Even with the previous administrations’ PPP (public-private partnerships) program pushed to the sidelines in favor of a more direct hand by the current government in ramping up infrastructure spending under its BBB (Build Build Build) sloganeering, optimism fortunately continues.
Businessmen are not the only ones hopeful the shift in strategy will indeed open up clogged investment lines and usher in the aspired “golden age of infrastructure.” Even the common tao is expectantly looking forward to the promised change.
Urban centers of the country, now experiencing unbridled economic growth, are seeing the constraints posed by the long delays in infrastructure spending. Truly, BBB is a call to action that strikes deep into the heart of every productive Filipino citizen.
No concrete change after a year
A year into Duterte’s term as president and barely a month when he stands before Congress and the nation to deliver his second State of the Nation Address (SONA), inaction is a term that does not sit well with the big promise of change.
More than ever, Filipinos want to move on from the campaign against drugs (which continues to be waged six months after the initial deadliest deadline originally set) and the “war” in Mindanao that led to a declaration of martial law.
Stripping off the veneer of sizzling street wars against drug lords, pushers and users, or the burning and looting of Marawi City and adjacent municipalities by ideology-motivated terrorists, one realizes it has been a year of not really seeing anything concrete being done for the economy.
Patience, however, is a virtue that Filipinos have in abundance. We’ve waited for decades, through many worse days, to see the day when change would happen. What is one more year, especially in relation to a new president who continues to enjoy immense popular support? Heck, he’s got five more years to deliver on his promises.
If there is one good thing going for the current administration, it is the prognosis of global institutions about the Philippine economy. ING said the country would continue to do well even on “auto pilot” mode, a condition where Duterte’s economic team fails to rev up the nation’s productivity.
Over the next five years, ING said the Philippines would score a projected trend growth rate of 6.5 percent, better than the average growth rate of 6.1 percent achieved by the previous administration.
If the Duterte government is able to deliver the promised “golden age of infrastructure,” the growth rate over the period of 2017 to 2022 could even exceed the aspired seven to eight percent growth rate set by the nation’s economic team.
The World Bank is betting on a 6.8 percent growth rate this year, one percentage point lower than its initial estimate made in April last year, but nevertheless still upbeat.
Fitch Group’s BMI Research gave a lower, more conservative growth rate of 6.2 percent for 2017 and 2018, but was still brimming with optimism largely based on a perceived improvement in the business environment, coupled with a growing young population, and increased infrastructure spending.
Ratings agency Moody’s Investors Service maintained its outlook for the Philippines at stable on an affirmation the country’s economic performance would remain strong.
Fast is best
Thus, everyone is now looking at how fast the Duterte administration will be able to let money to flow out from the National Treasury’s coffers or close loans to finance a long list of infrastructure projects estimated to cost P8 billion over the next six years.
The infrastructure splurge is expected to increase the share of the country’s infra spending to 7.4 percent of GDP by 2022, a marked improvement from the lackluster levels accomplished by the Aquino government.
As the government prepares to enter its second year, the President approved 11 prioritized projects, mostly infrastructure, with a total cost of P305.6 billion. This is only half of what NEDA had earlier included in the list of flagship projects to be approved by the country’s CEO at its end-June meeting.
The projects that were not approved, for one reason or another, were the Mega Manila Subway Project-Phase 1 (P230 billion), the PNR South Commuter Line from Tutuban to Los Baños (P134 billion), and the PNR Long-Haul from Calamba to Bicol (P151 billion).
The three projects command an aggregate cost of P515 billion, with the PNR projects already with financing arrangements in the final stages of discussion with Japanese and Chinese investors. The PNR projects will be beneficial to Southern Luzon’s economic blueprint.
The Mega Manila Subway project, on the other hand, was described as an “ambitious” undertaking utilizing Japanese technology and financing. With a daily ridership population of about 350,000, the subway would supplement the current above-ground MRT/LRT lines.
The first phase of the subway is from Quezon City to Taguig, and may likely only begin in 2020. Completion of all phases involving 13 terminals from Mindanao Avenue to the Ninoy Aquino International Airport is seen by 2024.
In the flurry of all the big projects, a few daring critics of the Duterte administration are warning against the resurgence of corruption. In this respect, the Makati Business Club has issued a call for government to promote ethical and acceptable integrity standards.
We must learn from China’s experience where, in the 1990s up to the 2000s, when government spending on infrastructure was over 8.5 percent of its GDP, road projects that led to nowhere and ghost cities were later uncovered.
Keeping track of all the projects, especially as they increase in number over the years, would by itself be a job fit for a superbody. Our state auditors will definitely have their hands full.
Lastly, the government could reconsider the involvement of the private sector which has shown interest in financing projects that are somewhere in the lower end of the state priorities. We need every hand to build, build, build, to secure a better future for the country.