Philippines aims for ‘golden age of infrastructure’

Philippines aims for ‘golden age of infrastructure’

Desperately needed airports and trains are part of Philippine President Rodrigo Duterte’s envisioned “golden age of infrastructure,” but graft, red tape and other perennial problems threaten the US$170 billion plan.

Unprecedented influxes of money from China and Japan are key planks of the hoped-for building frenzy, which aims to rectify decades of underspending that has been one of the main anchors on the Philippine economy.

Decrepit light-rail lines in Manila, which snake above ever-worsening traffic that has come to be known as “Carmageddon,” are among the most obvious symbols of the infrastructure problems.

“The city is really suffering now from lack of mobility, not only in terms of mobility, it’s really the total absence of infrastructure,” Duterte said last week as he described Manila as “decaying.”

Duterte and his aides have repeatedly said the six years of his administration will be the “golden age of infrastructure,” with a record US$168 billion to be spent on 5,000 projects across the nation.

If the plans come to fruition, infrastructure spending would reach 7.2 percent of GDP by 2022, when Duterte is due to step down — a huge increase from 1.8 percent in 2011.

The Philippines ranks 95th out of 138 countries for quality of infrastructure, and behind most of its Southeast Asian neighbors, Japanese-based financial services group Nomura said in a report.

It said the lack of infrastructure was a huge drag on economic development, citing a Japan International Cooperation Agency estimate of traffic costs in Manila alone as equivalent to 4 percent of GDP.

Infrastructure spending started to rise during the administration of former Philippine president Benigno Aquino III, who stepped down last year, but his much more ambitious plans were curtailed by many problems that will also confront Duterte.

“Financing is the least of the problems,” transport and infrastructure consultant Rene Santiago said, pointing to an abundance of government funds plus cashed-up local businesses and eager foreign investors.

“The biggest obstacle is the implementation capacity of the government infrastructure agencies,” Santiago added.

Santiago, chief executive of Manila-based business consultancy Bellweather Group, said the government did not have enough personnel with the capabilities or experience to oversee such a massive spending plan.

Another issue is corruption.

Aquino was heavily criticized in some quarters for not spending more on infrastructure, but he said he had to slow down the contract-awarding process in an effort to increase transparency and minimize graft.

About 10 percent to 30 percent of an infrastructure project’s cost is typically lost to corruption, Transparency and Accountability Network in Manila executive director Vincent Lazatin said.

Lazatin said this rose to 50 percent when lawmakers were directly involved in allocating national funds in a system known as “pork barrel.”

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