Standard & Poor’s (S&P) is closely evaluating Philippine efforts at expanding and upgrading its infrastructure capacity to accommodate more investment as the global credit ratings agency conducts due diligence on the country, the central bank said.
S&P remains bullish on the economy but infrastructure development in the country remains one of its concerns, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said late Wednesday on the sidelines of the Financial Times-First Metro Investment Summit in Makati City.
The Philippines currently holds a BBB rating from S&P, one notch above the minimum investment grade, with a stable outlook.
“They [S&P] recognized the continuing good economic performance and reforms that have been put in place that are supporting these performances. This kind of performance, I believe, is sustainable over the medium term although they are also looking at further improvements in certain areas like improvement in infrastructure, which is, you know, something that we all agree with,” Tetangco told reporters.
“The government is precisely doing that. They have been pursuing the PPP [public-private partnership] program. And they have committed to increase government spending particularly for infrastructure,” he added.
Overall infra strategy
The overall strategy of the government for infrastructure development is to increase public infrastructure spending from 2.7 percent of the gross domestic product (GDP) in 2013 to at least 5 percent or about P826 billion by 2016 to support its growth requirements in the years ahead.
The government targets 7 percent to 8 percent GDP growth this year and the next.
Based on its Comprehensive and Integrated Infrastructure Program (CIIP) 2013-2016 and beyond, the priority programs and projects for the infrastructure sector comprise a total of 3,077 projects, requiring total investments of about P6.58 trillion.
The CIIP covers public infrastructure projects funded by the government through sources such as official development assistance loans, General Appropriations Act, Corporate Budget, PPPs and/or joint ventures, and those funded purely by the private sector such as private-led energy projects, among others.
Projects in the pipeline
The government has about 50 PPP projects in the pipeline worth over $23 billion. Nine PPP contracts have been awarded to the private sector since 2011 at a cost of about $3 billion.
The awarded projects are the Daang Hari-South Luzon Expressway Link Project, PPP for School Infrastructure Project (PSIP)-Phase I, Ninoy Aquino International Airport (NAIA) Expressway Project-Phase II, PSIP-Phase II, Modernization of Philippine Orthopedic Center, Automatic Fare Collection System, Mactan-Cebu International Airport Terminal Building, Light Rail Transit Line 1 Cavite Extension and Operation and Maintenance, and the Integrated Transport System Project Southwest Terminal.
Of the nine projects, the Daang Hari-South Luzon Expressway Link Project; PSIP-Phase I, NAIA Expressway Project-Phase II, and the PSIP-Phase II are now in the final stages of completion, while the rest are in their initial stages of development.
Other infra projects allocations
Of the total investment required for infrastructure development, nearly P3 trillion or 45.4 percent is allocated to the transport system covering air, land, and water.
A separate P1.37 trillion or 20.8 percent is for social infrastructure to ensure the protection of public health and the environment, improvement of access to quality health and education facilities, and access to decent housing and services.
More than P1 trillion or 15.4 percent is for equitable and efficient management of water resources to ensure adequate, safe and sustainable water for all.
About P847 billion or 12.9 percent is for sustainable, diverse and reliable energy sources; while P89 billion or 1.3 percent is for the provision of fast, reliable and affordable Information and Communications Technology (ICT).