Infrastructure Projects are More Than a Mantra
We often hear from every new administration about huge infrastructure projects that it will pursue to speed up the development of the Philippine economy and ultimately reduce poverty. Yes, we know that the benefits of infrastructure projects on the economy are enormous in terms of creating jobs and new business opportunities.
Yet, for a number of Filipino consumers, infrastructure projects are a pipe dream whose economic benefits will accrue beyond their lifetime. In reality, however, infrastructure projects are more than a mantra or sloganeering from the administration.
The construction of infrastructure projects brings immediate benefits to the economy because of the instant jobs they generate from the start to the end. Additional employments by the hundreds of thousands are created in-between. The additional jobs will feed the economy—consumer spending increases and more products are churned out from factories to meet rising demand.
The added employment and decelerating inflation combined during the initial phases of the construction period are expected to fuel consumer spending more. The new ranks of consumers will shop in the malls, travel and boost the countryside, and dine in fast-food restaurants, a development that speeds up the economic cycle. The completion of the infrastructure projects—airports, railways, toll roads, seaports and bridges—will naturally provide long-term benefits to the economy.
Roads and airports, for one, will open new economic corridors and create additional business opportunities for property and mall developers. They will lead to the emergence of more small entrepreneurs like operators of sari-sari stores and smaller transportation modes. Infrastructure projects will also speed up the delivery of goods and services from the farms in the countryside to the urban centers.
But building infrastructure projects and funding them are a challenge, especially for a government that spent so much in fighting the pandemic. The state has other equally important sectors to fund like education, the military, welfare services, public works and mass housing.
President Ferdinand Marcos Jr. spent a lot of time abroad to convince foreign governments and their businessmen to invest here and participate in the country’s infrastructure program. Transportation Secretary Jaime Bautista made a follow-up plea with European investors last week when he met with top officials of the European Union-Association of South East Asian Nations Council and the European Chamber of Commerce of the Philippines (ECCP).
The budgetary constraints are prompting us to search for funding sources from foreign business groups as well as international financial institutions. The Philippines, per Mr. Bautista, has offered several infrastructure transport projects to international foreign institutions, private investors and professional associations and industry groups.
He cited the proposed privatization of the operations and management of the Ninoy Aquino International Airport as an option for private sector investment. Included in the offer are other regional airports in the pipeline for privatization.
President Marcos, through the Department of Transportation, has dangled other infrastructure projects in the transport sector, such as railways, maritime and road, including the Metro Manila Subway, North-South Commuter Railway, LRT-1 Cavite Extension Project, MRT-7 and MRT-4.
The government’s business-friendly policies, meanwhile, are bearing fruits. European investors gave their thumbs-up sign to the improving economic fundamentals and the Philippines’s open investment policy. ECCP President Lars Wittig cited the recent creation of a ‘green lane’ for strategic investments and the headway in facilitating ease of doing business here.
The recent business reforms passed by Congress and President Marcos’s resolve to go ahead with big infrastructure projects will certainly expand the economic base of the Philippines. These make me more bullish on the prospects of the economy this year and beyond.
With inflation in check and big infrastructure projects in the works, I don’t see any reason why the Philippines cannot sustain its rapid economic expansion.