When the Philippine government adds two years of senior secondary school to its required 10 years of basic education beginning in 2016, an additional 2.7 million students will flood schools already so full that students attend in shifts. Accommodating these new students in state schools will require a significant school building program. The government has taken its first steps toward addressing the existing classroom shortage using a public-private partnership (PPP) procurement modality—the PPP for School Infrastructure Project (PSIP), which aims to build up to 20,000 classrooms over a two-year period.

The Philippines faces significant shortages of school inputs, including teachers, classrooms, textbooks, and chairs. In June 2010, it was estimated that the Philippines was short more than 66,000 classrooms, and the shortfall has likely increased since then. Not surprisingly, class sizes are large, and many schools operate double shifts. In some cases, one set of students attends school on Mondays, Wednesdays, and Fridays, and another set attends on Tuesdays and Thursdays.

Absent any action, classroom shortages will become more acute when the government introduces the senior secondary component of its flagship K to 12 (kindergarten to twelfth grade) agenda beginning in school year 2016. One of the key planks of that policy is the addition of two years of senior secondary school (grades 11 and 12) on top of its existing 10 years of basic education. The Department of Education (DepED) estimates that the introduction of this policy will mean an additional 2.7 million students in the school system (2 million from public junior secondary schools and 0.7 million students from private junior secondary schools).

Accommodating additional millions

The government has identified a variety of possible responses to the challenges posed by the K to 12 agenda. While the official policy response is still being developed, it is expected that incoming students from public junior secondary schools will be accommodated through a combination of subsidized enrollments in private senior secondary schools and tertiary education institutions, and through increased numbers of students in state schools.

Accommodating these new students in state schools will require a significant school building program—particularly because it comes on top of the infrastructure requirements to address existing shortages. The government has taken its first steps toward addressing the existing classroom shortage using a public-private partnership (PPP) procurement modality—the PPP for School Infrastructure Project (PSIP), which aims to build up to 20,000 classrooms over a two-year period.

The PSIP is intended to complement DepED’s existing classroom construction initiatives, and involves the design, financing, construction, and maintenance of more than 9,000 one- and two-story classrooms, including furniture and fixtures, at locations in three DepED regions.

The PPP involves the use of a build-lease-transfer concession model and is projected to cost approximately $400 million. DepED is the implementing agency for the PSIP, with support from the PPP Center of the Philippines. In early October 2012, DepED signed agreements with two consortia for the first phase of the PSIP. The next phase will involve 10,600 classrooms covering remaining shortages in Luzon, Visayas, and Mindanao.

PPPs in the Philippines

The Philippines has been a leader in the use of non-infrastructure forms of PPP, such as contracting for the delivery of education services. The country’s Education Service Contracting (ESC) scheme, a government program that pays private schools to enroll students at public expense to reduce state school overcrowding, has been in operation since 1987.

Although PPPs are not a panacea, they can play a key role in improving infrastructure in the Asia and Pacific region.

The Philippines was one of the first developing countries with a Build-Operate-and-Transfer (BOT) Law and a dedicated BOT Center. Despite some early achievements in the power sector, progress subsequently lagged due to weak PPP governance and an increase in unsolicited proposals. The advent of the Benigno Aquino administration in 2010 provided new impetus for implementation of infrastructure PPPs, and the usefulness of these PPPs has since broadened to other sectors, including health and education. One result is that the government has taken steps to revitalize and transform the former BOT Center into the PPP Center of the Philippines.

To support the introduction of the K to 12 agenda, the Asian Development Bank (ADB) is working with the government to prepare an education improvement program. The program is examining the use of infrastructure PPPs for the construction of senior secondary schools, as well as the use of innovative mechanisms for the finance and delivery of senior secondary schooling (including private sector delivery). The ADB, along with the government of Australia and the government of Canada, has provided technical assistance to support the strengthening of the PPP Center of the Philippines.

The Philippines has been a leader in the use of non-infrastructure forms of PPP, such as contracting for the delivery of education services.

A centerpiece of this program is the Project Development and Monitoring Facility (PDMF), an innovative revolving fund facility that provides funding for professional transaction advisory services for PPP projects, including preparation of pre-feasibility, feasibility studies, bidding documents, draft contracts, and assistance to government agencies in the bidding process. The PDMF provided funding for the successful bid of the PSIP project to the private sector in October 2012.

A new chapter for Asian PPPs

PPPs are garnering increased interest within the ADB, driven in part by Asia’s significant infrastructure backlog and the organization’s focus on private sector development and private sector operations as a driver of change in its long-term strategic framework. Although PPPs are not a panacea, they can play a key role in improving infrastructure in the Asia and Pacific region. Increased demand for access to quality education and training eases the way for private investment, particularly through the use of infrastructure PPPs. There are many reasons for this, including the relative stability of demand in the sector, the less complex nature of the sector compared to others, and the less extensive project safeguard issues that arise in education projects compared to others, such as transport.

Infrastructure PPPs in the education and training sector can help meet rapidly growing school infrastructure requirements, create better teaching and learning environments, and improve maintenance by pre-committing governments to maintaining schools once they are built—a perennial problem in the education and training sector.