There are three things which, if given immediate attention, will help us recover from this crisis: agriculture to get people out of the cities and into jobs; construction to ease the burden of the next item, which is to create jobs; and major reform to public transportation.
Today I’d like to focus on construction. Private construction of office blocks that boomed pre-crisis has collapsed. And there’s not much industrial growth going on. So it leaves a lot of construction companies with less to do than they’d planned. They have most of the equipment and personnel needed to make a shift to public construction.
The ambitious “Build, build, build” (BBB) program was progressing reasonably well until COVID-19, when, for reasons I’ve never understood, it was put on hold. Construction workers could have been isolated on site, or in protected accommodations. With the easing now, those projects should be revived as rapidly as possible. Those companies with now little to do could be tapped to accelerate BBB.
I do not agree with a recent article that BBB had been a failure, and questioned using BBB to help get us out of this pandemic. It’s true, as the article says, that spending has not met targets. Which means more that targets were wrong than that performance was poor. I do agree with Finance Secretary Sonny
Dominguez when he said infrastructure spending remains the “best driver of economic growth,” for it has the “best multiplier effect in terms of employment and shared prosperity.” This is supported by various reports released by the International Monetary Fund and Asian Development Bank.
Just look at the record. The actual average annual spending has been more than double what the Noynoy Aquino administration spent, and close to four times more than was spent under Gloria Macapagal Arroyo. The contribution to GDP has gone from 1.6 percent in 2001-2010 and 3 percent in 2011-2016 to this administration’s
6 percent for 2017-2019. And that was lower than it could have been, because the House of Representatives delayed the budget for four months in 2019. Surely that’s a positive achievement, not a failure.
There’s no question performance can be improved; the government, principally the Department of Public Works and Highways (DPWH) and Department of Transportation (DOTr), has limited capability. These departments just don’t have enough expert staff to handle the higher volume of work the BBB demands, and with COVID-19 siphoning funds out of the treasury at a great rate, BBB funding is under pressure. To compensate for lack of staff, the government should bring in outside, truly independent consultants who’ve done it before to assist the department staff to design the projects and prepare the necessary bid documents. On funding, turn more to ODA and PPP as both can help get projects into play by providing the money and expertise needed. In the case of PPP, it can even take over the building, operation, and maintenance of the project, as well as its risks.
I don’t know if those who wrote the article have ever been to the Arctic, but I certainly don’t think that 34 out of the 100 projects implemented, 43 scheduled to start construction in the remainder of this year, 14 at “advanced stages of government approval,” and 9 “being studied” is the “glacial pace” they claim it to be. No government before this has achieved this speed. The ice cap is melting.
It’s true that the original list of projects and plans to achieve them have been modified. But who reading this hasn’t changed their plans as experience develops? In the beginning, the departments thought they could upgrade to handle far more than ever before; experience since then said they just couldn’t do it. So plans and projects were changed to more doable ones. Seems to me that makes good sense.
It’s also true that underspending has occurred in the DPWH and DOTr, which is why I urge bringing in outside help. The cost of that will be cheap when offset against the gain in speed it achieves.
Even if the Duterte administration were able to achieve only 50 percent of what it is ambitiously targeting, this would still be a major gain for the economy. And better than any administration of the past, so where’s the failure? Mr. Duterte and his economic team under Dominguez are putting in place the infrastructure through BBB needed to achieve the seven- to eight-percent GDP growth we must have to break the poverty trap. I consider that a success.
Email:wallace_likeitis@wbf.ph