Two weeks ago, National Economic and Development Authority Director-General Ernesto Pernia, Transportation Secretary Art Tugade, Public Works and Highways Secretary Mark Villar and BCDA President Vince Dizon presented the Duterte administration’s infrastructure plan before media.
The event was largely unnoticed because of major news events such as the killing of Albuera Mayor Espinosa and the suspense over the Trump-Clinton electoral war in the US of A which at that time was reaching culmination. These days of course, the continuing speculation on how Trump’s victory will affect us and the rest of the world is what the headlines are all about.
The underlying rationale for government investment in infrastructure is simple: failure to invest in infrastructure means failure to grow and develop the economy. Whether in the 20th century or now, this is a truism.
GDP is C + I + G, where C is consumption expenditures; I stands for investment, and G is for government spending.
Government spends for myriad services, from keeping the peace and ensuring public safety, or public health, and public education. It also invests in infrastructure, roads and bridges, power generation, irrigation, ports and airports and a host of other projects including inter-connectivity of the information highway.
Without such projects, the economy stands still, not only because by itself, construction of these projects hires a lot of manpower, thereby directly creating jobs, but because such projects open up economic opportunities that would not otherwise exist, or remain fallow in productivity without the needed infrastructure.
The International Monetary Fund estimates that a “sustained increase in public infrastructure spending to five percent of GDP would add a total of five to six percent to GDP after 15 years.”
Investments grow when there is adequate infrastructure. Without such, foreign capital will not come in, and domestic capital will remain in the doldrums. Once investments come in, jobs are created, which in turn generate greater consumer spending. When a road is built to open up the hinterlands, agricultural productivity increases, farm incomes grow, the quality of life of the poor farmers become a lot better, and again, their consumer spending increases. The multiplier effect of infrastructure spending is tremendous.
The inadequacy of our public infrastructure is legendary. Power costs are the highest in the region. Traffic in the nation’s capital is in gridlock. So it is in central Cebu, Baguio, and soon in Davao, Cagayan de Oro, and God knows where else. Commuters suffer day-in and day-out. Our airports are clogged; our runway worse off such that one keeps praying a major catastrophe in the air while planes circle over the Naia complex will never happen. Our ports are sub-standard. The number of hectares of irrigated land when Marcos died was 1.4 million hectares. After 30 years, it has marginally grown to less than 1.6 million hectares, and yet we keep asking why we import rice.
The Philippine Institute for Development Studies under Neda tells us why. Marcos spent 3.2 percent of the GDP on the average of his long reign for public infrastructure. Cory Aquino spent less, 2.2 percent. FVR spent also 2.2 percent of GDP. Erap’s abbreviated term averaged 2.2 percent as well. In GMA’s nine-year tenure, it shrunk to 1.9 percent of GDP. P-Noy, despite sluggish spending in the first two years, upped the average to 2.9 percent of GDP.
If you look at the Marcos spending on infrastructure, as compared to the decrease in every administration thereafter, then stop wondering why Bongbong fared so well in the last elections, and why senior citizens keep saying things were better off for them during the Marcos years.
We are playing a catch-up game. Catch-up not to Japan or China, but catch-up to Thailand and Malaysia, and Vietnam as well.
So our economic managers and President Duterte, on Year One, allotted 5.4 percent of expected GDP in the 2017 budget that the House recently approved and is pending in the Senate. It intends to spend as much as an average of 7.4 percent of GDP throughout it’s six-year term. Great!
Apart from eliminating drugs and curbing corruption and criminality. Aside from securing internal peace with the NDF, the secessionists, and neutralizing the terrorists. And skeptics say Duterte has no economic program?
I went through the list of major projects that the infrastructure team announced a week after the President’s Tokyo trip, which came one week after the rapprochement with China: The Manila-Clark railway (finally!); a Metro Manila Bus Rapid Transport System, with the first phase connecting Edsa through a tunnel beneath McKinley Road, and thence by dedicated bus line from BGC to the Naia, with the guarantee that from BGC to Naia will take the commuter 15 minutes (wow!).
Then again, the Clark International Airport Terminal, designed by the French, will finally be constructed, after sleeping for six years without any action. Clark’s carrying capacity, with its small terminal, is only a maximum of 1 million passengers per year, which is why it cannot take up much of the traffic from Naia. Similar regional airports will be updated.
A Subic-to-Clark cargo railway that will optimize the use of Subic as a port and the expansive Clark as a light manufacturing facility. The Mindanao railway, or at least, Phase One of this Mindanao dream and Duterte pledge.
The Sta. Monica bridge link to connect Makati and Taguig with the Pasig Kapitolyo area, to alleviate traffic in Edsa. And completion of the NLEX to SLEX superhighways that were entered into as PPP projects by the PNoy government.
There are more, including the much-needed upgrading of our decrepit mass railway transit systems and our moribund Philippine National Railways.
Can these be done? What about the financing of such major projects?
Now perhaps you see why Duterte launched his aperture Chinoise and his reassurance to the Japanese. Now you see why there is a need to balance our foreign policy into one where we shall be a friend to all and an enemy to none.
What about the corruption attendant to many major projects in the past?
“You think we are brave enough to do that under Duterte?” asked DOTr’s Tugade.
If the mantra is Build, Build, Build, and it is followed religiously according to the timelines drawn, and the President pounces on all in government to act with deliberate speed, with the private sector cooperating in one great national purpose, why indeed can we not achieve all these?