Slicing and dicing the Nation’s investments in itself

RoadworkFrom time to time, I explore the mundane workings of Philippine government to improve my grasp of what exactly is going on in the real world where tabloid journalists rarely tread. I know the Aquino government has given infrastructure development its rightful high priority. Where is the money going?

Is the overall program reasonable? Will it help build the nation? Who funds the projects?  Any lessons to be learned here?

These investments flow through the National Economic and Development (NEDA) for approval, and NEDA honors us by giving us the data on these projects. Well, let’s honor them back by working with the information.

NEDA approved 84 projects during the period from June 2010 through September 2014. They are at some stage of development, from preliminary work to completed. We can get an update on this every quarter. The total value of the projects is P896.555 billion, including a capitalized maintenance project for MRT Line 2 of some 16 billion pesos.

NEDA-Top 10

I’ve sliced and diced the data to get some perspective on matters and will share a few interesting cuts with you. My goal is to understand what the projects are, where they are, who funds them and how progress is going. The inquiry may lead to further examinations, perhaps of individual projects.

The 10 largest projects

The top 10 projects account for over one half of the entire investment amount. By far the largest is the Laguna Lakeshore Expressway which will create a dramatic new traffic route from Manila Central to Southern Luzon, while at the same time improving flood control and creating some environmental preservation areas. Cost is pegged at 122.8 billion pesos. The project will remake the urban landscape of Manila, pushing growth south, and create a landmark design statement for the city.

NEDA-Regions

The other large projects deal with roads, trains, community development (of cities), rural development, water supply, and an e-trike program.

Without question, these are meaningful programs. I find the community development and rural development programs most interesting because they involve multiple beneficiaries. What is being built, I wonder. That is a matter for further study.

Overall, I’d say the roster of projects is balanced, reasonable and doing what needs to be done. We could argue for adding some or booting some off, I suspect. But that would be quibbling.

Where are the funds headed?

Just over one-half of the investments (51%) are within the greater Manila metropolitan area which is defined as NCR plus Regions III and IV-A. Substantial investments are also being made in multiple regions or across the nation. They account for another 37%. About 12% of the funds go to specific projects in outlying regions. ARMM gets 1.7%.

NEDA-Map

This allotment of capital seems reasonable considering the neglect of Manila during recent administrations.

What does the future hold? I have argued for major infrastructure projects in Cebu and along a Mindanao beltway between Davao and Zamboanga to take some of the pressure off Manila (“Manila is to New York as Davao is to Los Angeles“). Perhaps you have some suggestions.

Without those comprehensive regional design plans, development becomes piecemeal, as we see in Cebu where a proposal is being considered to add a third bridge between the city and Mactaan. I’d argue for longer term masterplans for development that fit everything together. I can’t see the overall picture, frankly, by looking at the pieces.

When were projects approved?

The pace of investments jumped in 2012. That suggests it took about 18 months for the Aquino Administration to get its projects lined up and documented for proper approvals. More correctly, perhaps, it took that long to cancel some Arroyo projects and recast them as work the Administration could support.

NEDA-Year

The investment pace is now running at over P300 billion per year and rising.

It would certainly be beneficial if there were not another change of gears after the 2016 presidential transition. Losing 18 months of infrastructure development is a significant penalty for the nation.

NEDA-Status

What is the status of projects?

Only three small projects have been completed. Almost two thirds of all investments are still tied up in preliminary work such as finalizing funding, bidding the projects, hiring consultants and so forth.

I suppose the lesson here is that it takes a long time to work each of these complex elephants through the pipeline. As we will see, a good number of projects are funded through PPP (Public Private Partnerships), where the private parties are large Philippine companies. These must be bid out, and as we have seen with numerous delays in projects handled by DOTC (Department of Transportation and Communication), the bidding and legal requirements are onerous. When a case goes to court it gets snarled in troublesome delays. Costly delays.

NEDA-Agencies

It seems to me there needs to be a “best practices” book put together for each agency that sets forth guidelines and timetables aimed at accelerating the prepatory work. Five years in and only P7.7 billion of a P897 billion portfolio is completed.

What agencies of government oversee the projects?

As we might expect, roads, trains and airports dominate the construction. A full 67% of all investments are handled by DPW (Department of Public Works) and DOTC.

Departments handling in the 5% range (about P50 billion) include Agriculture, Education, Social Welfare and Development and Metro Waterworks and Sewerage (flood control for Manila).

Who funds the projects?

I found this to be a rather interesting finding. Infrastructure development is funded by a great many different nations, a testament as to how much the Philippines is globally well connected. This was also seen in Yolanda relief contributions which came from around the world in large chunks.

NEDA-Sources

The two nations doing the greatest share of funding are the Philippines through PPP programs (P370 billion) and Japan (P109 billion). Other substantial funding sources are World Bank (P32 billion), Korea (P23 billion), Asian Development Bank (P23 billion), and Australia (P16 billion).

Agencies from Austria, France, Saudi Arabia, Spain and the United Kingdom all participate in funding.

China does almost no funding at all, and the US Aid organization is funding a modest P9 billion. The US “pivot to Asia” is clearly about military defense and not investment. There is no “recolonization” going on.

Conclusions

The most significant conclusion has to do with the time it takes to get projects rolling and done. This may warrant special attention and development of “best practices” focused on cutting out delays.

Transition from one administration to another is also problematic. Continuity will be one aspect of what we are voting on, perhaps.

I’d recommend that NEDA develop a “layman’s” picture of developments so that the total program can be presented in a way suitable for public consumption. It might improve the impression of government as being “on the move” in building a better Philippines.

And I’d suggest there be a look at the future, again in terms that could be understood by the the everyday man or woman. What is envisioned? Does the administration have a vision of what the Philippines would look like 25 years from now?

A very positive takeaway for me was how many nations are playing a role in Philippine development.

This is not your father’s Philippines, sealed off in a small corner by international neglect and marginalized by instability. This is a nation on the way up, globally engaged and striving to take better care of itself.

 

Comments
40 Responses to “Slicing and dicing the Nation’s investments in itself”
  1. David Murphy says:

    I agree but it is still not too late to screw it all up. It is essential that the masses be educated about the need to vote for candidates with integrity who follow the mandate of “a private commitment to a public trust.” And those profiting from corruption must be identified and prosecuted as expeditiously as possible. We can do that can’t we? Of course we can, if we have the private and political will. And yes, it is a formidible task that lies ahead.

    • Joe America says:

      Yes, screwing it up is an option. I think the Pope helped with the enlightenment of the masses, interestingly enough. The difficulty has always been how to explain to people who never see improvement in their lives that a vote means anything. The anti-corruption message was quite clear.

      • Steve says:

        I don’t think the Pope’s words will make the slightest difference. Popes have come and gone before, saying much the same thing, and they pass with little impact. People go to feel the presence, not to listen to the words. If there is going to be change it will come from the inside; I do not think there will be an external Deus ex machina in the picture.

        • Joe America says:

          The evidence would suggest you are correct. I tend to work in shades of gray, and I think (or perhaps it is hope) the Pope’s visit will deepen the shadings in two areas: (1) by further diminishing Binay’s popularity among the masses; this can happen if others can put the Pope’s message in relevant terms to the poor on that point, and (2) by shading the values of the youth to upstanding instead of fluid and self-involved. But let’s leave this discussion for my next blog, which will be a summation of the Pope’s visit. It will be out later today once the Pope has safely left Philippine soil.

  2. Steve says:

    I think the focus on urban areas and high profile megaprojects is perhaps not ideal, but it is expected: every administration is expected to have “flagship projects”. It would be nice to see the provincial areas given more priority in both infrastructure spending and political reform, which might eventually slow and even reverse the flow of migrants to the city, but I don’t expect it.

    \Any administration here has to walk a thin line on infrastructure spending. If you insist that no project will proceed unless it is sure to be free of corruption, you will never do anything. At the same time, you cannot (or at least should not) tolerate corruption. Many projects have been delayed by attempts to impose safeguards, but that is hard to criticize: there is no perfect point in that balancing act, and no matter what choice is made, somebody will object.

    • Joe America says:

      Realist. haha. I want to dig deeper into the projects for city and rural development, and maybe look more carefully at what those projects of nationwide reach might mean. I think there is quite a bit of development targeted for the provinces, myself, but can’t prove the point right now. Locally, here in Biliran, roads have been upgraded, and are being upgraded, in a significant way.

      • If you look at the National Budget for 2015 ALL roads in the Philippines are budgeted to be extended and improved. This cannot be overstated ALL roads are budgeted to be rebuilt, rehabilitated, or extended. Although this smells like a massive fund buildup for the 2016 elections I have enough trust on singson to give him the benefit of a doubt.

        • Joe America says:

          I have to smile because roads in my area collapse quickly under the weight of big trucks and by erosion from too much water. The only good one is the one they built over the past year. The mountain roads in particular wear out quickly. Secretary Singson from all accounts is an absolutely trustworthy public servant.

    • I think if you look in the projects highlighted for the Urban Areas its really a function of the patterns of migration in the present time. The urban concentration happening world wide is also happening in the Philippines and the projects concentrated in the NCR are mostly infrastructure projects that alleviate the infrastructure deficiencies of airports,highways,trains in the NCR. In a way we can say that the present administration has a lack of imagination (for me this may have been brought about by the opposition people have for daring projects). Most of the NEDA approved projects are just extensions or capacity buildup of existing infrastructure.

      • Joe America says:

        Your observation gets right to my point that it would help if the projects were framed in a national vision. They would have a comforting fit rather than being debated on their own merits, outside that vision. The lakeside dike expressway ought to be expressed as essential to take the pressure off Manila and the southern expressway. And there should also be trains going south . . .

        And north . . . to Clark . . .

        Catch up, catch up . . .

  3. edgar lores says:

    *******
    I am glad that Australia is a substantial contributor to the nation’s progress.

    Individual: “Aussie Aussie Aussie!”
    Crowd: “Oi! Oi! Oi!”
    *****

  4. karl garcia says:

    what steve says is true nice to have an anti corruption drive but if that means adding another signature or adding anything to make sure everything is clean, nothing will happen.

    meandering digressing or what have you.

    delay of payments to contractor like hanjin who built repairs for the pnr is caused by overlooking something like relocation of squatters funds. I heard that the funds for relocation have to be taken from the funds meant to pay the contractor so now the contractor have to beg to be paid.
    there might be more to it like deviating from the scope of work, but that’s the gist.

    now do you have to cop out and say that’s the fault of the former administration.

    that is just one problem.

    another hindsight 20/20 thing.

    nbn broadband zte

    a lot of what ifs. what if it was allowed to proceed, what if this did not happen, what if.

    then we would not have a report concerning as one with the slowest internet connection ever.

    perhaps,perhaps perhaps.

  5. karl garcia says:

    I know the focus is infrastructure investments. Defense spending requires investments too. We want to have new ships. how can we when shipbuilders from europe to korea are having money problems. they would love to build ships for us because that would ease a lot of burden to their money issues but could they deliver.

    • Joe America says:

      The Philippines has ship-building skills. It needs designs and an order or two. Small missile carriers, missiles too, large troop carriers, why not? Maybe we can figure out how to make ferries that are not inclined to tip over in rough seas while we are at it.

      I agree, we should look at defense as infrastructure for security. And education as infrastructure for ingenuity and skill.

      • karl garcia says:

        i know our ship building skills have been mentioned time and again.

        there is a filipino version of a “if there’s a will, there is a way”.

        kung gusto may paraaan at kung ayaw madaming dahilan.

        we just added that if you don’t like you just make excuses.

        The thing is designs are vendor dictated. sometimes it depends on who makes the first move until someone claims that they should be considered instead, then the mess follows.

      • Steve says:

        The major shipbuilders in the country are foreign owned… they may be doing the actual assembly here, but are the designs and subcomponents coming from here? The Philippines remains a long, long way from being able to produce modern military vessels, and suffers major obstacles in the low quality of science education and the tiny number of graduates produced in key scientific fields.

        Ferries that don’t tip over might be a more realistic aspiration, though if you sail overloaded with unsecured cargo damn near anything is capable of tipping over.

        • Joe America says:

          Ah, I didn’t know that, about ownership. I just know it is big business in Cagayan de Oro and General Santos City. I guess I don’t see the barriers. How many scientists does it take to start a company? Go through the OFW roster and pay them overseas wages, or recruit new citizens from other lands like we do basketball players. Just zip them through congress and, voila, a bona fide citizen engineer. I think the guy who designed my house could do a boat, frankly. He’s a genius. Give him some samples, and . . . again voila . . . a small missile carrier. Or ferry. He’s ambidextrous.

          • Joe America says:

            I think of the industrial powerhouse the US became in WWII, in just a few short years. How many engineers did they have at the start? I think what is missing here is the will to find the way, the confidence, the cockiness (competitive verve, not smart-mouth), the drive, the problem-solving.

            • karl garcia says:

              Steve got it right again. Yeah the brain drain does not even have to be exported. Multinationals as Steve mentioned own shipyards. Koreans,Australians,etc.hire Filipinos of course, but they virtually own their brains so to speak.

              • karl garcia says:

                we have the cockiness but not the competitive verve, the smart mouth types outnumber the former. finding a way is called deskarte. Oh yes we find ways not in solving anything but in making excuses. For us confidence = cocky.
                But as you said enough with the crab more with the positive reenforcement.

              • Joe America says:

                Yes, I had to put the parenthetical expressing into the sentence after I wrote it, because cocky does exist. Interesting, so does competitive verve in some arenas, like the skating rink or basketball court. But it seems not always to exist in the arena of problem solving. Yet it did in the handling of the Pope’s visit. I don’t know. Maybe it is the vision part of the verve that is missing.

              • karl garcia says:

                yeah no one size fits all competitive verve. btw i saw the parenthesis i was adding not disagreeing that time.

  6. karl garcia says:

    In another post ,there was mention of technocrats,politicians, kkk and the dotc.

    I think this is a fair enough article from the inquirer.

    http://business.inquirer.net/185215/delayed-dotc-projects

  7. karl garcia says:

    Going back to competitive stuff.
    The biddings here are supposed to be competitive but it is of competitive one up manship. (called here ayaw palamang, or ayaw malamangan) If an offer is better the one who does not want anyone else to be ahead will kill that offer with TROS, press releases about things that happened ten years ago and words like disadvantageous to the government or simply overpricing suddenly appear. Some are legit,but many are delaying tactics.

    Going back to the link about DOTC. It was said that DOTC undersectretaries were afraid of graft charges,hence the delay or non action.

    I don’t agree that anti corruption should be used as an excuse not to make things happen. As you said problem solving is what is lacking..

    If there are hurdles, one must not just stand there, one must jump over it.

    • Joe America says:

      Yes, there seems to be a considerable lack of objective discipline and a lot of negotiating on terms other than the deal itself. So we have a lawsuit filed by Senator Osmena against the winning bidder of the Cebu airport reconstruction, and charges that the winner is not capable of pulling it off. Well, these are matters that should be considered in the bidding itself, and resolved outside the courts. The courts should be last resort, not first. Such a dysfunctional way to get things done. My biggest gripe has been with the switch in locations of an MRT/LRT common station to favor one mall developer over another, and to save up to a billion pesos. Meanwhile, commuters will have to hike down a long tunnel to make their connecting trains. As if the goal of the project is to save money rather than help commuters commute. That billion pesos spread over a 50 year timeframe is insignificant, especially if more riders ride because the connection is EASY. I fumed for months over that deal, and it is when I first grew suspect of Sec. Abaya’s competence. Until then, I had put all the delays and problems as “due course of business” for big, complex projects. But now I need evidence to show competence, rather than the other way around. Lost confidence.

      • karl garcia says:

        As a commuter, I know it will be hard. Some say in other places people walk, I can do that I am still in my forties, but what about the old people. In those other places even walking is made easier. Here we complicate stuff. An easier option is very available, our decision makers choose the harder one.

        Setting aside my closeness or my father’s closeness rather to the Abaya family, until proven otherwise this is a case of favoring the Ayala’s. I don’t blame you for your loss of confidence.

  8. karl garcia says:

    A promising company that is a gathering of experts is this renewable energy company whose expertise is solar energy. If the only complaint is it is founded by a son of a senator, I would not see that as a problem.

    http://business.inquirer.net/179216/a-power-plant-on-every-roof

    i guess the ship designers,naval architects, and potential builders can form such a company if given the chance.

    • Joe America says:

      Two challenges to starting a company. 1) It has to be able to work with state secrets, that is, have a security clearance, if it is to do war machines, and 2) start-up would require substantial capital, and that mainly rests overseas (a non-starter for military work) or with the oligarchs. I think it has to be a government funded and managed project. Oligarchs are interested in money, not State well-being, as far as I can discern.

      • karl garcia says:

        I have to say you are correct on all points.

        • karl garcia says:

          since we are back to constraints. one big constraint is previous experience in building or designing in short track record. which makes it impossible for newbies unless its a first mover unsolicited advice thing.

      • karl garcia says:

        i myself mentioned the ayalas and the sys(sm) in one form or the other.
        Oligarchs, damn!

        I almost forgot it was just recently that i tagged along in a gathering of retired dnd,,coast guard,navy and other maritime people, they were thinking of forming a company, but it lead to nowhere puro drawing so to speak. I guess it’s a if you can’t beat them join them thing, concerning joining or cooperating with foreign companies.

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