SEATTLE, Washington — The Southeast Asian nation of the Philippines, an archipelago of approximately 108 million people, has recently become quite economically viable. From 2017 to 2018, its global competitiveness score jumped from rank 68 to 56 out of 140 nations indexed by the World Economic Forum. However, the country’s infrastructure lacks the vitality of its overall economy, ranking at 92 out of 140 in the same report.
Improvements in infrastructure would lift the Philippines’ average global competitiveness score. With the U.S. Trade Representative reporting $29.6 billion in 2017 U.S.-Philippines trade, there are also lucrative American opportunities if infrastructure capable of supporting businesses were to grow. Fortunately, infrastructure in the Philippines is a focus of President Rodrigo Duterte’s administration. Unfortunately, financial difficulties accompany this initiative, which is why more NGOs are shifting their focus to infrastructure aid for long-term growth.
Build, Build, Build
President Duterte plans to make his mark on Filipino history with his “Build, Build, Build” campaign, an aggressive infrastructure development plan that includes 75 projects and costs $180 billion. It is part of a larger platform of economic development that President Duterte hopes will reduce poverty to 17 percent by 2022.
The effort mobilized a large part of the Filipino economy, and even prominent Filipino billionaires are pitching in. Forbes described a 7 percent GDP growth in 2017. Ramon Ang, one of the aforementioned tycoons and the largest shareholder of the San Miguel Corporation, offered to build the $13.8 billion Manila Bay Airport in a proposal approved by the government in late 2018.
Minor Development Issues
Despite the economic reinvigoration, billionaires cannot fund everything, and massive government investments spawn fiscal difficulties. Specifically, the Philippines suffers from a growing deficit, growing inflation and difficulty starting and operating businesses. The Asian Development Bank noted that the Philippines’ deficit jumped from 0.7 percent of GDP in 2017 to 2.4 percent in 2018. Growth in spending on infrastructure in the Philippines also contributed to inflation, which rose to 5.2 percent in 2018. However, it is expected to drop down to 3.5 percent by 2020.
All of this affects business development, which has suffered amid rising costs. Out of 190 nations, the World Bank ranked the Philippines at 124 on its 2018 Ease of Doing Business score. It is particularly difficult to start a business in the Philippines because of building permits, registering property and rising taxes. In the effort to enhance business development with infrastructure, progress has actually stalled. Fortunately, there are NGOs working to amend the problem at the local and national level.
The Local Road
The Asia Foundation is one NGO currently improving infrastructure in the Philippines outside of the major cities. Established in 1954, its initial program, Books for Asia, ensured that Filipino college students received textbook donations. The organization has concentrated on education throughout Asia for most of its history. However, today, it is concerning itself with creating more democratic societies by means of fair elections and infrastructure.
The Asia Foundation with the Australian Embassy created Coalitions for Change (CfC) in 2012. Is the centerpiece of the NGO’s Philippines program. It addresses road connectivity issues under the advice of local businesses and provincial governments to allow ease of access and increased economic activity. By February 2018, it had partnered with 15 provinces and used $1.9 billion for 298 new roads.
Provincial governments also saved money on planning new roads after CfC orchestrated a memorandum signing between the Philippines’ national mapping service and the interior ministry. According to a CfC report, this memorandum opened opportunities for provincial governments to use GPS technology to construct maps. Without the cost of 6,000 Philippine Pesos (roughly $117) per map sheet for an accurate 11,000 sheet map, local governments have more economic freedom when it comes to infrastructure in the Philippines.
The National Stage
The Asian Development Bank (ADB) uses a nationally based financing strategy to help its home country of the Philippines. Starting in 1966, it worked to implement its agenda of infrastructure and human development throughout the Philippines. ADB has completed 682 lending and assistance projects worth a total of $19.3 billion to date. Similar to The Asia Foundation, transportation comprises a significant chunk of their assistance. They devoted $2.05 billion and 79 projects to transportation alone.
Transportation infrastructure is a priority going forward as well. The ADB’s May 2019 announcement of a $2.75 billion loan for the Malolos-Clark Railway Line that will connect Clark in the Central Luzon region to Manila in order to reduce immense congestion on the roads into the capital. This type of assistance can drop rapid government spending on large projects. The ADB already predicts a 0.1 percent drop in the deficit in 2019 and 2020.
Despite the financing issues, the future of infrastructure in the Philippines looks bright. The work of The Asia Foundation and the ADB promises more sustainable solutions for infrastructure development. Cost-effective methods ensure that the Philippines does not make business more difficult while it simultaneously attempts to improve it. With more fiscally wise future aid, the Philippines’ roads and railways can propel more Filipinos to success.
– Sean Galli