Infra crucial to Asean integration – Purisima

MANILA, Philippines - Investment in infrastructure will be crucial if Southeast Asia wants to capitalize on the imminent economic integration of the region, Finance Secretary Cesar Purisima said.

In a speech delivered at the Nikkei Asian Review Forum Friday, Purisima underscored the need for the Association of Southeast Asian Nations (ASEAN) to invest heavily on infrastructure to maintain its current economic growth trajectory.

“From roads and power sources to social infrastructure like health and education,  the right investments will enable our young and populous region to take the driver’s seat towards robust global economic growth,” Purisima said.

The key to regional transformation, Purisima said, is continued and sustainable reform on each country’s end.

The Asean, Asia’s third largest economy after China and Japan, lags behind countries such as Hong Kong, Singapore, Korea and  Sri Lanka when it comes to quality infrastructure.

Asean’s infrastructure needs are estimated at $7 to $8 trillion over the next 15 years.

Without sustained investment in needed infrastructure, it is unlikely that the region would achieve its full potential and realize the opportunities of the Asean Economic Community (AEC).

The AEC aims to create a single-market economy with free movement of goods, services and investments throughout the ASEAN region.  Since 2010, most ASEAN goods have been traded in the region at zero tariffs, including products from the Philippines.

Purisima said the Philippines has much to gain by boosting spending on infrastructure.

He said the Philippines’ strong macroeconomic fundamentals and reform trajectory will allow the country to reap its demographic dividend, to become a major player in an integrated Asean economy.

The Asean population is expected to expand and grow from 600 million  to 700 million in 2030, giving it a big advantage for growth.

The government has committed to bolster public infrastructure spending to four percent of the country’s total economic output  for this year in a bid to sustain economic growth.  It intends to increase this figure further to five percent by 2016.

Budget Secretary Florencio Abad noted in this year’s national budget,  the Department of Public Works and Highways (DPWH) received the second largest allocation and the highest year-on-year increase -P303.2 billion.  The amount marked a  37.9 percent jump  from last year’s P219.9 billion.

Of the total, P185.8 billion will go to  the completion of all national roads by 2016 and all bridges along national roads by 2015.

Apart from this, Abad said big-ticket projects offered under the government’s  Public-Private Partnership (PPP) initiative are in the offing.  Among these include the Tarlac-Pangasinan-La Union Toll Expressway, the Daang Hari-SLEX Link Project, the NLEX-SLEX Link Connector, the Cavite-Laguna Expressway (CALAX), the Laguna Lakeshore Expressway Dike (LLED), and the NAIA Expressway.

The Department of Transportation and Communication (DOTC), meanwhile, was appropriated a budget of P59.5 billion, 21.9 percent higher than the previous year’s P48.8 billion. The funds would be used to cover its own infrastructure programs which include the the improvement of the country’s railway systems  (P10.6 billion) and various airport and seaport projects (P15.4 billion).

The Department of Agriculture (DA), meanwhile, received P89.1 billion out of this year’s total national budget.  The money would be used to fund a number of agricultural infrastructure programs.

With this funding, the DA will be able to construct a number of irrigation projects, farm-to-market roads, and fishery infrastructure projects like fish landings and fish ports.

Based on the World Bank’s 2014 Logistics Perofrmance Index, Philippine infrastructure is the worst among the six Southeast Asian nations ranked, including Singapore, Vietnam, Indonesia, Malaysia and Thailand.