S&P: 'Policy shifts' after 2019 polls may affect Philippine infra development
MANILA, Philippines — Policy actions influenced by elections and political shifts can create “greater uncertainties” for infrastructure projects in Southeast Asia, according to S&P Global Ratings, which also expects the region’s infrastructure development to “slow down” over the next year.
In a report dated September 19, the global debt watcher said infrastructure projects in the region are subject to “heightened risk of policy interventions” in view of recent and upcoming elections, among other factors.
In the Philippines, S&P said the mid-term elections in May 2019 “can create policy shifts,” noting how the Duterte administration changed gears on financing mode.
Widely known as the “Build, Build, Build” program, the Duterte administration plans to upgrade the country’s dilapidated infrastructure, which policymakers qualified as one of the reasons why the Philippines had lagged behind its Southeast Asian peers for so long.
Philippine history has shown that a newly elected president has always delayed — if not outright abandoned — pet projects pursued by predecessors.
To bankroll its huge infrastructure push, the Duterte administration said it will shift from public-private partnership as the primary mode of financing and will rely more on public funding and official development assistance to avoid delays and higher project costs.
The sudden change in funding modes is a departure from former President Benigno Aquino III’s high reliance on PPPs for major projects, which Manila-based Asian Development Bank said must be continued by succeeding administrations.
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“While economic momentum is strong, policy and macro risks are rising and could deter investment. Potential obstacles include a sharp currency depreciation, global trade war, and higher interest rates,” S&P said.
“Added to that, the region has a heavy political calendar going into 2019. Regime changes... may spur investors or governments to reconsider large infrastructure projects,” it added.
In a separate report released last week, Fitch Solutions Macro Research said the upcoming polls next year in the Philippines could see the Senate fill up with allies of Duterte, given that the opposition Liberal Party has been “weakened considerably.”
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