The construction of a railway is seen in Balagtas, Bulacan, June 14, 2021. — PHILIPPINE STAR/ MICHAEL VARCAS

By Aaron Michael C. Sy, Reporter

THE PHILIPPINES could boost infrastructure spending to as much as 12% of economic output as early as next year if its sovereign wealth fund goes as planned, according to its Finance chief.

“The 5-6% will come from the national budget,” Finance Secretary Benjamin E. Diokno told reporters on Wednesday. “If public-private partnerships (PPP) and the Maharlika Investment Fund are continued, we might reach 10-12% per year.”

The government plans to spend 5.3% of the gross domestic product (GDP) or about P1.29 trillion on infrastructure this year. Infrastructure spending is expected at 5-6% of GDP until 2028.

A number of priority projects are undergoing feasibility studies, while some are in the detailed engineering phase, Mr. Diokno said.

“Let’s not get the public’s hopes up that the Maharlika Investment Fund will suddenly ramp up infrastructure spending,” Terry L. Ridon, convener of Infrawatch PH, said in a Viber message. “Its initial funding is comparable only to a portion of the government’s infrastructure spending, so it should not translate into a massive percentage increase in total infrastructure spending.”

He also said not a single PPP has been started almost a year into the Marcos government. Its impact may only be felt midway into his term, he added.

As of May 9, there were 194 flagship infrastructure projects under the Marcos government’s “Build, Better, More” program. Sixty-eight projects have started, 25 were for implementation, nine for approval, 52 under project preparation and 40 under pre-project preparation.

The projects had a total investment of P8.2 trillion, including 14 projects in agriculture, five in digital connectivity, six in health, 119 in physical connectivity, one in energy, 44 in water and five in other infrastructure.

These will mainly be funded through official development assistance (ODA) worth P4.5 trillion, PPPs worth P2.5 trillion and P850 billion coming from the national budget.

Mr. Diokno said infrastructure spending was only 2% of GDP before ex-President Rodrigo R. Duterte came to office in 2016. The country needs more infrastructure to connect its islands, he added.

The government should determine which projects would be funded beyond the current spending plan because doubling it would not be easy,” said Alexander S. Escucha, president of the Institute for Development and Econometric Analysis.

“We need to see how much of these are already shovel-ready, and how much will need gestation or project development time,” he said in a Viber message.

Meanwhile, Mr. Diokno said the Senate version of the Maharlika Investment Found has enough safeguards.

He was reacting to the paper released by the University of the Philippines (UP) School of Economics, which said the Maharlika fund “violates fundamental principles of economics and finance and poses serious risks to the economy and the public sector — notwithstanding its proponents’ good intentions.”

“I think they have to read the Senate version first,” Mr. Diokno, who used to teach economics at UP, said. “It will be down to a matter of trust… This Maharlika fund is really going to be very useful for us. [It will be] another source of funding for our desire to boost infrastructure.”

He added that the discussion paper was too late since the bill was on its way to the presidential palace.

“It is both developmental and commercial,” the Finance chief said. “We will not invest in projects with no cash inflow… There should be a return to make sure the funds continue.”