Modern road infrastructure: Key to attracting investments

The Philippines can be competitive as an investment destination if its infrastructure is modern and adequate, according to former Public Works and Highways Secretary Jose de Jesus.

De Jesus, now the president and chief executive officer of the Manila North Tollways Corp. (MNTC), said countries like Thailand and Malaysia have seen a more consistent economic growth largely because of the presence of critical road networks that helped spur countryside development and provided links to economic zones.

The MNTC is the concession behind the rehabilitation, modernization and expansion of the 84-kilometer North Luzon Expressway (NLE) which runs from Balintawak to Sta. Ines, Pampanga.

The NLE is the main road artery connecting Central and Northern Luzon to Metro Manila.

"The government does not have the resources to build and modernize our road system," De Jesus said.

Budget figures for 2002 show that the infrastructure outlay for roads and bridges is about P23.14 billion but "a project of the magnitude of the North Luzon Expressway will cost the government P18 billion at today’s inflation and foreign exchange rates," De Jesus said.

The government has allocated its budget expenditure for more basic services. About P157.7 billion goes to economic services, P233 billion for social services, P133.6 billion for general public services, and P46 billion for defense. A big chunk, P210.4 billion, goes to debt interest payments.

"That is why the private sector has to come in and play a major role in infrastructure development," De Jesus said.

"The government has to tap alternative sources of financing because the financial requirements needed to expand government infrastructure projects are huge and fraught with risks inherent in any undertaking such as the NLE’s. With private sector participating in infrastructure development, the government does not need to take out more loans or issue guarantees," he added.

It will be recalled that the American Chamber of Commerce (Amcham) made a similar observation in a much-quoted advocacy paper called "The Roadmap to More Foreign Investment," which called for "the neglect of transportation infrastructure to end" as part of a set of recommendations for improvements in the business sector, which should make the Philippines a more attractive site for foreign investments.

The paper further states that "since only two to three percent (P16 billion to P24 billion) of the national budget (P800 billion) is available for public infrastructure, the funds will have to come from ODA and the private sector, given the government’s difficulty in collecting revenue and restraints of the size of the deficit and public sector borrowing."

De Jesus was main resource person in a recent forum of the Central Luzon Investment Coordinating Council (CLICC).

The forum, chaired by Nueva Ecija Gov. Tomas Joson III, supports the development of strategic infrastructure projects in Central Luzon as key to opening up more opportunities in trade and investment.