This document discusses public-private partnerships (PPPs) at the local government level in the Philippines as a way to address growing infrastructure and service demands with limited public resources. It provides examples of PPP modalities in education, such as increasing revenues, providing in-kind services, and service contracting. The document argues that PPPs can strengthen institutions and provide new solutions through various partnership types depending on supply and demand factors. Proper regulation is key to ensuring PPPs benefit constituents. PPPs may expand to other local services like water, garbage, and electricity if regulations enable sustainable long-term partnerships.

1. Public-Private Partnerships
for Good Governance
Local Government Level
J. M. LUZ
Associate Dean, Center for Development Management,
Asian Institute of Management
Panibagong Paraan for Good Government
5 November 2009

2. Public-Private Partnership for Good Governance
Local Government Level
Outline
 Key Questions
 Context
 Framework of Analysis
 Modalities of Participation
 Issues
 The Future: Opportunities for Local Governments

3. Public-Private Partnership for Good Governance
Local Government Level
Key Questions
 In the face of limited public resources, how to finance and
provide for the growing demand (at the LGU level) for more
infrastructure, services?
 What options exist that could deliver infrastructure or
services in a cost-effective manner?
 How to finance and support the needed investment?

4. Public-Private Partnership for Good Governance
Local Government Level
Thesis
 Private-Public Partnerships provide a variety of
options
 Options range from:
 Increasing revenues from the private sector for needed
investment
 Providing in-kind services that augments Local
Government
 Service contracting
 Private spending for identified infrastructure or service

5. Public-Private Partnership for Good Governance
Local Government Level
The Context: Local Government
 Range from First to Sixth Class
 LGUs largely dependent on IRA as source of
revenues
 The lower the income class, the more dependent on IRA
 Increasing share of LGU taxes…but never
enough to cover demand for more services

6. Public-Private Partnership in Basic Education Service Delivery:
Provisioning and Funding
Some Issues in Local Governance
 Devolution  service delivery
 Health
 Social welfare
 Agriculture
 Environment
 More demand for local cost-sharing
 Education (Local School Board, Special Education Fund)
 Disasters
 More competition for National Government resources
 For share of projects
 For timely release of IRA

7. Public-Private Partnership for Good Governance
Local Government Level
A Response: Private-Public Partnerships
 Partnerships are born out of a convergence of
interests
 To address growing needs or demands of constituent publics
 Hypothesis: The Whole (e.g. Partnerships) > sum of the parts
(e.g. Sectors’ contribution)
 Traditional responses inadequate viz heightened
demand or new need
 Government not in a position to respond adequately
 Markets not able to address needs

8. Public-Private Partnership for Good Governance
Local Government Level
Private-Public Partnerships: Framework
(Organizing Concepts)
 The ability of existing institutions (i.e. LGU) to
address demand or need
Versus
 Degree of need or demand
 What types of partnerships are needed?

9. Public-Private Partnership for Good Governance
Local Government Level
Organizing Concepts
SUPPLY-SIDE
Ability of institutions to deliver
STRONG LIMITED
DEMAND-SIDE
I. Partnership
as an II. Partnership
Arrangement as a System
Heightened Response
Effective Demand
III. Partnership
to strengthen an IV. Partnership
existing as a new
New or Emerging institution Institution
Need articulated
Capacity Issues Capability Issues
Can institution x deliver enough? Is Institution x able to deliver at all?

10. Public-Private Partnership for Good Governance
Local Government Level
Organizing Concepts
SUPPLY-SIDE
Ability of institutions to deliver
STRONG LIMITED
DEMAND-SIDE
II.
I. Partnership as Partnership
an Arrangement
Heightened as a System
Effective Demand Response
III. Partnership
to strengthen an IV. Partnership
existing as a new
New or Emerging institution Institution
Need articulated
Capacity Issues Capability Issues
Can institution x deliver enough? Is Institution x able to deliver at all?

11. Public-Private Partnership for Good Governance
Local Government Level
Organizing Concepts SUPPLY-SIDE
Ability of institutions to deliver
STRONG LIMITED
DEMAND-SIDE
I. Partnership as II. Partnership
New or Heightened an Arrangement as a System
Effective Demand Response
III. Partnership
to strengthen IV. Partnership
an existing as a new
New or Emerging Institution
Need articulated institution
Capacity Issues Capability Issues
Can institution x deliver enough? Is Institution x able to deliver at all?

12. Public-Private Partnership for Good Governance
Local Government Level
Organizing Concepts SUPPLY-SIDE
Ability of institutions to deliver
STRONG LIMITED
DEMAND-SIDE
I. Partnership as II. Partnership
New or Heightened an Arrangement as a System
Effective Demand Response
III. Partnership IV.
to strengthen an
existing
Partnership
New or Emerging institution as a new
Need articulated Institution
Capacity Issues Capability Issues
Can institution x deliver enough? Is Institution x able to deliver at all?

13. Public-Private Partnership for Good Governance
Local Government Level
Modalities of Participation  To go beyond
mere Government spending
(Example: Basic Education)
 Increasing revenues for public education (from Non-
Government participation)
 Providing in-kind services that augments Government
spending in education
 Service contracting
 Increased private spending for education (private
education)

14. Public-Private Partnership for Good Governance
Local Government Level
1. Increase Revenues for Public Education
 Objective: Raise revenues for public education (beyond
the national budget)
 From Private Sector: Corporate philanthropy through
“Adopt-a-School” mechanism
 Tax incentives provided by law
 From Local Governments: Special Education Fund
 1% of real estate taxes collected by LGUs
 Through Local School Boards (chaired by the Governor,
Mayor)

15. Public-Private Partnership for Good Governance
Local Government Level
1. Increase Revenues for Public Education
 Bold Ideas: Raise revenues for public
education through market mechanisms
 Education bond issue
 Securitization of school building construction
 Securitization of the voucher system

16. Public-Private Partnership for Good Governance
Local Government Level
2. Providing in-kind services to augment
Government spending in education
 Brigada Eskwela
 National Schools Maintenance Week (May)
 Community voluntarism  minor repair and maintenance of
schools (preparatory to school opening)
 2003 [2006]
 12,533 public schools involved [29,215 schools)
 832,000+ volunteer man-days [4.0 million m/days]
 Total value of repairs = Estimated P392 Million [P2.0 Billion]

17. Public-Private Partnership in Basic Education Service Delivery:
Provisioning and Funding
2. Providing in-kind services to augment
Government spending in education
 Textbook Count
 National Textbook Delivery Program (June-November)
 NGO involvement in monitoring deliveries of textbooks
 In 2003
 30,000+ deliveries (schools and district offices)
 37 million textbooks

18. Public-Private Partnership in Basic Education Service Delivery:
Provisioning and Funding
2. Providing in-kind services to augment
Government spending in education
 Textbook Count: Summary of Findings on Deficient Deliveries by
Elementary Schools District (Quantity)
Zone # Districts # with Delivery % Remarks
Errors
3 552 78 14.13 Region VIII (74)
4 538 30 5.58 Region XII (10)
1 500 8 1.60
2 491 15 3.05 NCR (12); Pasig-
San Juan (4/4)
TOTAL 2,081 125 6.00

19. Public-Private Partnership in Basic Education Service Delivery:
Provisioning and Funding
2. Providing in-kind services to augment
Government spending in education
 PTCA Involvement
 Parent-Teacher-Community Associations
 Local stakeholders
 School feeding programs
 Pay for school security, janitorial, utilities
 “Adopt-a-School” Corporate Involvement
 Corporate tie-ups for facilities improvement
 Manila Electric Company  audit of electricals in schools
 Manila Water Company  audit of school water systems

20. Public-Private Partnership for Good Governance
Local Government Level
3. Service contracting
 Government Assistance to Teachers and Students in
Private Education (GASTPE)
 Voucher-type program
 Shift enrolment from public high schools to private high
schools
 Education Service Contracting scheme (with a subsidy)
 For 2004-2005:
 325,000 students
 1600 private high schools contracted
 P1.5 Billion
 Managed by the Fund for Assistance to Private Education
(FAPE, NGO)

21. Public-Private Partnership for Good Governance
Local Government Level
3. Service contracting
 Proposals:
 Pre-school education service contracting (expansion
of the pilot project)
 ESC for Madaris Education (Madrasah schools) in
Mindanao

22. Public-Private Partnership for Good Governance
Local Government Level
4. Private spending for education (private
education)
 Regulation of private schools
 Standards
 Consumer protection
 As an alternative or option for parents
 Possibilities for PPPS
 Involvement of private educators in governance
 Opening Departmental programs to private schools (teacher
training, Educators’ Congress, professional associations)
 Opening LSB funding for private education

23. Public-Private Partnership for Good Governance
Local Government Level
Example: Cost effectiveness of ESC (Education
Service Contracting) Scheme
 Constructing (traditional DepED solution)…
 For every 50 students = 1 classroom = P500,000
 For every class = 1.25 teachers = P300,000/year
 For every class = 5 subjects x 1 textbook x P75 x 50 = P18,750
 For every 50 students = 50 desks x P1000 = P50,000
 For every student = P250 in MOOE/year (average) = P12,500
 Total = P833,750 start up + P312,500 recurring cost
 …versus contracting (ESC)
 P6000/year (SY 2009-2010) x 50 = P300,000

24. Public-Private Partnership for Good Governance
Local Government Level
If possible for Education, why not for
other services, needs?
1. Health: Private medical providers
 school health as primary target (preventive)
 Private hospitals/clinics + LGU health card
2. Garbage collection and recycling
3. Street maintenance (especially in town or city
center, business district) by local businesses
4. Disaster response (Local business)
 Preparedness (what other evacuation centers available?)
 Mitigation (reduce risks)

25. Public-Private Partnership for Good Governance
Local Government Level
The Future: Opportunities
1. Water
 Manila: Assets owned by MWSS; water and sewerage services
privatized to Manila Water and Maynilad
 Privatize the management of the local water district (If regulated
well, the town/city can realize greater efficiencies)
 Not a private enterprise, but a public-private partnership
2. Garbage landfill sites
 Collection
 Disposal
 Recycling (business opportunity )
3. Electricity cooperative
 Non-governmental, but many are run like government agencies

26. Public-Private Partnership for Good Governance
Local Government Level
The Future: Opportunities
The KEY: Proper Regulation
 Standards + enforcement
 Protection of constituents (from a monopoly)
 Ensure a stable environment to operate as a partnership
The DRIVER: Rules and regulations
 Local chief executive is critical, but not the key to success
 Partnerships must be sustainable over time (e.g. beyond 3 year
terms)

27. Public-Private Partnerships
for Good Governance
Local Government Level
J. M. LUZ
Associate Dean, Center for Development Management,
Asian Institute of Management
Panibagong Paraan for Good Government
5 November 2009