Tuesday, September 25, 2018
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Corporate Securities Info

After the infra projects, what?

Philippine Chamber of Commerce and Industry president George Barcelon raised a valid point at the recent second Sulong Pilipinas forum where business leaders met with President Duterte’s economic managers.

Adverting to the administration’s “Build, build, build” program, Barcelon asked: “After this infrastructure is done, what are the socioeconomic benefits? … You have a train going from point A to point B. But what are the job-creating industries that would take advantage of this infrastructure [boom]?”


The program aims to appropriate and spend more than P8 trillion to construct roads, airports, seaports and railways in different parts of the country, especially in the rural areas, during Mr. Duterte’s term.

The funds needed to make the so-called golden age of infrastructure a reality will primarily be sourced from government revenues and official development loans from other countries.

With the way Barcelon phrased his questions, he is assuming the Duterte administration will not suffer the same fate as its predecessor whose infrastructure projects got bogged down by bureaucratic red tape and temporary restraining orders from the courts.

In his second State of the Nation Address, President Duterte called on the courts to take into consideration the national interest when issuing those orders.

If the administration’s projects push through as planned, the economic managers have expressed confidence that the share of infrastructure spending in the gross domestic product will substantially increase between now and 2022.

There is no question that the construction of the proposed public works projects would have an impact on the economy.

They are expected to generate jobs that will, in turn, give rise to trickle down economic activities. The demand for construction materials will result in higher production and additional employment. The banks and other financial institutions can expect a spike in demand for credit facilities.

It is reasonable to assume that before these projects were to be rolled out, the technocrats who prepared them did their homework to ensure that they would not wind up as white elephants or mere show cases.

Modernistic airports, seaports, trains and toll roads will not be worth the millions of dollars and pesos in loans incurred or taxpayers’ money spent for their construction if they do not draw the volume of passenger and cargo traffic needed to make their operation financially viable.


The administration’s plan to turnover the operation and maintenance of some of these projects to the private sector after their completion makes good business sense.

The track record of government as manager or administrator of commercial activities imbued with public interest is dismal. The bureaucratic processes, including the pervading influence of politics, are not conducive to efficient business management. The government would be better off acting as regulator, not the operator, of these projects.

But this does not mean the government should confine itself to the role of project builder and leave to their own devices the parties who may be awarded the right to operate and maintain them.

It behooves the government to also provide, if not make possible through incentives, the conditions that would enable the operators to make the projects accomplish the purpose for which they were constructed and, at the same, time, pay for themselves.

While it is true that these projects, once completed, would create some economic activities in their peripheries, e.g., mom-and-pop stores and service outlets, these are not the types of businesses that would make the projects worth the money spent on them.

These projects deserve something more substantive than small and medium scale enterprises or activities that are in the league of export processing zones that can generate thousands of long-term jobs.

The country can ill-afford infrastructure projects that replicate the Film Center of the Philippines, Palace in the Sky and other monuments of extravagance that former first lady Imelda Marcos built during the Marcos dictatorship.

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TAGS: Duterte, Philippine Chamber of Commerce and Industry, Sulong Pilipinas
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