Better logistics infrastructure needed to boost trade, says PIDS

MANILA, Philippines - Exporting countries like the Philippines need to continue improving its transport and logistics infrastructure to seize new opportunities in the global markets.

This recommendation was made by Gilberto M. Llanto, a senior research fellow at the Philippine Institute for Development Studies (PIDS), in a paper titled “Investing in Local Roads for Economic Growth”.

Llanto pointed out that while the Philippines has made some improvements in transport and logistics performance, it still lag behind its of neighboring ASEAN countries such as Malaysia and Thailand.   

Llanto thus urged the country to intensify its focus on making its transport and logistics much more efficient.

“Exporting countries, which have been able to effectively address both border (e.g. tariffs) and behind border issues (e.g. transport and logistics), have been able to exploit new and bigger markets opened by globalization and trade liberalization,” he noted.

Citing a 2006 study, Llanto said it was found that improved road network quality was robustly associated with higher intraregional trade flows. Its simulations suggested that an ambitious but feasible road upgrade could increase trade by as much as 50 percent.

He said more investments to provide the road network especially in the local areas are imperative in boosting trade and local economic growth, as well as keys to poverty reduction.

“A severe under investment in good quality roads has certainly contributed to the high cost of doing business in the country,” he added, based on limited available data on classification of local roads.

Llanto pointed out that an important dimension of transport infrastructure is the network of roads that provide a physical link to various communities in urban and rural areas with outside markets.

“A good network of roads at the local level is indispensable in the timely movement of people and transport of goods with low transaction costs,” he said.  – PHILEXPORT News and Features