PH not alone in Asia’s traffic jams, infrastructure gap
FED UP with the horrendous traffic jams in Metro Manila? You are not alone.
Looking out at bumper-tobumper Monday morning traffic crawling along the Metro Manila main highway, taxi driver Ranilo Banez shook his head in frustration.
Congestion has gotten so bad as the economy grew, he said, that a 10-kilometer trip on Edsa that once took 30 minutes can stretch to two hours.
“We lose so much,” said Banez, 64. “We waste a lot of gasoline and time.”
The Philippines is far from alone.
The outpouring of support for a Chinese-led bank to finance infrastructure highlights a gap in Asia’s success story: From power-starved India to Thailand’s overburdened railways, developing economies face a shortage of basic facilities so severe it threatens to hold back growth and living standards.
Metro Manila and other cities are choked with construction sites for office and apartment towers. But spending on roads, railways and other unglamorous but essential infrastructure collapsed after the 1997 financial crisis, and they have yet to recover.
“The catch-up they need to do is still considerable,” said Ramesh Subramaniam, director general of the Southeast Asia department of the Asian Development Bank (ADB).
If spending fails to pick up, “this could possibly have an impact on future growth,” he said. “Certainly it is going to reduce the competitiveness of the countries in the region.”
That gap has given Beijing a chance to assert its ambition to be a regional leader and fueled a diplomatic alms race.
On top of its planned infrastructure bank, which 57 countries want to join, China has launched initiatives to improve road, rail and sea links.
Tokyo has joined Washington in staying away from the Chinese bank. Instead, Japan announced its own credit package of $110billion for the region.
The ADB estimates developing Asian economies need to invest $8 trillion in the decade through 2020, or 80 times the planned $100-billion capital of Beijing’s bank.
India is set to pass China this year as the world’s fastest-growing economy. To keep that up, its government says, the nation of 1.2 billion people needs to spend $1 trillion on infrastructure through 2017.
Prime Minister Narendra Modi has called for India to speed up building “all projects (to) ensure a modern infrastructure backbone.”
India’s most ambitious initiative is the $100-billion Delhi-Mumbai Industrial Corridor Project calling for creating seven industrial cities, high-speed railways, six airports and three seaports.
It also plans a $10.2-billion high-speed train to link Mumbai, the financial capital, with Ahmedabad to the north.
In Vietnam, the ruling Communist Party has approved a proposal for a $15.8 billion second airport for its business capital, Ho Chi Minh City.
To meet power demand, state media say Vietnam needs to spend $50 billion in the decade through 2020 and another $75 billion over the next decade.
Thailand has a $92-billion building plan for 2015-22 that includes high-speed train routes stretching from China to Singapore. It calls for expanding seaports and commuter trains.
In the Philippines, President Aquino in May approved $1.4 billion in spending for seven projects, including a commuter rail in Manila, upgrading national roads and irrigation for 70,000 hectares of farmland.
A P17-billion railway system from Tuguegarao to Sorsogon will be built, Trasportation Secretary Emilio Abaya announced yesterday during the commemorative rites on the third death anniversary of Jesse Robredo.
Bjorn Pardo, founder of Xend, a delivery company in the Philippines with 250 employees, said it was coping with congestion by using custom-outfitted motorcycles instead of trucks.
“The traffic situation will not get significantly better anytime soon,” he said.
The Philippines ranks 95th out of 144 countries on a World Economic Forum survey of infrastructure quality. Its development plan promises to reduce the number of homes without access to power and running water and build ports, railways, power plants and cargo terminals.
“Our priority will be energy,” said Benjamin Diokno, an economist. “The urban rail system is also pressing. The railway system from north to south is pressing. Everything is pressing.”
The ADB says if the facilities are built, the region’s people could get an extra $4.5 trillion in income in the decade through 2020 and another $8.5 trillion after that.
Before the 1997 crisis, public works spending in many developing economies was equal to 6-8 percent of annual economic output.
Postcrisis, that output tumbled to as little as 2 percent. It dipped below 1 percent in the Philippines in 2010. Today, it is below 3 percent in Indonesia, Pakistan and other economies.
The Philippines hopes encouraging private investment will help boost infrastructure spending from 3.4 percent of gross domestic product this year to 5 percent next year, according to Socioeconomic Planning Secretary Arsenio Balisacan.
But many projects have yet to be structured as profit-oriented ventures to repay investors. And investors are wary of political interference and delays over environmental concerns.
China has pledged to supply most of the initial $50 billion in capital for its Asian Infrastructure Investment Bank.
Still, the ADB’s Subramaniam said the region’s total spending was likely to be less than half the amount required.
“The continuing unmet needs clearly indicate we need more resources and different ways of structuring projects,” he said.