Multiplier effect

4

Ma. Lourdes N. Tiquia

DAVAO is “three times bigger than Metro Manila, six times the size of Cebu, one of the largest metropolitan areas not just in Asia but in the world.” Today, it is the unofficial capital of the country. The Davao formula was for the mayor to handle peace and order, use political will to build the city, and the local bureaucracy to attend to the rest. Can this formula be scaled up to the whole of the country?

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To a certain degree, yes, in terms of peace and order and infrastructure development. The other side of which is, no, because you have an unwieldy legislature trying to curry favor with PRRD (death penalty for illegal drugs?) or launch diatribes against him (EJK, Matobato, undeclared wealth, Lascañas and every anomalous act is labeled as done by Duterte). The 17th Congress in fact has just enacted two bills into law: the General Appropriations Act, or the national budget, and the postponement of the barangay elections. There are no super majorities because if there were, the legislative agenda of the President would have been on track.

PRRD has convened the Legislative Executive Development Advisory Council (LEDAC) and the chambers have crafted their own agenda. A common legislative agenda is said to be in the final drafting. Though we can do without more laws considering there are laws that have not been implemented fully and there are unfunded mandates, we need more and more for Congress to exercise its oversight function over the Executive and Judicial branches if it is to help PRRD in his effort to pursue reforms.

In a study done by the Congressional Policy and Budget Reform Department of the House of Representatives, there are “62 laws [that]remained partially funded while 75 laws were not funded at all as of 15 October 2015. Unfunded laws grew by 127.3 percent from 33 in 2007 to 75 in 2015, while partially funded laws grew even higher by 376.9 percent from 13 to 62 in the same period.” These laws amounted to “P367.3 billion. Of this amount, only P242.1 billion was allocated, leaving a funding deficiency of P125.2 billion.” Unbelievably, “the House committee on oversight (13th Congress) which made an inventory of unfunded laws even indicated that two laws enacted by the First Philippine Republic—the Friars Lands Act (1904) and Cadastral Survey Act (1913)—were not implemented because they required a huge funding of P1.5 billion.”

So if Congress can’t act as a direct partner to PRRD on infrastructure development and decides to use their pork for the innocuous projects that do not build a nation, then PRRD and his political will should push the envelope daily until such becomes the bureaucratic discipline. Why? Because doing infrastructure development is the way to respond to some promises of the President: inclusive growth, lowering poverty by the end of his term, providing jobs and bringing sunshine (economic activities) to the poorest provinces.

With political will, PRRD can connect the 7,641 islands by a system of airports, ports, bridges and rails. The bridges can be tourist attractions just like the bridges in Porto, Portugal. Porto is the second largest city after Lisbon and it has a mixed transport system of bus, rails, trams and subways. One can do a tour of the Duoro river and see the different designs of the bridges; some are modern while others are historical in make and design. If PRRD can implement Build.Build.Build and other infrastructure plans every year in the three islands of the country then we would have done much, much more than any administration has.

The nautical highway of then PGMA must be continued and further developed. Just look at the development it brought to Roxas, Oriental Mindoro. Roxas, the smallest municipality of the province, was a sleepy, fourth-class municipality. Today, it is a place of heightened economic activities because of the nautical highway, connecting its port to the famous destination, Boracay. Today, it is a second-class municipality from being a pass-through from Batangas to the Calapan piers and to Caticlan, Aklan.

The underlying reason for pushing for Build.Build.Build is that of the so-called multiplier effect. We can be competitive at the end of PRRD’s term if we are able to launch and implement the infrastructure plan. The multiplier effect is “an increase in income generated by an increase in spending,” which should be part of our national conversation. Such conversation should not settle for mere infra for infra sake but “wise” infra investment. The qualifier “wise” refers to projects that fill a need of the community they serve and which are economically viable. A key lesson is that “projects that have a lot of private capital behind them would have the biggest impact because more often than not they won’t be a road to nowhere.”

Further, it has been a settled model that “an additional 1 percent of GDP invested in transport and communications on a sustained basis increases the GDP per capita growth rate by 0.6 percent. “Productivity growth— and therefore competitiveness—is higher in countries with an adequate supply of infrastructure services.” So, we can even pursue a smart infrastructure development of a mix of hard and soft infra with ICT merged to it to create a resilient Philippines.

Clark should therefore be made as the main gateway, with Subic and Batangas designated as alternative, complementary ports to Manila. Clark and Subic should serve the northern part of Luzon while the south (CALABARZON) can be served by Sangley airport and port system. NAIA can be dedicated to the 12 million residents of Metro Manila. A tri-airport system in Luzon unclogs the bottlenecks of Metro Manila and spurs development from center to the peripheries.

Our unique geography, between East and West, allows us to be a competitive logistics hub. In a Transport Intelligence Report (TIR) in 2015 estimated “Philippine logistics to triple to P326 billion by 2020 from the present P100 billion.” TIR said that by 2020, based on low 11 percent compounded annual growth rate (CAGR) and high of 18 percent CAGR growth scenarios, the logistics market is forecasted to reach P204 billion (low) to P326 billion (high).

The forward linkage index of the Philippine logistics industry as of 2011 was placed at 1.4, the lowest in Southeast Asia, compared to Indonesia, 2.1; Thailand, 2.73; Cambodia, 2.48; Vietnam, 2.64; Thailand, 2.73 and Malaysia, 4.03. Based on the study, logistics’ multiplier effect is such that “every P1 investment has a multiplier of 2.81 investments in other industries such as services.”

There are 109 local and foreign logistics service providers in the country with aggregate revenue of P60 billion. They are very much concerned over the provision of efficient transport infrastructure, conducive policy environment, and regulations that will foster the logistics sectors’ competitiveness in terms of cost, service quality and reliability.

Based on a 2010 traffic study by the Japan International Cooperation Agency in Metro Manila and its environs, truck trips (per day) is expected to increase from 694,271 in 2010 to 872,329 in 2020 and 1 million by 2030. The share of trucks going to and from Manila is 60 percent. That means, we need to increase our road networks.

The Department of Public Works and Highways’ (DPWH) budget has increased dramatically over the last four years. In 2015, almost half (49 percent) of the government’s outlay infrastructure went to DPWH. The big challenge is improving the paved ratio of local roads that comprise 84.5 percent of the country’s total road network. Provincial and municipal roads have a low paved ratio of 35 percent, while city roads have a paved ratio of 62 percent.

Trains and trams are something we need to seriously pursue. Trains can be transshipment mode for raw and finished products, from Mindanao to the Visayas or Mindanao to Luzon. Trams can be an efficient mass transit in urban centers to the peripheries. But Congress will have to contend with the problematic Philippine National Railways (PNR) mandate, which has been pending in Congress despite the extension of its corporate life.

The good news is that under PRRD, the infra spending has been placed at 7 percent, an increase of 2 percent from BSA3’s 5 percent. The other good news is he is hands-on on infra coupled with the political will to push the projects fast. When we see projects launched and a building spree all over, then we test the government’s effort on corruption. If the infra projects are corruption-free, then we see why a Duterte is better than the rest. The surest way to defeat destabilization efforts is to perform well and accomplish more. Unfortunately, the Department of Transportation (DOTr) and the Department of Information and Communication Technology (DICT) are laggards instead of being shining stars. The social welfare clusters are moving. The economic clusters have rolled up their sleeves and the DPWH is getting things done. Agriculture is moving to remove bottlenecks one by one. The uni-dimensional focus must end.

The Duterte administration needs at least P8 trillion to close the infrastructure gap over the next six years. An initial list of 18 big-ticket items worth a total of P427.5 billion has already been approved by the National Economic and Development Authority. Clearly, accelerating infrastructure spending to help pull down the poverty rate to below 15 percent by the time he steps aside in 2022 is vital.

The reality is that the total resources of the Philippine financial system is P16.2 trillion and the Duterte administration would have to invest about Php8 trillion over the next six years on infra to be on a par with Asean. So, the more Congress spends time on this problem area, the better for the whole infra plan to be a reality.

Getting your act together has a multiplier effect, too. It quiets the shrillness in politics. Getting your act together is getting all hands deck, no lone stars. Getting your act together is no public meltdown; the only meltdown should be on tasks not done. From June 2016 to March 2017, or eight months hence, hold the reins tight and get things done. Don’t be derailed by the political noise.

As Socrates said, “the secret of change is to focus all of your energy not on fighting the old, but on building the new.”

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4 Comments

  1. Dick S. O'Rosary on

    The sad part is that the “intelligentsia” of this country, the so-called “thought leaders,” appear to be encouraging more opposition by these six senators. When does it end?

  2. Thank you also for reading positive view for the future Philippines. Only DU30 can do that and pray he will finish his terms and live longer.

  3. Wonderful article. Some column writers here are obviously anti-Duterte but of course the people know why? Thank you for being objective and supportive to our President. This is professionalism. This is journalism. Kudos!