Aquino in Final Philippine Infrastructure Push as Election Nears

  • 60% of 2016 public works projects to be awarded by March
  • Foreign contractors given easier access to big-ticket projects

With seven months left in office, Philippine President Benigno Aquino is taking measures to strengthen his infrastructure legacy and boost the resilience of one of Asia’s fastest-growing economies.

The government aims to award by the end of the first quarter at least 60 percent of the $7.6 billion in public works projects planned for 2016 before a pre-election ban comes into force, Public Works Secretary Rogelio Singson said. The president also signed an order on Nov. 13 to ease access for foreign contractors to deals worth at least 3 billion pesos ($64 million) by allowing them to apply for a permanent license to potentially work on multiple projects instead of having to apply on a per-project basis, he said.

“These measures will help fast-track projects to ensure they meet deadlines and avoid delays we have seen in the past,” Singson said in an interview on Friday in Manila. “We try to do a lot of the bidding before the end of the year. We are working on pre-construction activities: detailed engineering, bidding -- activities short of an award.”

The Philippines joins neighbors like Indonesia where governments are under pressure to step up spending to support their economies amid faltering global growth. Bangko Sentral ng Pilipinas Governor Amando Tetangco, who has held interest rates steady this year, said last week there is no urgent need to ease policy as state outlays pick up.

Weak Growth

Presidential elections are due to be held in the Philippines in May and the government will be banned from awarding public works contracts from around the end of March.

Delays in government spending earlier this year damped the economy with the World Bank forecasting growth will slow to 5.8 percent this year, the weakest since 2011. Faster state outlays will help ensure an expansion of as much as 8 percent is within reach next year, central bank Deputy Governor Diwa Guinigundo said last week.

The government is also speeding up projects under its Public Private Partnership program, with officials working on an executive order that will give the winner of the Laguna Lakeshore Expressway Dike project the right to sell reclaimed land, which is part of the contract, Singson said.

The public works agency’s budget is almost half of the 766.5 billion pesos in infrastructure spending planned for 2016, which is equal to about 5 percent of gross domestic product. By next year, the government will have completed paving all 7,000 kilometers of national primary roads across the archipelago, Singson said.|

Poor Infrastructure

Investors have identified poor infrastructure as a key deterrent to investing in the Philippines and Aquino has ramped up spending on airports, roads, and flood control projects since taking office in 2010. While Philippine’s competitiveness ranking has improved since then, the nation still lags neighbors like Thailand and Indonesia on infrastructure, according to the World Economic Forum.

Moving to a higher growth path "would be very dependent on the president that follows us," Aquino said at the APEC CEO Summit in Manila. "To a large degree all the main contenders are saying they will continue our policies, if not improve on what we were able to do. Our people have gotten to the point they know what government is capable of. If it ain’t broke don’t fix it."

To ease congestion in Manila, elevated highways are being built, which could be finished by 2017 to 2018, Singson said. These would help reduce traffic jams by about 30 percent on the capital’s main highway, Epifanio de los Santos, which stretches more than 20 kilometers, he said.

The Philippines needs to put more emphasis on improving infrastructure so it can attract investors who need not worry about connectivity if they relocate, Finance Secretary Cesar Purisima said in a separate interview with Bloomberg TV’s David Ingles. The nation is closely watching the impending increase in U.S. interest rates as it impacts currencies, he said.

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