Philippine Economic Briefing in Davao
March 9, 2018
Saranggani Province Governor Steve Solon; Sultan Kudarat Governor Pax Mangudadatu; fellow workers in government, friends in the business community, non-government organizations, academe and the media: good afternoon.
Thank you for this opportunity to brief you on the overall situation of the Philippine economy and the special role played by Mindanao in our country’s emergence.
In a recent survey among members of the global investment community, the Philippines ranked first among the best countries to invest in. We are proud of this recognition.
It caps the many years of hard work we invested in putting our economy in order.
Over those years, we worked down our foreign debt to the eminently manageable level we have now. We exercised exemplary fiscal discipline to achieve investment grade credit ratings. We sustained reforms in all areas of governance to improve the ease of doing business. We implemented hard policy reforms to make the economy more vibrant and our enterprises more competitive.
The recognition naming the country as the best place to invest in must have taken into account the recent efforts to ensure robust revenue flows. The recently enacted Tax Reform for Acceleration and Inclusion (TRAIN) law accomplishes the feat of reducing income tax rates for 99% of our people while increasing reliable revenue flows for the government’s increased spending on modern infrastructure and expanded social services.
The fiscal space opened up by budgetary discipline and tax reform enables the government to aggressively pursue the Build, Build, Build program. This program will link isolated communities and local economies to the mainstream of wealth creation. It will open up more land to modern farming systems that will boost our agriculture. It will bring down the costs of moving people and goods across the archipelago to make us competitive with our neighbors.
This year, with a fortuitous convergence of trends, we fully expect to grow our economy at 7 percent or better. The infrastructure program will provide the strong stimulus for growth. With substantial investment inflows, we aim to make our economic development investments-led. By creating quality jobs for the large mass of young Filipinos entering the workforce, investments-led growth will be more inclusive.
The end goal of all these efforts is, of course, to bring down the incidence of poverty. By 2022, we expect to bring down the poverty rate to only 14% of the population. That will be a significant milestone towards building a caring and nurturing society.
The centerpiece of our growth story will be the island of Mindanao. Long neglected by the centers of political and economic power, the island hosted many years of festering conflicts and failed local governance.
Beginning this year, a new Mindanao story is set to unfold. The island is the focal point of major infrastructure projects that will enhance economic production, open new irrigated lands for our agriculture and make the movement of goods and people easier. Five of the Duterte Administration’s flagship infrastructure projects already approved by the NEDA Board are on this island. Allow me to go through these projects.
The first is the phase two of the Malitubog-Maridagao Irrigation Project targeted to be completed next year. This is a 5.4-billion peso-project, and is located in North Cotabato and Maguindanao, which are potential rice baskets for the entire Philippines. We will irrigate almost 10,000 hectares of land in 56 conflict-affected areas.
The expansion and improvement projects in the Davao International Airport and Laguindingan Airport Projects worth P40.57-billion and P14.6-billion, respectively, will expand the capacity of the passenger terminal and cargo to accommodate the fast-growing number of visitors to southern and northern Mindanao. Completion of both airport projects is expected by 2025.
The third project is the Improving Growth Corridors in Mindanao Road Sector Project, and this involves the construction and improvement of a 280-kilometer network of roads and bridges in the Zamboang Peninsula and Tawi-Tawi areas. This project will cost 21.19 billion pesos and commence this year. Completion is expected by 2020.
The Panguil Bay Bridge will be an engineering marvel. It will be 3.5 kilometers across Panguil Bay from Tangub City, Misamis Occidental to Tubod, Lanao del Norte. This bridge will dramatically reduce travel time between these two points from the present two-and-a-half hours to only 10 minutes. It will be built at the cost of 4.86 billion pesos and construction will begin this year and will be completed by 2021.
We are also ready to begin construction of the Tagum-Davao-Digos segment of the Mindanao Railway project later this year. This segment will be 102 kilometers long with a design speed of 160 kilometers an hour. So we hope people will make sure that their carabaos are not crossing the railway. It will cost 35.26 billion pesos and should be completed in 2021. An efficient railway system will relieve road congestion, reduce the cost of moving goods and people across long distances and spur economic activity. By 2022, the Duterte government expects to complete 1,900 kilometers of rail lines in both Luzon and Mindanao. For your information, we only have 77-kilometers of operational railways at the moment and they are all located in Luzon.
What I have mentioned are only the projects that have passed all requirements and are ready for execution. We also have ongoing big-ticket infra projects in Mindanao ready for completion.
The Davao City Coastal Road is an 18.5-kilometer public works project that will help relieve traffic congestion in this booming city. Construction began last year and will be completed in 2022. It has a project cost of 19.80 billion pesos.
The Mindanao Logistics Infrastructure Network, which involves the construction or improvement of 2,567 kilometers of roads across Northern Mindanao, Davao, SOCCSKSARGEN and the CARAGA regions. This network of roads will cost 98.15 billion pesos when completed around 2019. The project has been on-going since 2015 and will link farms to markets.
There are other strategic projects currently under study by our economic experts. Over the next five years, the Duterte administration expects to invest 8 trillion pesos in new infrastructure. This will stimulate our economic growth in the short term and support the development of a competitive economy over the long term.
While we are busy financing and launching new infrastructure, let me assure you we have not forgotten communities ruined by war or calamity. Of course, all government agencies are involved in the rehabilitation of Marawi City. A Bangon Marawi Comprehensive Recovery and Rehabilitation Plan is now in the final stage of formulation.
This thing is clear: Mindanao will be the spear point of our rapid economic growth. It has the headroom, the talent, and the natural resources to perform that role.
I look forward to a fruitful economic briefing today. Mindanao is at the front and center of our development efforts. The island will benefit from investor interest and the staunch support from our development partners like the ADB.
Thank you, and I wish you a good seminar. We have experts here from all the infrastructure agencies as well as the Central Bank, and I know you will have a lot of questions for them.
Thank you very much.
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