BALI, Indonesia—The Duterte administration is going ahead with its ambitious “Build, Build, Build” infrastructure program despite the global headwinds now facing the Philippine economy, according to Finance Secretary Carlos Dominguez III.
These international headwinds include the sharply rising prices of oil in the world market, which is among the factors pushing up inflation back home, Dominguez said during his recent meeting here with top executives of Standard Chartered Bank.
Dominguez also expressed concern over the escalating trade dispute between the United States and China, as well as the US Federal Reserve’s “aggressive” stance on monetary policy normalization through interest rate increases.
He met with Standard Chartered’s Karby Leggett, Managing Director for Asia and Public Sector Head, and Paul Skelton, Global Head for Global Banking and Institutional Banking Head, on the sidelines of the Annual Meeting of the World Bank Board of Governors here.
Dominguez told Leggett and Skelton during their meeting that despite these challenges to the Philippine economy, “the ‘Build, Build, Build’ program is doing very well,” with the Philippine government expanding its inventory of big-ticket assets that future administrations can later privatize to raise funds for its own priority programs.”
He cited as an example the New Bohol International Airport–located in the tourist island of Panglao in Central Visayas–which began implementation in 2o15, but was only 5 percent completed by the time President Duterte assumed office a year later.
The original completion date for the airport during the previous administration was in 2021, which under President Duterte was moved up to 2018. As a result of the advanced schedule, the airport is now set to be ceremonially opened before the end of this year.
“We are building up our assets which some future governments, when they need the money, which I’m sure they will, can opt to sell,” Dominguez said.
Leggett, in turn, pointed out that the Philippines’ foreign exchange reserves remain strong, as well as the pace of GDP growth, with only the current account deficit falling behind.
But he said this was understandable, considering the massive importation of capital goods needed to power the country’s infrastructure modernization program.
Overall, Leggett said the long-term outlook for the Philippine economy is “extremely positive.”
Dominguez also said the widening current account deficit was partly the result of the rise in imports of capital equipment.
With the New Bohol airport nearing completion, the Department of Finance (DOF) and the Japan International Cooperation Agency (JICA) signed last week a supplemental agreement extending a 4.376-billion yen loan to the Philippines to help fund the second phase of the project, which would cover the expansion of its runway and passenger terminal building.
In line with the “fast and sure” approach adopted by Manila and Tokyo in the implementation of big-ticket infrastructure projects, Dominguez noted that the Philippine government acted swiftly in processing the necessary requirements for the supplemental loan, which, from the time the National Economic and Development Authority (NEDA) Board approved it on June 19, 2018 up to the Oct. 8 signing, took only a short period of four months to be formalized.
He said that if the government acts “with the same dispatch on all public projects, I am confident we will sustain the pace of growth we need to bring the benefits of inclusive growth to our people.”
Dominguez said the New Bohol Airport project is “a perfect example” of a hybrid Public-Private Partnership (PPP) project in which the government takes over the initial phase of the project and later bids out its operations and maintenance aspect to the private sector.
Through JICA, Japan also provided funding support in the amount of 10.782 billion yen (approximately P5.18 billion or $237 million) for the first phase of the New Bohol Airport.
The second phase of the airport project covered by JICA’s supplemental loan will include the extension of the runway from the current 2,000 meters to 2,500 meters to enable the airport to accommodate large commercial aircraft, and the expansion of the passenger terminal building from 8,500 square meters (sq. m.) to 13,300 sq. m., in anticipation of the possible congestion that could arise should tourism traffic to the area rise faster than expected.
Using local funds, the Department of Transportation (DOTr) is planning to further enhance the capacity of the airport by extending the runway to 2,800 meters, constructing a separate cargo terminal and a parallel taxiway, and building a fuel depot plus a fuel hydrant system.
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