Private and public sectors look forward to the success of Build Build Build

If this administration’s ambitious infrastructure program succeeds, it can generate many opportunities for different industries.

The Manila Times hosted its 6th Business Forum “Philippines 2021: Steering Toward the Golden Age of Infrastructure” on August 18, 2017 at the Marriott Hotel Manila. The forum tackled how the Duterte administration plans to finance the ambitious infrastructure projects, the growth of industries that will benefit from the Build Build Build and lessons and insights on its implementation.

Department of Budget and Management Secretary Benjamin Diokno said that the government is implementing the expansionary fiscal policy and pushing for the passage of the Tax Reform for Acceleration and Inclusion (TRAIN). Underspending spending in the previous administration will be addressed with various reforms, such as streamlining of the budget release process, improved budget planning and preparation, refinement of procurement policies, and geo-tagging of projects.

DBM also intends to shift from the standard Public-Private Partnership (PPP) to hybrid PP to speed up project implementation. 80% of the funds for the infrastructure project will be from domestic source while the remaining 20% will be borrowed funds. According to Diokno, it is now easier and faster for governments to secure loans because of lower interest rates.

BBB’s Potential Benefits to Other Industries

If this administration’s ambitious infrastructure program succeeds, it can generate many opportunities for different industries. Three well-respected leaders in their respective organizations gave an overview of the prospects of their industry, their projects, and how the Build, Build, Build could greatly impact their own initiatives.

Vince Dizon of the Bases and Conversion Development Authority (BCDA) spoke about several government initiatives to decongest Metro Manila.

Manila-Clark Railway, geared for completion in 2021, will slash travel time from Metro Manila to Clark International Airport down to an hour. Current travel time between the two points is at 4 hours. The Subic-Clark Cargo Railway is meant to reduce number of trucks traveling to Metro Manila and to reduce delivery time of goods. It is expected to be completed in 2022. The 9,500-hectare Clark Green City project will feature a commercial center, residential zone, and an integrated government services center to ensure seamless government transactions for the private sector. The Green City will also have a Food Processing Terminal and International Food Market, which will be groomed as a “stock exchange” of fresh produce and processed products. 

Dizon is confident that the infrastructure program will prosper because of the administration’s ability to act decisively on important matters. With the perpetual gridlock evident in Metro Manila’s thoroughfares, developing Clark City will decongest the capital and open up opportunities for people outside Metro Manila. Tourist arrivals can also be directed to Clark International Airport, loosen up congestion in the Ninoy Aquino International Airport, and provide more access points for tourists who want to go to other parts of the Philippines.

Sheila Lobien of Jones Lang Lasalle is optimistic of the developments of the Philippine real estate market, given the country’s stable GDP growth for the next 3-4 years and Southeast Asia’s (SEA) contribution to the global economy. This is on top of the Philippines’ rank as the 3rd largest contributor to SEA’s contribution to Asia and the Pacific’s (APAC) nominal GDP. The Business Process Outsourcing (BPO) industry is continuously booming in the country, with BPO revenues expected to grow to $250 billion by 2020. The Philippines is currently at $23 billion. If you add the young, highly-employable, and literate labor market of the Philippines to the equation, Lobien said that the influx of multi-national companies in the country will stimulate employment and office leasing not only in Metro Manila but also in “township locations”, such as Pampanga, Bacolod, Cebu and Davao City. Construction of eco-friendly green buildings, mixed-use business districts, flexible office spaces, are expected to rise as well.

The Philippines is also poised to become a retail and tourism hub. Influx of retailers from all over the world and low-cost retail rents compared to neighboring Southeast Asian countries will bolster construction of lifestyle-oriented malls. There will also be a boom in the hotel and tourism industry, with the 10.9% year-on-year increase in tourist arrivals from Q1 of 2016 and Q1 2017 and the forecasted additional 8,100 hotel rooms by 2021.

With the easy labor access, competitive rental rates, and credible supply in the Philippines, reliable infrastructure is the missing link that will propel the real estate market to greater heights. Lobien welcomes the Build Build Build as the solution to the infrastructure gap in the Philippines.

Bienvenido Chy of the Philippine Retirement Authority (PRA) has great hopes for the Philippines as a fast-rising retiree destination because of the low-cost of living, promising educational institutions, fast-rising medical tourism, and numerous opportunities for investment. PRA’s Special Resident Retiree’s Visa (SRRV) also has numerous benefits and exemptions that are attractive enough to lure foreign retirees to the country.

PRA reported 50,938 total enrolled retirees in the country this year, with the Chinese (38%) and Korean (21%) retirees topping the list. Enrolled retiree numbers are expected to rise to at least 80,000 by 2022.

PRA is constructing a retirement village for retirees to enjoy social integration and state-of-the-art medical and leisure facilities for retirees. According to Chy, PRA is already streamlining its infrastructure processes to achieve better efficiency so the Build Build Build initiative will complement PRA’s efforts. Moreover, better infrastructure means smoother mobility for incoming retirees.

Lessons on Implementation

A better future beckons for the Philippines if the Build Build Build program succeeds. Many sectors stand to benefit from the improved delivery of goods and services brought about by improved infrastructure. But as with a lot of big-ticket projects, implementation is crucial to its success.

Mara Warwick of the World Bank shared some insights on China’s infrastructure development. Warwick credits China’s well-coordinated strategic planning in the national, regional, and local levels in the success of infrastructure projects that are bringing development to regions and provinces outside China’s metropolis. Decentralization also spurred innovation and healthy competition in local regions. Finally, she pointed out China’s policy reform to improve delivery of infrastructure. China is clearly a bigger region, both in size and economy, but she thinks the Philippines could pick up some of these lessons for its own infrastructure program.

Penson & Company Inc. CEO Ricardo Penson urged the government not to turn away from the unsolicited proposals from the private sector. For him, the private sector can fast-track an infrastructure and use cutting-edge technology to execute the design. The private sector also prepares its own feasibility studies, financial models, and other preliminary studies needed for a project. Penson questioned the government’s preference for Official Development Assistance (ODA) because he said ODA-funded projects take longer and it becomes more expensive in the long run. PPP through unsolicited proposals, on the other hand, can be more cost-effective and will raise the bar on project standards.