ADB: Power, infra costs cripple RP
Bank cites Manila's 'unfinished' transport agenda
By Doris Dumlao
Philippine Daily Inquirer
First Posted 18:56:00 03/27/2008
MANILA, Philippines--The Asian Development Bank sees the "expensive" and "unreliable" electric supply as well as "inefficient" transport network in the Philippines as the two most critical infrastructure constraints to the country's growth.
The ADB cited studies, which included inputs from the World Bank, the Philippine government's unfinished reform agenda for the power and transport sectors.
A comparative study of 10 Southeast Asian cities showed that power tariffs for businesses in Manila were 20 to 80 percent higher than that in neighboring countries, the bank said.
"In addition, the reliability of electricity supply has been poor, and the investment climate survey shows that small and medium enterprises have been losing up to 8 percent of their production due to frequent power disruptions," the ADB said.
Losses due to power failure were estimated at about 8 percent of production.
"Power outages hurt SMEs most, costing them about 8 to 11 percent of production, compared with 6 percent for large firms," the ADB said.
To enhance domestic productivity, the ADB study said the government would have to address the following constraints:
- Financial viability of the National Power Corp. and Power Sector Assset Liabilities Management Corp.;
- The need for new investments in the power sector in view of forecast of power shortage in the near future;
- Privatization of the rest of the state's power generation assets; and,
An efficient and credible regulatory framework and institution.
On the transport network, the ADB noted that more than half of the country's road network was in poor or bad condition. Vehicle operating and inter-city freight costs are reported to be over 50 percent higher than that in Indonesia and Thailand.
"While the Philippine road network is extensive, much of it is in poor condition," the ADB said. "Only 70 percent of the national road network is paved. The national road network is a mere 12 percent of the total public road network."
The bank also said that village roads "are mostly unpaved and in poor condition and comprise more than half of the road network."
Likewise, the report cited a World Bank estimate that the high level of congestion on the main roads alone was costing as much as P185 billion a year.
The ADB said this was ironic because the government had accumulated a substantial amount of money since May 2001, when a law was passed creating the Road Fund, mandating the collection of a motor vehicle user charge from vehicle owners. An estimated P22.6 billion had been collected under this law from May 2001 to April 2005.
"The efficiency with which these funds are used could be improved," it said.
It was also noted that the port of Manila ranked 31st among the top 50 ports worldwide in the 2005 world port rankings in terms of container traffic.
However, ADB also pointed out that the Philippines was way behind other Asean ports in the top 50 list.
The bank added that the Philippines had the highest cost in the Asean for exporting a container, which it attributed to inefficiencies in port handling.
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