P5.7T in investments needed to make PH competitive in infrastructure

The government needs to invest at least P5.7 trillion in infrastructure every year to shore up international competitiveness and address demand of the growing logistics industry, according to the United States Agency for International Development (USAID).

The USAID’s Advancing Philippine Competitiveness Project (Compete) yesterday said this was the amount that would ensure the country was spending at least 5 percent—the international benchmark—of gross domestic product on infrastructure.

“Philippine public spending on infrastructure was 2.7 percent of national income in 2010 but it has reached 5 percent in 2015,” Compete’s chief of party Enrico L. Basilio said in a forum.

Compete helped the Department of Trade and Industry (DTI) in crafting the draft National Logistics Masterplan for the next six years or until 2022, which was unveiled yesterday at the AIM Conference Center in Makati City.

Basilio said keeping infrastructure spending at the benchmark level at the minimum would help realize the logistics industry’s high potential as a driver of economic growth.

“Forward linkages of the transport and storage sector [in the Philippines] including passenger transport is the lowest among the the Association of Southeast Asian Nations in 2006,” Basilio said, citing data from the Organization for Economic Cooperation and Development.

“[This] has further decreased in 2011, indicating a decline in integration of the sector to the entire economy,” he said.

OECD data show that in 2006, forward linkage for the Philippines was recorded at a rate of 1.56—meaning the economy increased by 56 centavos for every peso invested in the transport and storage sector.

In comparison, forward linkage level for Malaysia was 4.84, Vietnam at 2.84, Thailand at 2.62, Cambodia at 2.52 and Indonesia at 2.07.

In 2011, the Philippines remained the laggard with forward linkage pegged at an even lower 1.4.

Basilio also cited a 2015 report from market research firm Transport Intelligence, which shows that the logistics business in the Philippines was estimated to be worth more than P100 billion.

The industry is projected to grow by as much as 18 percent yearly to reach P326 billion in 2020.

One of the focus areas of the proposed master plan relates to improving the ratio of paved roads to the total road network in the country.

“Provincial and municipal roads have a low paved ratio of 35 percent while city roads are at 62 percent,” Basilio said.