ERNESTO M. PERNIA
Socioeconomic Planning Secretary
Director-General, National Economic and Development Authority
Philippine Energy and Infrastructure Finance Forum
“The new government’s plans for infrastructure development in the Philippines”
Fairmont Hotel, Makati City
07 September 2016 | 9:00am – 4:00pm
Tony Shale and Jason Coles of the Euromoney Institutional Investor Group,
Secretary Regina Lopez of the Department of Environment and Natural Resources,
Colleagues from government,
Partners and friends from the private sector,
Esteemed guests from the international community,
Ladies and gentlemen,
Thank you for this opportunity to speak before you about the Philippine government’s latest initiatives on infrastructure.
I cannot stress enough how infrastructure is critical to a country’s economic growth. Infrastructure is a sine qua non, a prerequisite of development owing to its pivotal role in increasing economic competitiveness, encouraging business investments, reducing poverty and inequality through employment generation, and strengthening communities’ resilience from natural calamities.
The previous government has worked hard to accelerate infrastructure development in the Philippines and the Duterte administration is redoubling efforts to achieve quantum improvement in infrastructure, including energy requirements.
From 2011 to 2016, the NEDA Board, which is the country’s highest development planning and policy coordinating body chaired by the President, approved a total of 115 projects worth Php1.64 trillion, of which 94 projects are infrastructure. Of these projects, 57 are transportation-related, 25 are water resource-related, seven are social infrastructure projects, three are ICT-related, and two are power and energy-related.
Also out of the 94, 26 projects were locally financed, 25 projects were funded through public-private partnerships, and 43 were funded through Official Development Assistance.
Moreover, last year alone, the NEDA Board approved 30 projects. These include Lines 2, 4 and 6 of the LRT, the North-South Commuter Railway, the Davao City Bypass Construction Project, and the Laguna Lakeshore Expressway. It also includes the Naga Airport Development Project, the Metro Manila Priority Bridges Seismic Improvement Project, and the Tarlac-Pangasinan-La Union Expressway Project, among others.
These are, indeed, exciting times as we continue to move forward even faster and witness a major infrastructure boom in the Philippines.
Needless to say, the new government aims to do the same. We are determined to build on gains of past administrations, and ensure that public interest, especially that of the poor and disadvantaged, is at the heart of the government’s plan and projects.
The 0-10 Socioeconomic Agenda is designed to address this.
First, the Duterte Administration will significantly improve the investment climate by pursuing peace and order, massive infrastructure upgrade, cut red tape, and ease constitutional restrictions on FDI, etc.
To address the unequal economic growth, we shall focus on regional and rural development including agriculture, building up socioeconomic resiliency. Infrastructure development will be another instrument to boost economic activity in the rural areas as well as enhance connectivity with the other regions. Manufacturing in the regions will be key to job creation and poverty reduction.
To reverse the output decline in the Agriculture sector, a comprehensive agricultural development program will be pursued. This includes better land administration, asset reform, improving access to technology and innovation, and moving up the value chain.
Improvements in agricultural productivity will address the problem of high food prices. At the same time, we will maintain macroeconomic stability, price stability in particular, and pursue a strategic trade policy.
We also emphasize the need to fully implement the Responsible Parenthood and Reproductive Health Law. The next six years will see the highest number of women of reproductive age (15-49). This is referred to as the population bulge and, if we are not able to sharply reduce the total fertility rate, we could miss out on the so-called demographic dividend, when the relative share of the work force would outsize the dependent age group.
The country’s considerable lag in Science and Technology (S&T) relative to our ASEAN neighbors needs attention. During the next six years, S&T and creative arts will be promoted to achieve self-sustaining and inclusive growth in the long run and allow us to participate in the global knowledge economy.
These strategies, and many more, will be elaborated in the upcoming Philippine Development Plan 2017-2022. The objective of this PDP is to lay down the foundations for inclusive growth and a high trust society, which is a basic requirement for the attainment of the long term Vision or the AmBisyon Natin 2040, which will cover four administrations.
Infrastructure development will be critical to the PDP 2017- 2022. We are working to accelerate annual infrastructure spending toward 5 percent of the GDP in 2017 and perhaps even hitting 7 percent in subsequent years in order to rapidly deal with our infrastructure deficit. The public-private partnership modality of investment will continue to play a key role.
I am pleased to say that at its first meeting under the Duterte administration, the Investment Coordination Committee (ICC) endorsed 10 infrastructure projects for the final approval of the NEDA Board, which may be held later this month.
These projects are the South Line of the North-South Railway project; Phase II of the Maritime Safety Capability Improvement project for the Philippine Coast Guard; the EDSA Metro Manila Bus Rapid Transit project; the Plaridel Bypass Toll Road project; and the Metro Manila Flood Management project. Also included are the Passenger Terminal Building project of the Bicol International Airport, the New Bohol Airport Construction and Sustainable Environment Protection project, the Modernization Project of the Eastern Visayas Regional Medical Center, the Gov. Celestino Gallares Memorial Hospital project in Bohol, and the Inclusive Partnerships for Agricultural Competitiveness project.
We can expect the NAIA Skyway 3 to be completed and usable by November this year, and we also hope to have the Clark-Manila Railway project completed shortly before 2022.
We are off to a good start, indeed.
However, we still face the challenge of infrastructure investment financing because of our expanding population and the huge gap in infrastructure provision. To accelerate infrastructure development and to offer equitable access to infrastructure services, the government will pursue the following key strategies:
First, as already mentioned, the government will increase public infrastructure spending to enhance the adequacy, quality, and accessibility of public facilities and services. Also, the government is undertaking a deliberate effort of increasing expenditure efficiency by linking the government’s planning, programming, and budgeting processes. The purpose is to ensure that public resources are better channeled to projects that benefit productive sectors and create more jobs.
NEDA has also started an initiative that will help streamline infrastructure project management processes. This is the Public Investment Program Online System, or PIPOL System, which is a new online database of government projects that will allow for more comprehensive monitoring and evaluation reports.
Second, we will continue to improve investor confidence so we can generate additional financing for infrastructure programs and projects, and make the country an attractive investment destination. I would like to take this opportunity to acknowledge the private sector, both local and international, for its indispensable role in providing infrastructure services in the country and for working with the Philippine government in accelerating infrastructure development to promote faster economic growth. We hope this collaboration continues.
To promote competition and investments, the government will continue to improve governance in the infrastructure sector and institute policy reforms through improving PPP processes and procedures.
The Senate recently filed the PPP Bill, which seeks to amend the Build-Operate-Transfer (BOT) Law to support the strategy of fast tracking and eliminating bottlenecks and stumbling blocks in the implementation of PPP projects. It also covers Joint Venture Agreements to be one of the PPP contractual arrangements.
The government is also pursuing the utilization of indigenous renewable energy resources to ensure energy security and reduce dependence on fossil fuel. To further encourage competitiveness and promote ease of doing business, we are looking into expediting the implementation of the remaining policy mechanisms under the Renewable Energy Act of 2008. The approval process for renewable energy service contracts will be streamlined, and government permits required for power projects will be rationalized.
Third, the infrastructure development thrust of the government will continue to be guided by masterplans and roadmaps to ensure that public infrastructure programs and projects complement each other and are in line with our national development priorities.
To ensure linkage of investment programs and projects with the national development agenda, we need your cooperation, both international and domestic partners, in providing assistance to finance potential infrastructure initiatives under appropriate master plans and roadmaps.
We currently have six major master plans and roadmaps for the infrastructure sector. These are the Transport Infrastructure Development Roadmap for Metro Manila and Surrounding Areas such as Region III and IV-A; the Master Plan on High Standard Highway (HSH) Network Development, the Flood Management Master Plan for Metro Manila and Surrounding Areas; Survey on Mindanao Logistics Infrastructure Network; the Philippine Energy Plan 2012-2030; and Household Electrification Development Plan 2013-2017.
Moreover, just last month, the NEDA Board Committee on Infrastructure or InfraCom identified the following plans, which will require the support of the national government to ensure their completion. These are the Manila Bay Development Master Plan; the Philippine Transportation Systems Master Plan; the Water Supply, Sanitation and Sewerage Master Plan; National Irrigation Master Plan; and the Philippine Energy Plan which I mentioned earlier.
Furthermore, economic policies will soon be crafted so as to encourage more foreign direct investments in the country, as we believe that more competition is good for the economy. Thus, the government continues to work to make it easier for businesses to invest in the country by planning to improve power supply, implementing tax reforms, cutting red tape in government, allowing foreign businesses long-term land leases as we are also look into increasing foreign capital share from 40 percent to as much as 70 percent.
There are a lot of infrastructure programs and projects underway, and in the new administration is working doubly hard to ensure that resources are efficiently and effectively utilized. We therefore hope for the continued participation and support of the private sector in the government’s endeavors in infrastructure and energy development. I would urge all of you to work with us as partners in achieving faster economic growth coupled with job creation to sharply reduce poverty and inequality.
Thank you and mabuhay.