The Market Monitor Minding the Nation's Business
By Riza Lozada
The Joint Foreign Chambers of the Philippines (JFC) lauded the ramping up of public spending by nearly double mainly on infrastructure in the proposed budget for next year.
The budget proposal or the National Expenditure Program (NEP) proposed a five percent share of infrastructure spending in the Gross Domestic Product (GDP), which was JFC’s recommendation since 2010 when President Aquino started his term and when spending for infrastructure in the budget was only two percent of GDP.
“The Philippines significantly under-invests in physical infrastructure, with spending averaging two percent to three percent of GDP for the last 10 years, far below regional norms.
However, the government has set the goal of five percent spending of GDP for 2016. Poor infrastructure is a key inhibitor to higher investments in the Philippine economy,” the JFC said.
In the World Economic Forum Global Competitiveness Report, the country’s overall infrastructure quality ranks below Singapore, Malaysia, Thailand and Indonesia and is close only to Vietnam.
JFC recommended to Aquino to increase infrastructure spending through Public-Private Partnership (PPP) projects.
Aquino last Tuesday submitted the proposed P3.002-trillion 2016 National Budget to Congress.
He said that the budget would consolidate the reforms introduced since 2010 and provide foundation for inclusive development.
“Transport and communications infrastructure will get the bulk of the budget and bring expenditures on infrastructure to five percent of GDP. As such, the Department of Public Works and Highways (DPWH) will receive P391.2 billion to enable the agency to complete the pavement of all national arterial and secondary roads,” Budget Secretary Florencio Abad said.
From P1.541 trillion in the 2010 General Appropriations Act (GAA), the proposed budget for 2016 stands at P3.002 trillion, 15.2 percent higher than the 2015 enacted budget.
The GDP share of 19.5 percent of public spending in 2016 will take up a larger share of the economy as compared to 18.7 percent of the GDP in 2015 and 16.4 percent of the GDP (actual obligations) in 2010.
The PPP Center as of July said notices of award were given to PPP projects Daan ng Hari-SLEX Link Road (Muntinlupa-Cavite Expressway); PPP for School Infrastructure Project (PSIP)—Phase I; NAIA Expressway Project (Phase II); PPP for School Infrastructure Project (PSIP)—Phase II; Modernization of Philippine Orthopedic Center; Automatic Fare Collection System; Mactan- Cebu International Airport Passenger Terminal Building; LRT Line 1 Cavite Extension and Operation & Maintenance; and the Southwest Integrated Transport System (ITS) Project Cavite-Laguna Expressway.