Build Build Build’s challenges

BIZLINKS - Rey Gamboa - The Philippine Star

With many good golf courses in the south as far as Calamba, heading back north for us golfers after a game often means having to use C-5 or EDSA, which are both severely congested in the early afternoons, especially on a Saturday.

There is an alternate route, but one that will likely break your car axle or bust a tire. I’m referring to C-6, originally a two-lane road of about seven kilometers full of potholes running from Bicutan to the Napindan Bridge over the Pasig River.

It has since been widened and improved to four lanes by the Department of Public Works and Highways, but its potential remains unfulfilled. Recently, the Department of Transportation announced the upgrade of the roadway with an expressway going straight to the Batasan Complex in Quezon City.

SMC expressway to Batasan

A 34-kilometer toll and at-grade road to be built by San Miguel Corp. linked from the Skyway Stage 1 in Taguig will shorten travel time significantly for those coming from the South Luzon Expressway going to the Batasan.

After its scheduled completion in 2020, the road project is expected to extend it to its next phase, this time to connect to the North Luzon Expressway and going to San Mateo, Rizal and San Jose Del Monte, Bulacan.

SMC will have the tollway contract to the C-6 project for 30 years, and while this would mean having to pay extra for  use of the road, it is definitely better than having to wait an eternity for the government to find the resources to maximize this crucial alternative road in Metro Manila.

Pressure to build

Another crucial infrastructure project that’s been in the planning stage for some time is the Philippine National Railways line that will run from Tutuban in Manila to Malolos, Bulacan.

With pressure on the Duterte government to ramp up its infrastructure spending until 2022 under the Build, Build Build program, the Department of Transportation is forcing the project off the drafting table by holding a pre-construction groundbreaking ceremony last week.

Unlike the C-6 project, financing for the PNR line will be shouldered by the government through a soft loan from the Japan International Cooperation Agency. The Japanese, so far, have been delivering on their promise to support the current administration.

Bigger problems of PNR project

But the bigger problem lies is getting the project to the actual construction stage, which means having the whole 38 kilometers where the trains will pass cleared of obstruction, including informal settlers, landowners contesting the government’s right of way call, and utility lines.

And yes, choosing the project contractor, which the DOTr optimistically hopes to announce this April. This would be the biggest project to date for the current government with significant impact for commuters as well as the local economic activity in the north of Metro Manila.

Aside from drastically reducing commuting time for workers residing in the North, it will also cut down the travel time of agricultural and manufactured goods to and from the ports of Manila and economic hubs of Bulacan and provinces further north like Pampanga.

Project completion and operations is seen by 2021. This project is complemented by the equally long Malolos to Clark New City line, which will also be funded by JICA loans.

Glowing 2017 report

At the end of 2017, Duterte’s economic team submitted its glowing report that included passage of 20 infrastructure projects, of which eight are considered of flagship status. Among those dealing with mobility are the Mindanao Railway, the Metro Manila Line 9, the Binondo-Intramuros Bridge, and the Clark International Airport New Terminal Building.

All are expected to be rolled out this year, which would raise the 2017 government public spending of 5.2 percent of gross domestic product (GDP) to 6.2 percent next year, and bring economic growth from seven to eight percent.

More 2018 projects promised

This year, the National Economic Development Authority is set to approve another 15 big-ticket infrastructure projects, and if majority of these would be rolled out within the year, this should further boost the country’s economic activity and further raise GDP closer to the eight percent level.

NEDA also reported that the government has managed to open up its coffers to ramp up its infrastructure spending. The plan is to spend at least P8 trillion until 2022 to finance Build Build Build and usher in Duterte’s promise of a golden age in infrastructure.

TRAIN not enough

The Organization for Economic Cooperation and Development (OECD), however, says that the amount is not enough. In fact, it says the Philippine government must raise between P23.7 trillion and P27 trillion until 2030 in current prices to sustain economic growth.

The Paris-based organization pointed out that that the Philippines will find it very challenging to meet its infrastructure needs by 2030 largely because of poor revenue collection averaging at less than 15 percent of GDP and a still shallow capital market.

The OECD offered some sage advice to meet the daunting problem, including ventures into the bond market to finance long-term infrastructure projects that offer lower interest rates and pose less risk than funds raised by private project developers.

Other suggestions involve levies that capitalize on land value results from the built infrastructure, infrastructure user fees to pay for maintenance costs, and participation in funded cross-currency swap agreements with multilateral development institutions.

Definitely, the first round of Duterte’s tax reform initiative is not enough.

Facebook and Twitter

We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us at www.facebook.com and follow us at www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

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