By Cai U. Ordinario & Catherine N. Pillas
The government is confident of hitting double-digit growth before President Duterte ends his term in 2022, to be driven by the rejuvenated manufacturing sector, foreign direct investments (FDI) and heavy spending for infrastructure.
Budget Secretary Benjamin E. Diokno on Monday said the government’s infrastructure spending can exceed the initial P8.2-trillion target to reach around P9 trillion in six years.
The amount of infrastructure spending can also increase the number of jobs, which augurs well for a consumption-driven economy and the need to create at least a million new decent jobs per year.
“[The economy can grow] double digits, so at least 10 percent,” Diokno said. “[This will be driven by] infrastructure and investment. I’m sure FDI will come; there will be more jobs, more economic activity, tourism [and] manufacturing.”
Diokno said the government aims to attain a GDP growth rate of 8 percent by 2022. But this, he said, is a conservative estimate, given the planned public infrastructure spending of the Duterte administration.
He said the P8.2-trillion to P9-trillion infrastructure spending does not include the public-private partnership (PPP) projects, which will continue under the Duterte administration.
Diokno said the administration will tweak the PPP Program by accepting unsolicited
project proposals and undertaking hybrid PPP projects, where the government constructs the infrastructure and the private sector operates and maintains it.
Longest bridge
The budget secretary remains confident that, despite the few number of projects in the government’s pipeline, they are confident they will be able to fill in the gaps and undertake more projects in the coming years.
“That’s why we continue to look for good projects. These do not include half a million projects,” Diokno said.
Among the planned government infrastructure projects is the construction of the longest bridge that will connect Luzon and Mindanao.
Diokno said the National Economic and Development Authority (Neda) will be tasked to undertake the feasibility study for the project.
This study will explore the ways by which such a herculean task can be undertaken. It can be done at grade by anchoring certain parts of the bridge on major islands in the country or underwater, which is what has been done in Europe.
“We are trying to find out if that is feasible. If it is, we’ll do it. For the feasibility study, we will ask the Neda to do that,” Diokno said. “I think there’s a bridge now from China to Macau; its about 60 kilometers.”
Government center
Apart from connecting Luzon and Mindanao, the government plans to revive the government center that was proposed under the Estrada administration, just before former President Joseph E. Estrada was ousted in a popular uprising.
The initial government center plan was envisioned to be in the area where TriNoma Mall currently stands. The lot was initially owned by the National Housing Authority.
However, given the current situation, Diokno said Arch. Felino Palafox, who designed the government center under the Estrada administration, said it might be better to locate the government center in Clark.
But Diokno said if the government can find another location that can be similar to the Eastwood area in Libis, Quezon City, which can also operate 24 hours a day, it may work for the government.
Diokno said this government center is being seen as cost saver since the government spends billions in rent to house all government offices.
During the time of Estrada, Diokno said the government was already spending about P2 billion for government rent alone.
“That will be at no cost to the government. A good concept for a government center is like Eastwood. It’s not only from 8 [p.m.] to 5 [p.m.]; it’s got to be 24 hours so we invite developers and divide the area among them. In this way, the development will pay for
itself,” Diokno said.
Underspending fears
Diokno admitted that, while all these projects are very good, his “greatest fear” is for the government to again underspend.
He said if government line agencies fail to meet their commitments to spend their budgets, there will always be that threat that underspending could again occur.
Diokno said he earlier estimated that underspending in the previous administration reached as much as P1 trillion.
This caused the economy to suffer greatly because of the lack of government spending.
Key agencies handling big-ticket infrastructure projects that are particularly expected to
perform include the departments of Transportation, Public Works and Highways, Energy, and Agriculture, among others.
“That’s my greatest fear; if the other Cabinet secretaries do not work, we will underspend. But like I said, there are marching orders by the President to ‘use it or lose it’ [referring to their jobs],” Diokno said.
Manufacturing
Meanwhile, the Department of Trade and Industry (DTI) is targeting manufacturing growth to average between 8 percent to 10 percent in the next six years, with micro and small enterprises (MSEs) contributing further to the economic expansion through a credit facility for smaller businesses that can go up to as much as P18 billion.
“We’re trying to remove the ‘five to six’ industry; we are replacing this with an alternative micro and small fund and we’ve managed to set aside P1 billion under the Office of the President. This is for the very micro businesses. We’ll provide flexibility and no collateral needed,” Lopez said during the DTI’s Manufacturing Summit: Trabaho and Negosyo held on Monday.
The P 18-billion credit facility, to be called “Pondo sa Pagbabago at Pag-Asenso,” (3P) will be released through conduit-partners of micro-finance institutions.
The 3P Program will start with an initial amount of P1 billion in 2017. The DTI will make the funding available through six or seven microfinance institutions that will retail the funds to beneficiaries.
The interest rate will be on a par with SME market rates of at least 7 percent annually, way below the “5 to 6” rate, or 20 percent, offered by informal financiers.
Having an SME Modern Policy also forms part of the DTI’s Comprehensive National Industrial Strategy (CNIS), the agency’s “mother program that charts the Philippines’s industrial policy to develop local industries.
Five priority subsectors were outlined as the key priorities under the CNIS: manufacturing, tourism, information technology-business process management (knowledge-process outsourcing), agribusiness, and infrastructure and logistics.
Manufacturing has grown by 8.1 percent in the last four years.
According to Lopez, with these programs, manufacturing growth can reach 8 percent to 10 percent during the Duterte administration.
Manufacturing has been a major growth driver in the last decade, contributing 12 percent to the GDP as of July 2016. Its contribution to total employment is estimated at 8 percent of the total work force.
1 comment
One of the big projects need to be undertaken is the Davao City – Samal Island Bridge. What’s holding its construction? i have heard about its pre-feasibility and Feasibility studies having done and completed. But nowhere this project is mentioned as scheduled for actual implementation. Meanwhile, its too stressful to take the ferries as you have to wait for hours esp during peak summer season.