Join Date: Jul 2007
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Come one, come all, to CamSur
The young governor chose to keep it simple and said his main reason for embarking on an ambitious goal is an adage as old as he is young-—if you build it, they will come. And true enough, they did.
Today the once poor province of Camarines Sur is enjoying not only local acclaim but international recognition for its efforts in creating a world—class tourism destination, the CamSur Watersports Complex (CWC). The sports complex is now “the place” to be for the rich and the powerful, the athletic and the enthusiast, and practically all local and foreign adventurers who want to enjoy the thrills of various water sports.
But the CWC is just the tip of the iceberg, as Gov. LRay Villafuerte puts it. These days CamSur is also known as the first local government unit (LGU) to support Public-Private Partnerships (PPPs). The province recently passed a local ordinance that allows Camarines Sur to undertake its own joint-venture (JV) projects with the private sector.
Through this, Villafuerte said the province already expects over P1 billion worth of investments to hit its shores by next year. This amount may be peanuts compared with the P106 billion worth of 10 PPPs that the national government is tendering to the private sector next year. But, for a province once considered among the poorest in the country, this is something life-changing and worth looking forward to.
Villafuerte believes that CamSur’s experience is a testament that even LGUs are capable of achieving through innovative ideas such as PPPs. All that is needed is the will to take the first step and the resolve to stay the course.
Rags to riches
When the young governor assumed office in 2004, CamSur was just dust on the beaten path of development. It was ranked among the poorest provinces in the country, along with other provinces in the Bicol region. A significant number of people were living below $1 and $1.25 a day, many children were not in school, and many more were homeless.
Based on the 2003 Small Area Estimates data released by the National Statistical Coordination Board (NSCB), the poverty incidence in Camarines Sur reached an average of 60 percent. Some municipalities even had a level of 61 percent.
Believing his provincemates deserved much more, the young governor embarked on a local and international roadshow promoting CamSur’s beaches and other natural attractions. This was done in the hope of spurring tourism development in the country and creating employment opportunities for the people. To his dismay, no one took notice. Not yet.
“When I became governor in 2004, I promoted CamSur for a year going around the country, going all over the world saying that we have one of the best beaches in the world, in the country. Nobody was buying it. Why? Because in the Philippines all people talk about is Boracay, Bohol, Palawan and that’s it. So I said, okay, if you don’t want to believe what we’re doing, we will do the investing,” Villafuerte related.
The results of his efforts were nothing short of a miracle, considering that the province was practically scraping off “leftover” tourists who did not have the budget for Boracay, Bohol or Palawan and did not know where else to go.
From the letdown, Villafuerte started building. The local government then built the CWC and the world-class resort in Caramoan. Both resorts are now considered top tourist destinations in the country. As icing on the cake, the top-rated TV series Survivor decided to shoot in Gota island off the coast of Caramoan for Survivor France at around the same time. From there, the province found itself in the thick of tourism development and there was no turning back.
Partnering with the private sector
Having proven its viability for investment, CamSur started developing other aspects of the economy to help more people improve their lives and living conditions. This started with the local government’s efforts to provide free training for those who want to go into the Call Center and Business Process Outsourcing (BPO) industry.
Villafuerte said that when it comes to development, more often than not, it’s a “chicken and egg” situation. For investors, they will not invest in a particular location without enough manpower resources and for applicants, they will not stay in a province where no jobs are available.
To break this vicious cycle, the province invested in the free training of applicants and partnered with investors by putting public lands on the table, as well as undertaking the construction of office buildings for investors use. The training not only included call-center agent training but also medical transcription and animation.
With this, CamSur became the only LGU in the country that has built and established ecozones such as a tourism park, IT zone, and agroindustrial zone, which are more known to be initiated by the private sector rather than LGUs. Usually ecozones are created or declared by the national government through the Philippine Economic Zone Authority (Peza).
Villafuerte is also proud to note that CamSur was also able to undertake a partnership with Sutherland Global Services Inc. The province provided the land, constructed the building and trained the manpower for Sutherland. There are now 2,000 call-center seats in CamSur.
With average incomes of around P12,000 to P15,000 a month for agents, the call-center alone provides an additional boost to the economy in the amount of P24 million to P30 million a month. This translates to P288 million to P360 million additional income for people in the province every year.
This does not yet include the income the province generates from the rent paid by companies to the LGU for the use of the land and the buildings. In fact, after six years in office, Villafuerte said he was able to triple the LGU’s budget to P2 billion from only P800 million in 2004.
Another project is building homes together with nongovernment organization (NGO) Gawad Kalinga. The province was able to construct as many as 4,700 homes in the province.
The governor explained that assuming the construction of each home amounted to P70,000 to P80,000 each, which translates to an investment in the province of P400 million.
“The problem, not just in CamSur [but for] everybody all over the country, is the problem with squatting and people not having homes. The problem of the province then was we had all the lands, Gawad Kalinga’s problem [was they] lacked lands. So we partnered with them,” he said.
These partnerships are also very pioneering in a sense that they happened even before the National Economic and Development Authority (Neda) released and implemented its JV guidelines.
Through the earlier partnerships with the private sector the LGU undertook, CamSur has since been able to meet and even exceed national targets particularly in meeting the Millennium Development Goals.
Based on the 2008 National Nutrition Survey of the Food and Nutrition Research Institute, CamSur was able to reduce its malnutrition rate by over 45 percent and has since been able to boost the Bicol Region’s economy to 8.2 percent in 2009, according to the Gross Regional Domestic Product data provided by the NSCB.
Data from the Neda Region V Regional Development Council show that through the CWC, CamSur attracted six out of every 10 tourists in Bicol and even emerged as the top tourist destination in the Philippines in 2009.
Villafuerte also proudly noted that the Commission on Audit (COA) ranked the province as the 10th richest province in the Philippines, from being 39th. Using 2007 data, CamSur’s net income reached P233.85 million and its total equity increased to P1.993 billion, COA said.
This despite the fact that the province derives most of its funds to develop all these projects from their Internal Revenue Allotment and borrowings from government financial institutions like the Development Bank of the Philippines (DBP).
The success of these projects resulted in higher revenues that allowed the local government to continuously meet its obligations. The DBP even gave the LGU a P2-billion credit line because of the viability of the projects that CamSur is investing in.
“We presented to DBP proposals for projects, additional projects for schools and roads, but we have income-generating projects like the IT park, [which] we financed through our DBP loan. [For] all the money we borrowed, the net effect was very positive so coming from that, we [thought we] should expand this concept,” Villafuerte said.
The first PPP LGU ordinance
In support of the cur-rent administration’s goal of pushing for PPPs to finance infrastructure projects, CamSur passed Ordinance 003 or An Ordinance Prescribing Guidelines and Procedures for Entering into Joint Venture Agreements with Private Entities Consistent with the Neda Guidelines on Joint Venture Agreements.
According to Villafuerte, around 95 percent of the local ordinance was based on the Neda JV guidelines, but some provisions were localized, such as the creation of a local JV Selection Committee (JV-SC) to evaluate and select a private-sector partner for a selected joint-venture undertaking.
The JV-SC is led by the Chairman, a third ranking officer in the province followed by a Secretary which will be assumed by a legal officer of the province; two LGU officers knowledgeable in finance and management and operation of the JV; and a representative from and selected by the Sangguniang Panlalawigan.
Based on the guidelines, the governor can also create a technical working group to be composed of personnel from the public and private sector operating in the province who have the expertise to share in specific JV undertakings.
The governor said the local government will exert all efforts to promote transparency and accountability in all JV projects and undertakings. All that CamSur is looking for from the national government is support—a guarantee that they will also help in disseminating information that certain projects in the LGUs are also being undertaken through PPPs.
“What we want from the national government is simply for it to help us promote public-private partnerships. It will also relieve them, [since] instead of us asking money from them, all we need is for these projects to be part of their list, [considering they are] viable. Of course now, we also want clear guidelines from the national government supporting LGU public-private partnerships by providing a guideline for LGU partnerships,” Villafuerte said.
He thinks this will also encourage other LGUs to undertake their own JVs with the private sector for local PPP projects. Based on their experience, LGUs can easily cut business processing time. He said CamSur was able to do half of the business requirements for investors by simply providing a place to operate in.
Villafuerte said this also cuts the costs incurred by businesses operating in CamSur. He said it is CamSur’s business-friendliness that’s behind the decision of many establishments to set up shop in the province.
“I think the LGU is the key to the economic development of this country. Think global, start local. You can implement global projects locally,” the governor said.
PPPs on the horizon
By next year, Villafuerte expects over P1 billion worth of investments will stream into CamSur in the form of PPPs. Several agriculture, tourism, infrastructure, environment, and other projects will be offered as PPPs in CamSur by next year.
One of these projects is a chili processing plant in the province. While it is not unlikely for the province to go into en masse chili processing—being known for serving up the country’s hottest viands—it has never been done before. Villafuerte intends to capitalize on this untapped potential.
There is, he said, a big demand for chili production because of the increase in demand for condiments like Tabasco or chili powder for seasoning. Since the province has a lot of land—approximately 30,000 hectares of it—land can already be the province’s equity as well as the manpower. The private sector can put in the technology and the capital that can be used for processing.
“What we want to do now is create a large-scale chili plantation as a high-value crop and process it into powder. So it’s like this, we plant it for you, you buy it from us, you process it, then we share. It’s an innovative approach to governance. Me, I’m very positive, very optimistic that we can do it. We’ve pioneered the ordinance to do it, it just takes time. Of course, all of these is in the parameters of government transparency, accountability, fairness; anybody can come in, provided that it’s advantageous to the government,” the governor said.
Another long-time project is a diversion road that will cut travel time from Manila to Camarines Sur by an hour. The diversion road will be a toll road that a private-sector entity can operate and lease from the government, depending on which arrangement is beneficial to both parties.
The province is also keen on developing solar and renewable-energy projects to help in solving the power problem in the country. By providing land, power companies can already come in and build whatever facilities are necessary to operate a solar or renewable-energy facility.
“We don’t have enough money, we need a partner and now is the right time for a partnership. Why? Because we’ve proven our worth. Meaning, CamSur is viable, fastest-growing, from nothing to something, from poorest to richest,” Villafuerte enthused.
Only time will tell whether these PPPs will indeed bring about the expected results of the local government but based on their experience, and assuming that future leaders of the province will have the same vision as the young governor, PPPs will be a staple in the province.
On hindsight, said Villafuerte, even if there was some political backlash at the onset of his innovative approach to governance, people subsequently started seeing clearly what his vision was. Soon, the attacks stopped and the projects received international and local acclaim.
Meanwhile, other LGUs are consulting with him on how to go about PPPs and having a local ordinance to support PPPs in their province. This is something the province welcomes because that is also where CamSur was not so long ago—poor and underdeveloped.
To naysayers, the governor said that while it is true that the government must step aside when it comes to businesses or corporate activities, especially when there are private-sector players, its not always the case for provinces in the Philippines.
“The government must encourage private enterprise but in our case, if we don’t do it, we will never be able to prosper. If we did not build the CWC, CamSur will still be poor and the only reason why we did it is [that] no private sector wanted to invest,” the governor said. “I always believe, build it and they will come, and we built it and people started to come.”
In Photo: Call-center agents are seen at Sutherland Global Services, one of CamSur’s notable investors.