Mumbai, India
June 26, 2018
Hon. Heng Swee Keat, Minister of Finance, Singapore; Hon. Bambang P. S. Brodjonegoro, Minister of National Development Planning of Indonesia; Hon. Preeti Saran, Secretary, Ministry of External Affairs of India; Mr. Kevan Watts, Vice Chairman of the HSBC Global Banking; fellow delegates; distinguished guests; ladies and gentlemen: good afternoon.
Thank you for inviting me to this valuable workshop.
The initiative to improve infrastructure across the region is a far-sighted one. In the immediate term, it will help stimulate economic activity in all our economies and help us build inclusive growth for our people. Over the longer term, it will improve the interconnectivity of our economies and foster productive exchange.
Improving interconnectivity is a strategic goal set by the ASEAN member-economies. It includes not only improving roads and ports to make the movement of people and goods more efficient. It involves rapidly upgrading our digital infrastructure as well as making our trade and financial policies more coherent.
All of these will hasten the development of a regional common market.
A dynamic regional common market will provide our economies a strong base to build competitive industries and profitably trade with the rest of the world. An emergent Southeast Asia will complement the mature economies of East Asia and the rapidly growing Indian subcontinent. This arc of progress will constitute the center of gravity of the global economy, the engine of economic expansion that will help propel all other economies.
The Philippines understands the urgency of building up our infrastructure base. We subscribe to the objective of enhancing regional connectivity. We grasp the strategic importance of developing the Southeast Asian region as a strong base for trade.
President Rodrigo Duterte has launched a massive infrastructure program to improve the movement of people and goods across our archipelago. We have nicknamed this program “Build, Build, Build” and it involves the completion of 75 strategic projects nationwide over the next few years.
Of these, 35 projects have passed the required approvals and are ready for execution.
Last year, our spending on infrastructure rose to 5.4 percent of GDP, about double the average annual spending on infrastructure the past three decades. This year, with 25.4 percent of the national budget committed to infrastructure investments, we will spend the equivalent of 6.3 percent of GDP for the Build, Build, Build program. By 2022, we project public spending on infrastructure to increase to 7.3 percent. This is the highest investment in infrastructure in our history and, as a percentage of GDP, possibly the highest in the region.
In addition to public spending on infrastructure, we have encouraged the private sector to undertake investments in improving our infrastructure backbone. Several tollways have been built on this basis. We will soon expand airport capacity for the Manila area on the basis of private investments.
The infrastructure buildup on this scale is made possible by a comprehensive tax reform program that modernizes our tax system to ensure robust and reliable revenue flows to government.
The tax reform program seeks to make the system simpler, fairer and more efficient. It likewise seeks to achieve a level playing field for businesses by making fiscal incentives more transparent. Since the passage of the first package of the tax reform late last year, revenue collections exceeded expectation. The tax reform program guarantees fiscal stability even as we embark on a costly infrastructure investment program.
This massive infrastructure build-up is also made possible by the expanded support from our friends in the region and multilateral agencies such as the Asian Infrastructure Investment Bank (AIIB).
We have likewise modified standard public-private partnership models by using ample inflows of official development assistance to hasten the execution of the strategic projects. After the projects are completed, we could transfer them to the private sector for operation and maintenance. This will provide financing for other projects down the road.
The Build, Build, Build program doubles the capacity of our domestic economy to provide employment for our people. With its multiplier effects, it will help stimulate economic activity and help us raise growth even further. With the efficiencies created by modern infrastructure, we encourage investments nationwide. This will pave the way for a shift from consumption-driven to investments-led development for the country.
In pursuing our strategy for rapid economic expansion, the Philippines relies on lessons learned from the development experience of our neighboring economies. It is also inspired by the common effort across the region to enhance the connectivity of our economies.
We are extremely grateful for the support extended to us and we are doing our best to lay down the foundations for a faster pace of growth in the quickest way possible.
We especially thank the Asian Infrastructure Investment Bank (AIIB) for the funding support for Phase 1 of the Metro Manila Flood Management Project, the first project in the Philippines co-financed by the institution with the World Bank.
Floods, particularly during the typhoon season from June to October, are a recurring problem in Metro Manila that cause horrendous traffic jams and considerable damage to infrastructure. Typhoons and floods also claim lives and lead to massive economic losses. This project aims to improve flood forecasting, reduce long-term flooding and modernize pumping stations and build new ones in the national capital region as well as its surrounding areas. The project will help protect lives and properties especially in low-lying areas of Metro Manila.
We are hopeful that with the approval of the funding for this project, the AIIB would find it feasible to invest in other big-ticket infrastructure projects under the Duterte administration’s “Build, Build, Build” program.
I am sure that workshops like this one will help us find even better solutions to get things done more efficiently.
I wish you a productive workshop and thank you for the strong partnership you have extended to us in this shared effort to quickly and boldly build inclusive economies for our people.
Thank you and good day.
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