Mel (not his real name) is a project manager in one of the leading engineering design firms in the country with a decades-long history in designing infrastructure like bridges, roads, air and sea ports.
Speaking to him over coffee, he and others have long lamented the lack of projects for his firm to do. He mentioned the Aquino years where the promise of big ticket and challenging projects failed to take off as part of the Public Private Partnership (PPP) scheme that was hoped will spur the necessary infrastructure meant to propel economic growth
According to him, the infrastructure that were funded were road widenings of already existing highways. For him and many engineers, these may have provided an image of an action-oriented government, but only amounted to marginal relief from traffic in urban areas, and did nothing more than what current roads in the rural areas could already do. "It makes government look good, but does not solve the big lack of over-all infrastructure we really have," Mel says.
True enough, fund statistics show that in the last five years, the Philippines has suffered from low infrastructure spending below the 5% needed to sustain growth, something that many economists criticized the previous Aquino government for. (http://business.inquirer.net/213957/aquino-regime-underspent-p1t).
Even multilateral agencies saw this, and along with the lack of inclusivity in reducing poverty, that barely moved from 25% in 2010 to about 21.5% in 2016, while our ASEAN neighbors, of Indonesia and Thailand have poverty reduced their rates to less at about half of ours.
Worse, the promised PPP projects failed to take off, with only four out of the promised 24 ever seeing the light of approval, and only in the last two years of Aquino's presidency.
The effects for this infrastructure lack is revealed in studies by the ADB noting that traffic alone has reduced our growth figures by 0.8%. The lack of urban infrastructure is glaring in the two-hour traffic jams that characterize trips to Metro Manila.
Despite rosy growth figures and credit ratings, these became the dark spot that stained the Noynoy Aquino economic legacy. Had these flown in at least the last two years of his presidency, many surmise that our GDP figures could have well reached upwards of 8-9%.
Infra spending coming, yet bottlenecks remain
Thus, the new government committed to spend at least 7 trillion pesos over the next five years to plug this gap to get our spending back to the international standard of 5% of GDP. The obvious need to spend on important infrastructure that eases vehicular traffic and spur needed countryside economic growth. This important expenditure is expected to boost growth more than Foreign Direct Investment and earnings from Business Process Outsourcing.
Agriculture and manufacturing can get a boost from infra spending with farm to market roads and better port connectivities lowering transaction costs and making products more competitive.
Recently, however, the World Bank slightly cut the country's growth forecasts amid concerns that the promised infrastructure roll out would not happen (http://bworldonline.com/slow-infrastructure-rollout-worries-wb/). While assailed by a few economists, what the banks statement did, however, was to cement the notion that infrastructure, and not FDIs nor BPO earnings widely believed, will be the backbone of future economic growth.
Insiders we spoke with affirmed that indeed, many of the procedures attending the approval of large infrastructure projects remain slow, hampering the needed spending.
Measures to boost project approvals and spending
In a bid to push Philippine growth figures and meet or exceed heightened forecasts, government officials have introduced a slew of measures to ramp up spending and speed up implementation of key infrastructure projects.
Recently announced was the formation of a Project Facilitation, Monitoring and Innovation (PFMI) Task Force, composed of economic and major infrastructure agencies, to push policies and processes to address issues in Infrastructure Flagship Projects.
Also announced was the implementation of hybrid PPPs meant to correct problems of the PNOY PPP and engage Joint Venture Agrements meant to speed up the process of getting private partners in to make the necessary investments to participate in Build Build Build.
Coloring the picture favorably for the Philippines is the Asian Development Bank, which approved a $100 million loan for the Infrastructure Preparation and Innovation Facility, which will support "accelerating the delivery of high quality public infrastructure projects under its ambitious “Build, Build, Build” program."
In the same statement, it also said that the facility will "assist two key agencies—the Department of Transportation and the Department of Public Works and Highways—in preparing flagship infrastructure projects under the Build, Build, Build program using international best practices. In all, it is estimated to spur $3.8 billion in public infrastructure investments in national roads, railways, bridges, flood control, ports, and airports, which in turn will add as much as $10 billion to the country’s gross domestic product (GDP) between 2019 and 2024." (https://www.adb.org/news/adb-supports-philippines-accelerating-flagship-infrastructure-projects)
Single Window to boost investment
Likewise dovetailing on these is the institution by the national Economic Development authority of a single window, where, unlike the previous practice of creating one stop shops, businesses will only have to submit all documents to one government representative or office which will handle all related processes from there. This is deemed more efficient and investor friendly, providing consistency and service in getting the investments done in a faster manner.
On top of this, proposed legislation remains to allow larger foreign equity ownership in many Philippine businesses, seen as a mean to attract more Foreign Direct Investment (FDI), which our negihbors Indonesia and Vietnam has historically been able to attract more and faster FDIs than we can.
A fringe benefit sought by instituting the single window and other measures is an improvement in the ease of going business scores in surveys by the World Bank (http://www.resurgent.ph/articles.aspx?id=123), where the philippines, despite improving on most scores, fell behind other countries that surged far ahead, leaving it at 113th place down from the previous year's 99th.
All of these measures are meant to remove the procedural bottlenecks and sustain that reportedly hampered vital infrastructure spending in the last administration. Apart from direct jobs provided, the long term attractiveness of the economy to spur local and foreign investment is raised when good infrastructure is present.
"Like the Ramos years"
Already, the stirrings of increased infra spending are being felt. Sources from within the engineering and construction industry report what amounts to a renaissance in project development reminiscent of the Ramos years, where engineering design firms could hardly cope with the raised demand for their services.
A peek into their portfolios reveal many dream projects that they as engineers never thought would be proposed.
It seems the infra push has bred an excitment that many like Mel will feel for a long time. He expresses sincere hopes that the kind of infrastructure he and others like him will work on will not only gain significant income for them, but cascade better growth for their families and communities.