Interaksyon, 09 April 2013
Darwin G. Amojelar

MANILA – The Philippine government cannot rely on public-private partnerships (PPP) alone to untangle the country’s infrastructure bottlenecks, the Asian Development Bank (ADB) said on Tuesday.

“PPP cannot provide a magic bullet. Even in very matured PPP environments in countries where PPP processes are really matured, governments still have to invest as much as 70 percent to 80 percent of infrastructure investment through the budget,” Neeraj Jain, ADB country director for the Philippines, told reporters.

PPP or not, the government has a huge responsibility to invest in infrastructure, he said, citing the Philippines’ low infrastructure spending of only 2.5-3 percent of the country’s gross domestic product and (GDP).

This “needs to go up by 6-7 percent of GDP” on top of the PPP infrastructure projects. “That’s the magnitude that the government has to mobilize to bridge the infrastructure deficit,” Jain said.

Budget Secretary Florencio Abad had said the country’s newly-won investment grade rating from Fitch Ratings would help push infrastructure spending to five percent by 2016.

Having said the above, Jain noted that the Philippines was doing “very, very nice” in implementing the PPP projects.

He cited the NAIA Expressway and the LRT Line 1 Cavite Extension, both of which are in the pre-qualification stage.

Besides infrastructure, the Philippines has to ensure that the judicial environment is stable, predictable and transparent to attract more foreign investors, Jain said.

“The good thing is that the government is addressing some of these issues,” he said.

Data from the Philippine Institute of Development Studies showed that the country’s investment-to-GDP ratio stood at 19.7 percent last year, only slightly higher than the 19.1 percent in 2011.

The marginal increase in the Philippines’ investment rate lags the pace of expansion of the country’s GDP, which last year grew 6.6 percent, or above the government target range of 5-6 percent and higher than the country’s trend-growth of five percent in the last decade.

In contrast, Indonesia’s investment rate stood at 33 percent in 2011, while that of Thailand and Malaysia at 27 percent and 24 percent, respectively.

Under the Philippine Development Plan 2011 to 2016, the Aquino administration is aiming for a 22 percent investment rate by 2016 and GDP growth averaging 7-8 percent a year. The country’s economic blueprint also aims to create one million jobs a year.