Losing bidders are like election losers

When in Switzerland, one cannot help but admire that European country’s transportation system that runs smoothly and certainly can be considered one of the best in that part of the world. While we were there last week, we cannot also help but think that the Philippines can learn much from the Swiss experience on how to keep our own mass public transport system running efficiently, if we cannot for now afford to modernize it.

Undeniably, the transportation system is one of the keys to Switzerland’s progress and ability to rebound from the major economic challenges it faced in recent times. It is a relatively small country at the very center of Europe, making an efficient connection to the rest of Europe and the world crucial.
Switzerland appears to be geographically isolated from the rest of Europe by the famous Alps. The country’s equally famous rail transport system has overcome that challenge. The Swiss international rail system connects it to other European countries like Austria, Liechtenstein, Germany and France. Rail transport is also widely used to bring people and goods around the various cantons and within urban centers.
During our recent visit, we landed at the Zurich Airport, Switzerland’s largest international airport. It has two other major international airports. One is in Geneva. The third is an interesting concept – an airport it sort of “co-owns” with France and is called a “EuroAirport.”

Zurich International Airport and the Swiss rail network have one thing in common – both are managed and operated by the private sector. It looks like Switzerland has opted to put these major services and similar other public services in the hands of the private sector which can do the job better.

The arrangement is quite similar to the Public-Private Partnership (PPP) program in the Philippines that the administration of President Benigno “Noy” Aquino III launched more than three years ago.
The Swiss rail network is operated and managed by the Swiss Federal Railways. We were told that this used to be a government agency until the Swiss government decided to turn it into what they call a special stock corporation which is run like a private enterprise.

An interesting note is that the Swiss railway network was reportedly built in the 19th century entirely by the private sector until the government stepped in to run it. Then it was given back to private sector mode some time before the turn of the 21st century.
The same system has worked for the Zurich International Airport. This impressive hub is managed and operated by Flughafen Zurich, AG. While it is mostly owned by the city of Zurich and the canton of Zurich, it is a well-run enterprise listed in the Swiss stock exchange.

Switzerland’s economy is private sector-driven. The government appears to have deliberately defined a limited role for itself in that area. And, as a believer in the PPP concept, Switzerland supports PPP projects worldwide through its membership in the Organization for Economic Cooperation and Development (OECD).
The Philippines can draw inspiration, if not learn, from this European country when it began to grow its strong economy – building on private sector strength.

Fortunately, the Philippines’ PPP has attracted much interest and enthusiastic response from both local and international investors. Some of the country’s biggest conglomerates – the Metro Pacific Investment Corp., as well as the San Miguel Corp. (SMC); the SM chain of malls owner Henry Sy group; the Ayala Group; the Aboitiz companies, just to name a few — have stepped forward to participate in several of these key PPP projects.

Latest developments, however, appear to dampen that enthusiasm. For example, the NLEX-SLEX connector road project remains embroiled in conflict. This is a much-awaited project and is seen by many as the key to resolving the killer traffic jam along EDSA.

Just the other day, P-Noy who mused aloud the government is mulling the possible rebidding of the P35.4-billion Cavite-Laguna Expressway (CALAX) project. The President intimated this before a question-and-answer with the Foreign Correspondents Association of the Philippines (FOCAP) in their forum last Wednesday. The presidential disclosure, however, may have aggravated a growing discomfort on the manner with which the government resolves controversies hounding major PPP projects.

Immediately after P-Noy blurted this out, there was loud howls, or should we say growls, from affected parties. The tandem of Ayala Corp. and Aboitiz Land Inc. — in a joint venture deal under the name Team Orion — protested on the possible rebidding of the CALAX project. Naturally, the tandem has every reason to protest because they submitted the top bid of P11.7 billion.

This came after SMC appealed to Malacañang after a technicality disqualified their bid that turned out bigger than what was offered by Team Orion.

Reacting to presidential statement at FOCAP, Team Orion argued there is no legal basis for such rebidding of this project being done on Build-Operate-Transfer (BOT) scheme by the Department of Public Works and Highways (DPWH). In an official statement, Team Orion cited with great satisfaction the bidding process on CALEX project done by the DPWH was “conducted aboveboard, transparently, and within the framework of the BOT law.”

This could be the best testimonial for DPWH Secretary Rogelio “Babes” Singson who has, so far, apparently been succeeding to exorcise DPWH from ghost deals of the past. The DPWH is a government agency once notoriously known for rigged bidding and other corruption-tainted infrastructure deals.

Should DPWH be forced to rebid the project because of this presidential imprimatur, Team Orion threatened not to participate anymore in the CALAX project.

With this development, CALEX project will join the NLEX-SLEX connector road project that have already gone through the completed bidding process before they got derailed and languished on the shelf of government indecision.
Transparency and certainty are what count most in the international business sector’s list of requirements for participating in government infrastructure projects.

Can investors trust a mechanism where the results of a perfected bidding process can be set aside without a clearly laid out basis other than complaints from disgruntled bidders?

Bidding in government projects in the Philippines is like elections here. Losers always claim they were cheated.