Title: Summary of Mandaluyong City Market rebuilding on a BOT basis (UNDP)

Languages: English

Type: Document

Region: South Asia

Country: Philippines

Keywords: PPP Project Cycle, PPP Options, Build-Operate-Transfer


Document Details:

Mandaluyong City (fig. 1) is the smallest city of the cities in Metro Manila, with an area of only 12 square kilometres and a population of over 278,000 people. A public market was located in the heart of Mandaluyong City on a 7,500 square metre area along Kalentong Road, a main transit route. In 1991, the market was destroyed in a major fire in large part because most of the structure was made of wood. As a temporary answer for the displaced vendors, the government allowed about 500 of them to set up stalls along the area’s roads and sidewalks.

This rapidly proved to be impractical in that it led to both traffic congestion and sanitation problems.

Rebuilding the public market became a high priority for the city government, but financing a project with an estimated cost of 50 million pesos was beyond the city’s capability.

Local interest rates were high, averaging approximately 18 per cent annually and the city was not prepared to take on the additional debt that construction of a new market would have required. The city government was also concerned that if the charges to stall owners became too onerous, the increased costs would have to be passed on to their customers, many of whom were lower-income residents of the area.

The answer to this problem that the city government decided to use was based on the Philippines’ national Build- Operate-Transfer Law (BOT) of 1991. This provided the statutory basis for developing a public-private partnership (PPP) for the project. A business consortium was created, called Macro Funders and Developers, Inc. (MFD), to complete the project. A seven-story commercial centre, named The Marketplace (fig. 2), was designed to include a public market, street-front stores, a parking garage, commercial shops, department stores, a bowling alley and a movie theatre.

Through this partnership, the commercial activity conducted in the new structure generates incomes that are used to recoup the capital investment by the private sector.

This document summarises the project.

Updated: March 30, 2021