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‘BBB’ implementation shows signs of strain

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construction yearender
MRT 7 -- whose Commonwealth Avenue segment in Quezon City is shown under construction in this photo -- is a vital part of government efforts to ease congestion in Metro Manila and improve connectivity to areas in the north. -- PHILIPPINE STAR/MICHAEL VARCAS

By Denise A. Valdez
Reporter

WHEN President Rodrigo R. Duterte assumed office, he initiated the “Build, Build, Build” (BBB) program which focused on infrastructure spending.

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Ushering in the “Golden Age of Infrastructure,” Mr. Duterte vowed to invest between P8 to P9 trillion on infrastructure development projects throughout his six-year term which ends in 2022.

The Philippine Development Plan 2017-2022 outlines a 0-10 Point Socioeconomic Agenda, where the fourth point is to “accelerate annual infrastructure spending to account for 5% of the Gross Domestic Product.”

“Why the infrastructure spending? We’re not able to maximize our growth because of reasons related to infrastructure… If you want to reach the next level of growth, you really have to push for infrastructure,” Department for Public Works and Highways (DPWH) Secretary Mark A. Villar said in an interview with BusinessWorld on Nov. 22.




“The President saw that there’s really this infrastructure gap that we needed to close the soonest possible time.”

The World Economic Forum’s Global Competitiveness Report 2018-2019 showed the Philippines ranked 56th globally among 140 economies on the list. In terms of infrastructure, the Philippines ranked 92nd as it lagged behind in road connectivity (129th), exposure to unsafe drinking water (101st), efficiency of train services (100th) and electrification rate (100th).

To address this, the government has increased infrastructure spending to P94.4 billion in October, up 83.4% from P51.5 billion in the same period last year.

The Department of Budget and Management likewise kept infrastructure development a top priority in its National Expenditure Program for 2019, allotting P909.7 billion for BBB.

Since 2017, the government has boasted of completing new airports, bypass roads, bridges, highways, an integrated terminal exchange building and a barge terminal, on top of starting construction and rehabilitation works for new railways, ports and toll roads.

The Department of Transportation (DoTr) had inaugurated a total of six airports, namely the new passenger terminal of the Mactan-Cebu International Airport (MCIA), New Bohol (Panglao) Airport, Puerto Princesa Airport, San Vicente Airport, Virac Airport and Maasin Airport.

It also opened the Cavite Barge Gateway Terminal and the Parañaque Integrated Terminal Exchange (PITX) — the country’s first barge terminal and first landport — this year.

“The Department of Transportation is very much satisfied with the pace of the rollout of the BBB projects in 2018, as numerous projects under the program were finished and inaugurated this year,” DoTr Director for Communications Goddes Hope O. Libiran said in an e-mail on Dec. 13.

In the case of the DPWH, Mr. Villar said he is proud the department was able to build 127 new bridges, 328 kilometers of bypass roads and inaugurate one of its big-ticket infrastructure projects this year — the Laguna Lake Highway.

“Practically every region in the country, there are major projects that are at advanced stages of construction. Sunod sunod na yung mga groundbreaking and inaugurations [Groundbreaking and inaugurations are expected to come one by one],” he said.

Worth noting, however, that only 21 of the 61 projects listed in the government’s BBB portal (build.gov.ph) were started or are slated to start under the term of Mr. Duterte.

These are the Light Rail Transit Line 1 (LRT-1) Cavite extension; night-rating of the Tuguegarao, Pagadlan, Ozamis, Naga, Dumaguete, Dipolog, Cotabato and Cauayan airports; Cavite Barge Gateway Terminal; Philippine National Railway North 2 Malolos-Clark Railway; MRT-LRT Common Station; Pinguiaman Bridge; Pigalo Bridge; Davao City Bypass Road; Metro Cebu Expressway; Bacolod Economic Highway; Panguil Bay Bridge; Clark International Airport Expansion; and the National Government Administrative Center and Food Processing Terminal and International Food Market at the New Clark City.

Of these projects, only two have been completed so far: the construction of the Cavite Barge Gateway Terminal and the night-rating of the Dumaguete Airport.

These two are among the 11 projects in the BBB list that were completed since 2017, but the rest were started during the previous administrations, namely: the MCIA, Panglao Airport, PITX, Laguna Lake Highway, NAIA Expressway, Communications Navigation Surveillance/Air Traffic Management (CNS/ATM) Systems Development, Apayao-Ilocos Norte Road, Mandaluyong Main Drainage Project and Pasig-Marikina River Channel Improvement Project.

Although the 21 projects started during the Duterte administration have not all began construction work, Mr. Villar said it is important to understand the work that goes in before a project breaks ground, such as feasibility studies and detailed engineering design.

“We’ve already done the feasibility studies… So the fact that we’ve laid it out now will show that coming into the second half of the President’s term, we’re really poised for takeoff,” he said.

Mr. Villar added that while DPWH is capable of doing the necessary work, a major challenge that has been hampering projects is acquisition of right of way.

This problem was also highlighted by Metro Pacific Tollways Corp. (MPTC) President Rodrigo E. Franco, operator of several toll roads such as North Luzon Expressway (NLEx), Subic Clark Tarlac Expressway (SCTEx) and Manila-Cavite Expressway (Cavitex).

“For many road projects, right of way remains a major problem. The right of way acquisition process takes a long time. The process is too lengthy and cumbersome,” Mr. Franco said in an e-mail on Dec. 11.

But Mr. Franco noted the private sector has been working very closely with the government, which is making an effort to fast- track the process.

Mr. Villar said there have been institutional changes in the DPWH to help solve this, specifically the formation of legal teams in all regional offices to handle right-of-way acquisition.

“We rationalized it. We created a legal team. We delegated responsibilities to the respective units. All those things combined, plus the fact that we invested on trainings of our personnel, it’s been wonderful… This is the best we’ve ever been at the acquisition of right of way and I think we’ll continue to improve,” he said.

But UP National Center for Transportation Studies professor and researcher Jose Regin F. Regidor said while underspending by the Aquino administration is a valid criticism for the slow movement of projects, the Duterte administration must note it has benefitted from a better functioning system when it took office.

“In the last administration, I think they spent a lot of time fixing what they termed as the processes. Fixing the system… The current administration I think benefitted from that, because when they came in, the system was fixed,” he said in an interview on Dec. 5.

Mr. Regidor also said while the Duterte administration is here to witness the completion of numerous infrastructure projects, it must refrain attributing success to a specific leader, especially since most of these began years before.

“I think the current administration is not doing well in terms of trying to correct the usual blame game between administrations. It must focus on continuity. I would like to think that if you want to project yourself as an administration that wants change and reforms, you must admit if projects were started by (former President Benigno S.C.) Aquino. That’s the only way to stop the vicious cycle (of hoarding credit),” Mr. Regidor said.

He noted some infrastructure projects really take years to finish, and spillovers beyond the six-year term of a president is always likely to happen.

RISKS
And as in any nation that has an aggressive infrastructure push, some observers are starting to flag risks that comes with ballooning debt the Philippines is incurring for BBB.

Ateneo Policy Center economists Ronald U. Mendoza and Jerome Patrick D. Cruz said signs of strain from the implementation of BBB are starting to show.

“Much has been said about the impact of the program on the country’s trade deficit, the exchange rate, and the government’s debt position, which are still critical macroeconomic issues to be dealt with. The ultimate challenge, however, is whether implementation of the program’s projects will be truly beneficial to the public and insulated from corruption,” they said in an e-mail on Dec. 12.

They said the government’s aggressiveness in accomplishing infrastructure projects may be compromising much-needed accountability from lenders by keeping some projects “off the books.”

“For instance, the shift to ODA financing allows foreign-funded projects to be exempted from certain procurement rules (e.g. caps on bids), which is also why the Chinese government is allowed to provide a shortlist of contractors for projects,” Mr. Mendoza and Mr. Cruz said.

They added, “This lack of transparency, accountability, and oversight has more general implications on BBB’s adoption of foreign loans. Assuming debt is not bad in itself — but if that debt is spent on projects which are corruption-laden, and bring more costs than benefits to the economy, then the burden of repayment will ultimately fall upon ordinary Filipino taxpayers for years to come.”

Based on the BBB portal, 14 of 61 infrastructure projects are for ODA financing, most of which are coming from Japan and China.

The projects for Japanese ODA are the Mega Manila Subway, Panglao Airport, CNS/ATM Systems Development, PNR North 1, 2 and South Commuter, Davao City Bypass Road, Central Luzon Link Expressway and Pasig-Marikina River Channel Improvement. Under Chinese ODA are the PNR South Long Haul and the Subic-Clark Railway.

The Manila Bus Rapid Transit (BRT) for Quezon Avenue is also to be funded through ODA from the World Bank, and the Panguil Bay Bridge by South Korea.

The Manila BRT Central Corridor was also originally for Asian Development Bank ODA, but the funder backed out and the new financing mode is now yet to be finalized.

Noteworthy, however, that the list in the BBB portal excludes several infrastructure projects that are also for loan financing, such as the North and South Harbor Bridge, Binondo-Intramuros Bridge and New Cebu International Container Port. These ones are identified in the list of 75 flagship infrastructure projects by the National Economic and Development Authority as of July 2018.