“Build, build, build.” This is the new mantra of the administration’s infrastructure plans as propounded by Secretary Benjamin Diokno of the Department of Budget and Management (DBM) during the recently held “Infrastructure and Construction Forum: Re-thinking Infrastructure Building” organized by the Italian Chamber of Commerce in the Philippines, Inc.in partnership with the EU-Philippines Business Network.
I was fortunate to be invited by the organizers and hear first-hand the current situation in the government’s infrastructure development plan considering the real needs in sectors of water, healthcare, education, and agriculture within the local government units (LGUs). It was well attended by practitioners from the public and private sectors including those from the financial services, construction, and property development industries.What was especially striking was the general optimism and confidence of the audience and participants in the future of the Philippine infrastructure and the economy as a whole.
Sec. Diokno pointed that the government is budgeting a whopping 5.3 to 7.3 percent of GDP from 2017 to 2022 for infrastructure, equivalent to 8 to 9 trillion pesos, a precipitous increase from the previous administration’s average of 2.9 percent of GDP from 2010 to 2019. In 2018 alone, the government is pending 1 trillion pesos in infrastructure development of 5.5 percent of GDP.
Imagine the multiplier effect to the economy when this is implemented – more than 1 million additional jobs annually on top of the already 1 million jobs the economy can produce annually, as highlighted by Sec. Diokno. This means more consumer spending, fuelling allied industries.
What’s even more laudable is where the infrastructure spending will be focused on. While the macroeconomy appears robust, inequality across regions, besidesacross households, remains highly skewed, and chronic poverty persists. Hence, most of the infrastructure projects under government’s “Build Build Build”program are intended to benefit lagging regions, either intra-regionally or via inter-regional connectivity. These will further create mass employment, vitalize the regions,and significantly reduce inequality and poverty. These will also decongest the mega-urban industrial region centered around Metro Manila.
Under the government’s infrastructure program is the National Logistics Masterplan 2017-2022. Undersecretary Ruth Castelo of the Department of Trade and Industry (DTI) described this as one that “envisions to advance Philippine competitiveness through the establishment of an efficienttransport and logistics sector that will contribute towards arobust and resilient Philippine economy.”
This bodes well for the emergence and development of e-commerce in the country, as local conglomerates and more and more medium, small and medium enterprises (MSMEs) engage in online business to stay competitive.
Already a significant number of projects are underway through Public-Private Partnerships (PPP) such as the Bonifacio Global City-Ortigas Center Link RoadProject, UP-Miriam-Ateneo Viaduct along C-5/ Katipunan, Metro Manila Priority Bridges Seismic ImprovementProject, NLEX-SLEX Connector Road, Metro Manila Interchange, Davao City By-Pass Construction Project (South Section (Road) and Center Section (Tunnel), Integrated Transport System Project, among others.
But behind all these grand undertakings are challenges that everyone agrees with such as supply of skilled labor and talent, and restrictive regulatory processes. Apart from what the government is already doing, such as empowering the Construction Industry Authority of the Philippines (CIAP) to address regulatory hurdles, Sec. Diokno made an appeal to the private sector to join forces with government and share their talents and expertise, to ensure the success of these projects.
The country has a big chance this time.
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The author is a senior executive in an information and communications technology firm. He is the Chairman of the ICT Committee of the Financial Executives Institute of the Philippines (FINEX). He teaches strategic management in the MBA Program of De La Salle University. He is also an Adjunct Faculty of the Asian Institute of Management.