Infrastructure inadequacies

NOTWITHSTANDING earnest efforts to boost infrastructure investments in recent years, we continue to face a huge gap relative to our own needs, and relative to what our neighbors have already put in place. If many local producers still feel hard-pressed to compete against their counterparts abroad, it’s to a large extent because they lack the same kind of power, transport, communication and other infrastructure facilities that their foreign counterparts can take for granted.

Take transport, for example. In the 1990s, the government had envisioned a seamless multimodal transport system. We did not deem it enough to provide separately for adequate facilities in air, water and land including rail transport. We saw the need even then to make them connect seamlessly with one another. A person who flies into Manila ought to be able to hop onto a bus or train (and not be limited to taking an overpriced taxi), and conveniently get to her final destination in the city or province, or, if necessary, get to the pier quickly to catch a ship to her home in the Visayas or Mindanao. Such convenience is taken for granted in many cities abroad. But we continue to gasp in disbelief at how our LRT/MRT system failed to take the extra kilometer to connect to the domestic and international air terminals at the Ninoy Aquino International Airport. Or to the port area, for that matter.

Is it mainly corruption (i.e., giving in to the taxi companies who didn’t like the idea of losing business to the trains)? Or simply lack of coordination? In the mid-1990s, as then head of the National Economic and Development Authority, I had to mediate between the Department of Public Works and Highways and the Department of Transportation and Communications in their dispute as to whether the LRT 2 rail (DOTC) or the C-5 road (DPWH) should go over or under the Aurora Boulevard-Katipunan intersection. They had premised their respective designs on taking the surface route, and it took months to resolve that debate. It was clear then that if the DPWH and at least the transport side of the DOTC were together in the same department to begin with, there never would have been an issue. To this date, I continue to wish that this could be the case, specially now that the public generally sees the former to be much better run than the latter. What would be left of the DOTC can then become the Department of Information and Communication Technology that many of us believe should have been established long ago.

To the extent possible, infrastructure serving the local areas ought to be put under the charge of the local government units. For example, farm-to-market roads, irrigation systems and postharvest facilities are best handled by the LGUs who would know best where these would be most beneficial. The national infrastructure agencies ought to limit themselves to national systems and to providing technical standards, guidance and supervision to the LGUs as they fulfill their proper role in providing more focused responses to local infrastructure needs. On this basis, much more of the infrastructure budget should be left for LGU execution.

Meanwhile, governance and financial realities make it important to continue relying on the private sector to provide much of our vital infrastructures, through various public-private partnership schemes. But the lesson we learned in the 1990s was that the government must no longer take on an undue part of the risks as it did before. That is what made us pile up contingent liabilities to private entities, much of which have become actual liabilities that now contribute to a heavy fiscal burden. Market-related risks should rightly be borne by the private contractor, for example. Government guarantees ought to be limited to risks within its control, such as political risk.

Tapping equity markets to fund infrastructure projects may also be better explored. Other countries have successfully raised funding for public facilities by selling shares of stock in a publicly-owned and -operated facility. We have enough financial geniuses around who can help package such schemes for financially viable infrastructure projects. But we cannot attract private funds unless there is reasonable assurance of reasonable returns. Thus, an important ingredient is the acceptance by public users that good infrastructure costs money to provide, and toll charges and user fees must be realistic. We pay much less than the Indonesians, Malaysians and Thais are paying to use their toll roads, for example. We cannot expect the government to provide subsidies it can ill afford. That is why we are turning to the private sector in the first place.

But we need not think in terms of expensive, capital-intensive projects to respond to every infrastructure need. In some cases, simpler and cheaper solutions can be just as effective. I’ve written before of that upland community in southern Mindanao whose only wish from the government was quite simple: horses to transport their farm produce to the market. Repairing the existing but badly damaged farm-to-market road was clearly not an option. But a few horses put in the charge of barangay authorities would do just as well to uplift their livelihoods. The government must look out for such simpler but similarly effective options whenever possible.

Finally, and as everyone would agree, massive leakages of public infrastructure funds through graft and corruption simply must end. If only all the money allocated to infrastructure in the past years really went to building them, the state of our public infrastructure would be far superior to what we all have to content ourselves with today.

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cielito.habito@gmail.com