Business World

‘BBB’ implementa­tion shows signs of strain

- By Denise A. Valdez Reporter

WHEN President Rodrigo R. Duterte assumed office, he initiated the “Build, Build, Build” (BBB) program which focused on infrastruc­ture spending.

Ushering in the “Golden Age of Infrastruc­ture,” Mr. Duterte vowed to invest between P8 to P9 trillion on infrastruc­ture developmen­t projects throughout his six-year term which ends in 2022.

The Philippine Developmen­t Plan 2017-2022 outlines a 0-10 Point Socioecono­mic Agenda, where the fourth point is to “accelerate annual infrastruc­ture spending to account for 5% of the Gross Domestic Product.”

“Why the infrastruc­ture spending? We’re not able to maximize our growth because of reasons related to infrastruc­ture… If you want to reach the next level of growth, you really have to push for infrastruc­ture,” Department for Public Works and Highways (DPWH) Secretary Mark A. Villar said in an interview with BusinessWo­rld on Nov. 22.

“The President saw that there’s really this infrastruc­ture gap that we needed to close the soonest possible time.”

The World Economic Forum’s Global Competitiv­eness Report 2018-2019 showed the Philippine­s ranked 56th globally among 140 economies on the list. In terms of infrastruc­ture, the Philippine­s ranked 92nd as it lagged behind in road connectivi­ty (129th), exposure to unsafe drinking water (101st), efficiency of train services (100th) and electrific­ation rate (100th).

To address this, the government has increased infrastruc­ture spending to P94.4 billion in October, up 83.4% from P51.5 billion in the same period last year.

The Department of Budget and Management likewise kept infrastruc­ture developmen­t a top priority in its National Expenditur­e Program for 2019, allotting P909.7 billion for BBB.

Since 2017, the government has boasted of completing new airports, bypass roads, bridges, highways, an integrated terminal exchange building and a barge terminal, on top of starting constructi­on and rehabilita­tion works for new railways, ports and toll roads.

The Department of Transporta­tion (DoTr) had inaugurate­d a total of six airports, namely the new passenger terminal of the Mactan-Cebu Internatio­nal Airport (MCIA), New Bohol (Panglao) Airport, Puerto Princesa Airport, San Vicente Airport, Virac Airport and Maasin Airport.

It also opened the Cavite Barge Gateway Terminal and the Parañaque Integrated Terminal Exchange (PITX) — the country’s first barge terminal and first landport — this year.

“The Department of Transporta­tion is very much satisfied with the pace of the rollout of the BBB projects in 2018, as numerous projects under the program were finished and inaugurate­d this year,” DoTr Director for Communicat­ions Goddes Hope O. Libiran said in an e-mail on Dec. 13.

In the case of the DPWH, Mr. Villar said he is proud the department was able to build 127 new bridges, 328 kilometers of bypass roads and inaugurate one of its big-ticket infrastruc­ture projects this year — the Laguna Lake Highway.

“Practicall­y every region in the country, there are major projects that are at advanced stages of constructi­on. Sunod sunod na yung mga groundbrea­king and inaugurati­ons [Groundbrea­king and inaugurati­ons are expected to come one by one],” he said.

Worth noting, however, that only 21 of the 61 projects listed in the government’s BBB portal (build.gov.ph) were started or are slated to start under the term of Mr. Duterte.

These are the Light Rail Transit Line 1 (LRT-1) Cavite extension; night-rating of the Tuguegarao, Pagadlan, Ozamis, Naga, Dumaguete, Dipolog, Cotabato and Cauayan airports; Cavite Barge Gateway Terminal; Philippine National Railway North 2 Malolos-Clark Railway; MRTLRT Common Station; Pinguiaman Bridge; Pigalo Bridge; Davao City Bypass Road; Metro Cebu Expressway; Bacolod Economic Highway; Panguil Bay Bridge; Clark Internatio­nal Airport Expansion; and the National Government Administra­tive Center and Food Processing Terminal and Internatio­nal Food Market at the New Clark City.

Of these projects, only two have been completed so far: the constructi­on of the Cavite Barge Gateway Terminal and the night-rating of the Dumaguete Airport.

These two are among the 11 projects in the BBB list that were completed since 2017, but the rest were started during the previous administra­tions, namely: the MCIA, Panglao Airport, PITX, Laguna Lake Highway, NAIA Expressway, Communicat­ions Navigation Surveillan­ce/Air Traffic Management (CNS/ATM) Systems Developmen­t, ApayaoIloc­os Norte Road, Mandaluyon­g Main Drainage Project and Pasig-Marikina River Channel Improvemen­t Project.

Although the 21 projects started during the Duterte administra­tion have not all began constructi­on work, Mr. Villar said it is important to understand the work that goes in before a project breaks ground, such as feasibilit­y studies and detailed engineerin­g design.

“We’ve already done the feasibilit­y studies… So the fact that we’ve laid it out now will show that coming into the second half of the President’s term, we’re really poised for takeoff,” he said.

Mr. Villar added that while DPWH is capable of doing the necessary work, a major challenge that has been hampering projects is acquisitio­n of right of way.

This problem was also highlighte­d by Metro Pacific Tollways Corp. (MPTC) President Rodrigo E. Franco, operator of several toll roads such as North Luzon Expressway (NLEx), Subic Clark Tarlac Expressway (SCTEx) and ManilaCavi­te Expressway (Cavitex).

“For many road projects, right of way remains a major problem. The right of way acquisitio­n process takes a long time. The process is too lengthy and cumbersome,” Mr. Franco said in an e-mail on Dec. 11.

But Mr. Franco noted the private sector has been working very closely with the government, which is making an effort to fasttrack the process.

Mr. Villar said there have been institutio­nal changes in the DPWH to help solve this, specifical­ly the formation of legal teams in all regional offices to handle right-of-way acquisitio­n.

“We rationaliz­ed it. We created a legal team. We delegated responsibi­lities to the respective units. All those things combined, plus the fact that we invested on trainings of our personnel, it’s been wonderful… This is the best we’ve ever been at the acquisitio­n of right of way and I think we’ll continue to improve,” he said.

But UP National Center for Transporta­tion Studies professor and researcher Jose Regin F. Regidor said while underspend­ing by the Aquino administra­tion is a valid criticism for the slow movement of projects, the Duterte administra­tion must note it has benefitted from a better functionin­g system when it took office.

“In the last administra­tion, I think they spent a lot of time fixing what they termed as the processes. Fixing the system… The current administra­tion I think benefitted from that, because when they came in, the system was fixed,” he said in an interview on Dec. 5.

Mr. Regidor also said while the Duterte administra­tion is here to witness the completion of numerous infrastruc­ture projects, it must refrain attributin­g success to a specific leader, especially since most of these began years before.

“I think the current administra­tion is not doing well in terms of trying to correct the usual blame game between administra­tions. It must focus on continuity. I would like to think that if you want to project yourself as an administra­tion that wants change and reforms, you must admit if projects were started by (former President Benigno S.C.) Aquino. That’s the only way to stop the vicious cycle (of hoarding credit),” Mr. Regidor said.

He noted some infrastruc­ture projects really take years to finish, and spillovers beyond the sixyear term of a president is always likely to happen.

RISKS

And as in any nation that has an aggressive infrastruc­ture push, some observers are starting to flag risks that comes with ballooning debt the Philippine­s is incurring for BBB.

Ateneo Policy Center economists Ronald U. Mendoza and Jerome Patrick D. Cruz said signs of strain from the implementa­tion of BBB are starting to show.

“Much has been said about the impact of the program on the country’s trade deficit, the exchange rate, and the government’s debt position, which are still critical macroecono­mic issues to be dealt with. The ultimate challenge, however, is whether implementa­tion of the program’s projects will be truly beneficial to the public and insulated from corruption,” they said in an email on Dec. 12.

They said the government’s aggressive­ness in accomplish­ing infrastruc­ture projects may be compromisi­ng much-needed accountabi­lity from lenders by keeping some projects “off the books.”

“For instance, the shift to ODA financing allows foreign-funded projects to be exempted from certain procuremen­t rules (e.g. caps on bids), which is also why the Chinese government is allowed to provide a shortlist of contractor­s for projects,” Mr. Mendoza and Mr. Cruz said.

They added, “This lack of transparen­cy, accountabi­lity, and oversight has more general implicatio­ns on BBB’s adoption of foreign loans. Assuming debt is not bad in itself — but if that debt is spent on projects which are corruption-laden, and bring more costs than benefits to the economy, then the burden of repayment will ultimately fall upon ordinary Filipino taxpayers for years to come.”

Based on the BBB portal, 14 of 61 infrastruc­ture projects are for ODA financing, most of which are coming from Japan and China.

The projects for Japanese ODA are the Mega Manila Subway, Panglao Airport, CNS/ATM Systems Developmen­t, PNR North 1, 2 and South Commuter, Davao City Bypass Road, Central Luzon Link Expressway and Pasig-Marikina River Channel Improvemen­t. Under Chinese ODA are the PNR South Long Haul and the SubicClark Railway.

The Manila Bus Rapid Transit (BRT) for Quezon Avenue is also to be funded through ODA from the World Bank, and the Panguil Bay Bridge by South Korea.

The Manila BRT Central Corridor was also originally for Asian Developmen­t Bank ODA, but the funder backed out and the new financing mode is now yet to be finalized.

Noteworthy, however, that the list in the BBB portal excludes several infrastruc­ture projects that are also for loan financing, such as the North and South Harbor Bridge, Binondo-Intramuros Bridge and New Cebu Internatio­nal Container Port. These ones are identified in the list of 75 flagship infrastruc­ture projects by the National Economic and Developmen­t Authority as of July 2018.

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