Author Topic: BUILD,BUILD,BUILD (Read 1770 times)

balong · « **on:** May 09, 2019, 09:46:25 PM »

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balong · « **Reply #1 on:** May 09, 2019, 09:47:26 PM »

Under Philippine President Rodrigo Duterte, the Southeast Asian country is experiencing an infrastructure boom unseen since the time of strongman Ferdinand Marcos.

Over the next decade, the government is set to embark on an ambitious $180 billion infrastructure spending bonanza, set to transform the Philippines’ economy.

Philippine Department of Finance (DOF) chief economist Karl Chua said in an interview that the government is looking at 75 flagship projects, which include six airports, nine railways, three bus rapid transits, 32 roads and bridges, and four seaports that will help bring down the costs of production, improve rural incomes, encourage countryside investments, make the movement of goods and people more efficient, and create more jobs.

The government is also aiming to construct four energy facilities that will ensure stable power supply at lower prices; ten water resource projects as well as irrigation systems that will raise agricultural output; five flood control facilities that will help protect vulnerable communities as well as boost their resilience against the impact of climate change; and three redevelopment programs that will deliver sustainable solutions to best meet the needs of urban population.

If successful, Duterte could once and for all extinguish the Southeast Asian country’s reputation as the “sick man of Asia”–and usher in an unprecedented era of inclusive economic development.

Striking while the iron is hot

To be fair, recent years have seen consistently high economic growth in the country. Since 2011, the Philippines has broken out of its historically mediocre growth pattern to feature among fastest growing nations in the region.

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balong · « **Reply #2 on:** May 09, 2019, 09:48:06 PM »

The World Bank expects the Philippine Gross Domestic Product (GDP) to grow by 6.7% in 2018 and 2019, the highest in Southeast Asia. The Duterte administration, however, is hoping to nudge growth to the 7-8% territory.

But the country’s growth has been shallow and far from comprehensive, leaving high levels of unemployment, poverty and hunger relatively untouched. And this is where the Dutertenomics’ “build, build, build” agenda comes into the picture, hoping to (literally) bridge the gap in economic policies of past administrations. Infrastructure is clearly the country’s Achilles heel.

Poor infrastructure holding Pinoys back

On one hand, infrastructure has been a major source of concern for foreign investors, who have been discouraged by the country’s weak infrastructure and heavy utility costs. Those investments are crucial to create well-paying jobs for the millions of poor and unemployed Filipinos.

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balong · « **Reply #3 on:** May 09, 2019, 09:49:22 PM »

According to an authoritative study by the Japan International Cooperation Agency (JICA), traffic congestion in Manila, caused by poor infrastructure, carried a daily price tag of P2.4 billion ($45 million) in 2012--a figure that is expected to almost triple by 2030.

According to the 2017 World Economic Forum’s competitiveness report, the Philippines ranked 97th in the world in terms of infrastructure. In a separate report by the United Nations, the Philippines ranked 5th in Southeast Asia in terms of access to physical infrastructure.

Duterte’s two immediate predecessors, Gloria Macapagal Arroyo and Benigno Aquino III, oversaw a decade of sustained macroeconomic reform, anchored by fiscal tightening, moderate inflation, expanding trade surplus and steady economic growth.

Yet, the cost of their disciplinary economic policies was lack of sufficient investment in basic infrastructure. Under the Aquino administration, in particular, under-spending was a major concern.

Both the Arroyo and Aquino administrations were also overly dependent on private-public-partnership (PPP) schemes with local conglomerates, which lacked proper competencies.

Duterte, however, can now build on his predecessors’ legacy by diverting the Philippines’ expanding fiscal pie to address infrastructure woes. Leveraging his skyrocketing approval ratings (80%), combined with a new foreign policy direction as well as a super-majority coalition in the legislature, his administration is marshaling necessary funds to finance and sustain its ambitious economic plan.

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balong · « **Reply #4 on:** May 09, 2019, 09:49:52 PM »

Who's footing the bill?

Unlike his predecessors, he is ditching the PPP modality in favor of larger reliance on government revenues as well as Official Development Assistance (ODA), particularly from Japan and China, as his main sources of infrastructure funding.

To support the new modality, Duterte has normalized relations with China, which has offered $7.3 billion in infrastructure investments, and Japan, which has been a leading investor in the Philippines for decades.

Duterte also passed a new tax reform package, which is expected to raise sufficient revenues to fund infrastructure spending. According to Mr. Chua, up to 70% of newly-raised revenues (estimated to raise P786 billion over the next 5 years) are earmarked for supporting the “build, build, build” campaign.

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balong · « **Reply #5 on:** May 09, 2019, 09:50:15 PM »

Communications Secretary Martin Andanar said that the government hopes the tax reform will “not only solve our present infrastructure gaps, but also support the country’s future growth.”

Nonetheless, Duterte’s ambitious infrastructure vision could be hobbled by chronic challenges. Experts have expressed doubts over absorption capacity of government agencies to undertake projects competently and on time; risk of large-scale corruption and bidding anomalies affecting foreign, especially Chinese-led, projects; lack of construction workers and skilled labor; as well as growing pressure on Philippine peso and international reserves due to need for importing intermediate goods and technology for infrastructure boom.

Supporters, however, claim that even if the government fails to achieve half of its ambitious goals, Duterte could still go down in history as a harbinger of a golden age of infrastructure buildup in the country. Infrastructure could very well be one of the Filipino

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