Infra buildup to spur inclusive growth

During the first “Sulong Pilipinas” consultative conference in June 2016, the Duterte administration unveiled its 10-point socioeconomic agenda for inclusive growth. Chaired by then-incoming Finance Secretary Carlos Dominguez III, the conference took place at SMX Lanang Convention Center in Davao City.

One of the reform agenda’s goals was to usher in a “golden age of infrastructure” through the centerpiece “Build, Build, Build” program — an aggressive infra spending plan to reduce poverty and encourage economic growth outside Metro Manila. These investments have multiplier effects on the economy in terms of creating jobs, spurring new businesses, facilitating trade, and improving logistics as well as connectivity.

Mr. Dominguez said the big-ticket projects would be funded mostly by official development assistance from the Philippines’ bilateral and multilateral development partners with additional revenue collections from the government’s tax reform program. The rationale behind this funding strategy was the implementation of the infrastructure program without delay and at the lowest possible cost. While still welcome, public-private partnership (PPP) projects that  truly benefit the people and not just the private sector are to be prioritized.

PPP projects encountered delays in the past because private proponents squabbled over legal issues while taxpayers ended up absorbing the contingent liabilities. Under the previous administration when PPP was the major source of financing, infrastructure investments as a percentage of the gross domestic product (GDP) had an average of 2.9% per annum and peaked at 4.5% in 2016.

Over the last 50 years, infra spending in the Philippines averaged only 2.8% of GDP. Being an archipelago, the country was trapped in a cycle of non-inclusive growth and its poor infrastructure was not only debilitating but is among the reasons why we have lagged behind our ASEAN neighbors in attracting foreign direct investments.

Prior to the onset of COVID-19, the percentage of infra spending to GDP had almost doubled to 5.5% compared with the previous half-century’s average. Investing in infrastructure has now become even more crucial to the government’s recovery strategy to combat the pandemic-induced crisis since it will fuel the economic rebound that will benefit present and future generations of Filipinos.

Sad to say, politics has gotten in the way of the flagship “Build, Build, Build” program. Critics continue to discredit infra projects such as Central Luzon’s New Clark City (NCC) that remained on the drawing board of the Bases Conversion and Development Authority (BCDA) during the previous management but came to fruition under BCDA President and CEO Vivencio Dizon in 2019.

With a land area of almost 10,000 hectares, NCC is the country’s first smart and green city described as a “climate-resilient metropolis where the future begins.” Envisioned as an agro-industrial hub and a home for cutting-edge tech companies, its first phase includes the construction of a world-class sports complex and the National Government Administrative Center that will serve as back-up offices of various agencies to ensure continuous operations in case of disasters and calamities.

The NCC sports hub was completed at a record of 18 months, just in time for the Philippines’ hosting of the 30th Southeast Asian Games (SEAG) last December. Local sports enthusiasts and visiting ASEAN delegations were impressed at the quality of the internationally certified facilities in this venue built to Olympic standards. It became a source of pride for Filipinos and a morale booster for our athletes who went on to capture the overall SEAG 2019 championship.

Supported by the Asian Development Bank (ADB) as transaction adviser, the project’s legality was reaffirmed by the Office of the Government Corporate Counsel (OGCC). Its record completion time, along with the swift implementation of the Clark International Airport expansion project without sacrificing the quality of their construction, have been used by Cabinet officials as showcases of proper infra execution.

Recently, however, a complaint was filed by a group of concerned citizens before the Office of the Ombudsman claiming irregularities in the deal between BCDA and Malaysian firm MTD Capital Berhad for the NCC sports hub’s construction. Included in the complaint were Mr. Dizon, OGCC head Elpidio Vega, MTD director Isaac David, and BCDA lawyer Elvira Estanislao. Are the complainants insinuating that both the ADB and OGCC gave bad advice on the project? Or is it an attempt to derail the “Build, Build, Build” program?

At this critical period when we need to ensure a strong economic recovery, the acceleration of infra projects must earn the support of all sectors. The pandemic should not stop the government from proceeding with the massive infrastructure program and protecting the gains it has achieved through bold and decisive actions.

J. Albert Gamboa is CFO of the Asian Center for Legal Excellence and chairman of FINEX Publications.