The Philippine government is betting on increased infrastructure spending to sustain economic growth, which slipped below expectations in the first quarter after a string of natural disasters late last year hobbled domestic output. The Department of Budget and Management has laid out a plan to bolster government spe
The Philippine government is betting on increased infrastructure spending to sustain economic growth, which slipped below expectations in the first quarter after a string of natural disasters late last year hobbled domestic output.
The Department of Budget and Management has laid out a plan to bolster government spending on public infrastructure–roads, airports, water supply, transportation–to 5% of gross domestic product by the time President Benigno Aquino III leaves office in 2016, up from 1.8% when he took power in June 2010.
The government plans to spend 399.43 billion pesos ($9.1 billion) on public works this year, or around 3% of GDP. That's projected to rise to 826 billion pesos by 2016.
Last week, President Aquino and his cabinet approved nine projects worth $1.4 billion, the biggest of which is a $425 million dam-and-water-tunnel project that would supply 600 million liters of water a day to the capital by 2020.
Another project is a $325 million, 10-year contract for the operation and maintenance of Manila's electric train systems.
But policy makers, including Budget Secretary Florencio Abad, acknowledge the increased spending won't be enough for the Philippines to make up for years of underinvestment relative to its Southeast Asian neighbors.
According to the World Bank's 2014 Logistics Performance Index, a benchmarking tool that compares trade logistics in 160 countries, Philippine infrastructure is the worst among the six Southeast Asian nations ranked, including Singapore, Malaysia, Thailand, Vietnam and Indonesia. The Philippines ranked 75th on the list, with a score of 2.6 out of a maximum of 5.