Infrastructure in the Philippines is still a long way off from achieving its full potential. There are several challenges, costs, and Public-private partnerships to overcome before a completed project can be called a success. Let's take a look at some of these issues. Here are some examples of infrastructure projects that the Philippines has recently launched:

Challenges

The Philippines has tremendous human and natural resources. This potential makes it a country with tremendous potential for economic development and poverty reduction, yet overall development outcomes have fallen short of these goals. Among the major reasons for this lag in the country's development is weak public institutions, which contribute to a vicious cycle of poor public services, low citizen trust in the government, and a lack of resources. Hence, reversing this cycle is critical for the country's economic growth. Infrastructure plays a vital role in achieving this cycle.

Currently, the Philippines has one of the lowest rates of ease of doing business in the ASEAN region. Compared to Thailand and Malaysia, the Philippines is much more difficult to do business. Obtaining a construction permit is difficult, while getting credit and enforcing contracts are challenging, too. Consequently, it poses risks to infrastructure projects. In addition, the Philippines' government may not have the capacity to oversee the project, and there may be delays and red tape.

Costs

One major challenge for the government in the Philippines is maintaining efficient ground transportation infrastructure. This is particularly critical in the densely populated National Capital Region (NCR), where the population is expected to reach 30 million by 2030 - making it the world's third largest megalopolis. Manila is already notoriously congested - with vehicles moving at an average speed of 10 km/h. This situation will likely worsen as the population grows.

Despite this problem, the Philippines ranks well in the global rankings for public infrastructure planning and management. The country has the highest number of projects under public procurement, a national infrastructure plan, and an efficient management system for handling infrastructure contracts. To improve infrastructure procurement and management, the Philippines can increase private sector participation, improve financial risk management, and develop domestic capital markets. All these factors would help it become one of the most competitive countries for foreign investment.

Government involvement

The Philippines has enormous natural and human resources, and tremendous potential for economic development and poverty reduction. But overall development outcomes are far from satisfactory. The government's weak public institutions have contributed to a vicious cycle of poor public services and weak public trust. Lack of financing and private sector participation has further hindered the expansion of public services and infrastructure. The road map lays out a framework for addressing the bottlenecks that impede service delivery and will bring the country into a virtuous cycle of growth.

The first year's impact on the poverty headcount is negative. The next three years show a gradual increase in poverty headcount. The long-term effects are more promising. In the first year, the PIE-to-GDP ratio increases by 25 percent. In addition, the Philippine economy will enjoy an increase in purchasing power due to the real exchange rate. In the long-run, increased investment in public infrastructure will result in an increase in real GDP.

Public-private partnerships

The Government currently has 17 projects undergoing PPP. Out of these, 15 were identified by the implementing agency. Two were identified by government units. There are also 26 projects in various stages of implementation under the Department of Public Works and Highways. Projects include the Laguna Lakeshore Expressway Dike, a 47-km dike that would link Taguig City and Los Banos. Eventually, the dike would serve as a flood control system and relieve heavy traffic congestion in the metropolis.

In addition to handling traffic, public-private partnerships can also operate airports, highways, railways, bridges, tunnels, and water treatment facilities. These facilities fall under the categories of environmental and municipal infrastructure. Public-private partnerships are typically long-term contracts between two parties. They involve substantial risks for the public entity and require management of private-party assets. However, the Philippines has been a pioneer in embracing PPPs for infrastructure, and its 2017-2022 Development Plan calls for investments of $180 billion in infrastructure, with a current pipeline of 37 projects.