P2 trillion worth of IT projects in the pipeline

By Tony Bergonia - Inquirer

MANILA, Philippines -- The controversial National Broadband Network (NBN) and Cyber Education Project (CEP) would sink the country deeper in debt because the government already owns other broadband networks and 31 information and communication technology (ICT) projects that have a combined cost of more than P2 trillion.

Most of the funds for the ongoing and proposed projects came or will come from foreign loans, a government listing showed.

Two of the projects are broadband networks that the government already owns -- the Philippine Administrative Network Project (PANP) and the Philippine Research, Education and Government Information Network (PREGINET).

The 31 ongoing and proposed ICT projects, plus the two existing government broadband networks, are the precursors of the NBN that would add about P15 billion to the more than P2 trillion that was already spent and would be spent on the government’s ICT projects.

Aside from the P15 billion that the Philippine government would borrow from China for the NBN, which was awarded to Chinese firm ZTE Corp., another P23 billion would be borrowed from China for the Department of Education’s CEP.

Huawei

The CEP was likely to be handed to ZTE’s competitor, Huawei, also a Chinese firm.

Two University of the Philippines economics professors, Raul V. Fabella and Emmanuel de Dios, said in a paper that it defied logic for government to own one broadband network, much less two.

Their paper was unable to study the implications of government having actually four broadband networks.

The PANP, also known as the French Protocol because it was built through more than P400 million in loans from the French government, was supposed to modernize the government’s news and information network.

The Office of the Press Secretary is its implementing arm.

The French Protocol was a satellite-based system that was meant to connect all offices of the Philippine Information Agency (PIA), the News and Information Bureau (NIB) and the Bureau of Broadcast Services (BBS) to enable them to transmit data, text and video faster.

But high costs of satellite technology and lack of funds have transformed pieces of equipment that were bought for the PANP into dust magnets, according to Malacañang officials who had first-hand knowledge of the French Protocol.

PREGINET’s funding is listed at P5.2 billion, which was borrowed from the Japanese government through the Japan Bank for International Cooperation (JBIC).

The Department of Science and Technology (DoST), the implementing arm of Preginet, said on its website that PREGINET was a “nationwide broadband network that interconnects academic institutions, government offices and R&D (research and development) centers in the Philippines.”

In June 2000, the DoST gave PREGINET P24 million to start the first year of a “high performance research and education network.”

“PREGINET lets users efficiently transmit and receive large amounts of data nationwide and integrates some existing government information networks into a common network backbone,” said the PREGINET website.

The project listing, which was attached as annexes to the Medium Term Philippine Development Plan (MTPDP) for 2004-2010, showed that some of the big-ticket projects computerizing government offices were done through build-operate-transfer (BOT) schemes.

Bizarre turnaround

BOT schemes applied to ICT projects made a lot of sense, according to the paper of Fabella and De Dios.

“Indeed, they seemed to draw and build upon the logic and success of past privatizations, which had either brought in revenue, promoted efficiency, better service, or both,” said the paper.

It came as a bizarre turnaround, the paper said, when the government did not resort to the BOT scheme for the NBN and CEP, two projects that the government didn’t need to own, in the first place.

Some of the projects listed in the MTPDP were utter failures, like the modernization of the electoral process under the Commission on Elections.

The MTPDP listed a P12-billion budget for the Comelec project that has turned out to be just a waste of public funds.

The project never took off, but hundreds of millions of pesos had already been withdrawn from government coffers for a computer contract that was declared invalid by the Supreme Court.

The computers are currently kept in a Comelec-rented warehouse in Manila.

Machine-readable passports

Another computerization project was for the Department of Foreign Affairs (DFA) that sought to replace hand-manufactured passports and visas with machine readable ones.

It cost P2 billion under a BOT project that has a life span of 10 years. The DFA has recently started issuing machine-readable passports.

Yet another computerization project was for the Department of Labor and Employment (DOLE) to establish a “wide area network that will link all DOLE offices.”

Part of the project was to develop a Labor Market Information System, or a computerized listing of job openings.

The DOLE ICT project was conceptualized in 1997 but its implementation started in 1998 and would take at least P100 million in government funds to complete.

The Government Service Insurance System (GSIS) has its own computerization program, one that is now drawing flak for delaying the release of government workers’ salary loans and pensions.

The 10-year computerization project of the Land Transportation Office was one of the biggest items on the MTPDP list. It cost P3.4 billion through a BOT contract and is a component of a bigger National Information Technology Plan for the 21st Century, or IT21, project to rev up the country’s IT sector at an estimated cost of $49.7 billion, or almost P2 trillion.

It was supposed to accelerate the issuance of drivers’ licenses and other motor vehicle documents, but queues are still long in many LTO branches.

Birth certificates

The National Statistics Office, that is more popularly known as the agency that issues copies of birth certificates, was the beneficiary of a P2.1-billion BOT project to computerize its operations and speed up the processing of documents.

A computerization project of the Bureau of Internal Revenue was listed as having a budget of P4.4 billion.

Another broadband-related project was for the Commission on Higher Education (CHEd) to administer the interconnection of 100 state universities and colleges (SUCs) through local-area networks (LAN) and wide-area networks (WAN).

LAN is a system that links computers together in a small area, like offices or buildings. WAN is the same system applied to a larger area like a town, province or an entire country.

The CHEd project has a listed cost of P1.5 billion and a completion period of three years.

Telepono sa Barangay

Under the MTPDP, the Department of Transportation and Communications was to carry out a P62.7-billion “alternative communication program.”

This, according to the MTPDP annexes, “shall serve as an alternative to the Municipal Telephone Program (MTP) and the Telepono sa Barangay.”

It was to install “telecenters in every municipality and public pay phones accessible to all barangays.”

The government had already spent P1.5 billion of loans from Canada for the MTP that installed 2,460 telephone lines in 246 villages in the provinces of Quezon, Negros Oriental, Lanao del Norte, Zamboanga del Norte, Zamboanga del Sur, Nueva Vizcaya and Misamis Occidental.

But the lines are now dead and the MTP fell apart as the use of cellular phones became more common.

Too poor to pay

It also proved to be a losing financial venture because most of the lines were installed in areas where poverty was so pervasive that people could barely afford three meals a day, much less pay for phone calls.

“Technology overran it (MTP),” said one official who took part in implementing the MTP.

“These guys working on the NBN and CEP should learn lessons from this (MTP),” said the official. “It’s Waste of Funds 101, but the lessons never sink in. It’s as if money grew on trees.”

Boao Forum

Malacañang officials, who helped prepare the MTPDP but declined to be identified for lack of clearance to talk from higher officials, said the listing of ongoing and proposed ICT projects in the government’s six-year development plan indicated “an aggressive push for IT (information technology) projects.”

It was an aggressive stance that President Gloria Macapagal- Arroyo herself announced in a speech at the Boao Forum in Boao, China, shortly before she witnessed the signing of the NBN deal with ZTE on April 21, 2007.

“In the Philippines, we are investing aggressively in the IT backbone,” said Ms Arroyo in the speech. “We are bringing the Internet to every high school.”

It wasn’t clear whether, at the time Ms Arroyo said those words, her administration had already outlined what it wanted in terms of ICT projects other than to connect all government offices through a broadband network and all public high schools to the Internet.

Written by President

But in a portion in the MTPDP dealing with ICT projects that Malacañang officials said Ms Arroyo herself wrote, the President was well aware of what the problem in the ICT area was -- the lack of private sector participation.

“The absence of clear and concise policies allowing innovative and more efficient services at lower costs has discouraged the entry of new players and further investments in the (ICT) sector,” Ms Arroyo wrote in a situationer on Digital Infrastructure in the MTPDP.

“Clearly, there is need to sustain the momentum already gained toward the building of a digital infrastructure,” she wrote in the ICT section of the MTPDP shortly after the May 2004 elections.

“Hence, efforts in pursuit of this goal will be further accelerated with the private sector playing a major role in these efforts,” she said.

Her officials were to come under fire three years after she wrote those words for entering into a government-to-government deal with China for the NBN, a broadband network that would have no private sector participation.