By Francis Anthony T. Valentin, Special Features
The Philippines’ transportation sector has long been plagued by poor and inadequate infrastructure, but the situation has taken on a new urgency as the economy continues to be one of Asia-Pacific’s top performers.
At the BusinessWorld Economic Forum held on May 19 at Shangri-La at The Fort in Taguig City, a panel of experts and officials took up the issue. It consisted of Mark Villar, secretary of the Department of Public Works & Highways (DPWH); Timothy John Batan, senior project development officer at the Department of Transportation (DOTr); Doris Magsaysay-Ho, president and chief executive officer of the shipping firm A. Magsaysay, Inc.; Christian R. Gonzalez, Asia-Pacific head of International Container Terminal Services, Inc.; and Sapna Sood, president of Holcim Philippines, Inc.
In his presentation, Mr. Villar extolled the Duterte administration’s “Build Build Build” infrastructure program, an ambitious, trillion-peso initiative seen as ushering in “the golden age of infrastructure.”
“We’ve never spent more than 3% of our GDP in any year on infrastructure,” Mr. Villar said. “This year we’re targeting to spend 5.4% of our GDP on infrastructure.”
The DPWH is planning to spend about P450 billion on various infrastructure projects this year alone, an amount that, Mr. Villar stressed, higher than the budgets the department had for 2010, 2011, 2012 and 2013 combined.
“In terms of turnaround time, there is a plan in place and we will decongest significantly all major areas,” he said, expressing confidence in the government’s ability in rolling out these projects. His agency is “well-equipped to meet our obligations and capacity issues,” he added.
Planned spending for this year will cover the establishment of 200 bypass roads across the country. He noted that P108 billion of the allocated funds will be spent on traffic decongestion programs.
“This is not a pipe dream, our projects are already on the advanced stage of planning,” he said.
Building more roads results in more cars
Among the projects that DPWH is overseeing is the Luzon Spine Expressway Network, composed of 18 expressways spanning 654.98 kilometers, that will connect northern and southern Luzon provinces, making the trip from Legazpi, Albay to La Union possible in about 12 hours. All the department’s projects, along with those of DOTr and other government agencies, are listed on build.gov.ph.
Mr. Batan framed the notorious congestion problem, especially on roads, as a matter of imbalance between transit demand and transit supply. “As any economist would tell you, one way to re-achieve equilibrium is either to increase your supply or to try to decrease your demand,” he said. Both strategies are actually being employed by the transport sector, he added.
Create more roads as an intuitive response to congestion may not always be appropriate, he said.
As Mr. Batan explained, “We have a very built-up city. There’s a limit to how many roads we can build.” There’s also the “build them and they will come” concern. “We build more roads, we get more cars… so we end up in the same situation,” he noted.
The government, according to Mr. Batan, is trying to maximize the available asset base to develop more roads, and, at the same time, come up with solutions that would make the utilization of roads more efficient.
“So if we can develop our public utility vehicle framework in such a way that they incentivize our car users to do what we call a modal shift, then we will end up transporting more people using the same amount or less amount of road space,” he said.
Increasing automation to cut corruption
When it comes to shipping, to find the right infrastructure solutions, Ms. Magsaysay-Ho said, “We need to understand what is our future aspirations for trade and what do we need to deliver competitively to market.” She added that port, shipping, and logistics infrastructure must also follow trade and social strategic goals.
To minimize one of the biggest hindrances to quick turnaround time in logistics, which is corruption, ICTSI’s Mr. Gonzalez offered a somewhat radical intervention. “We eliminate the interaction between people. You could only have corruption if people are dealing with one another,” he said. “So how do we do that in the port sector? We automate.” Automation gives a guarantee that processes would take only a few minutes to play out, and not hours, even days, that is likely with corruption-prone human interaction.
The development of ports in provincial areas is another issue that Mr. Gonzalez raised. “This is done in coordination between private sector and public sector to ensure that we put the ports around these economic clusters and make sure that we have bridges, roads and all the support infrastructure around them to make sure that the products are connected to the global economy,” he said.
For her part, Holmium’s Ms. Soo highlighted how the private sector could help the government build better. In 2016, Holcim’s SuperFast-Crete was used by the DPWH for the first time to repair sections of EDSA. The use of the 24-hour concrete technology allowed those sections to be passable again in less than a day, instead of the usual three to seven days.
The technology was soon approved by DPWH for use in its road projects. “These are indeed exciting times for Philippines, and we also believe for our industry. But we need to go further,” providing “solutions that are more durable, more cost-effective, more sustainable, more beautiful and indeed help the Philippines build, and build better,” Ms. Soo said.
During the forum, speakers from the private sector also discussed funding options for the administration to implement its infrastructure development plans.
According to Francisco Sebastian, vice-chairman at GT Capital Holdings, Inc., there is more than enough fund available for infrastructure lending, with interest rates seen to stay low despite increasing funding requirements.
He said the comprehensive tax reform program (CTRP) must be passed to ensure that the government has enough funding for the build-up. CTRP, which is expected to be passed by the end of the month, eyes lower personal income tax rates, harmonized estate and donor taxes, removal of some value-added tax exemptions, higher excise taxes on petroleum products and automobiles, as well as an excise tax on sugar-sweetened beverages.
Meanwhile, Oliver Tan, chief financial officer at Megawide Construction Corporation, said his company “continues to support the government’s infrastructure development as a roadmap for nation building.”
Tan shared Megawide’s experience in working with the government under the previous administration of Benigno S. C. Aquino III. He said the company was among the active participants in the previous administration’s public-private partnership program, spearheading five of 12 projects. The company was awarded contracts for the Public School Infrastructure Projects Phases 1 and 2, Mactan Cebu International Airport Project, Southwest Integrated Transport System, and modernization of the Philippine Orthopedic Center.
“There is no one-size-fits-all funding mode for implementing the govt’s infrastructure build-up,” he said.
According to Tan, funding is just among the many critical steps to implement the government’s infrastructure plans. “Focus on the forest, not the tree alone.” — with Robert A. Vergara