Duterte taps businesses in revamp of infrastructure plan

Reboot could streamline approval process, averting delays that earlier projects ran into

MANILA • When Philippine President Rodrigo Duterte took office in 2016, he promised US$165 billion (S$225 billion) in spending to "build, build, build" roads and railways in the country.

The programme consisted of 75 key projects - including a railway stretching the length of Luzon, the country's main island, along with thousands of smaller ones such as schools - to be funded mostly from development loans and the government's budget.

Halfway through the President's six-year term, only two of those key projects have been completed. Most have run into bureaucratic delays, or faced problems such as acquiring land and financing to get off the ground.

Now, Mr Duterte is revamping the plan and giving businesses a bigger share of the projects, after earlier shying away from privately led projects owing to financing risks and delays.

This is a boon for companies like Megawide Construction, which is already planning bids for rail and other infrastructure projects.

Mr Edgar Saavedra, chief executive of Megawide, said: "This is like a rebirth for the Philippines."

Mr Duterte's new plan consists of 100 priority projects, nearly half of which will be funded from investments by companies such as San Miguel, which wants to build a 736 billion peso (S$20 billion) airport north of Manila, and Udenna, which has proposed a monorail in Cebu.

The revamp could result in a more streamlined approval process, given "sufficient attention to fast-track implementation", said Ms Cosette Canilao, chief operating officer at Aboitiz Equity Ventures' infrastructure unit.

Mr Duterte's new plan consists of 100 priority projects, nearly half of which will be funded from investments by companies such as San Miguel, which wants to build a 736 billion peso (S$20 billion) airport north of Manila, and Udenna, which has proposed a monorail in Cebu.

Ms Canilao was head of the country's Public-Private Partnership Centre, which reviewed company-led infrastructure projects under Mr Duterte's predecessor, Mr Benigno Aquino.

The infrastructure gap is large across emerging Asia, with the Asian Development Bank estimating the region needs US$26 trillion worth of investment through 2030 to address bottlenecks and keep growth going.

Speaking to foreign investors this month at the Clark Freeport special economic zone, Mr Antonio Lambino, an assistant secretary in the Finance Ministry, said public infrastructure spending made up a record 5 per cent of the country's gross domestic product last year, and should rise to 7 per cent by 2022.

Philippine billionaire Enrique Razon, chairman of port operator International Container Terminal Services, said he was looking at proposing more infrastructure projects to the government.

Mr Razon is a major shareholder in a venture that seeks to develop a new water source for the Philippine capital.

The government aims to start construction on all 100 projects on the new list before Mr Duterte steps down in 2022, with one-third of the projects expected to break ground next year, said Mr Vince Dizon, a presidential adviser on the infrastructure programme, who was appointed to the post in September.

Private-sector participation alone does not guarantee projects will get completed, said infrastructure analyst James Su at Fitch Solutions in Singapore.

Reforms are needed to speed up approvals, address corruption and prevent policy reversals, he noted.

Turning to companies also poses a risk of competing firms suing each other over contracts. And even when projects do get off the ground, the Philippines faces a shortage of construction workers.

"These are issues all countries face when they raise infrastructure," Mr Thomas Helbling, head of the International Monetary Fund's mission to the Philippines, said at a recent conference in Manila.

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A version of this article appeared in the print edition of The Straits Times on November 27, 2019, with the headline 'Duterte taps businesses in revamp of infrastructure plan'. Print Edition | Subscribe