By: John Carlo Tria
DESPITE slight criticisms about a possible debt trap, the 8 trillion pesos massive Build! Build! Build! program over the next five years is a refreshing departure from past policies and is set to attract real investments, propel our GDP higher
- Past government under-spent. The previous government spent less than the 5% of GDP recognized as the standard for a country to sustain growth.
An engineer friend remarks that a lot of the infrastructure under daang matuwid involved road widening.
Major big ticket items were shelved, and of the 22 or so public-private projects to be supposedly launched, only 4 were ever awarded. Little wonder why we under-spent. Were they waiting for their “next” president to have his photo with them?
- More infra increases land values and tax revenues. Finance Secretary Dominguez calls it Economics 102, taxes come from generated wealth, not the other way around.
Thus, improved infrastructure pushed land values up, driving an increase in real property taxes, that in turn, will pay off debts. 80% of the borrowings will come from local banks, not China. Fears of a Chinese debt trap are unfounded.
- Like Thailand and Malaysia, we need to put your money where your mouth is. Both countries have low poverty rates (10% for Thailand and 2% for Malaysia) compared to ours at a dismal 22% and Indonesia at about 15% because both have attracted the most foreign direct investments after Singapore after massive infrastructure boom early this century. (ASEAN STATISTICS)
What foreigners did not sink money in, their governments built. Visit Thailand and Malaysia and drool over their wide highways and modern airports.
As a result, they have attracted job generating manufacturing and technology businesses, while lowering unemployment and pushing productivity and lowering food prices.
On top of that, both countries attract three times as much tourists as we have. Their Infrastructure made it happen. To think, we once prided ourselves to be more advanced than they were.
- Good infrastructure is good governance. People are tired of promises and wish to see government walk its talk for the working class makes governance more stable.
The politically chaotic Philippines we inherited from the past government shows just how weak our institutions tend to be. People will believe government when they see results, and infrastructure such as efficient trains, nice roads and bridges are proof that taxes are working, and that government is doing its job.
Imagine bringing a prospective investor to put money in building an industrial estate in the middle of nowhere, after a five hour trip over dirt roads?
He is not likely to invest in an area where transport of products is very expensive because of a lack of roads, electricity and water and the peace and order situation is dicey.
The lesson? There is simply no point in trying to lure foreign investments and confidence in government if your infrastructure is poor.
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