisfactory 3

Environment, Health and satisfactory 3

Safety Performance

In a scale of 1-5 with 5 being rated as excellent, 4 being rated as very satisfactory, 3

being rated as satisfactory, 2 as unsatisfactory and 1 as very unsatisfactory, the performance

61
rating of ADB in the PNLEX Rehabilitation and Expansion is rated satisfactory in terms of

private sector development, business success, economic sustainability and, environment, health

and safety performance. Private sector development was rated satisfactory because the PNLEX,

being a benchmark project for the toll road sector, paved the way for further private sector

participation and made government policy to endorse PPPs in the road sector (ADB, 2011). In

addition to that, the participation of MNTC, a private institution, in the toll management of the

PNLEX shows that ADB recognizes the vital role of the private sector in development project it

finances.

Business success is rated as satisfactory. Economic sustainability was also rated as

satisfactory. These are two complementing areas in the ADB performance ratings because both

deal with the losses of ADB in comparison to its gains. Business success was measured by the

projected volume of traffic in PNLEX in comparison to the actual volume of traffic which

turned out to be lower than expected. Although the traffic volumes were low, cash flow was

good (ADB, 2011). Given such situation, the initial stage of payment to ADB was made on time

(ADB, 2011) thus, implying that the joint venture on business and road service is efficient in

delivering both public service and collections for the financier.

Economic sustainability, the other hand, was measured in terms of the economic internal

rate return (EIRR). The return was also lower than expected being computed at 11% lower than

the 25.7% projection, according the ADB annual report (2011). However, the EIRR of their

investment in the PNLEX Rehabilitation and Expansion is above 10% (ADB, 2011), probably

their minimum indicator for sustainability, implies that the project is still sustainable and its

62
contribution to development outweighs the difference in margin between the project and actual

EIRR.

Environmental, social and safety performance is also rated as satisfactory. The

environmental guidelines of ADB has been adopted by MNTC. The standards of ADB on this

matter are being monitored if the conditions of the project, as well as the surroundings of the

project, in order to address issues on environment and social concerns (ADB, 2011). The role of

ADB in the PNLEX Rehabilitation and Expansion goes beyond investing on loans to finance

projects that are geared towards development. ADB also plays a communitarian role by

considering the environment and social concerns other stakeholders in society, before they

venture on their developmental projects.

In addition to the factors set by ADB among its partner-institutions that would evaluate

their performance in the PNLEX Rehabilitation and Expansion, it is also important that the users

also evaluate the enhanced road network. The impact to development of the PNLEX

Rehabilitation and Expansion was determined by interview with some NLEX users i.e. bus

companies who transport travelers to Northern Luzon via PNLEX. Victory Liner, the biggest bus

company bound for Northern Luzon, gave their opinion on the results of the PNLEX

Rehabilitation and Expansion. According to the management of the franchise stationed in

Manila, convenience both for the management and the passengers was enhanced because of the

increase from the 3 lanes to 5 [or 6 lanes] making the route wider, thus making the travel time

faster for those who pass through the PNLEX. The time allotted for travel decreased significantly

upon the rehabilitation and expansion of the said road network. According to Victory Liner

63
management (2012), the time for travel for traversing Balintawak to the San Fernando exit has

been reduced by about 40%.

Another concern of NLEX users are the toll rates being paid in exchange for the use of

the said road. According to the management of Victory Liner Manila, the behavior of toll rates

tending to increase in the long-run is justifiable because, first, when the toll rates increase, the

transport fare would also increase, in that way they are not drastically affected. Secondly, the

vehicular parts that were used by those who traveled prior to the expansion and rehabilitation

project of PNLEX route only lasted for about half-year because the road surface is rough, which

contributes to the damaging of the vehicular parts; hence, more costs to the vehicle owners, but

after the said project on the road network has been implemented, the vehicular parts of those

vehicle that traversed the said road network last for a year because of the wide and smooth road

surface; hence, less costs to the vehicle owners more convenience. Thirdly, the use of gasoline

became cost-effective in the sense that the route traversed by these motorists are more uniform as

compared to the old NLEX wherein there are shifting of lanes that happen, which leads to more

travel time and higher volumes of traffic. After the rehabilitation and expansion of the PNLEX,

certain motorists had a uniform path to travel, which makes their travel faster and more

convenient compared to the experience prior to the rehabilitation and expansion project of

PNLEX.

Convenience, safety, and the degree on the decrease of dilemma for travelers and

transport operators regarding the use of PNLEX were compared and rated on a scale of 1-5 with

5 meaning excellent, 4 being rated as very satisfactory, 3 being rated as satisfactory, 2 as

64
unsatisfactory and 1 as very unsatisfactory. Table 4.4 presents the ratings of NLEX users

revolving around these respects.

Table 4.4
PNLEX Ratings before and after Rehabilitation and Expansion

Before PNLEX Rehabilitation After PNLEX Rehabilitation

and Expansion and Expansion

Safety 3 5

Convenience 3 5

Travel Dilemma Reduction 3 5

Before the rehabilitation and expansion of PNLEX, safety was rated 3 meaning

satisfactory. This means that the safety of NLEX users in using the said road is only at a minimal

level. This is because there are only about 3 lanes, which leads to traffic congestion and risks of

accidents. On the other hand, safety was rated 5 meaning excellent when the results of the

rehabilitation and expansion manifested. The increase of lanes, interchanges, bridges and

overpasses further ensured the safety of the road users because the addition of more areas for

travelers to use lessens traffic congestion and risks of accidents.

Convenience, prior to the implementation of the project, was rated 3 meaning

satisfactory. After the project has been implemented, convenience was rated 5 meaning

excellent. The increase of lanes and the addition of features in the enhanced road network made

traveling to Northern Luzon more convenient. Time for travel was decreased because vehicles

65
can now travel faster in a wider road. In addition, traffic congestion in NLEX has been

minimized. The additional road features give more ways for travelers to take when bound for

Northern Luzon thus, they are not confined to a single route where they all crowd prior to the

implementation of the project.

Reduction of travel dilemma was rated 3 meaning satisfactory, prior to the

implementation of the project, and rated 5 meaning excellent, after the project has been

implemented. This means that now that the results of the rehabilitation and expansion of PNLEX

is manifesting among its users, the travel dilemma of those who pass on the road is reduced. The

rehabilitated and expanded PNLEX reduced travel dilemma by decreasing travel time because

vehicles can now travel faster, decreasing traffic congestion and decreasing the risk of accidents

in the said road network.

There are advantages that the Philippine North Luzon Rehabilitation and Expansion

Project had contributed, not only to those who are availing the services of the PNLEX but as well

as to the operators of the said road network and to the whole community as well. The primary

advantage of the PNLEX Rehabilitation and Expansion is that it provided more transportation

infrastructures (interchanges, bridges, lanes, and overpasses) for the purpose of easing the

transportation in the Philippine North Luzon Expressway. The project has is its operations of a

system-wide closed-circuit television system, which enables the management, operators and

control center for a closer monitoring of traffic situations. There is also a continuous and

convenient route of the travelers through toll plazas via Electronic Toll Collection (ETC) system

(ADB, 2008). Other important factors that were assessed and used as indicators on the significant

the changes that the PNLEX Rehabilitation and Expansion Project brought into are more
66
convenience, safety, a significant reduction in terms travel dilemma and an increase of numbers

of motorists that pass through the PNLEX.

The PNLEX Rehabilitation and Expansion is a product of a joint venture of ADB,

MNTC, PNCC and Leighton Holdings. The benefits of an enhanced road network was brought

about by the partnership of these institutions. The manifestation of positive effects on the users

of PNLEX show that the partnership of these institutions, despite their different interests before

participating in the project e.g. revenue and profit, show signs of development in the road

transport sector. Along with efficient collection of toll for maintenance and paying of ADB

loans, the positive impact of the road network to society provides an impetus that will lead

towards sustainable development in the road transport as a whole. Therefore, with the users of

PNLEX experiencing the dramatic change in the service of the enhanced PNLEX, the

partnership significantly affects the funding and undertaking of the PNLEX Rehabilitation and

Expansion.

67
 Chapter V
SUMMARY/CONCLUSION/RECOMMENDATIONS

Summary of the Study

The study entitled Public-Private Partnership Assessment of the Philippine North Luzon

Expressway Rehabilitation and Expansion is about the dynamics of the institutions engaged in

partnership in order to undertake and complete the PNLEX project. The institutions involved in

the partnership are the Asian Development Bank, the Manila North Tollways Corporation, the

Philippine National Construction Corporation and Leighton Asia.

The ADB is the funding agency that served as the impetus to start the project. The

foreign assistance coming from ADB served as a loan to the Philippine government in order to

undertake the PNLEX project. This is based on the premise that the Philippine government does

not have enough funds to create such a road network expansion. PNCC is the government

institution representative of the public sector, in the said project. It is through the government

by which ADB directed its funds in order to undertake the said project. MNTC is the private

institution that manages the collection of the toll fees at the same time, the increase and decrease

of the toll rates depending on the necessity to do so. This is being done by MNTC in order to be

able to pay the loan to ADB in constructing the project. Leighton Asia, is the institution to which

the contract is given to undertake the PNLEX project. It is the goal of the present study to assess

the dynamics of the partnership of these institutions i.e. their participation in the PNLEX

Rehabilitation and Expansion.

68
 In assessing the dynamics of the partnership of ADB, MNTC, PNCC and Leighton Asia

in the PNLEX project, the study seeks to answer the principal question How does the

partnership between the ADB, MNTC, PNCC affect the management of the funding and

undertaking of the PNLEX Rehabilitation and Expansion?. In line with answering the principal

question, the study needs to answer the following sub-questions: 1) What is the role/participation

of ADB in the PNLEX Rehabilitation and Expansion; 2) In what way will the parties involved

benefit in the decision-making activities with regard to the PNLEX Rehabilitation and Expansion

Project?; 3) How does the contribution of each partnering agency contribute to the success of the

project and the development of the transportation and road sector as a whole?. In answering these

questions, the study aims to support the claim that the dynamics of the partnerships between

international funding institutions, principally the ADB, private companies, Leighton Holdings

and MNTC and, the PNCC significantly affect the management of the funding and undertaking

of the PNLEX Rehabilitation and Expansion.

The study would primarily benefit the NLEX users. Knowledge of the partnership for the

undertaking of the PNLEX project would make motorists understand the manner toll systems

work and why toll rates change the way it does in the present society consistently increasing.

Likewise, the stakeholders would benefit the same from the study. The study would reflect the

efficiency of the partnership and draw prospects about the engaging in future partnerships for

other different projects. The study would also be beneficial to law-makers. With the partnership

of the the stakeholders assessed in terms of its efficiency, sustainability, participation,

accountability and impact, law-makers can create sound policies that could serve both the

interests of the users of the PNLEX as well as the stakeholders who manage it. Lastly the study

69
would be beneficial to the academe. The study can offer recommendations to future researchers

who plan to venture in the field of public-private partnerships. Given that public-private

partnership is the current trend for government business, the study contributes to the academe by

offering new analysis on partnering institutions.

The study covers assessing the dynamics of the partnership i.e. the decision-making

process and management of the PNLEX Rehabilitation and Expansion between ADB, Leighton

Holdings, MNTC and PNCC in terms of efficiency, impact on the project and its contribution to

the development of the road transport sector as a whole. The role, benefits and interests of every

participating institution is covered by the study in order to fulfill the purpose of assessing the

dynamism of the respective partnership. The study is therefore limited to these four institutions

only and other funding institutions who help in the success of the PNLEX Rehabilitation and

Expansion would not be considered. The study only refers to the decision-making process done

by each party in pursuance of their respective goals, interests, benefits and objectives on the

assumption that all other things remain constant.

The study employed a comparative structural-functional approach. An analysis and

comparison of the structures and functions of each participating institution in the PNLEX project

would determine their respective roles in the decision-making process of the project as well as

their benefits for participating in such project. In doing so, the data necessary for the study would

be gathered via interviews and dialogues classified as primary data, and via documents i.e.

journals, annual reports and other archival materials classified as secondary data. The data

gathered would be used for analysis and assessment of the partnership using Thomsen's and

Levinson's model of assessing private partnerships. The areas set by these models would be used
70
in order to have an objective ground for the assessment of the partnership that covers the

decision-making, roles, benefits, interests and impact of the partnership to the road transport

sector.

Conclusion

The partnership of the Asian Development Bank, the Manila North Tollways

Corporation, the Philippine National Construction Corporation and Leighton Holdings

significantly affect management of the funding and undertaking of the Philippine North Luzon

Expressway Rehabilitation and Expansion. The roles played by each of the partnering

institutions all contributed to the success of the management of the funding and undertaking of

the PNLEX Rehabilitation and Expansion. The following are the findings that lead to the

conclusion of the present study.

1. The PNLEX Rehabilitation and Expansion is being undertaken through a Public-Private

Partnership working on a Rehabilitate-Operate-Transfer process. The involvement of

each institution in the partnership is determined by their specific roles, purposes and

benefits that each of them derive from participating in the PNLEX Rehabilitation and

Expansion. While each of the partnering institutions are serving their particular interests

for participating in the PNLEX Rehabilitation and Expansion, they, in the process,

significantly affect the management of the funding and undertaking of the enhancement

of the said road network through the fulfillment of their roles and purposes inside the

partnership.

71
2. The management made in the funding and undertaking of the PNLEX Rehabilitation and

Expansion is an inter-institutional management involving PPP in partnership with the

development project investment of ADB. Each institution participates in the management

on the development project of ADB in accordance with their particular roles as

institutions and their orientations as to whether they are service-oriented from the the

public sector or profit-oriented from the private sector. In the Rehabilitate-Operate-

Transfer process, Leighton Asia fulfills the rehabilitation process being the contractor

tasked to rehabilitate and expand the PNLEX. MNTC and PNCC manage the toll

collection of the PNLEX in the operation process. MNTC seeks to gain profit by having

control of the toll rates however, apart from profit, it also manages the payment of the

loan to ADB. PNCC on the other hand seeks revenue from the returns of toll rates. Its

more crucial role is when it takes complete control of the system at the end of the

concession period in 2037 in the transfer process, where the management of all the

whereabouts of the enhanced PNLEX would be under its control and responsibility thus,

completing the Rehabilitate-Operate-Transfer process.

3. The factors considered by ADB in evaluating the partnership in the PNLEX

Rehabilitation and Expansion are private sector development, economic sustainability,

business success and environment, health and safety performance. Each of these

standards were evaluated by ADB as satisfactory. The development impact of the project

was evaluated as excellent. This means that the partnership significantly contributed to

the enhancement of the road network through the manifestation of positive results among

its users. This was proven by ratings of PNLEX users e.g. Victory Liner Inc. that claimed

72
 that the safety, convenience and the reduction of travel dilemma actually changed from a

mere satisfactory rating to excellent. The PNLEX Rehabilitation and Expansion not only

benefited travelers bound north but also the bus operators who have reduced the risks and

dilemma and increased the guarantee of safety among its passengers.

Recommendations

The positive impact and efficient service of an enhanced road network, brought about by

the Philippine North Luzon Expressway Rehabilitation and Expansion, by the partnership

between the Asian Development Bank, Manila North Tollways Corporation, Philippine National

Construction Corporation and Leightion Holding, show that Public-Private Partnership in

development projects contributes and could serve as a road to sustainable development. With

that, the following recommendations for made for further study.

General Recommendation

The present study would like to recommend that the government further venture on

public private-partnerships with regards to urban infrastructure development e.g. roads but still

with caution. PPP allows the government to gain returns without actually generating the bulk of

the capital when investing in development projects. In the case of the Philippine North Luzon

Expressway Rehabilitation and Expansion, bulk of the capital came from the Asian Development

Bank and paying the loans is the Manila North Tollways Corporation. The government, through

the Philippine National Construction Corporation simply generates revenue from their share on

the returns from delivering road service.

73
 The PPP in the PNLEX project can serve as a blueprint for government to further its

development agenda investment in urban infrastructure. With government acquiring loans and

employing the private sector to participate in the management of its projects, the government can

maximize the monetary capacity of the private sector towards development. In a nutshell, the

government ought to pattern PPP development projects after the system employed in the PNLEX

project because it benefits the interests of all parties involved.

Specific Recommendations

The following are the specific recommendations of the research study.

1. More evaluation reports should be done in such kind of projects especially if it involves

large amounts of money, major stakeholders in the political and economic sphere, and the

general welfare of the people. It is a paramount importance of making more evaluation

reports, either conducted by local or international companies or organizations that will

assess or reflect whether such kind of projects contribute significantly to the development

of the nation. Aside from assessing the entirety of the said project or partnerships, such

evaluation could also look at as to which parts are working or not, which parts are

beneficial or detrimental, which parts need to be revised, strengthen or remove. In such

case, the organizations that are involved in the partnerships will have the notion where

they need to improve; moreover, this evaluation reports will also guide the private sector

and other external sectors to have a certain amount of knowledge as to what the

partnership or project is all about, as well as, enhance the participation of those potential

entities that could serve as engines for national growth.

74
2. More monitoring devices shall be installed in the Philippine North Luzon Expressway to

further ensure not only the safety to the motorists, but as well as, diminution of motorist

disputes as regards to whenever accidents happen in the said road network. The former

can be explained by having surveillance camera for about every 1 kilometer in the

PNLEX route. These cameras instilled throughout the whole route shall be the ones

responsible for monitoring the speed of the motorists. The reason for this is to regulate

the speed of the motorists, by not making them traverse the route too fast or too slow,

which is the reason for the collision of the motorists. As to the latter -the diminution or

reduction of disputes whenever accidents happen in the PNLEX this occurs in such a

way that those monitoring devices can determine as to which motorist is responsible

when such accidents happen in the said road network. If these devices are installed, such

benefits are indeed highly contributory to the national growth and development of the

road transport sector.

3. Many motorists that travel through the North Luzon Expressway lack the knowledge

regarding the whereabouts of the money that they pay as toll fees. This may serve as one

of the reasons that contribute as to why there are protesters who stood against the

increase of toll fees collection. Hence, the idea of conducting seminars/forums and/or

round-table discussions for the purpose of informing the users of the PNLEX route why

such increase in terms of toll rates came about. In this sense, the number of protesters

would not only be reduced, but they will also be informed as to what and how the

processes are managed by the government and its partner institutions. In addition to this

benefit, these seminars or forums could also be used by the government agency to

75
 empower or encourage people participation as regards to engaging into a Public-Private

Partnership in pursuing projects that could be beneficial, not only to the road transport

sector, but also to other sectors that are still considered as an important component for the

success and development of the Philippines as a whole.

4. Since the study is aimed at assessing the public-private partnership , which is now the

current trend in pursuing significant projects that is geared sustainable development of

the country, the study recommends that the idea of Public-Private Partnership be instilled

at the early young age or the youth through interest and advocacy groups. This could also

be done by incorporating PPP in the academe and this could happen by making a course

curriculum in the graduate school that is principally concerned in studying, as well as,

practicing the art and science of PPP. Through this innovation, one could ensure that PPP

will have a place in the Philippines in the sense that it will be beneficial not only to the

academe, but also to the youth who are assumed to have more capacity to be productive

hence, more potential in engaging in PPP projects, and use this as an engine towards

national growth and development.

76
Bibliography
Alcantara, S. E. (2008, July 17). Making transport in the Philippines accessible for persons with
disabilities. Philippines.
Alesina, A., Dollar, D., 2002. Who Gives Foreign Aid to Whom and Why. Journal of Economic
Growth 5, 33-64.
Asian Development Bank. (2005). Assessing the Impact of Transport and Energy Infrastructure
on Poverty Reduction. Mandaluyong City: Asian Development Bank.
Asian Development Bank (2008, April). Extended Annual Review Report.
Asian Development Bank (2011, November). Philippines: North Luzon Expressway
Rehabilitation and Expansion Performance Evaluation Report.Independent Evaluation
Department
Asian Development Bank. (2005). Project Completion Report on Hebei Roads Development
Project in the People's Republic of China , 3-5.
Asian Development Bank. (2007). Southeast Asia Annual Report 2006 Vol. 1. Mandaluyong
City: Asian Development Bank.
Asian Development Bank. (2008, June). PHI: NORTH LUZON EXPRESSWAY
REHABILITATION AND EXPANSION (formerly Manila North Tollways
Corporation). Retrieved December 28, 2010, from http://pid.adb.org/pid/
PsView.htm?projNo=33924&seqNo=01&typeCd=4
Asian Development Bank. (2010). Employment on Project Implementation Officer
(Infrastructure Finance). Retrieved December 28, 2010, from adb.org:
http://www.adb.org/employment/local/rm10-013-inrm.asp
Asian Development Bank. (2010). Our Vision - an Asia and Pacific Free of Poverty. Retrieved
December 28, 2010, from http://www.adb.org/About/Commonwealth Scientific and
Industrial Research Organisation (2007, November). Network Theory. Retrieved
February 20, 2011, from http://www.utwente.nl/cw/theorieenoverzicht/ Theory
%20clusters/Communication%20Processes/Network%20Theory%20and%20
analysis_also_within_organizations-1.doc/

Asian Development Bank. (2008). Technical Note 'Social Analysis for Transport Projects'. ADB
Avenue, Mandaluyong City, 1550 Metro Manila, Philippines.

Ballantyne, P. (2003). Ownership and Partnership Keys to Sustaining ICT-enabled

Development Activities . IICD Research Brief No. 8 , 5-7.

77
Bougheas, S. (2003). International Aspects of public Infrastructure investment. Retrieved August
11, 2011, from Jstor:
http://www.jstor.org/pss/3131805?searchUrl=%2Faction%2FdoAdvancedSearch%3Fq0
%3Dinfrastructure%26f0%3Dall%26c1%3DAND%26q1%3D%26f1%3Dall%26acc%3D
on%26wc%3Don%26Search%3DSearch%26sd%3D%26ed%3D%26la%3D%26jo%3D
&Search=yes
Black, William R. (2010). Sustainable Transportation: Problems and Solutions. New York:
Guilford Publications, Inc.
Business Mirror. (2012, January 26). NLEX-SLEX Connector Road in the Works. Philippines.
Committee on International Relations. (2003). Chapter 1Policy; Development Assistance
Authorizations. Legislation on Foreign Relations Through 2002 Volume 1-A , 18.
Department of Trade and Industry. (2008). Philippine National Construction Corporation.
Retrieved September 10, 2011, from Department of Trade and Industry:
http://www.dti.gov.ph/dti/index.php?p=246
Enserink, J. F. (2009, April). Public-Private Partnerships in Urban Infrastructures: Reconciling
Private Sector Participation and Sustainability. Retrieved August 26, 2011, from jstor:
http://www.jstor.org/pss/27697864?searchUrl=%2Faction%2FdoBasicSearch%3FQuery
%3Dinfrastructures%26gw%3Djtx%26acc%3Don%26prq%3Dinfrastructure%2BAND%
2Bpartnerships%26Search%3DSearch%26hp%3D25%26wc%3Don&Search=yes
European Investment Bank. (2008). Infrastructure and Infrastructure Financing. Features of a
Partnership. (2010, September 14). Retrieved August 5, 2011, from Canton Grisons:
http://www.gr.ch/DE/institutionen/verwaltung/dvs/awt/dokumentation/Dokumente%20St
andortentwicklung%20Industrie/Features%20of%20a%20partnership.pdf
European Investment Bank. (2008). Infrastructure and Infrastructure Financing
Forsyth, P. (2005). Investing in Transport Infrastructure: Institutional Design and Efficiency , 5
-10.
Goldbach, C., Goldman, V., Phillips, R., & Seymour, A. (2004). Public Cost Comparator for
Public-Private Partnerships , 5.
Goldsmith, S. &. (2004). Governing by network: The new shape of the public sector , 27.
Graeme, A. (2004). The risky business of publicprivate partnerships. Australian Journal of
Public Administration Volume 63, Issue 4 , 37-49.
Grigg, N. S. (2010). Infrastructure Finance. New Jersey: John Wiley & Sons, Inc.
Harris, C. (2003). Private Participation in Inrastructure in Developing Countries. World Bank
Working Paper No. 5 , 17-25.

78
Hawkes, K. (2003). Refi on the Expressway , 1-5.
IC Net Limited. (1994). Philippine-Japan Friendship Highway (Mindanao Section)
Rehabilitation Project, Phase I and II. Davao City, Philippines.
Inderst, G. (2009). Pension Fund Investment in Infrastructure. OECD Working Papers on
Insurance and Private Pensions, No. 32 , 3-5.
Investment Model. (2002). Retrieved September 17, 2011, from Changing Minds. org:
http://changingminds.org/explanations/theories/investment_model.htm
Jain, N. (2010, April 14). Philippine economy to grow 3.8% ADB. (D. G. Amojelar,
Interviewer
Johnston, J., & Gudergan, S. P. (2011). Governance of Public-Private Partnerships: Lesson
Learnt from an Australian case? , 569-582.
Jraiw, K. (1998). Socioeconomic Impact of Sustainable Road Transport System Case Study.
Asian Development Bank , 3-6.
Kendrick, J. J. (1982, September-October). An ailing partnership? California Agriculture , p. 2.
Lancaster, C. (2000). Transforming Foreign Aid: United States Assistance in the 21st Century.
Washington: Institute for International Economic.
Leighton Holdings Asia. (2008). A bigger Wynn for Leighton in Macau. The Leighton Holdings
Asia Magazine Issue No. 1 , 1-2.
Leighton Holdings Limited. (2011). Concise Annual Report.
Leighton Holdings Limited. (2011). Corporate Governance Report.
Leighton Holdings Shareholders. (2010). Project North Luzon Expressway. Retrieved from
http://www.leighton.com.au/about_us/projects/north_luzon_expressway.html on
February 18, 2011
Levinson, David et al. (2006). A Framework for Assessing Public Private Partnerships, in
Institutions and Regulatory Reform in Transportation edited by Piet Rietveld and Roger
Stough. Edward Elgar Publishers. Retrieved from
http://www.google.com.ph/url?sa=t&source=web&cd=4&ved=0CDoQFjAD&url=http%
3A%2F%2Fciteseerx.ist.psu.edu%2Fviewdoc%2Fdownload%3Fdoi%3D10.1.1.145.5075
%26rep%3Drep1%26type%3Dpdf&ei=zMSLTvvLGaStiQfY673mBw&usg=AFQjCNG
UNIxtSCIAcOmONrNouilbhiCTdw on October 5, 2011.

79
Llanto, G. M. (2008). Chapter 11: Build-Operate-Transfer for Infrastructure Development:
Lessons from the Philippine Experience , 347-349.
Llanto, G.M. (2007). Reforming the BOT Law: A Call of the Times. PIDS: Policy Notes.
Macquarie Private Wealth. (2011). Leighton Holdings , 1.
Mandaluyong City, Philippines Case Study (Public Buildings). (2000). Retrieved August 27,
2011, from Public-Private Partnerships: Case Studies for Sustainable Development:
http://ncppp.org/undp/mandaluyong.html
Manila North Tollways Corporation. (2000, June). Summary Initial Environmental Examination.
Metro Manila, Philippines.
Manila North Tollways Corporation. (2009). NLEX: A New Standard For Safety. Retrieved
December 28, 2010, from mntc.com: http://www.mntc.com/nlex/

Manila Times. (2011, October 29). BCDA endorses NLEX-SLEX project. Metro Manila,
Philippines.
Nathan Associates Inc. (2007). Fiscal and Monetary Policy. Philippines Economic Performance
Assessment , 17-18.
NCPPP - How PPPs Work. (2011, March 20). Retrieved September 10, 2011, from Welcome to
the National Council for Public-Private Partnerships:
http://ncppp.org/howpart/index.shtml#define
Net Resources International. (2005, February). North Luzon Expressway, Manila, Philippines.
Retrieved December 28, 2010, from roadtraffic-technology.com: http://www.roadtraffic
technology.com/projects/north-luzon/
Oakley, W. M. (1995, April). The Politics of Infrastructure. Retrieved Augudt 25, 2011, from
Jstor: file:///Volumes/JEFF'S%20USB/CITEM%20reporting/725815.pdf
Panao, A. L. (2010, January-February). Financing Peace and Progress: Why foreign aid
fails in Mindanao. Retrieved December 28, 2010, from The UP Forum:
http://www.up.edu.ph/upforum.php?issue=35&i=307

Partnership Theory. (2005). Retrieved September 17, 2011, from Cross Border Opportunities
Project: :
http://www.crossborderpartnerships.com/partnerships/guide/theoryparticipationladder.asp
x

Patterson, F. B. (2005, December). PUBLIC-PRIVATE PARTNERSHIPS . Retrieved August

26, 2011, from Jstor:
http://www.jstor.org/pss/20447583?searchUrl=%2Faction%2FdoBasicSearch%3FQuery

80
 %3Dpublic-private%2Bpartnership%26gw%3Djtx%26acc%3Don%26prq%3Dpublic-
private%2Bpartnership%2Bof%2BPhilippines%26Search%3DSearch%26hp%3D25%26
wc%3Don&Search=yes
Philippine National Construction Corporation. (2010). Performance Report for the Period 2001-
2010.

Punay, E. (2011, September 30). SC won't stop VAT on toll. Metro Manila, Philippines.

Radelet, S. (2006). A Primer on Foreign Aid. Center for Global Development , 2-23.
Reader, P. (2001, July 7). Reciprocity and "The Psychology of the Gift". Retrieved September 29,
2011, from Type Pad: http://paulreader.typepad.com/
Reciprocity Norm. (2002). Retrieved September 17, 2011, from Changing Minds.Org:
http://changingminds.org/explanations/theories/reciprocity_norm.htm
Republic of the Philippines. (1983, December 22). Presidential Decree No. 1894. Metro Manila,
Philippines.
Riddell, Roger C. (2007). Does Foreign Aid Really Work? Oxford, New York. Oxford
University Press.
Singru, N. (2007). Socioeconomic Effects of Road Improvements: From the 2007 Sector
Assistance Program Evaluation for the Transport Sector in India Focusing on Results .
Asian Development Bank , 1-9.
Sustainable Development Timeline. (2007). Twenty Years After Brundtland. Brundtland Report.
Ottawa: International Institute for Sustainable Development.
Tanzi, V., 1998. Corruption around the WorldCauses, Consequences, Scope, and Cures. IMF,
Washington, DC, IMF Working Paper.
Tavares, J. (2003). Does foreign aid corrupt? Economic Letters 79 , 99-106.
Testimony of Mark Florian. Hearing on Investment in Transportation Infrastructure before the
House Committee on Transportation and Infrastructure. June 10, 2008. Accessed from:
http://transportation.house.gov/Media/File/Full20Committee/20080610/2008.06.10%20
Florian.pdf September 16, 2008.
The National Council for Public-Private Partnerships. (2000). North Luzon, Philippines Case
Study (Transportation). Retrieved September 10, 2011, from Public-Private
Partnerships: Case Studies for Sustainable Development:
http://ncppp.org/undp/luzon.html

81
The United Nations Trade Facilitation Network. (2005). Public-Private Partnerships in Trade and
Transport Facilitation. Global Facilitation Partnership for Transportation and Trade , 1.
Thomsen, S. (2005). Encouraging Public-Private Partnerships in the Utilities Sector: The Role of
Development Assistance. Investment for African Development: Making it Happen (pp. 6-
11). Kama Hal, Entebbe, Uganda: NEPAD/OECD Investment Initiative.
Thomsen, Peter Lund. (2007). Assessing the Impact of Public-Private Partnerships in the Global
South The Case of the Kasur Tanneries Pollution Control Project. Retrieved from
http://www.unrisd.org/unrisd/website/document.nsf/462fc27bd1fce00880256b4a0060d2a
f/cb11c6423c3c33e1c1257393004a339c/$FILE/LundThompap.pdf on October 5, 2011.
Treisman, D., 2000. The Causes of Corruption: A Cross-National Study. Journal of Public
Economics 76 (3), 399457.
United Nations. (2007). Public Private Partnerships: A Financier's Perspective. Economic and
Social Commission For Asia and the Pacific , 4.
Williams, V. (2010). Foreign aid. Retrieved December 28, 2010, from Britannica Online
Encyclopedia: http://www.britannica.com/EBchecked/topic/213344/foreign-aid
World Bank Group. (2010). Transport in the Philippines. Retrieved December 28, 2010, from
The World Bank:
http://www.worldbank.org.ph/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIF
CEXT/PHILIPPINESEXTN/0,,contentMDK:20458733~menuPK:333013~pagePK:149
618~piPK:217854~theSitePK:332982,00.html

82
APPENDIX A
PNLEX MAP

83
 APPENDIX B
PHILIPPINE NORTH LUZON EXPRESSWAY BEFORE AND AFTER THE
REHABILITATION AND EXPANSION

Figure 1. PNLEX Before the Rehabilitation and Expansion

84
85
Figure 2. PNLEX during the Rehabilitation and Expansion

86
 APPENDIX C

TRANSCRIPTION OF INVTERVIEW

Alex Facundo
Field Manager
Victory Liner Incorporated
Sampaloc, Manila
February 7, 2012
9:28 AM

L: Ang research po namin ay about po sa pagmamanage po ng NLEX. Ngayon, parte din ng

kelangan namin sa para sa research ay kung nakakaapekto ito sa buong road transport sector, yun
pong mga gumagamit ng kalye ng NLEX. And ang first question po namin is: Pamilyar po ba
kayo sa rehabilitation project sa PNLEX mula noong 2003?

A: Oo naman. Di pa yun NLEX andun na kami eh.

L: Yung transition period po, Sir. Noong 2003, nagawa ang NLEX diba po? Tapos nag-rerehab
pa lang ito at ngayon rehabilitated na siya. Mas maginhawa po ba biyahe niyo ngayon at yung
travel time ba ay mas maginhawa po ngayon?

A: Oo naman. Kasi ngayon, mga ilan ba yun? 5-6 lanes ata. Dati 3 lanes lang eh. Kaya
maginhawang-maginhawa.

L: Paano niyo po nasabing maginhawa na nga? Gaano kalaki po ang oras sa trapik ang
nabawasan? At tsaka yung pagtipid po ng gasolina, talagang nakatipid po ba?

A: Dati kasi sa tool gate pa lang 1 hour and 20 minutes siya. So ngayon, from Balintawak to San
Fernando, 40 minutes nalang. So ibig sabihin, 30 minutes din ang nabawas. Kulang sa kalahati.

L: Sige po. Next is yung pag-taas po ng toll fee dahil sa pag-rehab po at nababalitaan pang ita-
tax ang toll fee na ito. Ngayon po, sulit po ba para sa inyo ang presyo ng toll fee o namamahalan
pa po ba kayo?

A: Kasi kapag nagtaas ang toll fee, magtataas din ng pamasahe. So sulit din. Di lang kame ang
nagtataas kundi lahat ng transportation na dumadaan.

L: Kelan niyo po masasabing sulit ang pagtaas ng toll fee?

A: Kasi pagdating sa mga piyesa, once na malubakan ang ilalim ng bus dahil sa dating baku-
bako na daan, nasisira agad ang mga piyesa. Yung dapat umabot ng 1 year umaabot nalang ng

87
half-year. So dahel sa pagganda ng daan ngayon, di ka na magkakaproblema sa pagpapaayos.
Tsaka yang pagtipid nga ng gasolina, mas nakakatipid na at mas bumilis pa ang byahe. Kasi pag
pabagal-bagal ka, paliku-liko ang bus tapos ngayon diretso na ang byahe. Mas tipid na sa
gasolina.

L: On a scale of 1-5, paki-rate po ang safety ng NLEX.

A: Kasi dati 3 lanes madaling madisgrasya. Ngayong 5 lanes na, pwede na dumaan ang bus sa
fast lane.

L: So, before po ng rehabilitation project, ano pong rating niyo sa safety ng kalye?

A: 3 siguro. Tapos after ano na ... Nasa 5 na.

L: Convenience? 1 being di maganda ang daloy ng byahe tapos nagkakaproblema sa mga

pasahero, at 5 po bilang maganda at walang problema masyado sa byahe. Bago po ang
rehabilitation muna.

A: 3

L: After?

A: 5

L: Pagdating po sa perwisyo, 1-5.

A: Before, 3. Ngayon, 4. Mas bawas na ang perwisyo kumpara noon.

L: Bilang ng pasahero po? Ilan?

A: Load factor or average?

L: Average na po muna. Maya na po ang load factor.

A: Kasi 'pag binigay ko ang average o ang number of passengers, yun din ang load factor.
Binibilang muna namin ang mga pasaherong nakasakay bago bumyahe or umalis ng station ang
bus.

L: Average na biyahe kada araw? Yung salubungan po.

A: Dito lang sa Sampaloc?

L: Opo.

A: Pag salubungan, mga ano Aabot siya ng 90 mahigit. Mga hundreds kada araw.

88
L: 90? So, 45 galing dito tapos 45 ang darating?

A: Oo.

J: Kung meron po kayong suggestion/recommendations para sa improvement po ng NLEX, may

maibibigay po ba kayo? Yung ikabubuti po ng NLEX at benefit niyo at sa buong public transport
sector?

A: Yung maisusuggest ko sa kanila ay Every 1 kilometer (km) may monitoring device. Kasi
yung monitoring device nasa Balintawak lang eh. Tapos sa Bulacan, tsaka sa Pampanga. Kasi
ang pag-momonitor ang lalayo. Parang ang layo.

J: Every 1 km po dapat may monitoring device.

A: Kasi yung mga aksidente, namomonitor mo nga. Pero yung impact o tama halimbawa ng
aksidente makikita mo ba? So kung malapit ang monitoring device, makikita kung sino ang may
gawa ng pagkakabangga.

L: Toll rates ho, Sir. On a scale of 1-5, 1 being sobrang mahal at di tayo nakikinabang and 5
being mataas at ang services ay naibabalik naman. Before and after ng project.

A: Ah, before, 3 lang. Ngayon, 5.

89