The Philippines is experiencing a major infrastructure crisis. In a recent World Health Organization and UNICEF report, only 47 percent of the country’s population will have access to safe drinking water by 2020. These challenges are closely tied to large-scale rural-to-urban migration. Large numbers of rural residents are moving to big cities in search of better jobs, but this massive migration results in a severe traffic gridlock that causes exorbitant commute times and delayed goods transportation. One former waterworks engineer remembers signing off on projects that he didn’t want to touch.
Infrastructure quality
The lack of adequate infrastructure is one of the country’s main challenges. While the Philippines has performed well in the past few years, improvements in the country’s infrastructure quality will be critical for inclusive growth. While various reforms have been implemented to address infrastructure problems, more must be done to improve fiscal space, budgetary processes, and the regulatory environment. Better policy coordination is also required to address bottlenecks. This article will discuss some of the issues that need to be addressed in order to increase infrastructure quality in the Philippines.
One area to consider is strengthening public procurement. It will help reduce risks of corruption by increasing competition. Improving procurement processes will also lead to increased investment and lowering domestic capacity constraints. Furthermore, lowering obstacles to foreign investment will spur private sector investments, which will help push infrastructure development forward. The government should also establish an ease-of-doing-business law to complement efforts to reduce red tape. Such a law would promote transparency and accountability of regulatory agencies.
Costs
A major public spending program launched in April focuses on big infrastructure projects, totaling $167 billion. The goal is to spur the economy and increase jobs by creating an environment that attracts investors. Historically, underspending on infrastructure has inhibited growth and investment. This infrastructure push is part of the president’s socioeconomic program to turn the Philippines into an upper-middle-income nation by 2022. But can the country afford such an investment drive?
The Philippines is entering a “golden age” of infrastructure investment, but its shortcomings are costing it dearly. Poor transportation systems and aging infrastructure have discouraged manufacturers from investing in the country. As a result, the country’s economy has lagged behind neighboring economies and has become a source of profit-draining transport bottlenecks. Traffic congestion alone costs the country $17.5 billion per year.
Impacts on marginalised groups
A recent study shows that the country is constructing a burgeoning infrastructure sector, but how will it affect marginalised groups? In a new report published by the Philippine Institute for Development Studies (PIDS), I look at the implications of BBB on various groups of people. These groups face various challenges, including a lack of access to clean water, transportation, and ICT, as well as challenges in the adoption of technology.
Economic marginalization refers to situations in which people do not enjoy the same opportunities as other people. As a result, they often lack adequate incomes and cannot afford to buy goods and services. Those in these groups are often trapped in segregated communities. They cannot even go to the same clubs as their counterparts. This type of social marginalization can last for generations. The government must do more to ensure that every group can benefit from infrastructure investments, healthcare, and education.
Opportunities for foreign companies
As the government of the Philippines embarks on a massive program of infrastructure construction, the country needs foreign assistance to fund and implement the projects. However, local companies do not have the requisite expertise and resources to complete large infrastructure projects. Moreover, these projects require specialised construction skills. In such a scenario, foreign firms can fill in the gap with their expertise. Moreover, there are several collaborative opportunities for foreign companies.
The Philippines’s infrastructure has been widely hailed as a key differentiator in the region, linking the three main islands and ensuring their accessibility. The recent liberalization of domestic aviation and inter-island shipping has greatly improved services and facilities. Moreover, the country’s communication systems provide redundant international connectivity around the clock. While fiber optic cables are the primary backbone network, satellites are also used as backup. The country’s economic reforms also focus on regional growth, turning even remote areas into business centers. A landmark BOT legislation that enables private investors to build, operate, and maintain infrastructure in the Philippines is a key opportunity for foreign investors.
