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Economy

Philippines readying 'hundreds' of infrastructure projects: finance minister

MANILA -- The Philippines plans to roll out "hundreds" of infrastructure projects in the next few years, as the new government seeks to accelerate economic growth by reversing what it calls the previous administration's underspending and attracting investment, Finance Secretary Carlos Dominguez said on Tuesday.

The government of President Rodrigo Duterte, which came to power on June 30, plans to raise infrastructure spending's share of gross domestic product to 7% this year, higher than the 5% target set by the former administration of Benigno Aquino. The current administration aims to grow the economy by 7-8% in the next six years to bring the poverty rate down to 17% by 2022, compared to 26% at present.

The public-private partnership (PPP) program initiated by Aquino will also be revamped to speed up procurement, Dominguez said. The previous government awarded only 12 out of nearly 50 projects listed in the PPP program, partly due to the need for "multiple Cabinet approvals" and delays as the government sought to raise revenues from the PPPs, he said.

"There has to be a better way of doing this," Dominguez said during his keynote speech at the Financial Times-First Metro Philippines Investment Summit in Makati City.

"I am asking my staff to look into more innovative ways of doing this, bearing in mind that infrastructure are also public goods and not just commodities that enable government to earn," he added. "It is always tempting for government to think about its bottom line and forget about the public needs."

The $20 billion PPP program will be complemented by projects initiated and fully funded by the government, according to a spokesperson at the finance department.

Opening up the economy

Filipino businessmen who joined the summit's panel discussions, said they were keen on investing in infrastructure, but they can't do it on their own.

Makati Business Club Chairman Ramon Del Rosario and Erramon Aboitiz, chief executive of Aboitiz Equity Ventures and Aboitiz Power, called for the economy to be opened up.

"Our constitution is restrictive," Del Rosario said.

Aboitiz, whose group has participated in PPP auctions, said the government's infrastructure drive has to involve foreign investors. "That can't happen by just writing checks," he added.

Duterte's 10-point economic agenda already includes easing foreign ownership restrictions in the Southeast Asian nation. The Philippines' 6.9% GDP growth in the first quarter was the fastest in the region, but foreign direct investment in the country still lags behind that of its neighbors.

Metro Pacific Investment Chairman Manuel Pangilinan, for his part, said the government should make sure the private sector's investments pay off.

Pangilinan lamented the government's tendency to "bend on contractual agreements" to maintain its popularity.

Metro Pacific's water distribution and tollway units recently initiated two arbitration cases after state regulators denied them tariff adjustments.

Lilia de Lima, who headed the Philippine Economic Zone Authority for more than two decades and was praised by many investors, said corruption and red tape must be eliminated if the country wants to attract foreign investment.

Meanwhile, Public Works Secretary Mark Villar said that these reforms are underway, echoing Duterte's vow to respect existing contracts.

Villar said his agency is also preparing a "procurement manual" to speed up project execution, and will set up a monitoring group to minimize corruption. "We also plan to push for a 24/7 work schedule," he said.

Meanwhile, World Bank Philippines Country Director Mara Warwick said PPP projects should be well targeted.

"I think PPP is a very good tool but [the government should go] for projects that will make a difference," she said.

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