THE National Economic and Development Authority (Neda) is proposing a P15-trillion infrastructure program, parts of which will be bankrolled by Public-Private Partnerships (PPPs), as the government’s fiscal space has narrowed.
Neda Director General Arsenio M. Balisacan said the infrastructure program, to be presented to the interagency Infrastructure Committee (Infracom) this week, covers 3,700 projects. The finalized list will be submitted to the President on March 9.
Balisacan said this cannot all be financed by the government given its limited fiscal space, thanks to a long history of ‘boom and bust’ cycles as well as the Covid-19 pandemic.
“I think tapping private capital is the way to go partly because the government has no money. We have very limited resources because the policy responses during the pandemic have raised the level of debt,” Balisacan said.
“Unfortunately, the country does not have a long history of sustained economic development; we are not Vietnam, we are not Thailand, we are not even Indonesia. We’ve had a boom-bust cycle of growth. So we really cannot sustain massive infrastructure development,” he explained.
Balisacan also told reporters that the proposed projects are spread across various sectors. They address physical connectivity, soft connectivity, water, energy, logistics, as well as climate change and resiliency projects.
As of December, Balisacan said, some 210 PPP projects worth P2.335 billion have been awarded and another 98 projects worth P3.044 billion are in the pipeline.
These projects, Balisacan said, will be carried out in the medium term and some of these may even spillover to the next administration.
A shorter list will also be drafted for the government’s priority or Infrastructure Flagship Projects (IFPs) under the Build, Better, More Program.
This will be accompanied by the crafting of the Public Investment Program (PIP) and Three-Year Rolling Infrastructure Program (TRIP) 2024-2026.
Apart from the projects, the government intends to craft Implementing Rules and Regulations for the Public Service Act as well as introduce amendments to the Neda Joint Venture Guidelines in light of the recent Build Operate Transfer Law IRR.
RCEP ratification
The recent ratification of the Regional Comprehensive Economic Partnership (RCEP) Agreement, Balisacan said, would benefit from efforts to improve infrastructure nationwide.
The Neda chief said the RCEP by itself cannot be a gamechanger for the economy. It must be supported by other efforts, including on the infrastructure side, to boost the country’s investment climate.
“The question of whether we will gain in the RCEP and the answer is very clear, we will gain. How much we will gain depends on what else we will do,” Balisacan said.
“To improve the investment climate in the country, you have to do much more than ratifying a trade agreement. This RCEP is an additional lever but it’s not sufficient to create those quality jobs,” he added.
Balisacan noted that the ratification will also prompt the government to pursue amendments to the BOT Law/PPP Act as part of the Common Legislative Agenda of the Legislative-Executive Development Advisory Council (Ledac)..
This must also be accompanied by efforts to address learning poverty and improve the education system to keep the country’s labor force competitive.
He said these investments will help the country reap the benefits from RCEP which are long-term.
Earlier, Ateneo de Manila University’s Leonardo A. Lanzona Jr. told the BusinessMirror that RCEP’s impact will take longer to be felt as the country needs to make institutional and technological changes.
However, Lanzona said, labor-intensive industries such as agriculture and manufacturing are expected to improve after RCEP if the government can support transition and other reform efforts.
Lanzona said while investments in agriculture as well as industries are needed to maximize the benefits from RCEP, having a comprehensive plan to implement needed reforms is a more urgent requirement.
On the question of which industries will benefit, University of the Philippines School of Economics head of research Renato E. Reside Jr. said the fine print of the RCEP should first be examined more closely.
However, Reside said the trade deal will have guaranteed long-term benefits as it will increase consumer choices. Such could even help lower food inflation in the country, he added.