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Mapping The Future

Better infrastructure for a strong economy

05:01 AM October 01, 2018

Infrastructure is the framework that supports economic growth. When we put money into building and maintaining critical infrastructure assets, we create more jobs, improve overall productivity, promote a healthy and clean environment, and create wealth.

In the 2017 to 2018 global competitiveness report released by the Geneva-based World Economic Forum, the Philippines ranked 56th out of 136 economies. The report cited “inefficient government bureaucracy” and “inadequate supply of infrastructure” as the two most problematic factors for doing business.

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What is important to note is that, in the same benchmarking exercise, we scored only 3.4 out of 7, and ranked 97th out of 137 economies for infrastructure.

Important role

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This is the reason why the business community is happy to see that the current administration acknowledges the important role of infrastructure in national development.

Proof of this recognition is the inclusion of an infrastructure-focused policy statement in the 10-point socioeconomic agenda: “accelerate annual infrastructure spending to account for 5 percent of GDP, with public-private partnership playing a key role.”
The Management Association of the Philippines (MAP) supports this accelerated spending.

We are also glad to see that, after a slow 2017, infrastructure spending has surged by 42 percent year-on-year as of the second quarter of 2018.

The government’s catch-up plan is critical, considering that for 15 years since 2000, we have only been spending an average of 2 to 3 percent of GDP on infrastructure.

We call on the government to ensure that this trajectory is maintained, so that we can be well on our way toward becoming an upper middle income country by 2022, and reduce poverty by 14 percent.

Allow me to spend the next part of my sharing to expound on the MAP’s’ position on specific and crucial topics: namely traffic congestion, airport and seaport infrastructures.

A high-quality transport infrastructure system enhances economic productivity by enabling the efficient movement of people and goods. It is currently estimated that traffic congestion causes the economy to lose P3.5B daily. That is how urgent and important the traffic problem is.

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Given this urgency, what can we do to ease, if not totally address, this problem? Some of the quick fixes that we want to see happen include the following:

First, we want to see all Mabuhay lanes cleared of all forms of traffic obstructions-more so now, with the announcement that several bridges and a flyover in Manila will be closed for repairs and restoration.

Second, we also want to see more qualified traffic enforcers deployed, especially in the high-traffic areas. We all know that the number of motorists who obey traffic rules is directly proportional to the visibility of enforcers.

Third, more CCTVs should be installed in our streets in support of the MMDA’s non-contact apprehension policy.

We do know that the problem of traffic congestion will not go away with these quick fixes. It must be complemented by the accelerated construction of more elevated roads, as well as limited access expressways and bridges.

The MAP fully supports the expansion and upgrading of the mass transport system, including light and heavy rail systems, as a sustainable solution to traffic congestion.

We cannot overemphasize the urgency. The time for a concerted action to address traffic congestion is now.

The MAP also recognizes the work being done to expand the capacity of our airports across the country.

Just last June, we saw the inauguration of the new Mactan-Cebu International Airport Terminal 2, which has an increased capacity to 12.5 million from 4.5 million travellers.

Work continues in Mactan Airport, as well as in the airports of Clark, Bohol, Bicol, Puerto Princesa, Davao and Cagayan de Oro, to name a few.

The MAP supports the airport complementation strategy, which aims to decongest Naia, give travelers more options for flying, and spread development across Luzon.

There is also the matter of seaports, as many of our members’ businesses rely on our network of seaports for an efficient supply chain-from the movement of raw materials to the eventual distribution of finished goods to local and international markets.

Port congestion paralyzes businesses. It affects manufacturing efficiencies, causes missed delivery commitments, and damaged business reputation.

We simply cannot afford having to deal with another port congestion crisis.

Having said all these, allow me to offer, on behalf of the MAP, some insights on the government’s infrastructure development strategy.

I think part of the reason why we have major-and very costly-infrastructure issues today is because we have a problem with continuity of projects and policies.

We would like to see master plans issued and implemented to the end, instead of resetting with every change in the administration. This does not help build investor confidence. Often, changes in policies also mean deviations from contractual obligations.
We need to emphasize that businesses want simple predictability.

If we want to see more active participation by the business community, we should start with giving them the assurances that the sanctity of contracts will be upheld.

From what we have seen so far, I would like to say, after a sluggish start in 2017, we appreciate the increased pace of project implementation this year. However, we need to keep this pace to build up momentum.

The government needs to be ready and willing to address the challenges of implementing each infrastructure project.

It has to do this with more vigor and political will.

One very important challenge that I am sure many of us have had to deal with is right-of-way (ROW). The government needs to put in more budget to the implementation of the ROW Law of 2016. We need more qualified people to handle simultaneous and nationwide ROW acquisitions. Otherwise, this seemingly minor component will continue to impede implementation and delay timelines.

Over the next 10 years, $180 billion will be infused into the economy in the form of infrastructure investment as part of the “Build, Build, Build” program. This is expected to create jobs, reduce poverty, attract investors, boost the economy, and promote inclusive development.

But one of the important questions that have been raised is: “what should be the mode of delivery?”

Comments and opinions have pitted PPP against ODA. There is no single mode of delivery that will work for all types of projects. The choice should be based on the nature and scope of the project, the project size and value, the technical capability of the implementing government agency, and the terms and conditions of the ODA and donor country.

Finally, we also want to point out the fact that infrastructure projects are often held hostage by layers and layers of bureaucratic processes.

Consistent with one of MAP’s themes for 2018 on Ease of Doing Business, we would like to take this opportunity to recommend government action to reduce political interference into infrastructure projects.

Given the magnitude of infrastructure projects, we believe that supervision and approvals should be lodged with the executive branch’s regulatory agency.

Opening up major national projects to LGU interference will only be counterproductive.

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