Socioeconomic Planning Secretary Ernesto M. Pernia
36th Joint Meeting of the Economic Cooperation Committees of the Philippines and Japan
New World Makati Hotel, Philippines
February 22, 2018
Good morning, everyone.
Japan’s Ambassador to the Philippines H.E. Koji Haneda,
Philippines’ Ambassador to Japan H.E. Jose C. Laurel V,
Chairman Teruo Asada of the Japan-Philippines Economic Cooperation Committee (JPECC),
Chairman Aniceto G. Saludo, Jr. of the Philippines-Japan Economic Cooperation Committee (PHILJEC),
Former Prime Minister Cesar Virata,
Mr. Susumu Ito, JICA’s Chief Representative in the Philippines,
My coworkers in the people’s vineyard of the Philippines and the government,
Distinguished guests, and partners in development,
Ladies and gentlemen.
Before I begin, allow me to thank our Japanese partners on behalf of the Philippine government for their generous and unwavering support to our major development initiatives.
Our number one source of approved investments, the top source of official development assistance, and one of our top trade partners, Japan is that brother who has never left the Philippines’ side in its pursuit to realize its long-term vision.
Now its 36th year, it’s a testament of the bond between the Philippines and Japan that has gone beyond government-to-government affairs and has been made stronger through years of official and even personal partnerships and collaboration.
We are grateful for Japan’s even stronger tailwinds on our back as we come to the inflection point of our country’s development trajectory.
As the Duterte administration ushers in “Golden Age of Infrastructure” through the Build, Build, Build program, we see the Philippines powering its way towards socioeconomic development. Infrastructure development in the next few years will increase the pace of growth, hasten inclusion, reduce poverty and inequality, and attract more foreign direct investments.
Last year, we unveiled our program, so called “Build, Build, Build” agenda as this Administration’s overall strategy to accelerate infrastructure development in the country over the medium-term.
Let me first talk about the Philippine Development Plan 2017-2022, which lays down the foundation for a more inclusive growth through strategies falling under the three major pillars, namely: solidarity, inequality- and poverty-reducing transformation, and increasing the economy’s growth potential. In our local language: malasakit, pagbabago, and patuloy na pag-unlad.
From the overall Strategic Framework of the Plan, infrastructure is seen as among the priority thrusts of the government to support a higher growth trajectory and to improve the quality of life in both urban and rural communities. The infrastructure sector supports all three pillars towards enhancing the social fabric, reducing inequality, and increasing the country’s growth potential.
Anchored on the 0-to-10-Point Socioeconomic Agenda and geared towards our AmBisyon Natin 2040, our collective long term vision over the next 25 years, the overarching objective is to accelerate infrastructure development.
Allow me to elaborate on the Build Build Build program.
The Build, Build, Build program is an ambitious strategy of the Philippine government. It aims to ratchet up public infrastructure spending from 5.4 percent of the Gross Domestic Product (GDP) in 2017 to about 7.3 percent of GDP by 2022. This compares with the previous administration’s 2.9 percent of GDP spending on infrastructure. So you can see the huge difference between the spending in the previous years of the country versus the rapidly increasing spending on infrastructure relative to GDP.
This 7.3 percent of GDP spending on infrastructure will cumulate to about PhP8.1 trillion over the medium-term.
Accompanying the Philippine Development Plan is the Public Investment Program (PIP) 2017-2022, which contains the rolling list of priority programs and projects to be implemented by the national government within the medium-term. The strategies and action plans outlined in the PDP are translated into priority programs and projects in the PIP.
The Public Investment Program serves as a guide to help improve the government resource mobilization towards the achievement of sector outcomes, as embodied in the PDP, and to channel resources to priority investment areas, especially in the regions outside the National Capital Region.
For the whole Plan period of 2017-2022, the estimated total investment target for 5,636 priority programs and projects identified in the PIP amounts to around PhP10.6 trillion. And that’s because apart from the 75 flagship projects costing about PhP8 trillion, we have several minor projects all over the country in the provinces, in the regions, that would also improve the development in these regions, bring them into the mainstream economy of the country.
Infrastructure is taking the the largest share at about PhP7.70 trillion, or 72.7 percent of the total investment targets.
This is followed by Human Capital Development. So the 72.7 percent is for physical infrastructure, followed by human capital development at PhP720 billion (representing 6.7% of the total), Agriculture, Forestry, and Fisheries at PhP680 billion (6.4% of total) and Reducing Vulnerability of Individuals and Families with about PhP460 billion (4.32%) of investment target.
This slide shows the charts that present a breakdown of the planned investments in infrastructure contained in Chapter 19 of the Philippine Investment Program 2017-2022. A total of 4,490 infrastructure programs/activities/projects (or PAPs) on transportation, water, energy, information and communications technology (ICT), social and other public infrastructure, would need a total of PhP7.7 trillion as investment requirement over the medium term, with transport infrastructure taking the lion’s share of about 64% of the total PhP7.7 trillion.
The Philippines takes pride in its robust macroeconomic fundamentals and dynamic fiscal strategy. Thus, more than PhP4.8 trillion or 62.3 percent of the total investment requirement for infrastructure will be funded by the national government (NG) through the traditional government mode of procurement, while more than PhP1 trillion or 13 percent will be through Official Development Assistance (ODA) and PhP1.3 trillion or 16.54 percent will be through Public-Private Partnerships (PPP).
We will continue to utilize all modes of implementation for our priority infrastructure projects, including ODA, PPP, and GAA or Government Appropriations Act. This is to complement resources with technical expertise and financial capabilities from international development partners and the private sector, particularly in the areas of project preparation and development, construction, consultancy and allied industries.
As mentioned earlier, regions outside Metro Manila are getting a big share in the total number of infrastructure projects and programs of the government over the medium-term.
Of the total 4,985 infrastructure programs and projects listed in the Public Investment Program P 2017-2022, some 98 projects are inter-regional (meaning connecting the different regions of the country) and 3,911 projects are region-specific, excluding those in the National Capital Region.
If you look at the data more closely, the Autonomous Region in Muslim Mindanao, which is the poorest region in the conutry has the highest number of projects, which dispels the notion that government projects are centered in Metro Manila.
Over the medium term, from 2017 to 2022, the Autonomous Region of Muslim Mindanao will get a total of more than 1,300 projects while Metro Manila will get only 320 projects.
The investment requirements of the inter-regional projects amount to PhP3.3 trillion and the region-specific projects sans or without Metro Manila projects amount to PhP1.2 trillion.
Furthermore, 161 nationwide infrastructure projects worth PhP2.3 trillion will be rolled out for implementation by 2022.
Through these projects, we would be making headway in improving connectivity and promoting economic clusters in regional and sub-regional growth centers, which is consistent with the country’s National Spatial Strategy.
I am pleased to report that we are on track in terms of project processing and approval. The NEDA Board, which is chaired by the President, under this administration has already approved 29 infrastructure projects with funding requirement totaling PhP1.2 trillion, with the bulk funded by ODA and in the transport sector.
There are 8 projects worth PhP69 billion to be financed by the Government; 19 projects worth PhP1.06 trillion will financed through ODA; and 2 projects worth PhP76 billion will be implemented through Public-Private Partnerships.
Of the 29 projects, 20 projects worth PhP1.1 trillion are in the transport sector; 6 projects worth PhP55.8 billion are water resources projects; and 3 projects worth PhP6.1 billion are social infrastructure projects.
Let me now talk a little bit about the Infrastructure Flagship Projects. Of the thousands of projects listed in the Public Investment Program, 75 game-changing and high-impact infrastructure projects are identified by the NEDA Board Committee on Infrastructure or INFRACOM and the Investment Coordination Committee (ICC) as Flagship Projects. These projects is expected to bring us closer to our development goals.
On the slide, which is on the screen, you will see the 75 infrastructure flagship projects. The names of these projects can be seen in our website or in the Public Investment Program.
The list of 75 Infrastructure Flagship Projects were adopted by the NEDA Board on June 27, 2017.
All told, these projects are envisaged to enhance connectivity and the promotion of growth centers outside the urban-industrial region centered around Metro Manila. Forty-five (45) projects of the 75 are located in Luzon, 10 are located in the Visayas, and 17 projects are in the Mindanao region.
Furthermore, two (2) flagship projects, namely the Luzon-Samar Link Bridge and the Leyte-Surigao Link Bridge, will enhance inter-island connectivity in the country. Meanwhile, one (1) project has nationwide in scope, namely, the Nationwide Fish Port Project.
As of January 2018, 23 out of the 75 flagship projects have already been approved by the NEDA Board under the current Administration, while one is already under implementation as approved in the previous Administration.
To note, of the 24 NEDA Board-approved or ongoing projects, 15 projects are funded through Official Development Assistance (ODA), eight (8) through the General Appropriation Act (GAA) and one (1) through Public-Private Partnership (PPP).
The funding source for the remaining 51 proposed projects will be determined after pre-investment studies have been completed and undergone review and approval by the NEDA board.
Shown on the screen is the groundbreaking schedule of the 75 Flagship Infrastructure Projects. These schedules are contingent on the due diligence of implementing agencies, especially the Department of Transportation, and the Department of Public Works and Highways. Their due diligence is needed in preparing pre-investment studies, such as feasibility studies, and other relevant documents necessary for project processing and approval in the NEDA.
As you can see, 2018 will be quite busy with 34 projects expected to break ground. All our hands are on deck to make this happen.
Let me cite some of these projects.
The 12 Pasig River, Marikina River, and Manggahan Floodway Bridges are scheduled to break ground this year. By constructing and improving 12 bridges along the Pasig-Marikina Rivers and the Manggahan Floodway, we hope to provide additional fixed links or bridges and alternate routes to improve the road transport network capacity and efficiency in Metro Manila and subsequently alleviate traffic congestion.
Next is the Panguil Bay Bridge Project, which involves the construction of a bridge across Panguil Bay, which connects the City of Tangub in Misamis Occidental and the municipality of Tubod, Lanao del Norte.
The New Bohol International Airport involves the provision of additional facilities and other necessary improvements to enhance safety, security, access, passenger, and cargo movement efficiency at the airport, excluding Air Traffic Control, Air Navigation, and associated services. This project is expected to be completed middle of June this year and it will become operational, ready for planes to come in, not only from other parts of the country, but also from international origins by August 2018.
Another flagship project is the First Phase of the Mindanao Rail Project, which involves the construction of 102 kilometers of rail network which will run through Digos, Davao City, and Tagum in Region 11.
Now, this is the super flagship project, this is the Metro Manila Subway Project and also expected to break ground later this year, maybe third quarter of this year. The first phase of Metro Manila Subway Project involves the construction of a 25.3-km underground rail serving as a north-south rail backbone for the Greater Capital Region from Mindanao Ave in Quezon City in the North to Ninoy Aquino International Airport in the South.
Another major flagship project is the MRT-LRT Common Station Project, which was started as early as 2009. It only got off the ground last year. The new configuration of the LRT Line 1 North Extension Project – Common Station/Unified Grand Central Station Project includes a total concourse area of 13,700 square meters and connects the LRT Line 1 North Extension, MRT 3, MRT 7 at the corner of North Avenue and EDSA in Quezon City.
Two more flagship infrastructure projects.
The Philippine National Railway (PNR) North 2 involves the construction of a 69.5-km extension of the PNR North 1 from Malolos, Bulacan, to Clark International Airport and the Clark Green City in Pampanga. Also expected to break ground early next year.
Another one is the PNR South Long-haul. This project involves the construction of a 639 kilometers of railway, consisting of Los Banos-Legaspi segment (406 km), Legazpi-Matnog in Sorsogon (117 km), Calamba-Batangas (58 km), and a Manila-Los Banos Line (58 km).
I would like to note that this Administration is resolute in completing the projects on schedule. Thus, we have established a Project Facilitation, Monitoring and Innovation (or PFMI) Task Force to oversee the efficient and timely completion of the infrastructure flagship projects. The Task Force specifically will institute policies and processes to address issues and bottlenecks in the project cycle of the Infrastructure Flagship Projects from project identification/preparation, appraisal, funding and budget allocation, procurement, implementation, and post-evaluation. It’s a long series of activities.
We have also established the Infrastructure Preparation and Innovation Facility (IPIF), which aims to address key constraints on project planning, design, and implementation. It aims to accelerate progress in infrastructure delivery by supporting the Department of Public Works and Highways and the Department of Transportation, the two key agencies responsible for national public infrastructure projects.
We recognize that pre-investment activities help accelerate the approval process of projects and ensure a timely and high-quality procurement process and implementation of projects thereafter.
With an allocation of about PhP1.6 billion for Project Development and Other Related Studies, there is now more support for necessary technical studies to evaluate infrastructure programs and projects. This fund seeks to address implementation delays arising from inadequate project preparation due to the lack of technical capacities of the implementing agencies to prepare pre-investment and feasibility studies.
In closing, let me reiterate that infrastructure is crucial. It is a sine qua non in development. It is a necessary but not a sufficient condition, however. What we aim is an infrastructure boom that serves not only the economy, but more importantly, the people.
Indeed it is the government’s responsibility to improve quality and reliability of public infrastructure and make sure these services are accessible to all. This government will Build, Build, Build more and better infrastructure to enhance competitiveness and reduce poverty towards achieving inclusive growth and sustainable development.
We still have so much to do. And you, as our long-time partners, can help us transform the country at least into an upper-middle income country where every Filipino enjoys a matatag, maginhawa, at panatag na buhay. In English, a strongly rooted, comfortable, and secure life for all.
Again, many thanks to PHILJEC and JPECC. Productive and fruitful day ahead for all of us today.