PRESIDENT Rodrigo Duterte and his economic team have vowed to spend trillions of pesos over six years to transform the Philippines into an upper middle-income economy. This can be done, they said, through higher investments in infrastructure within and outside Metro Manila, which are seemed to be behind the times.
Dubbed “The Golden Age of Infrastructure” by government officials, this Duterte administration’s “Build, Build, Build” program calls for about P9 trillion in public and private spending until 2022, when the President steps down from office.
Budget Secretary Benjamin Diokno is confident about completing the major infrastructure on or before 2022. “Most of the major projects are targeted to be finished within the term of the President, except the subway, because this would take 10 years to be completed,” he told The Manila Times. He was referring to the proposed Mega Manila Subway, a 25-kilometer underground mass transportation system connecting major business districts and government centers.
“We will have to finish because the President does not like to start a project and just leave it hanging,” he stressed. “That is why we try to hasten the process.”
There are also 74 flagship projects under the “Build, Build, Build” strategy, of which 18—valued at P462.74 billion—have been approved by the board of the National Economic and Development Authority (NEDA) since the start of the Duterte administration, in June last year. He added that another 55 projects were in the pipeline for processing by the ICC, or Investment Coordination Committee. The projects involve the construction of roads and bridges as well as flood control systems, airports, mass transit systems, seaports, communication and information networks, and new townships.
These projects will be funded by a combination of official development assistance (ODA), with investment aid raked in from Japan and China, and government funds from the General Appropriations Act. “The hybrid public-private partnership (PPP) is a modality adopted by the Duterte administration to fast-track the rollout of infrastructure projects, and take advantage of concessional borrowing rates, as the government can borrow at very concessional rates,” Diokno said. Explaining it as mainly demand-driven, he said the scheme allows government to choose the project that it deems appropriate, then arrange the financing through ODA financing or foreign loans. The government will then bid out the project to be done by the local contractors or foreign contractors, or both.
Among the so-called “ambitious projects” the ruling administration plans to roll out during Duterte’s term are the country’s first subway, Mindanao’s first mass-transit railway, the development of Clark Green City, and another commuter railway linking Tutuban, in Manila, to Clark, in Pampanga. Among the other projects are the Bonifacio Global City – Ortigas Road Link, the Mandaluyong Main Drainage Project (Phase II), and the Cebu Bus Rapid Transit.
The Duterte government wants to set infrastructure spending at 5.4 percent of the economy this year, as against an average of 2.9 percent during the Aquino administration. The plan is to bring this up to more than 7 percent by 2022.
Officials have said the goal of such massive spending was to support growth. Another aim was to cut crippling traffic in major urban areas across the country, a problem likely to stay a while longer since many of the larger projects—trains and new roads, for instance—would be completed by 2020 or beyond.
The labor force that will be needed is “overwhelming,” Diokno said. “Luckily, we will not do it all at one time, so it’s going to be an S-curve, as I’ve said. We have enough time to prepare for that. I think we have 1.2 million people joining the labor force every year.” He added that graduating students will be joining the labor force, as well as overseas Filipino workers (OFWs), who are coming back to the country, can be tapped to support the government’s massive infrastructure program. This program addresses the fourth in the 10-point socioeconomic agenda, Diokno said, which seeks to accelerate annual infrastructure spending to account for 5 percent of GDP, with PPPs playing a key role. “The present poor state of infrastructure reflects decades of neglect and misallocation of public resources,” he added.
The government has programmed an infrastructure budget of P1 trillion in 2018, which was explained to be 5.8 percent of the country’s GDP.