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Business

Big goals… but can they deliver?

- Boo Chanco - The Philippine Star

Budget Secretary Ben Diokno shared the administration’s bold plans in a presentation before the Foundation for Economic Freedom (FEF). Deficit, he said, will expand to 3.0 percent of GDP over the Medium-Term to support expenditure priorities. Proposed FY 2017 disbursements will reach P2.9 trillion, nearly twice the disbursements in 2010.

Those are large figures because they have ambitious plans for public infrastructure. Diokno said they have already ticked in the proposed 2017 budget a total of P860.7 billion for infrastructure spending, P104.2 billion higher than the 2016 levels.

How will government make the promised golden age of infrastructure possible?

Diokno said, they will implement infra projects with a sense of urgency so that we will see construction going on 24/7. He said the performance of Cabinet members will be tightly monitored. “Cabinet members will not be allowed not to accomplish objectives,” he said.

Diokno said the Cabinet members will be entrusted with significant budgets on a use it or lose it basis. And losing unused budget may also mean losing their position for non performance. This is so unlike in the Aquino watch when they had so much “savings” that transformed to DAP.

I am still skeptical. They are working with the same bureaucracy that the last administration had. What makes the Duterte boys think they will succeed where the P-Noy boys failed? Political will, was Diokno’s answer. They have political will daw, to see these projects through.

So I asked, what about the so called “technical deficit” that his predecessor Butch Abad complained about? That refers to the government’s lack of technical capacity to carry out those projects. The so called absorptive capacity of the bureaucracy to carry out those many projects is doubtful.

But Ben is confident that will not be a problem. Maybe he is right. The reason the last administration dismally failed to carry out much needed projects was more due to the inability of Cabinet members like Mar Roxas and Jun Abaya to make decisions. They studied projects to death and made all sorts of excuses why they are unable to decide.

The studies are all there, Diokno pointed out, so that they can quickly get those “shovel ready” projects going. They don’t have to make new studies to validate what had already been validated by previous studies. Diokno said they amended the IRR of the Procurement Law to avoid project delays.

Besides, Diokno said, many of the infra projects are via PPP and that goes around the bureaucracy’s technical deficit problem and minimizes strain on the national budget. Diokno said unlike P-Noy, they will not use PPP as a fund raising operation for government to attract more takers and protect end-users from higher tolls.

Government will facilitate PPP projects and there are some P1.4 trillion worth of projects in the pipeline. Of this, projects worth P297.9 billion have already been awarded and some P459.2 billion under various stages of procurement.

Transport infra projects are on top of their priority list, Diokno said. Between now and the end of the year, Transport Secretary Arturo Tugade must make important decisions to build infrastructure that the previous administration merely played around with. If Sec Tugade is really able to make those key decisions, there is a good chance Diokno’s golden age dream may be realized.

For example, the airport. Studies upon studies have been made on what to do with the country’s key gateway airport. Do we dump NAIA, which was the announced preference of Mar Roxas? Do we expand the current NAIA but adding another terminal and runway? Do we build another airport in Sangley, accept a private sector proposal to build an airport in Bulacan or use Clark instead?

There are many things to consider in deciding this issue. Some of the more important considerations are the following:

It will take five or maybe even 10 years to build a real world class airport in a new location. According to the PPP Center, NAIA has breached its passenger design capacity of 30 million annually some years ago. Last year, it handled 35 million. No wonder it is suffering serious congestion problems.

The PPP Center cited a JICA study to emphasize the urgency of a proposed P74.56-billion NAIA Development Project which recently got the approval of NEDA.

According to a 2011 JICA study, annual passenger forecasts for the Greater Capital Region, which covers the National Capital Region and Regions 3 and 4A, will rise from 49.8-million in 2020 to 75-million in 2030, shooting up to 106.7-million in 2040. JICA has predicted that NAIA will reach its maximum capacity between 2018 and 2020.

It is obvious we should have acted yesterday but didn’t. So what do we do now?

The transportation department is supposed to bid out the NAIA development project, privatizing its operations and management. Seven local conglomerates and their foreign partners have expressed interest. They are waiting for the terms of reference and the schedule for the bidding.

The urgency of this NAIA project is glaring. We will need NAIA in the next 10 years or beyond. And even assuming we eventually develop Clark as the new main gateway airport, we will still need NAIA the way Tokyo is now profitably using Haneda to complement Narita.

But where do we site the new airport, Sangley or Bulacan? Or Clark?

I am told that there is an accepted practice in aviation circles not to have international airports too close to each other. If we keep NAIA, that would rule out Sangley or Bulacan and leave us with Clark.

Clark is the quick solution to NAIA’s congestion problem. But it has to gear up quickly. The dillydallying of the last administration meant that they have not even broken ground on a new terminal building that was proposed when P-Noy’s term started. It also needs a new runway whose distance from the runway now being used is compliant with civil aviation rules.

More than enough studies have been made and the time to make decisions is now. Sec. Tugade has to decide to build that terminal now, regardless of whether Clark would be the principal gateway or not.

Even if Clark does not end up being our principal gateway, it will be a good second airport to support NAIA. Clark’s usefulness will become more and more apparent as the air traffic congestion problem of NAIA worsens.

The principal negative of Clark is its distance from Manila and more specially from the industrial zones of Calabarzon. But if they fast track the NLEX-SLEX connector roads, Clark may be viable even without a fast train. It is also now faster for some Metro Manila residents to go to Clark than NAIA because of land traffic congestion.

On the other hand, a decision could be made to accept the reported unsolicited bid of San Miguel to build the airport in Bulacan. I understand Ramon Ang wants it completed in less than five years so Duterte can still inaugurate it.

The nice thing with San Miguel’s proposal is that the risk is totally private. There will be no government guarantees and government’s only role is to assure compliance with accepted international safety standards.

Because San Miguel will want to earn on its investment as soon as possible, they may be able to build this faster and maintain it better than if government was in charge. It is the most tempting offer on the table now. Sangley will require ODA loans and the hand of government will likely delay its completion or even getting it off the ground.

I understand Sec. Tugade wants to make a decision on the airport before year end. Sec. Diokno said as much because they are eager to show concrete on-going projects. Indeed, Sec. Diokno said the Cabinet members have submitted or about to submit their list of projects and progress on these projects will be monitored for the President.

It all sounds so promising but we have been here before. We can only believe once decisions have been made to build and they have actually broken ground.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco.

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