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Philippines: Meeting Infrastructure Challenges. The World Bank. Infrastructure in the Philippines. A mixed picture of important achievements And remaining weaknesses.

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Philippines: Meeting Infrastructure Challenges

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Philippines: Meeting Infrastructure Challenges

The World Bank

Infrastructure in the Philippines

  • A mixed picture of important achievements

  • And remaining weaknesses

Overall access to water supply and sanitation, telephones, and electricity are relatively high compared with other developing Asian countries

Total road network length compares favorably with neighboring countries

Sources:Philippine data from JICA-DPWH. 2003. “Roads in the Philippines.” Manila; other countries from the ASEAN Statistical Yearbook 2004 and the ASEAN Transport and Communication Sectoral Report 1999. ASEAN, Jakarta.

Major reform measures in the power, water, transport, and telecoms sector have already been initiated

  • Power:

    • Critical tariff adjustments implemented

    • Ongoing market restructuring and privatization

  • Water Supply and Sanitation:

    • Landmark Manila water concession

    • EO279 for water sector financing reform

  • Road:

    • Special Road Fund established

    • DPWH reform proposals

  • Private Sector Participation in Infrastructure:

    • BOT Law (1990, amended 1994)

    • Public broadly supportive of private sector participation

But overall state of infrastructure in the country has not kept up with rapid population growth and urbanization

% of population residing in urban areas

% of population residing in Metro Manila





Low quality of services has emerged as a key impediment to the economic competitiveness

Infrastructure Ranking in the Global Competitiveness Report

Source: World Economic Forum, “The Global Competitiveness Report, 2003-2004”

Legend: 1=poorly developed and inefficient, 7= among the best in the world

Service levels for the poor are much lower than the average

Access to basic infrastructure

Percent of population


Need to increase infrastructure spending from less than 3% of GDP to at least 5%, and increase the efficiency of infrastructure spending in the meantime

No breakdown




Note: No breakdown for China, figures are 1991-2000 average. Philippines and Indonesia (2002 figures) , Albania and Russia (2000) and Cambodia (2001).

Sources: World Bank Privte Participation in Infrastructure Database, World Bank Public Expenditure Reports, China Statistical yearbook (various years).

“Boom-Bust” Infrastructure Cycle Infrastructure Investments as a share of GDP, 1985-2002


Capital outlays only.

Sources: Department of Budget and Management; Department of Finance; Commission on Audit; Maynilad Water Services, Inc.; Manila Water Corporation, Inc.; Optel Ltd.; and World Bank.

The Way Forward – Four Priorities

  • A rigorous and sustained fiscal reform program

  • Continued specific reforms in key sectors – particularly power, road and water

  • Improved central oversight of the planning and coordination of investments

  • A few focused investments in the short term through public- private partnership

Implementing Specific Reforms in Key Sectors

  • Basic framework in place – thus huge returns to some specific measures

  • Cross cutting reform issue is to achieve cost recovery

Improving Oversight of Investment Planning and Coordination

  • Focus of oversight responsibilities to shift from detailed project-level approval process to a broader and more forward-looking role

  • Concerns about efficiency and transparency of unsolicited bids

Infrastructure Investment as a share of GDP, 1985-2002

Focus on a Few Investments that Address Infrastructure Bottlenecksunder Public Private Partnership

  • MTPDP has highlighted the priorities

    • Decongesting Metro Manila

    • Developing Subic Clark areas

  • Undertake these investments in close partnerships with the private sector

  • New projects should be tendered competitively and transparently to attract private sector

    • Good project preparation is key to be able to conduct competitive bidding

    • Proper management of subsidies: cash subsidies and guarantees

Summary of Messages

  • Infrastructure is key element of the Philippine Development Agenda

  • Many elements of good infrastructure policy framework are already in place

  • Some key measures are critical to revive infrastructure investments

    • Fiscal stabilization

    • Specific sector reforms, including cost recovery policy

    • Improving planning and coordination

    • Well-designed competitive tendering to maximizing the benefits of private sector participation

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