IF the Duterte government is looking for ways to buttress its economic program, it should be pleased with the new long-term strategy of the Asian Development Bank (ADB). At its 50th annual meeting in Yokohama on Saturday, ADB President Takehiko Nakao outlined the priorities of its “Strategy 2030,” which retains support for infrastructure development as a priority.
In his address at the opening session, Nakao said: “According to a recent special report by ADB, Asia will need $1.7 trillion per year in investments in power, transport, telecommunications, and water through 2030. This is more than the previous estimate, reflecting additional investments needed to support continued growth and address climate change.” Moreover, he brought up the need for quality infrastructure at another session in Yokohama.
That is welcome news throughout Asia, including the Philippines, where President Duterte has identified massive infrastructure build-up as a key agenda. The ADB announcement, although not surprising, bolsters the growing support within Asia for supporting infrastructure development, such as those from China. That news resonates in the Philippines, where the economy has been growing despite anemic public spending and where the supposed economic showcase of the previous administration – the PPP or public private partnerships – has been slow in taking off. Good thing the ADB will be of help there, too.
Another strategic priority, the ADB president said in his opening address, involves stepping up efforts to mobilize private resources for development. “This includes promoting greater and more effective use of public-private partnerships, or PPPs. This approach is not new. In the late 19th-century Japan, for example, many railways and electricity services were started through innovative private companies under concessions granted by the government.”
Also at the opening session of the ADB annual meeting, Japanese Deputy Prime Minister Taro Aso said, “I would expect the bank to continue to promote infrastructure devleopment, and to further mobilize private sector financing, including through PPPs.” The deputy prime minister is also the chairman of the ADB’s board of governors.
Mind the middle-income trap
Our economic managers and policymakers should seize this opportunity and strive to shift the collective national attention to focus squarely on development. The Philippine economy has been praised as one of the fastest-growing in the world, but the country is in danger of falling into a middle-income trap if the Duterte development agenda stalls just like the previous government’s. One might understand the complacency given that consumption accounts for some 70 percent of the country’s gross domestic product. But that is unlikely to be sustainable, not to mention vulnerable to external events.
Granted, there are many factors going for the Philippines. The economic policy directives seem to be headed in the right direction, but as mentioned earlier, the problem has been poor execution. And we cannot, and should not, rely on friends to do something about that.
Take the United States, for instance.William Grimes of Boston Univerity, said in another ADB forum in Yokohama that Mr. Donald Trump was more focused on narrow domestic issues rather than on larger international public goods – or as the US President said, “America first.” Grimes added that if another financial crisis were to strike, Asean + 3 must be prepared to go it alone.
In that same forum, which revisited the 1997 Asian financial crisis, Finance Secretary Carlos Dominguez 3rd, said that Asean has learned its lesson, and that another crisis is unlikely. “The crisis was a misfortune, but from it, we drew strength.”
Speaking of infrastructure, the Philippines is in crisis. Look at the high cost of power, congested roads in many urban areas, and broken public transportation systems. But from that, the country must now draw its strength. The opposite side of crisis is opportunity. The Philippines is at the center of regional growth and development, and it has friends willing to support it. The time to act is now. Manila will host the next ADB annual meeting in 2018. It would be good to hear then about concrete action that the Philippines has taken.