The recent Philippine infrastructure boom has been a mixed bag. Some say it helped to improve deprived areas, but others think it failed to meet its objectives. A dean at Ateneo de Manila University recently said that politicians use public infrastructure as an excuse to show voters that they have brought home the bacon. But the long-term desirability of public infrastructure is a questionable question. The boom in infrastructure is both job-creating and stimulative.
Foreign companies are welcome to invest in infrastructure projects in the Philippines, provided they are partnered with local companies. The local infrastructure sector has a high ratio of local-to-foreign ownership, making local partnerships vital to project success. Because of the close proximity between international and local parties and government agencies, foreign firms may need assistance from local partners in completing projects. This is the case for major infrastructure projects in the Philippines, as well as projects in Asia.
The Philippines has a poor infrastructure reputation, compared to its neighbors. Traffic and commute times are notoriously challenging. Port congestion has been repeatedly cited as a constraint on economic growth. Moreover, under-capacity in international airports posed a major impediment to tourism and development. But there is still opportunity to improve the transport infrastructure sector in the country. Infrastructure Philippines is an area that needs significant investment. So, how can it make up for its lack of funds?
The largest risk to infrastructure in the Philippines is the rise of sea levels. The Philippines’ urban population is concentrated in informal settlements with shoddy infrastructure. A giant storm could destroy these informal settlements, displacing millions of people. Natural disasters can also destroy urban infrastructure and cost millions of dollars. Tropical Storm Ketsana, for example, caused $33 million in damages. The Philippines also needs to address the issue of climate change.
The Philippines is a major emerging economy, with significant potential to attract foreign investors. Yet, despite the potential for great growth, the country’s infrastructure remains woefully inadequate. While President Rodrigo Duterte’s government has promised to “build the golden age of infrastructure” over the next five years by allocating $8-9 trillion Philippine pesos to the programme, infrastructure remains an Achilles heel. In fact, the country’s economy grew by 6.9 percent in the third quarter of 2017, surpassing its nearest neighbor China and ahead of its neighbours in the ASEAN region.
The Philippines is a world leader in mobile phone technology, with a huge national network and heavy involvement in the international market. While fixed-line services remain a crucial part of its national infrastructure, demand for mobile phone services has increased. This has led to extensive use of Wireless Local Loop (WLL) services. The government has supported two major programs to extend coverage in remote areas. These efforts will help the country’s communications industry continue to grow.
In spite of the challenges presented by the country’s infrastructure development, the Philippine government is beginning to explore the PPP model as a way to build physical infrastructure. The government has shown increasing interest in applying the PPP model to transport facilities. Another preferred model for transportation and water infrastructure is Build-Operate-Transfer (BOT) as the ownership of built facilities ultimately passes back to the government. It is important to note that in the past, the Philippine government has rarely tapped into the private sector for infrastructure projects.