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Philippines: Meeting Infrastructure Challenges

Philippines: Meeting Infrastructure Challenges. The World Bank. Infrastructure in the Philippines. A mixed picture of important achievements And remaining weaknesses.

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Philippines: Meeting Infrastructure Challenges

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  1. Philippines: Meeting Infrastructure Challenges The World Bank

  2. Infrastructure in the Philippines • A mixed picture of important achievements • And remaining weaknesses

  3. Overall access to water supply and sanitation, telephones, and electricity are relatively high compared with other developing Asian countries

  4. Total road network length compares favorably with neighboring countries Sources:Philippine data from JICA-DPWH. 2003. “Roads in the Philippines.” Manila; other countries from the ASEAN Statistical Yearbook 2004 and the ASEAN Transport and Communication Sectoral Report 1999. ASEAN, Jakarta.

  5. Major reform measures in the power, water, transport, and telecoms sector have already been initiated • Power: • Critical tariff adjustments implemented • Ongoing market restructuring and privatization • Water Supply and Sanitation: • Landmark Manila water concession • EO279 for water sector financing reform • Road: • Special Road Fund established • DPWH reform proposals • Private Sector Participation in Infrastructure: • BOT Law (1990, amended 1994) • Public broadly supportive of private sector participation

  6. But overall state of infrastructure in the country has not kept up with rapid population growth and urbanization % of population residing in urban areas % of population residing in Metro Manila Urban Thousands Percent Rural

  7. Low quality of services has emerged as a key impediment to the economic competitiveness Infrastructure Ranking in the Global Competitiveness Report Source: World Economic Forum, “The Global Competitiveness Report, 2003-2004” Legend: 1=poorly developed and inefficient, 7= among the best in the world

  8. Service levels for the poor are much lower than the average Access to basic infrastructure Percent of population Quintile

  9. Need to increase infrastructure spending from less than 3% of GDP to at least 5%, and increase the efficiency of infrastructure spending in the meantime No breakdown Percent Private Public Note: No breakdown for China, figures are 1991-2000 average. Philippines and Indonesia (2002 figures) , Albania and Russia (2000) and Cambodia (2001). Sources: World Bank Privte Participation in Infrastructure Database, World Bank Public Expenditure Reports, China Statistical yearbook (various years).

  10. “Boom-Bust” Infrastructure Cycle Infrastructure Investments as a share of GDP, 1985-2002 Percent Capital outlays only. Sources: Department of Budget and Management; Department of Finance; Commission on Audit; Maynilad Water Services, Inc.; Manila Water Corporation, Inc.; Optel Ltd.; and World Bank.

  11. The Way Forward – Four Priorities • A rigorous and sustained fiscal reform program • Continued specific reforms in key sectors – particularly power, road and water • Improved central oversight of the planning and coordination of investments • A few focused investments in the short term through public- private partnership

  12. Implementing Specific Reforms in Key Sectors • Basic framework in place – thus huge returns to some specific measures • Cross cutting reform issue is to achieve cost recovery

  13. Improving Oversight of Investment Planning and Coordination • Focus of oversight responsibilities to shift from detailed project-level approval process to a broader and more forward-looking role • Concerns about efficiency and transparency of unsolicited bids Infrastructure Investment as a share of GDP, 1985-2002

  14. Focus on a Few Investments that Address Infrastructure Bottlenecksunder Public Private Partnership • MTPDP has highlighted the priorities • Decongesting Metro Manila • Developing Subic Clark areas • Undertake these investments in close partnerships with the private sector • New projects should be tendered competitively and transparently to attract private sector • Good project preparation is key to be able to conduct competitive bidding • Proper management of subsidies: cash subsidies and guarantees

  15. Summary of Messages • Infrastructure is key element of the Philippine Development Agenda • Many elements of good infrastructure policy framework are already in place • Some key measures are critical to revive infrastructure investments • Fiscal stabilization • Specific sector reforms, including cost recovery policy • Improving planning and coordination • Well-designed competitive tendering to maximizing the benefits of private sector participation

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