DOF eyeing multi-scheme funding for flagship infra projects

By , on May 23, 2017

MANILA –Department of Finance (DOF) is looking at three sources of initial funds for the flagship infrastructure projects that President Rodrigo R. Duterte’s administration targeted for implementation.

These sources are the national budget, official development aid (ODA) and hybrid public-private partnerships (PPPs), noted DOF Undersecretary Karl Kendrick Chua.

“We must use a combination of schemes,” he said Tuesday (May 23) at a forum in Metro Manila.

Chua noted the amount of ODAs and PPP investments for infrastructure will vary.

For 2017 alone, however, he said government targets spending PHP800 billion from the national budget to jumpstart infrastructure-building activities in the country.

Approval of DOF’s proposed Comprehensive Tax Reform Program (CTRP) will enable government to raise such amount by some PHP200 billion annually, he said.

The proposed CTRP consists of income, corporate, property, capital and environmental taxation packages, said Chua.

He said government targets initially collecting, through CTRP, about PHP366 billion in revenues.

“That’s the end goal in maybe two years,” he said.

He noted CTRP’s income taxation package alone can net revenues totaling around PHP157 billion during its first year of implementation.

Chua said DOF is open to studying other revenue-generating schemes to help bring forth infrastructure’s golden age in the country.

Tapping government-owned and -controlled corporations for such purpose is something DOF can explore, he said.

Earlier, Chua said the proposed CTRP will enable government to either build or improve 44,000 kilometers of national and local roads, construct more local hospitals and improve existing ones while enhancing public services.

DOF also said targeted for CTRP funding are the Bonifacio Global City-Ortigas Center Link Road Project; UP-Miriam-Ateneo Viaduct along C-5/ Katipunan Avenue; Metro Manila Priority Bridges Seismic Improvement Project (Guadalupe Bridge and Lambingan Bridge); and Widening/Improvement of Gen. Luis St.-Kaybiga-Polo-Novaliches Road.

“Other projects to be funded by CTRP are the Arterial (Plaridel) Road Bypass Project Phase III, Central Luzon Link Expressway, Phase II in San Jose, Nueva Ecija, Pasig-Marikina River Channel Improvement Project, Phase IV, Marikina Dam Flood Protection Works in Marikina River including Retarding Basin, Flood Mitigation Project in the East Mangahan and the Floodway Area (Stage 1) and several major flood control projects,” DOF further said in April this year.

Accelerating strategic infrastructure development, attaining just and lasting peace, ensuring security, public order and safety as well as ensuring ecological integrity and a clean and healthy environment are the four cross-cutting bedrock strategies supporting the three pillars of government’s 2017-2022 Philippine Development Plan (PDP), noted National Economic and Development Authority (NEDA).

NEDA noted those pillars are ‘Malasakit’ which aims to regain people’s trust in public institutions and cultivate trust among fellow Filipinos, ‘Pagbabago’ or inequality-reducing transformation through increasing opportunities for growth of output and income as well as ‘Patuloy na Pag-unlad’ which concentrates on increasing potential growth through sustaining and accelerating economic growth.

In February this year, NEDA board approved the PDP that’s anchored on AmBisyon Natin 2040, the national long-term vision representing Filipinos’ collective vision and aspirations for themselves and the country.

NEDA said the 2017-2022 PDP targets stronger GDP growth at 7.0 to 8.0 percent in the medium term.

“Growth is also expected to be more inclusive where overall poverty rate is targeted to decline from 21.6 percent to 14 percent and poverty incidence in rural areas to decrease from 30 percent in 2015 to 20 percent in 2022,” NEDA added.

Citing NEDA, DOF earlier said infrastructure spending must increase from 5.4 percent of GDP in 2017 to 7.0 percent of GDP in succeeding years to achieve the country’s vision of reducing poverty and becoming an upper middle income economy by 2022 while being close to becoming a high-income nation by 2040.

“This means there will be no letup in the Duterte administration’s commitment to spend on urban and rural infrastructure as a growth driver to guarantee sustained high and inclusive growth,” DOF Secretary Carlos Dominguez III said in January this year.

He noted the administration is keen to undertake such spending as the Philippines’ infrastructure backlog over the years reduced the country’s competitiveness as a Southeast Asian investment destination.

Previous Philippine spending on infrastructure averaged just 2.7 percent of GDP, he said.

However, the Philippines’ Southeast Asian neighbors devoted at least 5.0 percent of respective GDPs to infrastructure investments, he added.