Regional resources of financing for infra pushed

MANILA, Philippines - The Philippines can propose to augment local resources for infrastructure investments with regional resources such as official development assistance (ODA), as the country plays host economy for the Asia-Pacific Economic Cooperation (APEC) Summit this year.

Adoracion Navarro, senior research fellow at the Philippine Institute for Development Studies (PIDS), made this recommendation in a discussion paper titled “Philippine Priorities in Expanding APEC-Wide Connectivity through Infrastructure Development.”

“Other sources of financing including ODA and private sector funds will be needed to ensure the sustainability of infrastructure investments going forward,” she said.

Navarro said the government particularly needs to improve spending on infrastructure as a share of gross domestic product (GDP) to five percent by 2016 from 2.09 percent in 2012.

While the government has now more resources for its critical programs and projects, she said that sustaining public investments remains a concern due to low revenue generation.

Navarro said that during APEC discussions on financing infrastructure, the Philippines can thus raise the topic of increasing local resources for infrastructure resources with regional resources.

Information sharing on best practices on the use of such sources can be also pursued, she said.

“Most of the bilateral sources of ODA loans for infrastructure projects are APEC members and it is expected that these sources will continue to play a significant role in financing Philippine infrastructure investments,” she said.

Navarro proposed these measures amid a decreasing trend in Philippine ODA loans for infrastructure for the past few years.

She attributed this to the improving government’s fiscal space and some of the infrastructure projects in the public investment program were re-studied and became part of the public-private partnership (PPP) program.

“But this is a medium-term trend and it is still necessary to ensure that sources, whether domestic or external, are available to make infrastructure investments sustainable for the longer term,” the report said.

Navarro considered PPPs a significant mode of project financing given the momentum gained thus far in PPP program implementation.

She thus proposed that the Philippines prioritize PPP-related topics in APEC discussions by expressing the need for more sharing of knowledge and best practices on appropriate risk allocation and contract design, management and monitoring.

“Moreover, the Philippines can ask for regional cooperation on sustained, dynamic and productive capacity building assistance for 35 PPP units in less advanced APEC members so that they can generate a pipeline of bankable infrastructure PPPs. Since knowledge on PPPs is not static, capacity building should be dynamic,” she added.

Further, Navarro said the priorities of the Philippines as host economy for APEC 2015 should likewise be aimed at regional cooperation on investing in good infrastructure, building resilient infrastructure, and sharing of best practices on the effective use of infrastructure during calamities.