For the past few decades, the poor state of Philippine infrastructure has been a major constraint to economic growth. Under spending on infrastructure is said to have deterred investment in the past thus inhibiting growth. The six year term of the President Duterte is coined by his administration as the “Golden Age of Infrastructure” where massive infrastructure spending will be increased substantially to improve competitiveness which currently lags behind neighboring countries. It is allocating as much as 5.
1 percent of the gross domestic product in 2016 to 7.4 percent in 2022. The “Build, Build, Build” program is central to the foundation of Duterte’s administration’s development plan. A projection of Php 8.4 trillion will be allocated for the increased public spending on infrastructure in the next five years to rapidly modernize the country’s infrastructure in order t5o boost industries, create jobs and uplift the lives of Filipinos.
Accelerating strategic infrastructure development is one of the activities indicated on the first medium-term development plan anchored on “AmBisyon Natin 2040”. Based on the 2017 World Economic Forum’s competitiveness report, the Philippines ranked 97th in the world in terms of physical infrastructure. Also, the country is ranked 5th in Southeast Asia as reported by the United Nations.
Potential foreign investors that are critical in creating well-paying jobs for the millions of poor and unemployed Filipinos are hindered from investing because of the country’s weak infrastructure condition and heavy utility costs. The country’s infra gap is estimated at USD 30 billion at the end of 2020. A total of USD 127 billion is needed to accelerate infrastructure build-up specifically the transportation which is the cornerstone of “Dutertenomics”.
Only about USD 97 billion of funds are available with USD 57 billion from the government, USD 5 billion from foreign sources and USD 35 billion from the local private sector. The key component of the president’s infrastructure development comprised of seventy- five flagship infrastructure projects with a total worth of USD 36 billion are programmed that includes an initial list of sixty four that are mostly transport infrastructure such as major road networks, railway systems, bus rapid transit systems, and airport and seaport modernization. Funding for these infra projects are mainly through public-private partnership (PPP) but funds coming from official development assistance (ODA) and public-private partnership (PPP) are also being sourced out. Based on Figure 7, San Miguel Corp. (SMC) accounts for 45.
9% of the total cost of PPP projects as of March 2017 followed by combined Manny V. Pangilinan (MVP) and Ayala group.