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February 3, 2017


Policy concerns may get in the way of Budget Sec. Ben Diokno’s dreams of a Golden Age of Infrastructure for the Philippines.

According to BMI Research, a research firm of The Fitch Group, a “lack of policy continuity in the Philippines is also a growing risk that could dissuade investors.”

The report specifically named Finance Sec. Carlos Dominguez III, who has contradicted statements from the President. While President Rodrigo Duterte has promised to honor existing Private-Public Partnership Projects, Dominguez said in December that the Dept. of Public Works and Highways (DPWH) is considering building projects itself.

Dominguez has also promised that he would “dramatically review” the PPP process.

PNoy’s Palpak PPP

The report emphasized, however, the failure of the PPP process under the former administration.

While 14 projects were awarded since 2010, under former President Benigno Aquino III, only four were completed by 2016.

Most notable is the delay in the Metro Rail Transit line 7 (MRT-7) project. The report noted that in spite of a budget of P69.3 Billion, construction started only in April 2016, after a seven-year delay.

Lift Foreign Ownership Ban

The constitutional limits against foreign ownership was also mentioned as a roadblock to moving forward on infrastructure projects. Interested foreign investors are forced to partner with local companies through joint venture agreements, resulting in essentially just four major conglomerates bagging PPP contracts.

Diokno On Track

Nevertheless, the Budget Secretary is notably on track with the direction of the country in terms of infrastructure development, targeting spending the equivalent of 5.3% of GDP on public infrastructure of Php 847.2 Billion.

The government will also raise this to 7% of GDP by 2022, spending as much as Php 9 Trillion on infrastructure. This is to catch up with growth requirements.

Diokno dreams of the Philippines achieving the Golden Age of Infrastructure during Duterte’s administration. To achieve this, BMI notes that the “the operating environment for infrastructure projects” must be improved, and the policy considerations voiced out by the Finance Secretary reconsidered.

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