Philippines to invest more in infrastructure projects

The Philippine government will continue to invest more and build resilient infrastructure that would transform the country into a desirable market for tourism, trade and investments in the global arena.

“Our target is to increase infrastructure spending from 3.4 percent of the gross domestic product (GDP) in 2014 to at least 5 percent in 2016,” said Economic Planning Sec. Arsenio Balisacan.

Government spending will be supplemented by public-private partnership (PPPs) projects to free up public resources and utilize the provision of much-needed social services.

“In line with mobilizing the private sector, the government will continuously improve governance in the sector and institute policy reforms to improve the business climate in the country.”

Balisacan noted that while there is progress, there are gaps that need to be addressed within the remaining years of the Aquino administration.

The government is working to step up investments in infrastructure to be at par with the country’s neighboring countries and keep up with rising demands of our fast-growing economy.

Over the past three years, the government has made considerable progress in terms of initiating and implementing strategic plans, policies, and reforms to encourage investment in infrastructure.

The Philippines has revised the guidelines and procedures for entering into joint venture agreements between the government and private entities to promote competition and encourage private investments in infrastructure.

The Department of Energy (DOE) has revitalized programs on energy efficiency and conservation including the demand-side management and promulgated implementing rules and manuals for the Interim Mindanao Electricity Market. Likewise,

The NEDA board committee on infrastructure (INFRACOM) has approved the proposed amendments to the National Sewerage and Septage Management Program (NSSMP) to increase the number of local government units (LGUs) and water districts that would avail of the program.

The National Telecommunications Commission (NTC) has adopted the Japanese standard to facilitate the country’s switch from analogue to digital broadcast system to enable the modernization and growth of the broadcast industry.

Balisacan also pointed out that the government is producing physical framework plans covering major areas in the country. One important milestone is the development of the roadmap for transport infrastructure development for Metro Manila and its surrounding areas with assistance from the Japan International Cooperation Agency (JICA)

The roadmap includes short, medium, and long-term strategies and investment programs for the development of the transport infrastructure sector.

Balisacan said the roadmap serves as a guide in the development of policies, prioritization, and design of transport programs and projects and approved by the INFRACOM and the NEDA board in 2014.

The NEDA board, under the Aquino administration, has approved a total of 97 projects amounting to P1.39 trillion, 81 of which are critical infrastructure programs and projects with a total cost of P1.24 trillion to support the growth requirements of the country’s economic sectors.

Of the total number of approved projects, 24 are funded through PPPs, 54 projects are financed through Official Development Assistance (ODA) and 19 projects are for local financing.

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Philippine imports up 2.4% to US$64 billion in 2014

Philippine imports grew by 2.4 percent in 2014 to US$63.9 billion despite the 10.6 percent drop in December 2014 due to significant decreases in the value of imported mineral fuels and lubricants, capital goods, and consumer goods.

“The full-year growth of the Philippine merchandise imports relative to our strongly performing merchandise exports reduced trade-in-goods deficit in 2014 to US$2.1 billion from US$5.7 billion in 2013. This by far is the narrowest trade gap recorded since 2001,” said Economic Planning Sec. Arsenio Balisacan.

Balicasan noted that the tepid growth of imports for December 2014 was generally pulled down by the plunging oil prices, a trend which was more conspicuous during the last three months of 2014.

“Over the immediate term, the combination of strong world crude oil supply growth and weak global demand is expected to reduce imports via lower oil prices and possibly weaker demand for the country’s exports, thus tempering imports,” he said.

Balisacan said port congestion appears to remain a significant risk for both exports and imports growth. The lingering effects may have been felt by the sector towards the end of the year as both value and volume of major commodity imports declined or slowed down despite the holiday season.

“A more lasting solution to the port congestion and other transportation and logistics issues need to be in place, specifically in Metro Manila where approximately 25 percent of all imports passes through. Transportation constraints could further lead to unnecessary escalation of commodity prices,” he said.

The higher value of imported raw materials and intermediate goods partially tempered the overall decline in imports during the month. Total payments for inward shipments of raw materials and intermediate goods reached US$2.4 billion in December 2014, higher by 12.7 percent as opposed to US$2.1 billion in December 2013.

“What could sustain imports are domestic consumption and investment. Given these, the manufacturing sector will likely continue its growth momentum, thus, keeping imports of raw materials and intermediate goods brisk.”

“Stable prices, availability of jobs and more vigorous business activity are seen to further increase consumption spending that could support a healthier demand for imports of consumer products,” Balisacan said.

China remained as the main supplier of imported goods accounting for 13.7 percent share to the total value of inward shipments in December 2014 followed by the US (9.8%), Germany (8.4%), Singapore (8.3%), Japan (7.9%), Taiwan (7.1%), South Korea (6.9%), Saudi Arabia (5.7%), Malaysia (5.5%), and Thailand (4.7%).

NEDA board okays infrastructure projects worth US$375 million

The National Economic and Development Authority (NEDA) board has approved six infrastructure projects worth US$375 million (P375 billion) as part of the government’s thrust to increase investments in roads, highways, bridges and other infrastructure.

Economic Planning Secretary Arsenio Balisacan says most of these projects are intented to have a more reliable and efficient transport infrastructure system.

Among the approved projects is the P5.09 billion Panguil Bay project which involves the construction of a bridge connecting Tangug City in Misamis Occidental and Tubod town in Lanao del Norte, northern Mindanao.

The bridge will potentially reduce travel time along the 100-kilometer national road between Ozamiz City and Tubod from 2.5 hours to 37 minutes. The project would be fully financed by the government and targeted to be implemented starting this year until 2018.

Under the North-South Railway master-plan, the first phase of the North-South Commuter Railway (NSCR) project will involve the construction of a 36.7-kilometer narrow-gauge elevated commuter railway from Malolos to Tutuban. The project aims to improve efficiency of land transportation capacity of Metro Manila and provide a more environmentally sustainable mode of transport.

The first phase of the NSCR will use the Philippine National Railway’s (PNR) right-of-way with 10 stations and a depot at Valenzuela. The project’s total estimated cost is P117.30 billion and targeted to be implemented from 2015 with a 35-year operation period starting 2020.

Another is the North-South Railway Project – South Line, a Public-Private Partnership (PPP) project of the DOTC with a total estimated cost of P170.70 billion.

The project consists of commuter railway operations between Tutuban and Calamba, Laguna. It also includes a long haul railway operation between Tutuban and Legaspi, Albay and on the branch line between Calamba and Batangas and an extension between Legaspi and Matnog.

The expansion of the Tarlac-Pangasinan-La Union Expressway (TPLEX) project to four lanes which entails an estimated cost of P2 billion. The total project cost for TPLEX ultimate stage is P24.303 billion for the design, financing and construction of the 88.5 kilometer expressway from the Subic-Clark-Tarlac Expressway (SCTEX) in Tarlac City to Rosario, La Union province.

The P20 billion NLEX-SLEX connector project of the DPWH involves the construction and operation and maintenance of a 13.4 kilometer 4-lane elevated expressway over the PNR right-of-way, which starts in Caloocan City and ends in Buendia, Makati. This will connect the North Luzon Expressway (NLEX) and SLEX to decongest traffic in Metro Manila.

The rebidding of the Cavite-Laguna expressway project of the DPWH would cost P20.105 billion out of the total project cost of P35.4 billion. With a total of 47.018 kilometers, the project will start from the Cavite Expressway in Kawit and will end at the SLEX-Mamplasan Interchange in Biñan, Laguna.

There will be nine interchanges in areas such as Kawit, Daang Hari, Governor’s Drive, Aguinaldo Highway, Silang, Sta. Rosa-Tagaytay, Laguna Blvd., Technopark, and a Toll Barrier before SLEX.

“These projects will support the government’s goal of increasing infrastructure spending to at least 5.1 percent in 2016. We hope that they will be implemented efficiently and effectively,” says Balisacan.

Waterfront development to create more opportunities in Philippine communities

A leading Filipino architect has cited the great potential in waterfront development that would create opportunities for the Philippine communities.

“We see a lot of potential in strengthening this industry as long as we do adaptive architecture and engineering,” said Architect Jun Palafox said.

He allayed fears about the dangers posed by natural calamities like tsunamis and storm surges. “All developers have to do is simply determine the highest flood line and build an elaborate infrastructure from that point.”

In a recent SEA-EX 2015 news conference, Palafox stressed that waterfront developments around the world have high-amenity value for communities.

“Coastal areas offer plenty of opportunities for recreational activities. As a result, they attract lots of enterprises and people, which, in turn, require other services and establishments to address their residential and recreational needs,” said Palafox.

He noted that there are more than enough opportunities and resources to maximize the potential of waterfront development in the country with coastline covering more than 18,000 kilometers, a great portion of which remains undeveloped despite the country enjoying continued economic growth.

Palafox also pointed out the need to address the challenges such as obsolete laws, corruption, criminality and climate change.

“With a substantial help from the global community, we can really address a lot of challenges from other industries such as tourism, health care, wellness, waterfront developments, vacation homes and many other more.”

“The markets that get attracted to these kinds of developments are people with deeper pockets—high-value tourists. At the moment, we are catering to the backpackers, but with the marinas, we can attract people who own yachts, go on a cruise, and those who will invest in a variety of industries in the Philippines,” Palafox added.

Angelo Olondriz, chairman of SEA-EX 2015 said: “Coastal and marina development is a tried and tested formula that has been a thriving economic activity in some of the most developed countries of the world.”

He cited the progress of Sabang in Puerto Princesa, Palawan where tourists want to see the underground river, one of the world’s natural wonders.

“Investors are not convinced about the demand for marinas and yachts and pleasure boats,” said Robin Wyatt, managing director of Europa Yachts, the exclusive distributor of Azimut, Beneteau and lagoon catamarans in the Philippines.

Wyatt said that many potential investors, developers, boat builders and pleasure boat buyers would proceed if only a more supportive infrastructure was in place.

He noted that the boating sector is also a unique industry that champions all-inclusive growth, particularly for coastal towns and communities.

“It’s an industry spearheaded by people who do not only have the capacity to sustain a lifestyle, but also empower communities. If you look at it closely, the story of the marina development and boating industry is really about the more capable group of people spending their resources and distributing it to local communities,” he said.

“A touring 100-foot leisure boat, for example, spends about $10,000 a day for accommodation, repairs, replenishing supplies and other auxiliary services which trickle down to the local community,” Wyatt added

Philippines is the 5th most improved economy among 178 countries

The Philippines has moved up 13 notches to 76 from 89 out of 178 ranked countries in the 2015 Index of Economic Freedom. The Philippines is the 5th most improved economy this year and the most improved country since 2011.

Published annually by the Wall Street Journal and the Heritage Foundation, the Index measures “a nation’s commitment to free enterprise” and scores economies in 10 categories, covering a broad range of factors including court system efficiency, tax rates, investment restrictions, and licensing requirements.

Based on the average of these scores, economies are then classified as “free” (score of 80 or higher), “mostly free” (70-79.9), “moderately free” (60-69.9), “mostly unfree” (50-59.9), or “repressed” (below 50).

With a score of 62.2 this year, the Philippines sustained its status as “moderately free” for two years now, improving from its “mostly unfree” category in 2013.

Compared to last year’s index, the Philippines improved its rank in the following: freedom from corruption (up 31, from No. 126 to No. 95), financial freedom (up 30, from No. 69 to No. 39), monetary freedom (up 1, from No. 65 to No. 64), and labor freedom (up 33, from No. 140 to No. 107).

The country slipped in business freedom (down 19, from No. 112 to No. 131), government spending (down 9, from No. 4 to No. 13), fiscal freedom (down 4, from No. 96 to No. 92), trade freedom (down 5, from No. 94 to No. 99), property rights (down 1, from No. 93 to No. 94) and investment freedom (down 1, from No. 80 to No. 81).

The report noted that the Philippines “has charted an upward trajectory” since 2011. The total gain is now 39 places, up from No. 115 in 2011. This makes the Philippines the most improved ASEAN economy, and now, as the most improved economy in the world since 2011.

Among the ASEAN economies this year, the Philippines remains at 4th rank, just behind Singapore (No. 2), Malaysia (No. 31), and Thailand (No. 75). From 2011 to 2013, the country was at 5th place and moved up to 4th place last year, overtaking Cambodia.

“Economic Freedom is important to attracting foreign investors so moving up in this index reinforces signals that the Philippines welcomes investors. At the same time, it is a good diagnostic tool which enables us to identify areas for improvement for the country,” according to Guillermo Luz, private sector co-chairman of the National Competitiveness Council (NCC).

Consumer confidence remains high in the Philippines

Consumer confidence in the Philippines remained high along with Bangladesh out of 16 Asia Pacific markets, according to the MasterCard Index of Consumer Confidence.

In its latest survey, MasterCard Index revealed that only the Philippines and Bangladesh recorded greater than five index-point improvement in consumer confidence in the second half of 2014.

Consumers in Asia Pacific’s emerging markets remain optimistic despite a slight decline in overall consumer confidence for the region, according to MasterCard Index.

This decrease came after the region recorded the highest consumer confidence score in more than 10 years in the first half of 2014 survey.

Respondents were asked to give a six-month outlook on five economic factors including the economy, employment prospects, regular income prospects, and their quality of life. The Index is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.

The Asia Pacific markets are optimistic despite a decrease of 2.9 Index points to 65.5 Index points in the second half of 2014 from 68.3 Index points in the first half last year.

MasterCard noted that there were declines across all five key economic indicators for Asia Pacific – economy, employment, regular income prospect, stock market and quality of life.

Bangladesh recorded the single largest improvement in Asia Pacific, moving from optimistic to very optimistic territory at 83.3 index points, up 16.9 index points. It is the only market that saw a double-digit rise in consumer sentiment.
Myanmar, India and Indonesia are the Asia Pacific region’s most optimistic markets, with 97.2 Index points, 91.6 Index points and 90.1 Index points, respectively.
Within Southeast Asia, consumer confidence rose in the Philippines by 7.7 Index points, pushing into optimistic territory (77.1 Index points), while Malaysia saw a deterioration in consumer confidence, down 11.5 Index points to 49.9 Index points in the second half of 2014.

Vietnam and Thailand remained very optimistic, while Singapore remained optimistic.

MasterCard noted that while consumer confidence in China and South Korea stayed stable with muted increases, Japan, Taiwan and Hong Kong posted the sharpest declines in consumer confidence. All three markets plunged below the 50 point neutral mark from the previous survey.

More declines were recorded in Australia, keeping it in pessimistic territory, while New Zealand inched closer to the 50 point neutral mark after falling 9.4 index points to 56.4 index points. Australia’s score is the lowest since the financial crisis low in 2009.

“The slight drop in Asia Pacific’s consumer confidence reflects an outlook of cautious optimism. Consumers across the region are holding their breath for signs of sustained economic growth and opportunity,” said Pierre Burret, head of Delivery, Quality & Resource Management for Europe, Asia Pacific, Middle East & Africa, MasterCard Advisors.

Burret noted that the emerging markets Myanmar, India and Indonesia are the most optimistic because of either positive anticipation for a brighter future or excitement around their respective newly-minted governments.

“Conversely, the developed markets of Northeast Asia such as Taiwan, Japan and Hong Kong were much less optimistic in their outlook. In these markets, the wanted signs of long-term growth and opportunity are blocked by Hong Kong’s recent political crisis and Japan’s weakening yen,” Burret added.

Comprehensive strategy needed to sustain Philippine economic growth

The Philippine National Economic and Development Authority (NEDA) has stressed the need for a comprehensive strategy in implementing structural reforms in order to sustain an inclusive economic growth.
Speaking at the APEC workshop on structural reforms at Widus Hotel in Clark on Monday, Economic Planning Sec. Arsenio Balisacan said that structural reforms would require a level playing field, transparency of regulations and credibility of institutions, investing in human capital and ensuring mobility to equalize opportunities.
“Acknowledging that there will always be losers resulting from the implementation of reform, we need to put in place a very effective social protection mechanism,” said Balisacan.
Balisacan underscored the need to build a constituency for structural reform that would require a strong and credible leadership. “Good governance and sound economic policymaking and management feed into each other.”
“Structural reform also entails a long-term vision and planning must be put in place by a coalition of reform champions, with support from the global community.”
He reiterated the need to generate more quality employment since a significant number of Filipinos needs to be taken out of poverty.
Balisacan noted that recent economic growth has created more jobs, though unemployment and underemployment remain high. “There are still 2.4 million people who are jobless and 7.3 million who want better jobs or more hours of work,” he said.
“The proportion of the poor has been reduced significantly, by 3 percentage points in just one year. However, the incidence is still quite high at 24.9 percent in 2013.”
He also stressed the need to deepen and broaden structural reform. “APEC provides a forum for us to interact and learn from other economies, forge cooperative partnerships based on mutually beneficial goals and in the process accelerate structural reform.”
Balisacan noted that potential gains from competition and opening up of the economy are massive, from being able to take advantage of value-for-money goods and services to access a bigger market.
“We support the move to further open markets, including reducing behind-the border barriers. Small and medium enterprises (SMEs) need to be brought into the global value chain to make growth inclusive,” Balisacan added.