Lessons from the failed Baguio Market project

The withdrawal of SM Prime Holdings from the proposed public-private partnership (PPP) for the redevelopment of the Baguio Public Market on December 19, 2025, marks a decisive rupture in the city’s push for large-scale redevelopment through private capital. The suspension of a P5.4-billion project, which already granted original proponent status, reflects more than a failed investment; it reveals a breakdown in the legal and institutional conditions necessary for a viable PPP, exposing systemic weaknesses that made the project politically unstable and legally vulnerable.

From a legal perspective, SM Prime’s exit points to deeper weaknesses in the handling of the PPP process. The company referred to unresolved disagreements among government offices, market vendors, and other stakeholders—conditions that made it difficult to reach clear, stable, and enforceable decisions. Although city officials acted within their authority in proceeding with SM Prime’s proposal, that decision did not translate into broad institutional or public support. As uncertainty persisted, much of the political and social risk was effectively shifted to the private partner, weakening the project’s viability. The episode highlights an important lesson for PPPs: compliance with procedure alone is insufficient if decisions are not backed by coordination, shared commitment, and public trust.

The episode also highlights the reputational risks that private firms may face when participating in highly politicized public infrastructure projects. The Baguio case is likely to have implications beyond the city, serving as a cautionary signal to potential investors. Despite holding original proponent status and offering a project cost lower than competing proposals, the proposed redevelopment unfolded in an environment where opposition narratives—particularly those framing the project as privatization and corporate encroachment—were difficult to counter. Such conditions may discourage other firms from pursuing unsolicited proposals, potentially narrowing the city’s future options for mobilizing private capital for large-scale redevelopment.

For market vendors, the company’s withdrawal represents both a reprieve and a form of precarity. While many had opposed the proposed seven-storey commercial complex out of concern that it would disrupt livelihoods and marginalize small traders, the project’s collapse has not resolved the underlying structural problems of the public market. Longstanding issues of dilapidated facilities, congestion, and safety remain unaddressed. In the absence of a clearly articulated alternative, vendors remain in prolonged uncertainty and continue to operate under inadequate conditions. This outcome illustrates a recurring paradox of stalled PPPs: when projects fail without transition mechanisms, the intended beneficiaries bear the cost, and existing inequities are sustained rather than remedied.

Politically, the withdrawal heightens pressure on local officials to align development goals with the city’s “Baguio First” policy doctrine. Statements by Vice Mayor Faustino Olowan invoking the Vendors’ Bill of Rights signal an effort to restore legitimacy after prolonged dispute, but accountability demands more than symbolic reaffirmation. The city must articulate a clear path forward in the absence of SM Prime and reassess whether earlier decisions, including the rejection of Robinsons Land Corporation’s proposal, remain defensible. The episode underscores the political risks of executive actions that, while procedurally sound, diverge from public sentiment.

More broadly, SM Prime’s exit forces Baguio to rethink its approach to urban redevelopment. The public market is not merely an economic facility but a cultural and social institution, and redevelopment models that privilege scale or efficiency at the expense of community engagement invite resistance. The challenge now is to craft a framework that balances private-sector capacity with public ownership, transparency, and meaningful participation—addressing both infrastructure needs and the legitimacy gaps that undermined the previous effort.

While SM Prime’s exit represents a significant setback, it also presents a pivotal opportunity for strategic leadership by local government officials. The pause affords the city a chance to confront governance and coordination gaps that have hampered the project, rebuild trust among vendors, residents, and the private sector, and reassess development priorities in a more deliberate and inclusive manner. More than the collapse of a single proposal, the withdrawal underscores the need for institutional learning and course correction. For cities like Baguio, sustainable modernization cannot rest on speed or scale alone; it requires leadership that aligns legal frameworks, social equity, and democratic participation, ensuring that redevelopment advances without compromising civic identity or public confidence.