The Philippine government is very cautious about spending public funds on infrastructure projects. The process of signing off project funding is often a lengthy one that involves numerous government agencies. There is no centralized agency that coordinates these projects. The government also is hesitant to explore unconventional sources of funding, which often causes delays. Infrastructure projects are also often delayed due to congressional and working department approval. Therefore, it is essential to understand the level of infrastructure development in the Philippines to make informed decisions.
Infrastructure development in the Philippines
The Philippine government is keen to pursue the PPP model and is attempting to build physical infrastructure in priority sectors like transport, education, and community development, with the aim of giving the private sector a hand in operations and maintenance. This approach would be a departure from the Aquino administration’s reliance on PPPs, but the Philippines government still has to spend public money wisely and explore unconventional funding sources. For this reason, projects often face delays in Congress and working departments.
The “BBB” program aims to boost infrastructure spending while reducing the country’s dependency on foreign investment. It has successfully implemented 121 airport projects, including 114 that are ongoing. It has also undertaken 75 procurement projects. It has also completed 369 seaports, 23,657 kilometers of roads, and 4,959 bridges. However, the program has been hit with setbacks in the wake of the COVID-19 pandemic. The government has also had to realign its budget to address the health and socio-economic crisis.
In the recent World Economic Forum report, the Philippines ranked 56th in the world in terms of infrastructure, up a rank from the previous year, but still far behind six other ASEAN countries, including Indonesia and Vietnam. Lack of investment in infrastructure continues to hold the country back, as its poor transportation network, chronic power outages, antiquated telecommunications system, and subpar airport are a hindrance to economic growth.
The Philippines has enormous natural and human resources, resulting in tremendous potential for economic development and poverty reduction. However, its infrastructure development has not kept pace with the population’s growth. Insufficient financing, poor planning, and weak coordination have all hindered the country’s infrastructure development. Furthermore, there has been little investment in the private sector, limiting the expansion of infrastructure services. However, President Duterte has declared infrastructure development as one of his major policy goals.
Power and energy
The power and energy infrastructure in the Philippines requires innovative solutions to address challenges faced by local utilities. The Philippines is considering a large, $2 billion interconnection project between the Visayas and Mindanao islands. Other major projects will require upgrades to existing utilities, as well as the construction of new ones. The need for electricity outside the main islands is pressing and the government is looking for cost-effective ways to meet this need.
The country’s abundant water resources make hydropower an important part of its energy mix. Hydropower is a proven resource, with 3,367 megawatts of installed capacity. Hydropower, however, involves high upfront costs and long construction periods, as well as environmental concerns. For these reasons, the Philippine government is focusing on small hydro power, which has a potential of 1,300 megawatts. Wind energy also has strong potential but has limited usage in the Philippines.