Japan-China competition in infrastructure development benefits Asean

Nagoya University sQXx2BfV_400x400The increasing competition between Japan and China in infrastructure development would benefit the countries in the Asean region including the Philippines.

Professor Yukiko Nishikawa of Nagoya University stressed that China is expanding its influence in the Asean region particularly in infrastructure development.

“This apparent competition will benefit the ASEAN member-states as they will have more bargaining power to gain better opportunities,” said Nishikawa.

She told a recent international forum on Asian development studies that Japan would focus on a new area of cooperation in terms of defense aid which is supported by Prime Minister Shinzo Abe.

“This is partly because Japan and China and some other countries continue to struggle to maintain security in the Pacific region and that Japan is also looking at the situation in the South China Sea.”

While Japan’s official development assistance prohibits any use of ODA for military purposes or for aggravation of international conflicts, Nishikawa explained that its ODA has been has contributed to the political and defence area in terms of international cooperation.

Japan has contributed to providing ships and arms to Philippines and other Southeast Asian countries. Nishikawa said that Japan will increase its cooperation with ASEAN in terms of disaster management and rehabilitation.

Nishikawa noted that Japan’s Official Development Assistance (ODA) to the region has been one of the largest, which focuses mainly on infrastructure development.

In the Philippines, Japan has continuously provided infrastructure development aid including the rehabilitation of the Manila Metro Rail Transit 3.

From 2012 to 2017, Japan has funded the establishment of the Disaster Emergency Logistics System for ASEAN, which aimed to provide emergency relief items to ASEAN member-states in the event of a medium- to large-scale disaster. Its second phase has been implemented in 2018 and will end by 2020 which aims to advance the disaster emergency logistics of ASEAN member-states by building warehouses in the Philippines and Thailand to aid in faster disaster response.

Lower cost of doing business to boost business creation – PIDS

PIDS logoThe Philippine Institute of Development Studies (PIDS) has urged the Philippine government to implement policy reforms that would lower the cost of doing business and encourage business creation in cities and towns in the country.

These policy reforms would include legislations to lower the cost of electricity, water, and land or business space rental and  creation of a business-friendly environment for investors in the power industry to increase power production that will address the high cost of electricity.

Dr. Jamil Paolo Francisco told participants of the 4th International Symposium on Asian Development Studies that the rising prices of fuel and electricity in the Philippines are major roadblocks to foreign investors who may want to do business in the country.

Using data from the National Competitiveness Council for the period 2011 to 2015, Francisco and his co-authors Dr. Tristan Canare and Jose Fernando Morales, tested the relationship between business creation and the ease and cost of doing business in cities and municipalities.

To establish the relationship between the aforementioned variables, the authors focused on two factors — cost of doing business and ease of doing business.

The indicators for cost of doing business included prices of electricity, water, diesel, amount of minimum wage, and cost of land or rental of business space.

The ease of doing business referred to the number of processing days in getting a permit for a new business, number of steps in securing a permit, number of days and steps for business permit renewal, and number of days and steps in getting a building permit.

Based on the overall outcome of their study titled “Firm Creation and the Ease and Cost of Doing Business”, Francisco noted that the “lower cost of doing business is a stronger driver of business creation than the ease of doing business.”

“For instance, in the Philippines, high prices of electricity and fuel are a huge barrier [to foreign investments], not to mention our current situation of a higher-than-expected inflation rate,” Francisco said, adding that ‘’when business creation is difficult at the local level, it discourages entrepreneurship, which is a critical component of inclusive development in developing countries.”

Francisco explained that lower foreign direct investments and the technological growth of a country can affect the productivity in both macro and micro levels. The lack of business competitiveness can lead to the growth of informal economy in the grassroots.

The findings of the study also suggested that potential business owners are“discouraged more by high operating costs than by cumbersome processes of regulatory compliance in running and starting a business.

ADB-JICA lendsUS$143 million loan for railway project

ADB logoJICA-tmb-270x180The Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) are extending 7.7 billion pesos (US$146 million) in loans to the Philippines for the construction of the North-South commuter railway.

The National Economic and Development Authority (NEDA) says the loan would also cover resettlement activities, meeting ADB and JICA social and environmental safeguards, proper housing and welfare support for the estimated 12,901 informal settler families that will be affected.

The project will bring together the NSCR Phase 1 (Malolos-Tutuban), the PNR South Commuter Railway (Solis-Calamba), and the Malolos-Clark Railway Project (MCRP), that will create a 147-km elevated, double-track, and seamless connection from Clark International Airport to Calamba, Laguna with 36 stations.

The railway system will link existing railway lines — LRT-1, LRT-2 and MRT-3, as well as the upcoming Metro Manila Subway.

The rail system is expected to be operational by 2022 with a daily ridership of 340,000 passengers, reaching full capacity of 550,000 passengers by 2023.

The Philippine government will subsidize an average of PhP5 billion (US$94.1 million) a year to cover capital, operating and renewal costs of the project which is expected to generate substantial economic activity, create more jobs, increase incomes, and deliver a more comfortable commuting experience.

The Department of Transportation would implement measures that would maximize non-fare box revenues such as incremental taxes from increased property value through revenue-sharing arrangements with the local government units and through the development of national government properties in the project area.