The ambitious infrastructure development plan by the Duterte administration could provide the much needed boost to transport speeds and road access that would unlock the greater part of the country’s economic potential, the Fitch Group’s think tank said in its latest report on the Philippines.
BMI Research forecast that the transport sector will experience strong growth over the next five years as the government pursues its infrastructure development program.
“The Philippines’ transport sector will enjoy strong growth over the next five years, according to our forecasts, as President Rodrigo Duterte’s government pursues a P3.6-trillion infrastructure development plan aimed at accelerating economic growth by improving the country’s logistics environment,” BMI said in its analysis released on Wednesday, referring to the target infrastructure spending for the next three years.
Road and rail projects designated as high priority, including those outside Metro Manila, will help alleviate poverty in the country and speed up economic growth, the research team said.
“This fits in with Duterte’s stated focus on developing the economies of regions outside Metro Manila and the goal of reducing the poverty rate from the current 22 percent to 13 percent by 2022,” BMI said in the study.
The Duterte administration’s program of economic development—which Cabinet officials call “Dutertenomics”—aims to build new roads and railways to help sustain the country’s economic growth momentum.
“The Dutertenomics program detailed by officials in April has a strong focus on road and rail projects in particular, and underscores our forecast that the Philippines’ transport sector will grow at an annual average of 9.5 percent between 2017 and 2021,” BMI said.
“Even modest improvements to transport speeds and accessibility across the country have the potential to unlock faster economic growth,” it said.
Projects with foreign financing and expertise backing, such as the PNR North-South Project and the Mega Manila Subway, are expected to move at a much quicker pace than projects facing less certain financial backing.
Last month, Transport Secretary Arthur Tugade discussed the ongoing construction and development in connectivity via land, aviation and water under the Duterte administration’s thrust of “Build, Build, Build,” pushing the Philippines toward its “Golden Age of Infrastructure.”
Tugade has said these projects, many of which will be financed by official development assistance from Japan and China, are targeted for completion before the end of President Duterte’s six-year term ends in 2022.
During his whole term, the government intends to spend P8.4 trillion on infrastructure. For this year alone, the government aims to spend P847 billion on infrastructure development, covering projects in all regions, including small-, medium- and large-scale ventures.
The National Economic and Development Authority (NEDA) earlier said the government’s ambitious six-year infrastructure spending program of P8.4 trillion could boost the country’s real gross domestic product (GDP) by 3.4 percent and translate to 1.06 million additional jobs every year until 2022.