In its recent pre-SONA forum, the economic team spent\nthe most time talking about four years of infrastructure accomplishments. On\nthe other hand, there was next to nothing about the government\u2019s plans for\neconomic recovery from the serious crisis brought on by the pandemic. The\nmisplaced emphasis on infrastructure during the pre-SONA forum only reflects\nthe misplaced emphasis on infrastructure as some kind of magic bullet for the\ncountry\u2019s development.<\/p>\n\n\n\n
The Philippine economy has a basic problem \u2013 it is\ndependent on external and temporary drivers of growth. These include overseas\nremittances and foreign investments especially for business process outsourcing\n(BPOs) and manufacturing. Yet COVID-19 wreaked havoc on these. Overseas\nremittances fell by 5% in March as thousands of OFWs were repatriated back to\nthe Philippines. BPO investments are slowing down more than ever and export\ndemand is weakening from a sluggish global economy. <\/p>\n\n\n\n
The economy lacks substantial and sustainable internal\ndrivers of growth such as from developing the core productive sectors of\nagriculture and manufacturing. Yet, instead of developing these, the government\nis looking to infrastructure spending to spur growth even if this is\nsuperficial and short- term.<\/p>\n\n\n\n
More than any other government since the Marcos era,\nthe Duterte administration is extremely dependent on public infrastructure spending\nto boost growth. It has been relying on infrastructure as a major economic\nstimulus long before COVID-19. The longest lockdown in the world delayed implementation\nof various infrastructure projects around the country. <\/p>\n\n\n\n
Yet the government is still hell-bent on pursuing a\ngrand infrastructure program amid the pandemic and despite its actually bleak\naccomplishments so far. The government says it will revise its list of\ninfrastructure projects to adapt to COVID-19. But does it really have the will\nto shift the focus of its infrastructure program, or even the capacity to fully\nimplement this?<\/p>\n\n\n\n
2 out of 75<\/strong><\/p>\n\n\n\n The Philippines was said to lag behind its neighboring\nAsian countries in terms of infrastructure. The Duterte government dreamed of\nbuilding high-impact infrastructure projects through the Build, Build, Build\n(BBB) program. BBB aims to build more\nrailways, urban mass transport, airports and seaports, more bridges and roads,\nand new and better cities. The program is estimated to cost Php8 to 9 trillion\nfrom 2017-2022. <\/p>\n\n\n\n The BBB program originally had 75 infrastructure\nflagship projects (IFPs) composed of transportation (53), water resources (15),\npower\/energy (4), and social infrastructure (3). The government said these\nprojects would facilitate efficient movement of goods and help bring down\nproduction costs in the country. They would also improve the income of rural\nfamilies, encourage countryside development, and create 1.7 million jobs by\n2022. These are grand claims considering\nthat the 75 IFPs were mainly concentrated in the National Capital Region (NCR),\nRegion III, and Region IV-A and IV-B which are the trading centers of the\ncountry. <\/p>\n\n\n\n Altogether, the 75 IFPs were estimated to cost around\nPhp2.1 trillion. The government planned to tap official development assistance\n(ODA) and the private sector to fund these. Of the 75 IFPs, ODA would fund 57\nworth Php2 trillion, public private partnerships or PPP would fund 6 worth\nPhp23.3 billion, and government budget would be allocated for 12 IFPs worth\nPhp138.5 billion. This means that most of the 75 IFPs would be funded with loans\nfrom various countries.<\/p>\n\n\n\n The status of the projects was telling of its\nprogress. Data from the National Economic and Development Authority (NEDA)\nshows that only two out of the 75 IFPs were completed in November 2018. These were improvements along the Pasig River\nfrom Delpan Bridge to Napindan Channel (Phase IV) and the selective dredging of\nthe Pulangi River. It is also worth noting that the Pasig-Marikina River\nChannel Improvement Project has three other phases that started as early as\n2009. Only Phase IV was constructed during the Duterte administration. NEDA\u2019s\nlast update on the status of the 75 IFPs on July 2019 reported the same two\nprojects as being completed. <\/p>\n\n\n\n 38 out of 100 before Duterte steps down?<\/strong><\/p>\n\n\n\n In November 2019, the Duterte government announced that it revised\nthe list of IFPs from 75 to 100 in order to \u2018streamline\u2019 the list and make it\n\u2018more feasible\u2019. This was due to the slow rate at which projects were going.\nWith their new list, the Bases Conversion and Development Authority (BCDA)\nexpects only 38 of the 100 IFPs to be completed by the time Pres. Duterte steps\ndown. <\/p>\n\n\n\n The 100 IFPs are composed of projects for transport and mobility\n(73), water resources (10), urban development (9), information and\ncommunication technology or ICT (6), and power and energy (2). The list is\nprimarily composed of economic infrastructure to make the country more\npalatable to investors, which has basically been the basis of infrastructure\nplanning for a long time. Noticeably, the current infrastructure program lacks\nsocial infrastructure, which is much needed by Filipinos to live humanely and decently.<\/p>\n\n\n\n The 100 IFPs are worth around Php4.3 trillion and ODA is the\nbiggest funding source. There will be Php2.4 trillion funded with ODA, followed\nby Php1.2 trillion through PPP, and Php172 billion funded solely from the\nGeneral Appropriations Act (GAA). The glaring over-reliance on loans and\nprivate sector funding reflects the sore absence of government capacity for\nthese.<\/p>\n\n\n\n Leading the ODA funders for the 100 IFPs is Japan with a total of\naround Php1.3 trillion in loans, China with Php700 billion, and the Asian\nDevelopment Bank (ADB) with Php273 billion. Data from NEDA as of June 2019 show\nthat the Philippines has already received US$8.1 billion worth of ODA loans\nfrom Japan, US$2.8 billion from ADB, and US$273 million from China.<\/p>\n\n\n\n The short-sightedness of the government\u2019s infrastructure program\nwas really highlighted during the outset of the COVID-19 pandemic. The\ngovernment had to scramble to convert evacuation centers into quarantine\nfacilities to absorb the rising number of COVID-19 cases. More alarming is how\njust recently 11 hospitals in Metro Manila have reached full capacity for their\nCOVID-19 dedicated beds. <\/p>\n\n\n\n The government announced a few weeks ago that construction of some\nroad projects under the 100 IFPs will resume. Still, COVID-19 has to a certain\nextent compelled government to announce that it will come up with a revised\nlist of the 100 IFPs to cater to the country\u2019s health needs. <\/p>\n\n\n\n In line with reviewing the current list of 100 IFPs, the\ngovernment could reconsider large projects such as the Metro Manila Subway\nProjects Phase 1 and the Safe Philippines Project Phase 1. Instead of spending on\nthese import- and capital-intensive projects, the budget could instead be used\nfor subsidizing jeepney modernization. This would benefit more Filipino\ncommuters as well as support the employment of thousands of jeepney drivers. <\/p>\n\n\n\n The controversial Kaliwa Dam should also be reconsidered for the\nenvironmental and community impacts combined with the nature of the onerous\nloan agreement. Another project that\ncould be shelved is the Bataan-Cavite Interlink Bridge. The huge amount spent\nto shorten travel time may not deliver commensurate returns, and the money is\nlikely spent better on more urgent pandemic-related needs. Additionally, the\nSafe Philippines Project Phase 1, a CCTV surveillance system project, may just\nmake Filipinos more unsafe especially in the current repressive political\nenvironment. <\/p>\n\n\n\n The ODA loans are specifically for these projects but the\ngovernment can negotiate with Japan, China and the ADB to realign these towards\nthe country\u2019s more urgent needs. These lenders say they are focused on\npromoting development so the Philippine government should not be afraid to hold\nthem up to that intent.<\/p>\n\n\n\n The government has not yet released its supposedly revised list of\nprojects because of the pandemic. The public is waiting to see how much of the\nrevised list includes health, housing, and education-related infrastructure. COVID-19 may also have pushed the\nimplementation of some projects back, and the public deserves to know about delays\nand how many would be completed before President Duterte steps down. <\/p>\n\n\n\n Complementing the New Normal<\/strong><\/p>\n\n\n\n The BBB program gives the impression that building\nmore infrastructure per se is the key to sustained long-term economic growth.\nThis notion is reinforced by the visible short-term stimulus that large-scale construction\nprovides. New bridges, roads, airports, and railways also seem to give palpable\ngains. The real economic question however is not just whether there are\nbenefits but if these benefits are worth the costs.<\/p>\n\n\n\n Improving mobility around the country, which comprises\nmajority of BBB projects, is not in itself enough to improve the country\u2019s\neconomy. Without active promotion of agriculture and manufacturing, the improved\ninfrastructure will mainly benefit just the service- and trading-oriented\nsectors that dominate our shallow economy. <\/p>\n\n\n\n Infrastructure can contribute to long-term economic\ngrowth if it helps push the country\u2019s agricultural and manufacturing potential.\nPolicy changes are needed for this to happen. The government has to protect and\nsupport agriculture which unfortunately has been backsliding especially with\nrice liberalization. Additionally, the Filipino manufacturing sector is waning\ndue to investment liberalization that favors foreign investors at the expense\nof nurturing domestic capital. The country\u2019s policies are even more misguided amid\nincreasing protectionism and departures from liberalization globally.<\/p>\n\n\n\n The government should release the revised infrastructure list immediately. As healthcare has become the priority, the government should add more social infrastructure like hospitals to help deal with congested health facilities. More socialized housing units could also help decongest urban settlements in the country and help prevent the spread of the coronavirus. <\/p>\n\n\n\n Moreover, policy reforms such as protecting agriculture and the manufacturing sector to complement the country\u2019s revised infrastructure plan can result in long-term economic growth to benefit Filipinos. Dealing with the COVID-19 pandemic in a way that prioritizes the people\u2019s well-being should be the present challenge and government should realign its infrastructure program to complement this. <\/p>","protected":false},"excerpt":{"rendered":" FEATURES<\/p>\n The government is still hell-bent on pursuing a grand infrastructure program amid the pandemic and despite its actually bleak accomplishments so far. The government says it will revise its list of infrastructure projects to adapt to COVID-19. But does it really have the will to shift the focus of its infrastructure program, or even the capacity to fully implement this?<\/p>","protected":false},"author":7,"featured_media":9952,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":"","_expiration-date-status":"saved","_expiration-date":0,"_expiration-date-type":"","_expiration-date-categories":[],"_expiration-date-options":[]},"categories":[2048,3],"tags":[1041,347,144,2316,2315,116],"acf":[],"_links":{"self":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9951"}],"collection":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/comments?post=9951"}],"version-history":[{"count":2,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9951\/revisions"}],"predecessor-version":[{"id":9954,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/posts\/9951\/revisions\/9954"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media\/9952"}],"wp:attachment":[{"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/media?parent=9951"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/categories?post=9951"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ibon.org\/tl\/wp-json\/wp\/v2\/tags?post=9951"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}