Trip

The other week at the 50th annual meeting of the Asian Development Bank (ADB) in Yokohama, people seemed to have a genuinely optimistic outlook on the Philippine economy.

Among the main reasons for the optimism is that the current administration, despite President Duterte’s unorthodox style, has retained the sound policies of previous economic teams.

His appointment of a career insider to replace outgoing central bank Governor Amando Tetangco Jr. has further bolstered business confidence. For a while persistent rumors about the possible appointment of certain unsavory characters to replace Tetangco were spooking the business community much more than the drug-related killings.

Another major reason for the bullishness, for both ADB officials and private businessmen, is the promised “golden age of infrastructure” under Duterte’s watch. The commitment of the administration to “build, build, build” offers opportunities for business expansion and increased commercial activity especially in the countryside.

President Duterte is in China again so he may take some pointers from Beijing on development. China is trying to generate more investments, create jobs and spur greater industrial activity in its less developed inner areas – and there are still many of these in the world’s second largest economy.

With production costs rising and the global economic slowdown, China is moving away from its emphasis on manufacturing and is focusing instead on boosting domestic consumption and tourism development.

Providing adequate infrastructure is necessary for these activities. Connectivity is crucial, whether in transportation, telecommunications, systems and services. Airports and seaports, high-speed internet, everything that will facilitate the movement of people, goods, ideas and services spur economic growth.

Everyone will welcome a golden age of infrastructure in the Philippines. But we all know what the problems are, even with plans drawn up and objectives set.

Instead of thinking about how a particular project can best benefit the masses, the prime consideration in project implementation in this country is personal profit.

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The focus on kickbacks is one of the biggest reasons for the poor quality of our public infrastructure. Because a hefty chunk of project cost goes to lining crooked officials’ pockets, contractors cut corners and sacrifice quality.

This is a key reason for our substandard roads and poorly planned mass housing projects. The World Bank sees a link between the quality of the road network and the level of corruption in a country.

In the days of the Priority Development Assistance Fund, officials of the Department of Public Works and Highways often sighed that lawmakers earmarking projects for funding with their PDAF or pork barrel routinely disregarded procurement laws and qualifications set by the DPWH for contractors.

The only qualification needed, as far as the lawmakers were concerned, was the capacity of the contractor to pay commissions.

Even with the abolition of the PDAF by the Supreme Court, Congress inherently plays a big part in crafting the annual national appropriation, and lawmakers continue to have a say in picking projects for public funding.

In keeping with the SC ruling, lawmakers supposedly can no longer pick projects after the annual budget has been enacted, and there are no more lump sum appropriations. But Sen. Panfilo Lacson insists there is “pork” in the 2017 budget, with Mindanao lawmakers supposedly hogging the bulk of the funds.

Even if budget officials deny this, a number of lawmakers can still influence the selection of contractors by government agencies. Naturally, being a favored contractor does not come free.

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Corruption is the reason for the disaster that is the Metro Rail Transit 3, and why we have such crummy airports. Corruption is the reason why a single railway project in Luzon has been derailed for over a decade now.

President Duterte, who is in Beijing for its One Belt, One Road initiative, said China has complained about the depletion of its “200-million” grant for a railway in the Philippines that has yet to materialize.

Duterte must be referring to the nearly $200 million for the Northrail project that was supposed to be implemented by China’s state-owned Sinomach, or China National Machinery and Equipment Corp.

Northrail – 80 kilometers long, connecting Manila to Clark International Airport in Pampanga – was supposed to be a showcase Chinese project in Southeast Asia. The Export-Import Bank of China approved a $400-million concessional loan in 2005, when then president Hu Jintao visited Manila, to rehabilitate an initial 32 kilometers of the old railway. About $180.8 million was actually disbursed by the Eximbank.

Accusations of corruption hounded the project from the start. Rumors swirled – denied in public by Northrail and Chinese executives – about one set of Philippine officials demanding commissions at the outset, followed by another set of officials demanding their share.

Northrail’s woes were compounded by the corruption scandal that brought down the national broadband project being negotiated by Manila with another Chinese company, telecommunications giant ZTE.

Corruption tainted the Chinese brand, and President Duterte’s pivot to Beijing has not completely changed this Pinoy perception of Chinese companies.

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The desire for fat commissions goes all the way down to local government units (LGUs) and even barangay offices.

Barangay officials, who enjoy wide leeway in raising funds, concoct the most imaginative ways to create red tape and make life hell for anyone doing business with their office. Every layer of red tape means an opportunity for collecting facilitation fees.

The same myopic mindset pervades many LGUs. If President Duterte wants to get his infrastructure program moving, he must confront this problem squarely.

Recently, Duterte asked the nation for three years to deliver results. This has been met with as much skepticism as his promise to eradicate the drug menace in six months.

With recent corruption scandals in mind, he may have to implement a version of Oplan Tokhang to get his results in three years, and achieve his golden age of infrastructure.

Unless he deals decisively with corruption, the President’s P3.6-trillion TRIP or three-year rolling infrastructure program could trip and fall on its face.