“Priority must be on infrastructure that will have optimal benefits to the mass population”
The state of a country’s infrastructure is a major factor in its competitiveness especially when it comes to attracting foreign investments.
The efficiency of transportation, communications, power, water, and digital infrastructure is a requisite that prospective investors must see as adequate before committing to locate confidently in a country.
As the world’s economies become more digitally connected, meeting the demand for more access and speed in internet connection becomes a critical challenge that the government must prioritize.
The findings of the latest World Competitiveness Ranking conducted by the IMD World Competitiveness Center from the survey responses of business and government executives showed the Philippines slightly improving to 56th from last year’s rank of 58th out of 63 countries.
A two-step improvement but a more objective way of looking at it is we are at the sixth to the lowest rank.
Compared to Southeast Asian countries we are still in 13th place for the third year in a row which is second to the last just ahead of Mongolia. This is actually a one step drop from 2019 when the Philippines ranked 12th.
The competitiveness landscape rankings were not as encouraging. The survey findings on the Philippine domestic economy, international trade, international investment, employment and prices gave an Economic Performance rank of 53rd.
Government Efficiency which considered public finance, tax policy, international framework, business legislation, and social framework garnered a rank of 48th.
Business Efficiency in terms of productivity efficiency, the labor market, finance, management practices, attitudes and values earned the rank of 39th.
Infrastructure which considered the country’s basic infrastructure, technology, scientific, health and environment, and education infrastructure was ranked at 57th.
In a recent online forum of thank tank Stratbase ADR institute, CEO and founder Prof. Victor Andres Manhit emphasized that government investments in a nationwide digital infrastructure that would be at least at par with global standards must be prioritized as a strategic pillar for a sustained economic recovery.
Prof. Manhit stated that, “The presence of adequate infrastructures may help attract both foreign and domestic investments in the country as investors naturally prefer areas with paved roads, sturdy bridges, and stable internet connectivity, among others.”
“Infrastructure development generates a remarkable domino effect as it provides jobs for Filipinos, ensures income security, allows for increased production and distribution, and stimulates spending that keeps the economy running strong for the long term,” Manhit said.
Dr. Epictetus Patalinghug, Professor Emeritus at the Cesar E.A. Virata School of Business at the University of the Philippines and ADRi Trustee and Program Convenor, presented his paper which gave an in-depth assessment of the Build Build Build (BBB) program of the Duterte administration.
He pointed out that the Duterte government’s infrastructure spending from 2017 to 2021 was about P4.98 trillon or about 5.5 percent of the country’s GDP which is far short of the goal of 7.3 percent.
As of October 2021, 77 projects worth P3.5 trillion were ongoing with 30 projects yet to start construction. Only eight projects totaling P94 billion were completed.
Dr. Patalinghug said that factors that affected BBB performance aside from the typical project delays and cost overruns were weak strategic guidance, poor project appraisal, poor project selection and budgeting. He also points out the lacking absorptive capacity of government agencies which may remain to be a problem beyond the Marcos Jr. administration.
He said that the Marcos Jr. administration’s rebranded “Build Better More” infrastructure program should focus on the “shovel ready” projects inherited from the Build Build Build of Duterte and mentioned the Metro Manila subway and the North-South Commuter Railways as low hanging fruits.
To avoid a repeat of the Build Build Build shortcomings, Dr. Patalinghug recommends the Streamlining of the approval process of major infrastructure projects, strengthening project management and monitoring, Simplifying the implementing rules and regulations of the Procurement Reform Law, and improving the regulatory framework in the PPP program by focusing on solicited proposals.
Priority must be on infrastructure that will have optimal benefits to the mass population.
These instructive insights paint a daunting challenge to the Marcos Jr. government to initiate structural and policy reforms that will renovate the bureaucracy to become more development-oriented facilitators of high impact infrastructure projects.
The challenge is to achieve a seamless complementarity and dynamism in building “hard” infrastructure to truly serve the public.