The Aquino administration is embarking on an aggressive infrastructure program, allocating more funds for roads, bridges, irrigation, airports and similar projects until expenditures reach a quarter of the national budget by 2016.
Finance Secretary Cesar Purisima said that the government will be focusing more on infrastructure development in the years ahead to improve the country’s competitiveness.
This year, infrastructure projects account for 16 percent of the P2-trillion national budget.
In the proposed national budget for 2014, set at P2.268 trillion, infrastructure may account for 20 percent of the total. The allocation will continue to increase until it hits 25 percent of the national budget by 2016, Purisima said last Friday during the Bureau of Internal Revenue’s (BIR) 109th anniversary celebration.
The need to invest heavily in infrastructure has become more urgent because of the measly amount of foreign direct investments (FDIs) that goes to the Philippines, compared with those flowing into neighboring countries.
In 2012, the Philippines cornered about $2 billion in FDIs while Indonesia had over $20 billion.
Economists said one of the factors dragging down the country’s competitiveness is its relatively poor infrastructure, which makes it longer to transport goods in the Philippines than in many neighboring countries.
Public infrastructure spending in the Philippines stood at 2.5 percent of the country’s gross domestic product (GDP) last year, while the average for Southeast Asia stood at 5 percent.
Development institutions, led by the World Bank and the Asian Development Bank, have urged the Philippine government to increase public infrastructure spending to at least 5 percent of GDP in order to catch up with its neighbors in terms of competitiveness.
Purisima said the government is responding to the challenge, particularly by allocating more public funds for infrastructure.
Also, the finance chief said the BIR would continue to step up tax collection to support the government’s growing expenditure requirements for infrastructure and other development initiatives.
In 2012, the BIR for the first time breached the P1-trillion collection mark—up 15 percent year-on-year.
The bureau is now targeting to collect P2 trillion in taxes by 2016 to allow the government to fund its infrastructure development plans, Purisima said.