POST PNOY: PPP is key to 8-10% annual growth 

(Updated 5:26 p.m.) Implementing all the public-private partnership (PPP) projects and other infrastructure developments will be the challenge for President Aquino III's successor, the key to unlock a gross domestic product (GDP) that grows 8 to 10 percent annually, a leading economist said Tuesday.

 

"If the next president focuses on infrastructure, then there's an upside and after 2016, our growth rate can be 8 to 10 percent every year," he noted.

 

In truth, the Philippine economy has the potential to grow 7 percent to 10 percent over the next 10 years, thanks to long and painful reforms in the last 25 years, University of Asia & the Pacific economist Bernardo Villegas said during the Asia CEO Awards forum in Makati City.

 

"If you put all those reforms together, you already have institutions that are very difficult to reverse for anyone who will takeover in 2016... and 6 to 7 percent growth is going to continue," Villegas noted.

 

Starting with the term of then-President Corazon Aquino, who was known for restoring Philippine democracy after decades of strongman rule by the dictator Ferdinand Marcos, the economist said the Philippines reached a critical mass in terms of reforms.

 

During the term of former President Fidel Ramos, market reforms as in privatization, regulation and liberalization were implemented and the focus of development was shifted toward the countryside from an inward-looking industrialization under the administration of former President and now Manila Mayor Joseph Estrada, he said.

 

The UA&P economist said the highlight of Gloria Macapagal-Arroyo's administration was the establishment of the Philippine nautical highway, linking all the Philippine islands so farmers could access markets and deliver their goods effectively while 40 million Filipinos could travel and tour their own country.

'Failure of this govt'

 

The current administration of President Benigno Aquino III made a significant contribution terms of governance, Villegas said.

 

"There are real serious efforts to fight corruption. That is why a lot of international agencies are upgrading us because they see that we are serious in governance," he said.

 

With all the reforms, the Philippine economy is supposed to meet, or even surpass, the 6.5 percent to 7.5 percent growth target in 2014 if it were not for the lackluster spending of the national government, Villegas noted.

 

"The 8 percent could have happened, if the present government was a little confident in spending for infrastructure and unleashing the over 50 PPP projects.

 

"That is the failure of this government," Villegas said.

 

The current administration is seeking private sector support through the PPP initiative, to tap private sector funds for 57 infrastructure projects worth P852.13 billion.

 

So far, only eight projects valued at P128.5 billion have been awarded since the initiative was launched in November 2010.

 

"If all of those projects had been implemented, our investments as a percentage of GDP would not be remaining at a very measly 20 percent that we have right now," Villegas said.

 

"The Achilles heel of the Philippine economy is high savings, but we have the lowest rate of investment in East Asia at 19 to 20 percent," the economist said.

 

The average investment-to-GDP ratio in East Asia is 30 percent, while China espouses a 50-percent ratio.