How exactly is the Duterte admin going to “Build, Build, Build”?

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During CNN Philippines' "Build for the Future" forum, Budget Secretary Ben Diokno announced that the funding for the "Build, Build, Build" project has already been secured. Photo by JL JAVIER

Manila (CNN Philippines Life) — At the recently concluded forum hosted by CNN Philippines, “Build for the Future,” heads of government agencies and private sector leaders joined CNN Philippines chief correspondent Pia Hontiveros and CNN International correspondent Andrew Stevens on a discussion about how the government plans to implement the “Build, Build, Build” program, as infrastructure is one of the priorities of the Duterte administration.

According to the World Economic Forum (WEF), Philippine infrastructure ranks 97th out of the 137 countries, which is on the same level as Rwanda. WEF also said that, for competitiveness, the Philippines places 7th out of the 9 countries in the ASEAN region, besting only Cambodia and Laos.

These figures already give a picture of how poor infrastructure in the country has dragged the Philippine economy down. The government’s “Build, Build, Build” project seems to be a promising solution to this problem, and through the forum, heads of economic, transport, and budget agencies — namely Budget Secretary Ben Diokno, Transport Secretary Art Tugade, Department of Public Works and Highways (DPWH) Secretary Mark Villar, Bases Conversion and Development Authority (BCDA) President Vince Dizon, and National Economic Development Authority (NEDA) Chief Ernesto Pernia — share how exactly they’re going to build infrastructure that could catapult the Philippines into economic progress.

Photo-46.jpg CNN Philippines' Pia Hontiveros and CNN International's Andrew Stevens led the "Build for the Future" panel discussion, where government heads and business leaders talked about the "Build, Build, Build" project — from the sustainability of the program to the challenges that the government could potentially face. Photo by JL JAVIER

What is the status of the “Build, Build, Build” program?

The transport and public works departments have the biggest budget, with the program projecting six airports, nine railways, three bus rapid transits, four seaports, and 32 roads and bridges. The government has already spent ₱1.03 trillion from January to April 2018 alone, and it is expected to spend more.

“We are going on a 35 percent to 40 percent accomplishment,” said Transport Sec. Tugade on the status of their projects. DPWH’s Villar affirmed that their agency is doing better, adding that they have also finished projects that had been set aside on top of creating pipelines that will last longer.

NEDA’s Pernia shared that they have already covered 35 of the 75 flagship projects. “That's more than 50 percent of projects approved,” he said.

Photo-36 (3).jpg The forum included panelists from the different government agencies that are involved in the "Build, Build, Build" program. From left: Pia Hontiveros, Bases Conversion and Development Authority President Vince Dizon, Department of Public Works and Highways Secretary Mark Villar, Transport Secretary Art Tugade, National Economic Development Authority Chief Ernesto Pernia, Budget Secretary Ben Diokno, and Andrew Stevens. Photo by JL JAVIER

Who is going to pay?

The administration’s program is estimated to cost ₱8 to 9 trillion pesos, from 2017 to 2022. Budget Sec. Diokno said that the funding has already been secured for all the proposed projects. “What we have set in our financing plan is biased towards domestic financing. A part of it is 25 percent foreign, 75 percent domestic. We already have pledges from Japan, which is $9 billion worth of projects,” he added.

Asked about the seeming opposition of the government to the public-private partnerships (PPP), Diokno explained that the government cannot fully commit to PPP alone because there will be a national delay if other modes of funding, such as overseas development assistance (ODA) and hybrid PPP (a funding mode combining loans and private sector assistance), are not considered.

San Miguel’s Chief Finance Officer and Treasure Head Raoul Romulo, who was part of the private sector panel in the forum, then suggested that government agencies should be more balanced in the opening and distribution of the different kinds of funding. Diokno, however, argued that there is a good mix of projects funded by the private sector, such as telco projects. Pernia also supported Diokno, saying that many contractors of the projects come from private sectors.

“It’s situational that in the sense that certain factors now are not exactly the same a few years back,” explained Former Finance Secretary Teves, who was also one of the private sector panelists. He suggested a more open attitude towards public-private participation including unsolicited proposals.

Photo-39 (2).jpg Raoul Romulo, San Miguel's Chief Finance Officer and Treasure Head, joined the private sector panelists who expressed concerns and suggestions to the government leaders who were on stage. Romulo said that they are hoping for government agencies to be more balanced in the distribution of the different kinds of funding modes. Photo by JL JAVIER

In 2017, it was reported that the government scrapped public-partner partnerships (PPP) for five regional airports. BCDA’s Vince Dizon, however, clarified that the government is not anti-PPP.

“I think the perception from the private sector seems to be that the Duterte administration is anti-PPP. This is absolutely wrong,” he said. “In some cases, ODA will be faster, in some cases, a hybrid PPP is faster, in some cases, a full-on PPP is faster … We want to work with the private sector but let’s sit down, let’s look at these projects, and let’s see what mode is the fastest.”

Is the project sustainable?

Since the “Build, Build, Build” project would need substantial funding from various streams, there then becomes a concern on the sustainability of the project, especially since debts would be incurred.

Stevens mentioned a Forbes report saying that the debt-to-GDP ratio of the country could balloon to 136 percent. Diokno quickly dismissed this report as fake news. According to their computations, he said that they are confident that they would be able to finance the projects. “We will outgrow our debt … We’re in good shape compared to Japan,” he added. “It’s very safe. Very safe. It’s all systems go for us. Nothing can stop us now.”

Photo-42 (1).jpg National Economic Development Authority (NEDA) Chief Ernesto Pernia said that they are aware of the "debt trap" that the Philippines could fall into if they are not careful about taking loans from China. Photo by JL JAVIER

Stevens then opened the discussion about U.S. Secretary of State Rex Tillerson’s warning towards African countries like Djibouti to be cautious about falling into a “debt trap” with China, implying that the Philippines could be walking into this same trap. 

“We read a lot of reports from Sri Lanka, African countries, Pakistan. We are well aware of that,” responded Pernia. “We have to make haste slowly in terms of Chinese-funded projects so we know every step of the way. We know what the pitfalls are.”

Pernia also emphasized that, so far, there is only one project, a minor irrigation project that is fully funded by China.

What are the jobs to be created?

More infrastructure projects also mean more jobs for the Filipinos. On Tuesday, the DPWH launched the “Jobs, Jobs, Jobs” portal, where would-be workers can apply for job opportunities within the infrastructure sector.

“It’s broken down per project and when you click that, you see all the available positions. I think it’s a very important part of what we’re doing, the job generation aspect,” explained Villar. “Our estimate is 1.1 million average jobs created annually.”

Hontiveros then raised the issue on labor shortage in the country and if this is a threat to the “Build, Build, Build” project. Pernia said that it’s true, but that there are reports of OFWs coming back. However, Hontiveros asked if the salary they will be receiving here would be commensurate to the jobs they had abroad. Pernia responded that they would be earning a competitive compensation.

Photo-26 (7).jpg “You have a president who has political will. Today we are witness to a very good dialogue between businessmen and government,” said Transport Secretary Art Tugade during the forum. Photo by JL JAVIER

Stevens also asked if welcoming Chinese laborers would be an option that the government is looking at. Pernia said that it would be a matter of negotiation. Villar added that there are certain projects that require the expertise of foreign workers but that in general the workforce will be locally sourced.

Dizon underscored that there is indeed a shortage laborers, but particularly of skilled laborers. “Clearly for the semi-skilled and low-skilled laborers, there are a lot [in the Philippines],” he explained. “But just a point on Chinese laborers coming in. I don’t think that’s going to happen because first of all Chinese labor is already more expensive and I don’t think it’s economically smart for China to bring their workers here.”

How optimistic is this government about the project?

The creation of jobs is poised to help Filipinos break out of poverty, and in turn contribute to the growth of the Philippine economy.

According to The World Bank, the Philippine economy’s medium-term growth remains positive. Their 2018 report states that “the Philippine economy is projected to continue on its expansionary path and grow at an annual rate of 6.7 percent in both 2018 and 2019. In 2020, growth is expected to level at 6.6 percent.”

While the future remains to be seen, it does seem bright. When asked about how optimistic they are on the administration’s massive infrastructure project, Villar said, “I can say from the whole admin to the President [that] we are united and firm in our resolve. We are ready to put everything on the line to get this done.”

Tugade also echoed this sentiment. “You have a president who has political will. Today we are witness to a very good dialogue between businessmen and government.”

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Catch the initial telecast of the "Build for the Future" forum on Friday, June 1, at 7 p.m.