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Professor Mark Turner
The Asian Development Bank’s (ADB) recent review of its investments in the Philippines has revealed a disappointing record of project performance. Between 1986 and 2001 only 31 per cent of 36 projects completed and evaluated have been classified as ‘generally successful’. Thirty-six per cent were judged ‘partly successful’ and 33 per cent ‘unsuccessful’. As the projects collective value was US$5.9 billion the poor performance entails considerable financial wastage and lost opportunities.
The Philippine record contrasts with the overall ADB general success rate of 51 per cent and the figure for fellow-ASEAN members Malaysia, Thailand and Indonesia of 68 per cent over the same period. In contrast to the ADB’s ratings, the World Bank’s 1999 review found that their projects performed ‘relatively well’. They were almost at the regional average for outcome and sustainability and were superior for institutional development. The World Bank’s 1999 portfolio of projects was also reported as doing well with 90 per cent gaining ‘satisfactory’ rating. It is not clear whether the current picture is so bright or why the World Bank’s review is such a contrast to the ADB.
The ADB has provided a comprehensive list of factors to explain the Philippines’ sub-standard record: poor project design; inadequate feasibility studies; lack of sufficient counterpart funds; insufficient monitoring of project implementation; poor maintenance of project facilities; institutional bottlenecks; lack of ownership and participation by project beneficiaries; and economic and political instability. What could go wrong did go wrong in many cases. Why there were such basic failings remains unclear.
However, the ADB’s report is not all doom and gloom. When the project sample is confined to only projects initiated, completed and evaluated since 1986, the failure rate drops to 7 per cent, the ‘partly successful’ category jumps to 64 per cent but the ‘generally successful’ proportion actually dips slightly to 29 per cent. The ADB reckons that the review has produced some important lessons, which will contribute to improved performance in the future. The lessons are simple and obvious. There is a correlation between political and macroeconomic stability and project success; ‘project success requires careful project preparation’; ‘project design should be relatively simple’; close monitoring is vital; and institutions need nurturing to assure sustainability.
There are problems of governance, which the ADB acknowledges, and which have had such an adverse developmental impact over decades, but little is said about how to overcome these persistent obstacles. They are less amenable to reform than technical adjustments such as making plans simpler or being more careful in project preparation. Improved political management of projects would perhaps provide the highest rate of return of any initiative aiming to generate better project performance. However, the embedded power of elites at national and local levels has meant that reforms to the political economy of the Philippines are extremely difficult to obtain.
WATCHPOINT: Will reforms improve the ADB’s project performance record in the Philippines?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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