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Friday, March 29, 2024

Infrastructure push

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Why is the Marcos administration’s economic team all-out in urging the private sector both here and abroad to take part in our infrastructure development?

That’s because, as Finance Secretary Benjamin Diokno explained recently, “infrastructure is front and center of our growth strategy.”

At present, the government has lined up 194 flagship projects costing a total P165 billion.

One hurdle is there’s been longstanding under-investment in infrastructure that the economic managers want to surmount.

Government spending on infrastructure averaged only 2 percent of gross domestic product from 2001 to 2015.

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The Marcos administration now intends to maintain infrastructure spending at 5 percent to 6 percent of GDP until 2028. This means a budgetary outlay of between $20 billion and $40 billion yearly.

The government wants to sustain high infrastructure investment through the public-private partnership mechanism, particularly in projects related to energy, logistics, transportation, telecommunications and water resources.

Foreign investors can actually now participate in a broader range of industries that ever before, thanks to economic liberalization measures enacted by the legislature in recent years that have opened up key high-growth sectors to international participation.

Among these economic liberalization measures are amendments to the Retail Trade Liberalization Act, Foreign Investments Act and the Public Service Act that eased restrictions on foreign investments in the Philippines up to the point of full foreign ownership of a project.

There’s also the Strategic Investment Priority Plan that grants fiscal incentives to identified priority industries, projects and activities under the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Act.

The SIPP is the vehicle under which the government determines priority industries and projects and offers a simpler and more effective fiscal incentives system that’s performance-based, time-bound, targeted and transparent.

The Marcos administration has made it a top priority to utilize the PPP to support and complement its infrastructure drive.

The program provides ample opportunities for the private sector to participate in such sectors as energy, water, logistics, transportation, agribusiness, manufacturing, tourism, health, education and digital connectivity.

Infrastructure programs take time to conceptualize and implement, and require huge resources that cannot be drawn from taxes and revenues alone.

Public-private partnerships can be one way forward for governments to push economic growth that will improve the quality of life especially of Filipinos living on the edge of poverty.

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