Infrastructure in the Philippines is Holding the Philippines Back Economically

The Philippines’ infrastructure problems are holding it back economically and are now one of the biggest obstacles to the country’s growth, according to a recent World Economic Forum report. A number of problems are plaguing the country, including power failures, chronic water shortages, antiquated telecommunications systems, deteriorating roads, bridges, and an under-performing airport. If these continue, the country could see its economy suffer, and its people suffer.

The study examines the sources and levels of Infrastructure in the Philippines and concluded that public infrastructure spending falls far short of the target 5 percent of GDP. The Philippines’ government is also far behind schedule, as it only received about one percent of the world’s infrastructure funding in 2012.

The Philippines’ economy depends on its infrastructure, which is the cornerstone of its economy. It is vital to the country’s economy and helps businesses and workers take advantage of opportunities. A healthy economy relies on a robust infrastructure to support public spending, create jobs, and fuel economic growth. Infrastructure development in the country is a critical part of this goal and makes it one of the most appealing markets for foreign investors. Despite the high risks of inflation, the Philippine market has attracted many foreign direct investments in the past.

Lack of public investment has been a major structural challenge in the Philippines. Public investment in the country averaged 2.5% of GDP during the period 2000-2014. Although public investment is an important source of infrastructure funding, it does not accurately reflect all sources of investment. Private sector investment in infrastructure is also limited by an inadequate infrastructure, weak investment climate, and restrictive foreign direct investment policies. Poor implementation capacity and weak revenue base have limited the Philippine government’s ability to properly allocate funds for public infrastructure. But, increasing investment is necessary to reap the benefits of a young and growing population. So, the Philippine government embarked on an infrastructure push under the Duterte administration.

Green and grey infrastructure are two major approaches to coastal protection. Green infrastructure protects natural ecosystems by preserving their biodiversity and providing other ecosystem services. Grey infrastructure, on the other hand, refers to traditional built structures that need ongoing maintenance and cannot adapt to a changing climate. For example, seawalls are vulnerable to breaching and mangroves reduce the impact of storms. Ideally, a combination of green and grey infrastructures will be most effective.

One such project is E-PESO, a project led by the United States Agency for International Development (USAID) that supported financial inclusion and economic growth in the Philippines. The Philippines has also improved the efficiency of eleven local government units through the development of mobile payment platforms for building permits, property taxes, and other fees. Further, the project’s success has encouraged the development of new infrastructure in the country, and many local governments have already opened their own platforms.