While the Philippines has invested in an ambitious infrastructure program, the record of this programme is mixed. While some analysts argue that the Philippines infrastructure program has helped to improve underserved areas, others say that it has fallen short of its aims. Dean of the Ateneo de Manila University Ronald U Mendoza has argued that politicians use public infrastructure to “bring home the bacon” for their voters. In the long run, the desirability of public infrastructure is questionable, but in the short term, its effects have been positive. Infrastructure development is also job-creating.
Infrastructure development in the Philippines
One of the most pressing challenges for infrastructure development in the Philippines is the lack of a unified agency to manage all infrastructure projects. The government is cautious about spending public funds and is reluctant to explore unconventional funding sources. This lack of centralized management can stifle the speed and quality of project delivery. The country also lacks the technical and managerial skills to execute major infrastructure projects efficiently. The resulting delays are often due to red tape, policy changes, and poor management of government-owned infrastructure projects.
Despite the recent promise of a “Golden Age of Infrastructure” in the Philippines, it is far from clear how the new administration will handle the task. While the Philippine government has declared the new administration a “Golden Age of Infrastructure” and gleaning more than US$20 billion in project pledges from Beijing, Tokyo and other major international donors, the Philippines has a complicated political and economic history. Despite this, the government has made efforts to implement its ambitious infrastructure plans.
Cost of infrastructure
While the country’s government allocated PhP 889 billion in 2009 for road construction, DPWH is a different story. The Department of Public Works and Highways (DPWH) spends around PhP 130 billion for public works and infrastructure, the largest share of the national budget. However, even with the increased spending, the quality of roads in the Philippines has not improved. The following table shows the cost of public works and infrastructure in different countries in Asia.
In recent years, the Philippines has been increasing the amount it spends on infrastructure. The government has been increasing infrastructure spending as a percentage of GDP since last year, after it lifted quarantine restrictions. The cost of public works increased by 31 percent in 2021, exceeding government allocations. The lower base of 2020 was partly the result of project cancellations and postponed public works. Moreover, during the ‘pandemic’, government resources were diverted from public works to address social issues.
Investments in infrastructure
Investing in infrastructure is an important part of the country’s economic recovery. The Philippines is currently experiencing a boom in investment in infrastructure. Investments in this sector have increased by 35% year over year and now represent 5.5% of the country’s GDP. The government is aiming to boost that figure to 6% by 2020. FDI restrictions have been relaxed so that firms with up to 40% foreign ownership can bid for locally funded infrastructure projects. There are also plans to reform the Philippine constitution to make it more FDI-friendly.
One of the biggest challenges for the Philippines is its weak public infrastructure. According to the World Economic Forum, the country ranks 97th in the world when it comes to infrastructure development. Increasing infrastructure investments would help the country take advantage of its growing and young population. However, achieving that goal is not easy. The country’s current infrastructure is substandard and the government must find ways to raise investment levels to attract more foreign direct investment.
Policy reforms for infrastructure development
The Philippine government has been pursuing structural policy reforms since 1986. Aside from assessing the effectiveness of reforms in infrastructure development, this study also addresses the institutional arrangements necessary for the success of such efforts. In particular, policy reforms for infrastructure development should focus on fiscal space, budgetary processes, public-private partnerships, regulatory environment, and policy coordination. These reforms should be implemented gradually and with a focus on the key bottlenecks of the infrastructure program.
The Philippines’ goal to achieve middle-income status by 2022 and a poverty rate of 14 percent have impeded its progress. Despite its high growth rate, the country is still plagued with inadequate and outdated infrastructure. In fact, it takes approximately 5 minutes to travel just a kilometer in Metro Manila. The lack of mass public transportation, particularly in cities like Metro Manila, is one of the main reasons for this situation.
