Infrastructure News Analysis

Battle for the bucks to build

The Philippines will have to punch well above its weight if it is to secure much-needed FDI for its considerable infrastructure needs as the competition it routinely faces, from just within Asean, is likely to get a lot tougher. And the competition for cash within the Philippines itself, between the sectors – rail, road, ports and airports – is also likely to heat up, as each argues for its priority projects.

Asia as a whole is now confronted with a massive investment shortfall that will increase the pressure for funds. According to Asian Development Bank estimates the region as a whole requires US$8 trillion for infrastructure by 2020, and that on present projections it is unlikely to get half of that. The battle is on.

Countries will now be looking at ways of making their locations more investment attractive. And in this area, the Philippines has more to do than most.

The Economic Research Institute for Asean and East Asia regards the Philippines as having among the most prohibitive FDI policies of anywhere in Asean with certain sectors excluding or severely restricting foreign participation. The US State Department’s recent investment-climate statement also highlights this, along with the country’s extremely high power costs, its poor telecoms and its bureaucracy which can be “. . . difficult and opaque, [and] business registration and procedures are slow and burdensome”.

There is no question that the new administration is aware of all these problems and the indications are that it is already engaged in finding ways to present the Philippines as a desirable destination for foreign funds.

According to some estimates, the Philippines infrastructure deficit could be as high as US$21.64 billion.

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