CNN Philippines Business Forum: Building for the Future

a grand plan to address the country's failing infrastructure a total of eight pravin pesos spread over six years designed to spur economic growth to create jobs to reduce poverty and to usher in a golden but the DJ adminstration field program has hit the snake blame it on the delayed 2019 budget 100 billion pesos worth of key infrastructure projects and programs are now on hold how will the government make up the lost time how can the administration stage a comeback after a series of setbacks so many questions remain and we want to know the answer special presentation building for the future part truth welcome everybody thanks for fighting your way through the Manila traffic to be with us today we always appreciate it here you and I stood here 15 months ago so good to see you again and it is so great to see so many of you here today in this auditorium this is the second part or part two of our building for the Future Forum last year we did a comprehensive review of this massive plan worth more than eight trillion vessels I think comprehensive is a good way of describing that we were here for a good hour and a half and we got through a lot of the key issues and we're hoping to do that once again today I think the takeaway from last year was the fact that the government's very firm that there was a unity of decision that they were on course with this project it was going in the right direction it was interesting hearing in the criticism from the private sector saying what about us where's the access for us the PPP the public-private partnership I thought that was very interesting and you can see why because this is such a massive program 75 flagship projects and many more on top of that but of those 75 just let me read you a couple six airports nine railways three bus rapid transit 32 roads and bridges four seaports so the question is I guess why we come back here why we're doing it again today well press of Duterte is ending is beginning the the second part of his of his administration so we've got three years to go it's a good time to revisit this to see whether this government this administration can deliver on what they call this golden age of infrastructure and who many things have happened since that first forums on 15 months ago while the build build build program has inspired much hope for the economy and relief that the country's infrastructure would finally be addressed there are concerns about its impact on the country's debt the chances of Congress passing the tax reform law for those much-needed funds and the possibility of over dependence on luhan's especially from china it's right tenza there was the hiccup i wouldn't call it the Black Swan because it's happened before but there was the delayed budgets that but the first quarter budget discussions I'll call and that went on and eventually the budget was passed in April that though did mean delays they had to enact the 2018 budget for the first part of this year q1 and that led to delays in projects on build build build and because of that and many other smaller hiccups if you will the government is on catch-up mode interesting because last year that's what we talked about how the government is trying to catch up when it comes infrastructure so government on catch-up mode right now to meet its full-year economic targets and now we want to know are we doing enough to stay the course will we see a golden age of infrastructure by the end of President Emeritus term in 2022 and that's just two years and ten months from now and how soon will the economy benefit from build build build so there are the questions there the big questions I would like now to ask our panelists to join us on stage and would you please welcome the Transportation Secretary Arthur to guard [Music] Public Works secretary mark Villar [Music] we were going to be joined today by a nest open air but of sadly due to personal reasons he could not make it today but with us public-private partnerships center executive director Ferdinand Batson Hana missed and I'll buy second District Congressman Joey Sal said ah I'm also being joined once again by members from the private sector please welcome at Jorge see he's chairman emeritus of the anvil Business Club also with the PCC I and the Filipino Chinese Chamber and the executive director of the British Chamber of Commerce please welcome mr. Chris Nelson [Music] gentlemen peace have a seat and in the words of one of our colleagues let's get after them gentlemen again thank you in this a couple of familiar faces two secretaries thank you again for making your time available to us we really do appreciate and thank you to all our guests this afternoon I would like to speak my direct my first question to secretary tagada and to secretary vilya if I may we talked about the delay as we talked about the unexpected headwinds just then just to set the scene if you like it's not just domestic with with the budget delays also the global economy has been slowing 15 months ago things were looking great and there's been a few interesting developments should we say globally as far as the economies are concerned so I guess my question opening question broad question is what has been the impact on your timetable over the past 15 months how negative has it been for build build build for the last 15 months we as you have mentioned in your introduction we have addressed six airports we are now about to start nine railway projects and many more flagship projects there obviously was some delay caused by certain factors which to our mind we didn't consider it as an insurmountable issue but rather we considered it as a challenge still to achieve our targets so that the build build build team formulated a cuts a plan because of this cuts a plan we were able to address the seeming delays caused by factors like delayed project problems on right-of-way this will address so because of these cuts our plan basically the cuts a plan consisted of two parts insofar as transportation is concerned number one we went into multiple contractors award that's one number two as we go into multiple contractors award we do a 24/7 construction period remember that the projects then was predicated on 10 to 12 hours work on a single contra what we did was to divide the projects in two phases so that you can have multiple contracts and then we have imposed or rather we have agreed where our contractors to do a 24/7 we felt them by increasing the number of contractors and by increasing the number of working hours we felt then that this will occur well to our cuts a plan and so in fact indeed we are there we are on track right now you're caught up right now we right now in fact on some projects its advanced which and then to you secretary villa from York from Public Works where are you where are you similarly caught up that to begin with last year we had a banner year in fact we've had the highest disbursement grade 590 billion pesos of course there were we all face there were certain delays with the budget but we did have continuing projects so we did have we did have disbursements in the first half of the year not as high as we would have liked but because of the delays we did formulate a catch-up plan which at this point we are we are where we expect to be based on the new circumstances so secretary to god and secretary we are like you were saying you've already caught up well uh no problema no no problems but when we talk about the you know the you know if we were going to assign a percentage to it um delay in the approve of the budget you know what what percentage would that be how much of the delay is because of this percentage-wise estimate yeah maybe I will say it caused a delay of around 30 to 35 percent on our part so that basically because of that effect of 30 to 35 percent we thought that he cuts a plan and we believe them that he cuts a plan which we have formulated will certainly be able to put us on track [Music] as far as looking the statistics I think they're 11 now under construction given there are 75 you've got another slightly less than three years on built built built only 38 of these 75 projects have been approved how close do you expect to get to the completion at the end of the term of this administration to those 75 projects how many will be done what's the target before I go into the generic percentages of how many or how much can be done let me if I may be allowed to inject certain specific things on the projects that uh pertains to the Department of Transportation number one whereas before some 15 months ago we were talking of plans about trails we're talking about subway and the railway tracks from try to to ban from the improvements up mr LRT one LRT to MRT seven mrt-3 from the Bicol Express and from the mindanao railways those were then plans asou is speed except for the mindanao project which is which will hopefully be started by the first quarter of next year except for that everything now is believe me sir under actual construction I got my percentages on what is being done now I will go for other than attainment of 65 to 70 percent let me cite to you also matters related to the ports airports there is the vehicle International Airport that has been an keep on shell for many many years if I tell you now that we are now 57 percent completion and we are targeting actual completion of the structures by June of next year and be operational by end of next year then that is a performance indeed put the the development on the bulletin Airport and believe me that's just the another unsolicited proposal mom another unsolicited yes Manson it's now it has Ebola Khan has been subjected to Swiss challenge and it has been awarded so the construction by the winning proponent will be started he said not later than the end of the year so these are concrete manifestations of what is being done in relation to the built built built in relation specifically to the Department of Transportation okay just just before we move off the secretary Leah on that point because one of the issues about the budget delay was the underspend and it's actually difficult to catch up to actually spend the money there there are sort of bottlenecks is is that a is that an issue now or are you is there a free-flow financing to where it needs to go I think the DBM will attest to this last year the there was no longer a problem with underspending if anything we spent I mean more than we expected but coming on this year like we mentioned earlier I look at it in terms of an a yearly basis of course there was because of the budget delay there are some delays in the first half of the year but during that it was during that point that we had already been planning how we would catch up by the end of the year so we have set a target of 700 more or less about 750 billion to disperse which is significantly higher than a dispersements from the year before at this point this year we've dispersed about 300 billion so we're catching up and we expect to hit our targets I think that's the important thing you know we had we said it target for the end of the year and we will hit it and so eventually so in terms of although the the first or second quarter might not reflect but eventually the third and fourth quarter will compensate for what is missing and we will hit our targets by the end of the year I like lost the private sector if I could from from what you see about how the bill bill bill is progressing George to you first George say desist what you're hearing is that tally with what you're seeing and what you're hearing yes in fact we welcome people sometimes in the some of the reports that say that it's behind to come visit each of the areas that we operate in and we operate internationally that the roads are being built and it's going so fast it's very unusual because we've been in different chambers of commerce and actually it's not unusual for a project to take 9 10 15 years to start and for this government we're able to start it within its period and finish some of them within its period British chambers perspective we first of all fully support the infrastructure like a lot of the chambers do I think everything we can plead it I think the challenges you face are very hard and then I think we got to look at what is the impact later on the other thing I would draw out of course is that the the target keeps moving we're in a great place here BGC it just keeps expanding from the private sector which then puts more strain on the infrastructure and what you have to meet so we fully endorsed the the direction I just think the challenges are going even more because the private sector is also going very strongly which is great for you to try to meet but we should remember that and all the say think we've got to look at plans going forward in terms of Education in terms of how you commute this is a prime example and I just make one comment these gentlemen secular lugar de Ville yeah they were all in London last year actually next almost one year and I think London is a great example of how you can move a lot of people around on public infrastructure and therefore that to me will be the challenge going forward how you educate people once you commit these because we sit in a place it'll take you 30 minutes to park your car I just want this before we wrap this up I just like asking you Joe if I could I'm talking about budgets being approved realistically we let's come back to this 75 projects what realistic will be achieved by the end of this administration it won't be all 75 will it well I can I can speak for our department of course the 75 was identified by the Neda but I can speak for the Department of Public Works and highways in terms of our roads and bridges all of our plans that for this for this the major projects which include some of the bridges and major roads that is onyx pine Expressway not where all them are either in advanced stages of construction or in terms of planning they're ready to be started in time to be finished by the end of the term of the president so I would say a bulk supermajority of our projects are slated to be finished by 2022 which is really the original plan of course you know we we have also projects that are long term we you know these these projects don't and just at 2022 we've built a pipeline of projects that that runs to the hundreds of billions of pesos and it's we've never had a pipeline that big so what we have planned so far we're on schedule but of course we don't think just at the end it doesn't there's no hard stop at 2022 we still have a pipeline of projects that we will continue to pursue but your thought you're saying you're ahead of schedule for projects that are already under construction meaning that they have been approved yeah but there are also like 38 something like 30 projects that have not yet been approved of course the next question is and we wish that Ernie burner was here to answer that is when it is gonna get approved know what's going on why is it taking so long does anyone have the question are we gonna go to a break for a sec do you like to have a go in so far as the Department of Transportation is as I mentioned earlier if I were to be followed hopefully I'll try to strive for a 100% a payment of what I have formulated but putting realities to what is if I make 70 to 75 percent I'll be more than happy let me cite to you certain specifics number one please note that we are introducing another concept the concept of partial availability meaning we will not wait if the project isn't finished yet and can be used yes the project's progress secretary together can you hold that thought we need to take a very quick break Andrew we're gonna continue this discussion guide you see discussion thank you very much after this break [Music] it's briefly just finished impartial repairability you know it has to be admitted that there are certain projects that cannot be fully completed during the term of the president but our obsession our target is to be able to experience the comfort of these infrastructures we are putting up during the term of president so that we have introduced what we call partial availability meaning to say we don't have for the entire project to be completed when certain sacred table but pieces can be done then it can be enjoyed and be partially operational just want to come back to talk about domestic investment I mean if I could turn to you congressman is the funding and the debt to GDP ratio comfortable because we spoke about this last year and the budget secretary jacques neau at the time said that growth of the Philippines will offset the the growth of debt basically because because of the terms of the debt we're getting which I understand but growth in the Philippines a full percentage point has been knocked off looks like I'll be knocked off this year and perhaps next year that's what the forecasts are is that enough to worry you that the budget will not be all the debt won't blow out the deficit I know number one because our debt to GDP is only forty-one of course under the plan it should have been 36 which means that the economy should be running faster at 7.5% instead we're running at 6.2 on the average with respect to going down beneath 5.5 I don't think so it was really because of the budget today you don't think we're gonna get worried about the cyclical things like even a us-china trade war I'd rather go into the structural changes that are being done on the reforms the more secular trends in the Philippines especially the demographic and plus of course our social cultural specificity as a nation I think really obvious well for our stronger growth than what most people expect so on what's really missing is the private corporate response to the public invest stimulus last year we remember very clearly at Francisco video was saying that they had wished that they could participate more in the build build build program and now that the government is playing catch-up or well now they're saying we're not trying to catch up now should there be you know should there be more public-private partnerships should there be more private sector involvement in this build build build program so that we do see the golden age of infrastructure by 2022 my reply to that is there's actually quite a healthy participation of the private sector in in the build build build it's just that it's not perhaps being communicated as as much as the other projects so in fact there are 21 projects in the ICC process ICC is the investment coordination committee that approves projects of that go beyond a certain amount so six of these are airport six are railed or two that are road projects I actually have a map here of where these are you can see there they are distributed across all major islands of the Philippines but of course most of these are in in Manila so the green ones are airport projects and then the red ones are rail projects and yellows are other types of projects by these kinds of projects we have even one seaport project in some Wonga so I guess the the the issue is that we're not communicating this as much as the other projects and and that the explanation is that because these are unsolicited and most of these are undergoing appraisal and evaluation we can't really talk much about this until they have reached approval stage like the San Miguel airport which has been approved after the whole process took 14 months for the ordinary men and women what's important is jobs jobs jobs jobs like you know build build build and that was one of the promises of the there the administration that this would generate jobs and enough jobs for Filipinos Filipino nationals where yes Joey where we in that if you look at the April s we've recreated one point three four eight four million jobs and the average for the first up is four hundred eighty four thousand that's actually if you we expect a pick up probably because more people went into college in the second in them because this is the first year that the senior are in going into college and second is the fact if you look if you disaggregate four point two to two million is in a construction that's an increase of almost there's an increase of two hundred fifty thousand and I attribute that to bill bill bill we need to take a very quick break again we'll be right back [Music] welcome back to a CNN Philippine special presentation building for the futures DBM is saying 52 of the 75 flagship projects are Oda how confident are we that we are going to get that funding that we are going to get that in so far as we are concerned the Department of Transportation most of our projects are Oda the loan agreements have been signed and executed so where our defense it's there you know insofar as our requirements are concerned there has been approvals and we now find a more understanding and cooperating House of Representatives and Senate that will understand our budgetary requirements and we are competent dica of requirements will be there we have heard that China has been slow in their take-up of Oda funding for the Philippines is that true we are working on it now different countries have different approaches in fact during the state so it sounds to me like they're not China's not where you would expect it to be as far as funding [Music] requirements being required by the Chinese government and we try to seek compliances are we delayed at this point in time no is China driving a hard bargain you said that you're still negotiating with them and there has been a lot of talk and a lot of what's the word evidence that China has not a drop drives very hard I say driving a hard bargain we have to define our terms well if you compare it with what we've seen in Sri Lanka in Pakistan where there have been problems with repayment of loans which has left lip collateral difference between the China and China's relationship with our other countries as regards our project what is the basic difference we choose our project in other countries that have been funded by the Chinese government it is choose the project the site of the projects I'm telling you at this point in time we don't have is workers in the projects which Realty r4d pwh will Aladin well let me just really quickly basically I don't think there's anything wrong to begin with to have Chinese specialists in many of our projects such as the such as the inter-island bridge program we've never had projects of that magnitude before which is why we tap foreign countries to help us bring technologies here part of that technology transfer is also having specialists who come here it also teach us how it's done so if we have certain projects in fact Chinese the Chinese have given us grants for feasibility studies and even donated to bridges to us completely so of course they bring in their specialists but as a majority it's still the majority of the workers are still Filipino but nevertheless there are specialists who have certain skills that we do not necessarily have yet and I don't see anything wrong with having them here to help the technology transfer just coming back to what you were saying mr. C about this employment level of employment in the Philippines this is going to obviously continue for years if these infrastructure programs continue to roll out as we expect them to how is that going to be solved but how is this in employment shortage can resolve will it be having to import labor well part of it is having to import labor and use new technologies as we did some our Institute did some studies of some of the construction projects they have some Chinese workers but they are there and it's up to us to learn the techniques that they are putting in now of course we have tests they are doing a training of more workers but a lot of it we feel in the business sector right now is an attitude the issue because people are very choosy about their jobs and also there's legislations that we have to deal with that are making legislations in tax and so forth that might have an impact here in terms of the investments as well as the workers attitudes let me put some numbers into the discussions regarding jobs jobs jobs in relation to rails direct employment in relation to rail projects we are estimating around 58,000 direct employment indirect employment more than half a million only on rails now in order to address the requirements there are what we call on-site skills training and off-site training the up side training consists of two parts one as mentioned by east testa the other is doing it on a long term we are putting up for example in rails a railway Institute just three numbers unable underemployment from 18 to 13 release 1.8 million in other additional under additional s less under employed we have 2.3 million and unemployed and actually our participation rate has gone down from 66 to 60 because people went to school alright and at that on that note we just need to take a final quick break this is a CNN 50 special presentation Greta [Music] [Music] secretary together you were talking about railways rails can you tell us about the update on the Mindanao railway the Mindanao railway we have more or less address the issue of alignment with the alignment where the system will pass da ghoom tavaa ghoom Tico's Davao our target is to be able ma'am to be able to start actual construction by the first quarter of next year but just as an aside why is it called the Mindanao railway if it's if you know the line is Davao digo stuggle that's basically the entire network mom has three phases you're gonna cover the entire Mindanao but for the first phase remember I mentioned about partial operability the first phase will involve that portion to enable us to have partial repair ability I'd like to switch the conversation to starting with you Chris Nelson we spoke about this last time transparency and we heard from representatives of the government how you were setting up web sites how you were doing the transparency to avoid any corruption or any any accusations of corruption in the bill bill bill Chris someone looking at this a overseas investor how comfortable are they that the Philippines is going about this the right way there's definitely been improvements and you've seen that in the index is I think of course there also a related issue that means things get are obviously slower right because of the process so it's a it's a pro and con it's not just a one one win-win I think for overseas investors they want to understand what's going on one thing which is not spiffy bill bill but I think we should bring it up here because I think it just goes into the context of the government is the passage of the ease of doing business that I think take do you mean yeah well they caught use of doing business they set up a department called the anti red tape Arta and I think that's a very important signal now of course we have to follow through with that signal and the reason I raise that is that when we do our missions to the UK the number one question is actually on the ease of doing business Tocqueville er since we're talking about ease of doing business and we'll hope you don't mind let's talk about the ease of getting right-of-way how are things in that department well in terms of you can see like well I'll give a concrete example here in Metro Manila we've seen that we've seen the we've recently were on pace to deliver two major projects that will really contribute greatly to the D congestion of ATSA which is harbour link and the skyways and yes it's called the Skyway stage 3 which will essentially connect the index to the air sex now this is one of the most challenging our right-of-way and it includes numerous factories buildings settlers which you're able to resolve because it's a it's about the tools are there we have a process for a right-of-way it's a matter of focus having the having a specific team dedicated to each project and political will Ferdinand pixon one of the things that I'm astonished by it with this forum compared with 15 months ago is how positive private enterprise is becoming with the PPP situation because it was very clear 15 months ago that private enterprise was not happy so are you saying that this is now no longer an issue that the the corporate Philippines is being included enough in this bill bill bill are you happy with the ratio of Oda versus government funding versus PPP I can only base it on the evidence and the evidence I presented earlier where you now have 20 or so projects because out of the 21 one is so it's also PPP but it's a solicited type but when you have investors proposing projects to government that's a sure sign a sure indication that they want to participate in and these are not measly amongst these are billions of these are unsolicited unsolicited because as opposed to the bill bill bill program the 75 big sort of big-ticket items mm-hmm so private enterprise is going its own way on unsolicited what about getting inside the tent if you like inside being operating on those 75 yes well we will two things one is for the or the eight that you mentioned there is a good chance in fact we had discussed this also in the nether that those that would be built through Oda would then be operated the operation and maintenance could be done then through a PPP meaning the private sector [Music] for our panelists today we wanted to ask you this as well for the private sector representatives especially you know you've been down this road you've seen big plans come and go how optimistic are you that this is going to be a game-changer these are your final words and then we'll go to the other representatives Chris Nelson first sure first of all as I said for me it's not as much as I like to hit 75 that's not the important thing I think the question is the direction I am optimistic however I'm also think that the private sector is growing extremely strong which produces even more challenges for you in terms of infrastructure building and I would just say I'd like to see along with the other chambers more foreign investment for more involvement and more signals we can do that I think well because I think it's a lot of support and expertise certainly in the UK but in all of other countries and that will be here to assist you we are optimistic but there are still challenges thank you George as we've seen unlike before we're not just talking physical infrastructure the government has forced a convergence of the payment systems and financial systems and the human resource development however with there are three things we want to see one is the Filipino as that President himself has said has to take this up and put their effort and focus into using this so they can participate second is the technology is going to be changing so you know are we going to make the sharp turns because this is going to change the type of business that we have and I forgot the third but thank you mr. Bexon final final words what was mentioned by Congressman cell said their earlier structural reforms internal structural reforms are really very very important and because this helps to create more or say an environment that is more conducive for private sector participation so one of the things I am looking forward to congressman is the PPP act as you know we have been working on that together so we hope that also that in this Congress that that would be passed okay and and for a government officials just a few words starting with you congressman um just what can you give us as far as your assurance that this will be done that this build build build we will be talking about in ten years as a triumph I can only speak for what Congress is doing let me just run you what we have done for one month alcohol tax a proven third is the incentive investment earth was already approved it's now in the floor it's offering technique for six years ith four years of lower seat at thirteen percent on the sixth year we have approved the much simpler passive income financial intermediation tasks we have approved the Foreign Investment Amendments Act we have approved the public service amendments which will reduce utilities to only three water electricity and I forgot the other one the new the new PPP a law has been referred to the committee the National valuation service which will facilitate rawa because it will set the price it on the fifth of September we will invoke rule 48 and get it approved on the m/v you see we're now drafting the house tool and we could raise between 11 to 25 billion in the 2020 budget well I'm getting so what you're saying is over the last month you have you have done this from the pool and you seen there's no you know I tell all the projects of the built buildings it took me an hour and a half and even then I wasn't able to detail all of them but obviously I don't have time but let me reassure everyone that the build program is already at an advanced stage and you can feel confident that there will be dramatic improvements in our infrastructure and more importantly dramatic improvements in the quality of life the topic of our forum today is building for the future this administration is really building for the future and it's building for the future to the built built built in the few moments that we are together we have fight in the Department of Transportation which what we are doing in relation to building for the future we have shown what we are doing and have done in rails in aviation for those who are having doubts and skepticism on what we are doing in built built built I assure you we are hearing you but in the same token we will not use your doubts and skepticism to disturb us the struck us or even the rail in our efforts to build built built so that this administration can really be said that we are building for the future and this brings our see special presentation of CN n 15 soon end it certainly does yes on behalf of the CN n Philippines team who are all invisible would have done an amazing job here today we would like to thank our guests specifically for devoting your valuable time and your valuable insights even more important and answering these questions on the future so please join us of stage year secretary art tagada secretary mark vidyard mr. version of Exxon Congressman Joey Salceda Albert's second district trips it of joy Salalah and thank you very much and also to all of you here at the globe auditorium here in Bonifacio Global City here's the gig thank you very much for joining us as well we hope we've gotten some of the answers that you're looking for thank you good night [Music] [Music]

Channel: CNN Philippines

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Length: 42min 43sec (2563 seconds)

Published: Sun Sep 01 2019