The Philippines has always been seen as a country with a huge potential for growth and prosperity because of its endowments, including rich natural resources, numerous tourist spots, fertile lands, and a large pool of skilled and hardworking labor force, among others.

In recent years, the economy has also enjoyed the right environment for investments, such as stable banking system, low interest rates, remittances from overseas Filipino workers and the business process outsourcing (BPO) industry.

Despite these endowments and advantages, our economic growth has lagged behind the country’s neighbors, such as Malaysia and Thailand. Based on its performance in 2016 and estimates for 2017, the Philippines is being touted as the fastest-growing economy in Southeast Asia, and one of the leaders in Asia.

In terms of stage of economic development, however, the Philippines is still catching up with its peers.

There is no mystery behind the catching-up status. Local and foreign economists, including multilateral agencies like the World Bank and Asian Development Bank, have been pointing to inadequate infrastructure as the major barrier to the inflow of investments throughout the country.

True, the government did not have enough resources in the past to finance infrastructure projects, which generally require substantial funds. This is no longer true today, or in recent years, because the growing economy – notwithstanding inadequate infrastructure in many areas – as well as reforms helped the government increase its financial capacity.

In 2011, the government launched the Public-Private Partnership (PPP) program to undertake big-ticket infrastructure projects. The belief is that the participation of the private sector will accelerate infrastructure development.

It did not happen as expected.

With the availability of funds (from the private sector) and the partnership with private companies, an old problem only became more evident: implementing infrastructure projects has been a long, tedious process.

The first project under the PPP program is a good example. The Muntinlupa-Cavite Expressway (MCX), a four-kilometer toll road, was awarded in December 2011 and was completed in the middle of 2015. Roughly, it took 12 months to complete each kilometer of the project.

In addition to the MCX, the PPP Center’s website lists three other completed PPP projects, namely the PPP for School Infrastructure Project – Phase I, Automatic Fare Collection System and the NAIA Expressway Project (Phase II).

With the financing part no longer a major worry, President Duterte’s economic team is confronting the implementation part. The President has vowed to reduce poverty, and he recognizes that the way to achieve this is to accelerate economic growth, which requires accelerating infrastructure development.

Instead of relying solely on the PPP, which had been the previous administration’s flagship infrastructure program, the Duterte administration is opting to avoid the PPP scheme if the government can undertake the project by itself.

The Department of Public Works and Highways (DPWH), according to Finance Secretary Carlos D. Dominguez III, would implement some projects because these could be approved faster and would entail lower costs than if these projects were done under the PPP program.

The DPWH has already been tasked to directly undertake two road-widening projects in Bulacan and north of Manila totalling about 40 kilometers.

Under the PPP program, a project usually takes 13 months to get going because of the time spent for bidding and contract negotiations,

Sometimes, even 13 months may not be enough to get a PPP off the ground, because of possible challenges from losing bidders or questions raised by some groups. Also, proponents of a PPP project may request for changes in the contract while construction is already ongoing, which results in further delays.

We are not abandoning the PPP program, under which numerous projects like expressways and airports will be implemented with the private sector as the lead partner.

At the same time, the simultaneous implementation of other projects by the DPWH and other agencies gives the government a two-pronged approach to infrastructure development.

This is what I call a creative solution, which can only be expected to accelerate economic development.

Hopefully, the Philippines would achieve not just fast growth, but reach the same economic status as its current wealthier neighbors.

06 February 2017
By Manny B. Villar