Sustained Infra Buildup
We laud the administration of President Ferdinand Marcos Jr. for prioritizing infrastructure development to make up for the sluggish public spending that led to lower-than-expected gross domestic product growth in the second quarter.
I believe that a sustained infrastructure buildup will resolve many things. It will boost public spending and lift the economy at the same time. It will generate jobs, enhance connectivity, reduce the cost of doing business, open new opportunities and enhance the overall experience of the people.
It will also improve the perception of foreign investors and tourists toward the Philippines, which eventually leads to more capital inflows into the country. Well-connected and modern cities tend to attract more visitors because of the comfort and pleasant experience they offer.
Building modern roads, railways and airports will definitely lift the Philippine economy, especially as the government secured funding support from the private sector, multilateral lenders and development partners such as Japan, China and Korea. An investment-grade credit rating of “BBB+” also allows the country to avail itself of financing at more favorable rates.
Although the economy grew by just 4.3 percent in the second quarter and 5.3 percent in the first semester, we could still catch up in the second half to meet the target range of 6 percent to 7 percent by launching new projects or ramping up ongoing ones. This would support the growth of the construction sector, as well as fuel the demand for materials such as cement and steel.
Per the National Economic and Development Authority, the Economic Team agreed to speed up government spending in the coming quarters to facilitate the recovery of growth momentum. Specifically, they wanted to accelerate the execution of government programs and projects, including the delivery of public services.
No less than the President ordered the faster buildup of infrastructure projects. In the 8th Neda board meeting, the government announced that three more projects advanced to construction stage, bringing to 71 the total number of ongoing projects with a total cost of P4.11 trillion.
Neda identified the three additional projects as the Metro Cebu Expressway, the Nautical Highway Network Improvement, and the Daang Maharlika Improvement projects, which are implemented by the Department of Public Works and Highways.
It said 123 infrastructure flagship projects, or IFPs, will also join the list of active projects soon. Of the total, 27 IFPs were already approved for implementation, eight were awaiting government approval, 52 were in the project preparation phase, and 36 were under the pre-project preparation phase as of July 2023, according to Neda. Let us hope that most of these projects will be completed within the term of the President.
The Neda Board likewise revised the guidelines for the prioritization of IFPs and recently included three more projects, such as the Tarlac-Pangasinan-La Union Expressway Extension Project, the Philippine Rural Development Project Scale Up and the Expansion of the Laguindingan International Airport in Misamis Oriental.
Neda said the inclusion in the list of IFPs would mean that these projects would be prioritized in the government’s budget preparation and would benefit from the expedited issuance of applicable permits and licenses.
I hope more projects will be certified as IFPs around the country to connect our islands, boost power supply, expand potable water coverage and enhance communication services. Project studies and preparation usually take a lot of time, and it will be very helpful if infra projects immediately take off if they are found to be good for the nation.
Where government funds are lacking, the private sector should come in. I commend private companies for contributing to infra development under the public-private partnership framework. Some of the biggest projects in the country are being undertaken by the private sector today, including mass transit systems, expressways and airports.
This is why it is also important to have steady policies that honor PPP contracts and obligations. The private sector will only invest in long-term projects if they are assured of policy certainty and government support.
Infrastructure projects are long-term investments that will benefit the next generation, if they are built to last. The Light Rail Transit Line 1, constructed in the early 1980s and the first elevated system in Southeast Asia, continues to serve hundreds of thousands of passengers to this day.
What we build today will certainly ensure the sustained growth of the Philippine economy in the next decades and contribute to our goal of having a prosperous society by 2040. For the meantime, ramping up construction activities will have an immediate impact on employment, public spending and demand for materials. This in turn will translate into faster economic growth in the second half of 2023 as envisioned by the government.