CNN Philippines Presents: Building for the Future

[Music] build build fill the Philippines is investing in the future to the tune of eight to nine trillion pesos the government calls it the Golden Age of infrastructure a period of strong and sustainable growth seventy-five flagship projects that it says will create new jobs and new opportunities increased productivity and reduce poverty add it all up and the Philippine economy could outpace its ASEAN neighbors but is this hugely ambitious program realistic and who's footing the bill - who with the country oh it's national debt there are still lots of questions and we're looking for the answers this is a CNN Philippines special presentation building for the future [Music] ladies and gentlemen please welcome our moderators CNN International correspondent Andrew Stevens and CNN Philippines chief correspondent via Ontiveros thank you very much and thank you so much for coming here to join us this afternoon pretty good crowd here that's right hello everybody it's so great to see everyone here today at the May bank performing arts theater year in the gig for the build for the future Business Forum it goes to show Andrew that this is a subject that's closed not just to the president's heart we know how close it is to the prisoners heart but it is close to everybody's heart because everyone basically is affected by infrastructure we talk about loves making the world go around hey come on guys it's if it makes the world go round because if you think about it without infrastructure an economy will never get to its full potential I think that is a story and narrative that has the Philippines has basically owned now for decades that's right for decades so the question is how bad is philippine infrastructure I guess the answer is bad bad bad I mean every time I travel Andrew I get infrastructure and V in a phone call yeah so you don't know what so you ready for the people in the audience here in the vernacular it's called in get me in get Khmer in diba last year the World Economic Forum rated the Philippines infrastructure at 97 the 97th best out of 137 countries the same level as Rwanda yeah when you put a nice sort of term to realize how much work there is to be done interestingly that same survey from the World Economic Forum was about competitiveness overall an errata does appear says those 137 countries the Philippines actually finished 56th in that survey one not better than the previous year but think what that number would have been had infrastructure not been at 97 in fact if you look at your neighbors the Philippines on that competitive level is seventh out of nine yeah in here in ASEAN it's better than Cambodia and Laos only I don't know if I should say ouch or thank God so it's clear infrastructure is the Achilles heel of this country's economic development but you all here already know that what we all wanna know is exactly how is build build build working and whether the policy plans are in place so here to answer those questions we have assembled a very very high-level team from the Philippines government and also from the private sector so ladies and gentlemen please give a warm welcome to the budget secretary bin Diop know [Music] also tonight we have the socio-economic Planning secretary and needed chief ernesto hernia [Music] also transportation secretary are together Public Works and highways secretary mark Villar [Music] and Vince DS on president basis conversion Development Authority [Music] gentlemen please take your seats here and Andrew yeah we also have as I said we have leading figures in the private sector here today including gentleman if as I name you two can stand up and just acknowledge the girl so they know who is going to be speaking so with with the role Romulo who is the chief finance officer of the infrastructure division of San Miguel and also head of Treasury mr. ed Francisco president of BDO capital & Investment Corporation and Bill Luz president of the national competitiveness Council thank you sir let's all take our seats now okay and let us begin gentlemen please and I'd like to kick this off to you budget secretary what I want to do is basically set the scene so this build build build was announced back in July of 2016 where nearly two years into this I want to stay this report from you where are we are we where we need to be out we where you expected to be basically are things on track before I answer that question let me put things in perspective why are we doing this because I look at the numbers for the last 50 years the Philippines spent only 2.6 percent of GDP for infrastructure 2.6 percent the acceptable level will be around 5 so what we did was for last year 2017 it was about 4.7 percent this year our target is six point one percent ramping it up to about seven point three percent by 2022 now to answer your question yes I'm happy we're where we are it's it's not easy to do this kind of massive ambitious program in two years but what we did was to maybe complete some projects which were not started but we are finishing right now for example the Bangalore International Airport will be done this August Wow that's been lying down there for 10 years the Cebu International Airport the seaboots second tourism we will complete that this new terminal that the Clark International Airport has been started now right it's it's ongoing so I'm happy where we are that the train going to cry it's also being started just a very quick follow-up they're talking about if you're talking about 100 percent being completion how far down the road are ways at a 10 percent completion so far 50 percent it's hard to see this guys will answer that maybe secretary to God and secretary you know it's hard to do a generic yardstick here because of the peculiarity of the projects we have the projects of transportation will not be a teen or similar to the things which the Department of Public Works will be doing or are doing or have done in the same token it will not be in the same platform as what BCD is doing in other words what I'm trying to say is if for instance you are to ask transportation within a time set of say the remaining four years of the term of the president we are going on a 25 to 30 percent accomplishment but what's dramatic changes after this year and mid of next year that will turn that number of 30 percent will dramatically improve perhaps you know Public Works can answer the yardstick which is being asked by Andrew in relation to the peculiarity of what projects yeah I guess that would also be understandable because like what secretary Jackman was saying earlier you're making up for five decades right in other words the gobball nalang indi booba in villain Honegger Hubble it's not just catching it is performing and achieving if your effort is just to make Hubble or to catch up then will not be doing full what is expected of us as Department of Transportation as we try to do what was forgotten or neglected in the past we do certain things that is a new and peculiar to the administration of President to that the secretary will you are are you on target well again we have so many projects it's hard to generalize percentage-wise but let me talk about our disbursements which is how we measure accomplishment construction accomplishment is always a function of our disbursements despite the larger budget in fact last year I can speak for our department and actually our or even the DoD I really experienced one of our highest absorptive capacity rates last year despite the fact that even with the increased budget so in terms of performance disbursements we are tracking higher than we are in previous years and I think this is a this is good especially given that there was a significant increase in infrastructure spending so if you're asking me are we doing well yes we're doing well we're doing better and what we're doing now is we're creating aside from finishing projects that some of which been have been set aside for a very long time we're also creating a pipeline that will last for in the long term many projects many master plans were doing now will not just will will redound not just to this administration but to further administrations down the road [Music] six airports nine railways three bus rapid transit for seaports thirty-two roads and bridges I mean it is a colossal undertaking I just wanted to ask a question to you mr. pannier secretary premier um what was the criteria the key points that you needed to tick those boxes when you are choosing or when those projects were being chosen in terms of metrics we have in our list seventy-five flagship projects meaning projects that are at least 2.5 billion pesos in terms of cost and as of the latest we we have already processed meaning it has gone through several stages about six stages of processing and approvals we have already covered 35 of the 75 flagship projects so that's more than 50% in terms of new projects getting approved by in terms of technical evaluation and getting through the cabinet level investment Coordination Committee and then on to the net board which is chaired by the president so these are now ready for implementation this third 35 flat new flagship projects and besides that we have as mentioned by secretary bill we are we have all we are completing several projects that were and finished in the previous administration and they are about to be finished like the hyperlink harbor harbor link from the port area that DMX directly to the two endlich's instead of having to go through manila cities and further congested traffic and so let me get your question again I think criteria the criteria are for example we have in the development plan Philippine Department plan 2017 2022 we have priority projects based on pent-up demand in terms of transportation in terms of roads and bridges by the Department of Transportation communication no no Public Works and highways and airports so we see where we are the demand really growing that has already been unmet for several years and so that's a very good criterion because in terms of viability and economic returns from that project it's going to certainly have to be going to have great returns in terms of satisfying the needs of the country for transportation or for whatever types there are several types of transportation and also energy energy is mostly a private sector though so several years or several decades five decades in fact but I was wondering there is a hashtag that you use and I guess the younger the younger men on stage with know this hashtag that you're using comfortable life for all is that the criteria also part of the criteria I mean that that's right to make things easier for people yes you know I have mentioned earlier when we assumed our respective position indeed at the 30 administration the president gave an all-embracing order make the Filipino comfortable on the part of Transportation therefore if you will ask for criteria and view this in the light of the president directive of making the Filipino comfortable what will be the criteria the criteria will be mobility the criteria will be connectivity the criteria will be to enhance the movement and transfer of people and goods and then ultimately this will be related into one word comfortable so that we are committed the Department of Transportation is committed to achieving mobility and connectivity in the hope and with the target that we in our own ways will make the Filipino comfortable comfortable in terms not only of trouble but comfortable more particularly and generically in relation to way of life so that he will the Filipino will no longer have infrastructure and V in the nighttime I think it's a bank banza but I wanted to ask also be CTAs Vince DS on they're implementing 11 projects correct 9 sorry new cities special economic zones including the new Clarke City 9450 hectares the alternative we call this the alternative to Metro Manila a release or exhaust valve to decongest Metro Manila you're looking to build a new government administrative center there this is a very ambitious project but a lot of people are pinning their hopes on this can you tell us more about that yeah thank you Pia you know before I get into the details of those projects I think to respond to the to the question raised earlier what sets this program apart from from past programs and past government's I think there are three things first is the boldness in the decision-making that's being done by this government second is the swift action that's being undertaken and third is the unity of purpose of all the departments related to infrastructure I don't think you have seen the kind of coordination and cooperation and unity that the doTERRA tea administration has shown to be able to as Andrew said earlier accomplish the colossal output that needs to be that needs to be done in such a short span of time for be CDA in cooperation with do TR and DPW H I think the new Clarke City is really the crown jewel and the cornerstone of the projects that we're trying to do right now it's so important because when you look at the quality of life of people in not just in Metro Manila but in other urban centers across the country Cebu Metro Cebu Metro Davao Metro it's it's it's really at reaching a point where congestion traffic and all the other urban pressures that were all going through on a day to day basis has become unbearable you know and that's why the President himself said a couple of months ago that you know Metro Manila is is a dying City and it's no exaggeration no and just the kind of life that our people have to endure on a daily basis is really something that government needs to address and it cannot be addressed overnight you know I know a lot of you know experts seem to have you know Magic Bullet solutions but in reality there's no magic bullet to solve the problems we have in the urban centers in this country and Newkirk city I think it just shows a way forward no way a peek into the future a peek into the kind of quality of life that every Filipino deserves whether rich poor young and old deserve know and that's why it has to be done properly it has to be done well it has to be planned well and it has to also be done quickly now because the the kind of life that our people are having to injury he cannot wait a single day and more and now we've moved forward with new Clarke City were doing phase one now the first 60 hectares which will be the national government administrative center construction is already underway the first part of phase 1 will be completed by late next year in time to host the Southeast Asian Games in December of next year and the remaining parts of phase 1 will be completed by the before the end of the president's term and that will provide our people with some hope now that you know we can build a city that will hopefully avoid the mistakes and the pressures we all experience here in Metro minor than other urban centers throughout the country at this point we'd like to acknowledge the presence also of another member of our private sector panel mr. Gary Davis who was finance secretary during the time of the Arroyo administration sir can you please just say hello to the to the crowd so they can see you thank you for being here sir that's all about funding now this is something we need to ask secretary Diablo and secretary Barnea how are we paying for all of this how is the Philippines paying for build build build eight to nine trillion pesos or 167 billion dollars can you outline the total plan is for the next five years is 160 to 180 billion dollars all right and what would we have set our financing plan and it's a it's a bias towards domestic financing so part of it will be it's 25 percent foreign 75 percent domestic we already have pledges from Japan there's a nine billion dollars nine billion dollars worth of projects and that was given the competition between Japan and China China said nine billion - right so we got all the all these projects the funding is secured for all these projects for example the first ever subway 25 kilometer subway correct me if I'm wrong the financing there is 0.1% 40 years to pay 12 you crazy period right right that's correct and who is that with it's Japan that is a japanese japanese yes right because I've been reading that and talking to people that previous administrations have always pushed the public-private partnership model and this administration is much more interested in as you just mentioned cheap money as overseas development assistance funds in favor of the PPP why is that why have you changed that model because the IMF people at the IMF have been solidly behind the PPP model now we're opening many options for us financing modes we do not commit to PPP alone because there's a natural delay for the PPP how many months 37 months before we 29 months from from from project ID to take off so we cannot afford that that long to so we we decide to have a PPP and heiped what we call hybrid PPP where we will initially construct it using all the a funds that's also private sector coming with us will not construct that it's it will be paid out just like with what did we did with Clark it's ongoing now within sixty days we were able to bid out the Clark International Airport it's being done now after that and at this time already we are talking about the OLM it's already bidding being bid out so after the international relations and management yes after it's done we will turn it over to the private sector okay so so that's PPP hybrid PPP national budget that's how we going to finance the the Mindanao railway system and then also we for the first time we are welcoming unsolicited proposal subject to Switzerland's what we were don't want to do is to have a project funded with a premium in other words there's a project where we say okay who can give me the highest premium that's yours that's that's taxation without representation so we don't consider that okay so we have many options depending on which is appropriate for a particular project let's bring the private sector here mr. Rama law of San Miguel chief Finance Officer this hybrid model is this something that you think is an attractive or profitable business for the private sector well as Vince mentioned earlier there is no one silver bullet that can address all the neglect of government deficit through the decades so what the secretary secretary John is saying they've opened up many windows to to facilitate these projects is a welcome addition to all of our projects that are going through but what we'd like to see is and we're very grateful that the government is supportive of a lot of the projects that are still unfinished because from the past pin dispensation most of them are secretary to gardeners are our hours so they've been very cooperative and assisting us to complete these projects but what we'd like to see is a more balanced opening and distribution of of these different kind of budget fundings you have the ODA you have the the highbreed you have the GA DJ and and also the the unsolicited proposals which we are one of the most prolific submitters to but we'd like to see a more balanced approach if possible to see all of these projects roll out more efficiently as it is now we understand that a lot of the projects that you put together are are still trying to complete from the previous administration you're rolling them out we'd also like to see the different that agencies have more people to help us analyze all of these projects that can go into fruition faster so yes this hybrid is it's a welcome Avenue but we'd also like to see the opening or reopening again on the thrust of the PPP side without the premium sir and also again the the unsolicited proposals that are already there if you can move this a little faster and they're moving faster than the past but we'd like to see the little and we know you also want us to finish faster secretary together we talk about this all the time but yes these are very welcome additions but maybe the balance of the distribution maybe shouldn't be more towards more Oda or land borrowing maybe a more equal distribution because also as our colleague here from the banking side says there there's very little business for them as well yeah the PPP window has slowed down sorry can we get a response yes we there's a long list of projects and as secretary Perez said - we have decided on 35 great so we'll consider your proposal anyway on the only other half maybe but sorry these are you know these are like a 600 kilometer railway system do you wanna do you want to enter there which private sector would like to do that well we are not there but we'd like to see as I said what will happen is that China for example if you could give it to China they will actually chop it off to several segments because they want to finish it within the time timeframe so I think you'll benefit from that all at this point we'd like to bring in also mr. ed Francisco of BDO into into the discussion sir tell us what do you think of this this hybrid model we're first of all were believers and we support the government and we've I've I've had the chance to be with secretary Fernand Davao and my spiel was basically the private sector is always big doing its part so the hybrid model is actually great it's just that I guess they're just less of these no so for example right now what are what is the private sector waiting for it's really waiting just for the airport project of course we know that he's a prolific Picasso we said prolific uh I guess submitter or unsolicited but how many of those are gonna be gonna be decided upon where we can actually fun so there's if it's is it 150 million for the knock on shore so missus manga while is that but other than that the but of private banks have braced capital were so liquid but we're just not there at the understand of course there's the pricing concerns so I guess out from our perspective our request is even if let's say you're gonna do an Oda maybe as a bridge we're there to support if there's some delays use us because uh and then later on they can be taken out anyway by the J cars by the JPEGs the Jack Sims but use us because in fact one other way we're using her in fact today we're helping the art the art that Bureau of Treasury with the RTB so that's one way to fund the government but at least if we work there to help because we want it to succeed we want more in fact uh so anyway you can use the private secretary [Music] secretary opener I mean is this program squeezing ourselves like it's squeezing out the private sector financing too much should you look at to to readjust perhaps now there are some that projects that are purely private sector to mean all power projects are done by the private sector telco projects are done by the private sector some transport projects are done by the private there's a lot of possibilities so you're quite happy with the mixed one I think so also the construction of projects are being done by private sector contractors and many of these they would borrow money from commercial banks but in terms of you know the volume of funding it's cheaper to get it from the government or from Oda when there's no comparison how much do you charge what twenty percent ten percent its way we sometimes within single digit but we're not we admit we are we admit we are heard we are we are more expensive an ethylene 0.1 I guess I'm just saying that if there are delays or because of course there's some there's a premium anyway there's also the other argument is that there'd be a big premium also it is other ODS at first versus if it were done by a private sector we're just there really to support so however we can be used to get a better price or if the effective project cost becomes lower even if the funding cost is high were there to help can I just just like to bring you into this mr. Davis as a former senior economic manager with the government do you think that the MEK makes us right here or is there a good point come from the private sector well the percentages have not been indicated but I think qualitatively secretary been tried to suggest that there's a balance but I think it's also situational in the sense that certain factors now are not exactly the same as they were a few years back and even in terms of the macroeconomic indicators were facing a slight deterioration in the peso and that would surely give us some concern on foreign borrowings and then private sector participation may also beat up because actually they're also ready and the risks are going to be borne by them and there are occasional requests from the governments from various sectors of the economy which were not anticipated and may not be anticipated really so the government will have to anticipate how to fund this example of which lists like the education for students in state universities salaries for government employees and soldiers I think maybe the government might want to consider looking at even the 35 projects that have been approved and see whether there should be more private sector participation through public-private partnership and get them to bear more of the risk but at the same time indicate to them that would like you to assure us that the timetable is within our own timeline been mentioned about 29 verses 37 if they want 29 maybe one of the criteria should be whether the private sector interested can also meet that deadline but this time they take the burden of the risk they fund the project they may want to borrow but then that will give some flexibility on the part of the government to also anticipate other consideration other requests in the future social and education and so on I would in effect suggest a more open attitude towards more public-private participation including unsolicited proposal and look at the macroeconomic indicators they're not as comfortable as they were a few years back yes economic circumstances are changing I would like to move on to a question for for the secretary a per Nia and we talked about 75 projects billions of dollars worth and the government is taking such a big position in this in in in sort of organizing Oda in doing own loans the government have the capacity does it have the expertise to manage this size project taken taken in its entirety or are you biting off more than you can chew the government has access to consultants to technical experts as consultants and you know by the way in in addition to the to the 75 flagship projects there are about 400 more than 400 minor projects in the provinces having to do with road widening irrigation projects that are not as expensive as these flagship projects and they're also going on and there's also a lot of construction going on in the provinces and in the regions to satisfy pent-up demand for water supply and other infrastructure needs markets and other infrastructure but do you need to expand your own Department to nettle and and all the ancillary depends to actually deal with this influx of of project no as far as project evaluation is concerned we have been able to do that rather rather smoothly we have a process as I've said there are about six steps that the project has to go through and about two of them would be in the Neda and of course and then it goes through the secretary level investment Coordination Committee and to the Neda board so these are several steps and I bought no bottlenecks I and we have we also have this project facilitation and facilitation grant it's a soft loan actually as a grant from ADB to you know facilitate the processing and completion of projects where there are bottlenecks were able to apply this kind of kind of money from so we have different ways of making sure that there are no bottlenecks and whatever bottlenecks there are are surmountable all right before we move on I just wanted to ask is the private sector happy with the response did you get the response he wanted from the government because like for example mr. francisco is saying peace use us was okay no bah mr. Romm below may I also suggest gentlemen that through our experience and when we go to the different agencies for for our projects we see that there are little shortfalls in terms of manpower to help analyze the projects to make it move to go to your level secretary so there are some stumbling blocks and challenges at the different agency levels because there are what well there is a shortage of talented manpower in in the different agencies maybe that's one area we can beef up as well to to to start your sector can help this we can also assist in that but without any conflicts hopefully that when we submit the soleus our proposals as well well yes go ahead so just really quick now and and I'm just quite disturbed because I think the perception from the private sector seems to be that the authority administration is anti PPP this is absolutely wrong no this is absolutely wrong we are not in fact I think and you probably San Miguel and the bigger conglomerates would know this that a lot of the PPP projects have actually moved faster under this administration compared to previous administrations that secretary mark give you a couple of examples in that regard no but I think what the government is looking at we're taking a step back and we're saying hey we've got this huge infrastructure gap that we've got to close and the key here is speed we have to be able to do all of these things as fast as possible and the modes on how to get them done will depend that's what secretary Johnson said in some cases Oda will be faster in some cases a hybrid pp people's will be faster in some cases a full-on PPP will be faster compared to other administrations past administrations have said no unsolicited proposals you're very familiar with this now the previous administration said no unsolicited proposal we have said openly and we've proven that already by by granting several original proponent status except to several unsolicited proposals you know Secretariat together would be witnessed so I think that's a complete misrepresentation of reality you know this government is not anti PPP we want to work with the private sector but let's sit down let's look at these projects that we badly need and let's see what mode is the fastest because bottom line that's that's it's right things faster yeah the offer of the private sector in terms of extending funding opportunities in terms of talents and skills are most accepted in our most welcome in fact we'll always reach out to the private sector when the need arise but as VIN said we have considered all the opportunities available there will always be a basket available a basket of funding requirements to fund different projects there will always be a basket of balance to address different requirements on projects let me be very specific as we discuss funding as we discuss cooperation or offer up skills and talent remember the dough turkey administration is barely two years and what have we done in barely two years let go to actual accomplishment let's talk about the airports when you speak of the airport before when you speak of Maria and Terminal one two three and four the tagline is one of the worst airport in the world now that tagline was changed it is now one of the most improved Airport in the world why is this so because there have been developments construction completed of that in relation to the airports and the funding came from multiple funding sources from unsolicited proposal to bright private toga to Oda let us be specific before panglao Airport in Bohol is just a topic for conversation secretary John dimension by August of this year perhaps it will disappear for another 30 to 45 days it will be commercially be operational you speak of cebu cebu terminal by june 17 by june 7 7 7 it will be inaugurated and operational look at the airports all over the country before you have a total of 11 nitrate er airports now as we speak there are more than 16 nitrated airports and it is the ambition of this Doherty administration that when the term is over all the 44 commercial airports would have been nitrated as we speak about nitrating capability of airports we speak about the reality of how to maintain the safety and punctuality predictability of air operation when we assumed there were only three radars now as we speak ten additional rudders are in place adding to the predictability of air travel security of the space all these things are in for and in place funding from varied sources from private to God to unsolicited proposals this is what I am trying to say let's go to maritime for the first time the month of January we will be inaugurating ever ever the first parts terminal in the Philippines this is funded by a private party you know what is this Bart's terminal this is a business model where the containers that normally apply the highway industry 20 footers and 40-footers all will already move on water it is hoped that when we implement this the movement of containers on the road will be reduced by 35 to 40 percent funding private [Music] welcome back to our special presentation thank you very much our special CNN Philippines presentation on build build build building for the future now there are two phases to this program there is build build build and that leads to jobs jobs jobs and of course there are jobs jobs jobs the other target here is to reduce poverty at the moment more than 1 in 5 people about 21.6% living below the poverty line like Andrew you were going to say right yeah this massive infrastructure with an infrastructure program like that when you've got one in five people living below the poverty line the actual government targets by 2022 is to reduce that to 14 percent and at the end of the day you think what is this you talk about comfortable about making Filipinos lives more comfortable reducing poverty has to be the key all right but of course before we go to reducing poverty and challenges we wanted to give the floor first to secretary to god who's gonna wrap up what he's gonna say and then secretary mark Dooley are yes thank you very much ma'am you know we have revisited in genetic presentation what we are doing with air what we are doing with maritime let's revisit the rails you know the present population of the rail system now is only 77 kilometers it is hope that by the end of President to third Test term this administration would have completed 1,900 kilometers of railway system such that you have rail system being put up from Manila to from to Tobin to Malolos to cry you have tried the noisily in terms of cargo you have from total ban to Columba those ban is going to be : that is the South Railway yes - out railway you have the expansion of LRT - and then you have LRT one then you have MRT seven then you have improvements on mrt-3 all this covers a motley of funding plan forms it is not limited to one kind of funding platform and then there is the subway before subway was a talking piece in this administration the mode of implementation is already in place why in place when the idea of having the first subway in the Philippines was brought up and planning was made the start of construction would have begun or will is scheduled to start next to in the year 2019 2019 third quarter today as we plan as we deliberate and as we talk with the private sector and the government of Japan we will start the construction or partial on a partial operability of the first subway station covering three places North Avenue Mindanao Avenue and tandem Zara with a railway Institute being put up in Valenzuela which will also serve as a Depot these are plants which are being done being implemented in barely two years of the total administration how will this be funded it will be funded under a preferred loan arrangement with the Government of Japan again buildings will be in process there will be construction and the construction can be handled by the private banks and the private sectors and this is what I mean when we said what we have now is a basket of opportunity of funding it cannot be limited just to one and I mentioned the specific situations because it points to the reality that we have here a basket of funding sources on projects that are predicated in building the future which is the topic of our gathering today and then you speak of terminals in the road you have the modernization program all requiring funding there is a partnership and there should be a partnership between government and the private sector you know we in government cannot say we can do this alone a new the private sector with due respect cannot say hey leave it to us government should do something else it must be a duality of role mutually respecting its other's capacity and capability well anyway I just want to just to re-emphasize what they mentioned earlier about the the robust cooperation that we have with the private sector in terms of infrastructure projects and I can speak for the DPW H with regards to our various projects for instance with San Miguel RTR 4 which is going to Lucena which will be starting this year that's a long-delayed project we have the harbour link which we've acquired 90% of the right-of-way which would be the delivering at the second quarter the third quarter of this year we also have the first exit of the Skyway which will also be opened we're targeting by the second quarter of this year my point is in terms of cooperation with the private sector I believe that we've this administration has given its full support and I know this because I regularly meet with all our concessionaires and we've not only pushed the existing we've also awarded new projects such as the endlichs SS connect the road you should also be starting construction this year that was recently and we have also other unsolicited proposals that we are considering and which were previously never entertained I just want to quickly bring bill Lutz into this and the natural competitive council just listening to the the funding opportunities and the funding avenues do you think the mix is right as far as getting the competitiveness of the Philippines on the increase I think the funding issues have been are always gonna be constantly addressed because the needs are gonna be so so large at the end of the day it also boils down to speed and in the Philippine context within ASEAN we're a large country and growing but we are way behind on the competitiveness rankings in infrastructure not just the general competitiveness rankings so when I take a look at the full range of infrastructure roads ports airports telecom energy rail we're were ranked somewhere between say 97 and 120 out of one four out of 137 so we're kind of in the lower half of the spectrum so we need to to move with some speed to be able to to get to that to be able to move up with the competitiveness ranking so I think that's that's one item that I think we need to be very mindful of the second is that even as we address all the funding issues there are probably other issues we need to to look at I just want to flag to maybe that we we ought to be really thinking about I know the government is thinking about it one is case of resilience you know when we build the infrastructure they're all designing more resilience into it because of the nature of the of our situation with with weather and seismic activity and things like this and it's one of the reasons why our office at Peter F for instance moved to Clark thanks to the foresight of secretary tagada and and working with Vince because we felt that we needed to move to places that are gonna be you know offer us a better chance at resilience but the issue I think that cuts across all these things aside from the funding I think it's really gonna boil down to the right-of-way issues there are a lot of projects out there but if we don't kind of break those bottlenecks in right away issues projects can come to a to a stop so it's we have to be very careful about spotting that and and deep bottling that and I the bottleneck think that and I think that's something that that the government of the private sector will need to identify early on and and work through because the projects are there I think the funding is there but speed gets affected every time we hit little bumps in a road like that well I want to move the conversation on to the financing in terms of the national debt I think the national GDP debt to GDP ratio stands at around 42% Forbes magazine says that under the build build build the massive borrowings that could blow out to around about a hundred and forty percent over the next 10 years tie that in with we heard earlier that we don't have a trade surplus anymore there is a trade deficit and a weaker peso with this growing national debt is this not cause for concern for the national accounts now false lose that projection is wrong our projection is that it will continue to decline alright the national debt will continue to debt to GDP ratio which is the important metric that the absolute level of debt it's your debt in relation to GDP right now you said 40 42 right we our projection is it will continue to decline to about 37 to 38 yes even with this so we're confident we're confident that we we are we will be able to finance the projects without getting us into a debt crisis just just can you explain how that works does you know we we will outgrow our debt so this is an economic growth sure we are performing seven to eight percent plus nominee in nominal terms plus three percent maybe we will growing in nominal terms at ten percent the debt the interest rates are very low so we will outgrow our debt so that report is false what we're talking excuse me is Andrew that's the total debt to GDP ratio but in terms of foreign debt external debt to GDP ratio is only 23 percent so that's just a more critical metric actually because you know those are foreign loans that you're talking about the ship doctrine says that if your debt to GDP ratio you sixty percent or lower you're in pretty good shape well we're in good shape compared to say what Japan or Japan's debt to GDP ratios more than 200 percent us more than a hundred percent China's can I put that to be do you do you have any concerns about the government's finances under build build build frankly you know where we believe in what they are doing the economic team and this land were very supportive of train so in fact we as long as the train packages or continue toget render that the tax back to in the rest yeah we support what where you're going and getting the upgrades okay so there is no there's no red flags that the bounce of trade turning to deficit is not a red flag we could peso introducing inflation it's not a red flag the trade deficit has always been there it is increasing because we have a lot of capital requirements the bulk of our imports is in terms of value is due to capital imports import of capital goods and intermediate products that are needed in in building and in our construction activity we have a very hefty reserves equivalent to eight months of imports the rule of thumb is if you can cover three months of your imports you're okay our reserves can cover a lot eight months of imports and we have a steady inflow of overseas remittances plus the BPO that's about fifty billion dollars every year so we're okay so the numbers do add up survey the country can raise the money and deliver this program is sustainable very safe very safe it's all so simple for us nothing can stop us now I'd like to ask a question about you talk about the Oda and we've mentioned Japan a couple of times about Japan being being a donor very low interest rate loans and China has also been mentioned China will partake big will be a part of Oda assistance as well on that on the back of that you may have seen this quote from Rex Tillerson that the former US Secretary of State talking about China's practices as far as Oda and what is being turned the China debt trap now this is his quote Beijing encourages dependency using opaque contracts predatory loan practices and corrupt deals that mire nations in debt and undercut their sovereignty denying their long-term self sustaining growth now this is going to talk about this China debt trap is are you aware is this a concern within the government that this is something you actively have to avoid yes we are aware of that we really we read a lot of reports from Sri Lanka yeah from African countries Pakistan and so you know we are well aware of that and we are making haste slowly with with China actually only one project a minor project an irrigation project in two key ground which is some small project an irrigation project that's the only one that has been signed so far the other projects that you know we that are potentially fundable in in fact a job the Chinese are interested in finding them they have not they have been moving very slowly right is there a way of guarding against that that the potential of that happening is well we just have to as i've said make haste slowly in terms of chinese funded projects so that we know at every step of the way we know what where the where the pitfalls are in terms of chinese funding all right let's talk about jobs what jobs are we talking about here on tuesday you launched that jobs jobs jobs jobs portal and bc big of no what yeah secretary mark what jobs are going to be available yes actually it's a it's a multitude of jobs as you know with these i think a large issue for why you know there's there's this some firms have a hard time it's also placing where do you go to and what is the medium for which you can attract or hire talent so now we've created the sport of that which we launched that's called jobs jobs jobs so along with the build build build we have the jobs jobs jobs portal and we just started it we already have posted 11,000 but that's just the start now if you see that it's broken down per project and then when you click on the project under that you can see all the available positions that that the companies are looking for in enhancements so I think like this is an important part of what we're doing is the job generation aspect and it's something that the president is very keen on it's but with this job generation and we need we created this portal in order to expedite the process and make it easier for us to create less friction in terms it's a job market but we're looking at how many jobs more than a million right our estimate 1.1 million average jobs created annually 1.1 million due to well yeah when the projects are on stream there already they've got broken ground and they are you know in full blast then we would be averaging up around 1.1 million over the next five years well of course this includes direct employment as well as indirect employment from construction and all that yeah well construction there's a construction boom is it true there is a labor shortage and how is that going to you know is that a threat to build build build a nope we on yes it is and in fact I think there are some already OFWs that are coming back I saw some number of 32,000 come back these are the skills workers that we need just the technical technical but when we when we say we're bringing home the OFWs they earn a certain amount abroad we are saying that we are going to pay them the same amount well there would be there would be competitive compensation visibly what they have been getting there are so many projects in the provinces that also going to be that are going on stream that would create a lot of employment you said there is an issue of a labor shortage do you see the returning workers being able to to nullify that or is this going to be something which leaves with the bill bill bill project just the difficulty in finding and the number of workers well if the compensation that they'll be getting will be you know close to par with what they're getting many of those workers would love to come home what about the idea again programs where you tend to say the donut country sending apart from sourcing materials also sending skilled labor and and well that that's that's the practice of Chinese funded projects but not Japanese Japan funded projects they have skilled that technique help technicians you know specialized technicians for train for subway projects for example but not the eunsu collar blue collar type workers and i will be welcome in the philippines the chinese blue collar work will be working well that that that that will be a matter of negotiation with China but with Japan there's no problem we can use our own blue collar workers yes Adam we already have existing foreign funded projects and of course these foreign companies Chinese we have Chinese Korean and Japanese and of course certain projects requires certain level of expertise that might not necessarily be available locally so they bring in experts but in general the labor that is the labor that they utilize is locally based labor that's that's how that's how it's been that's how we it's we expect it to be one way to build build build program you know they share with us their expertise they might bring some personnel but in general the perk forces will be comprised of locally sourced labor okay just anecdotally in in the projects that are already ongoing right now they're we're actually experiencing a a shortage in skilled labour so when I say skilled I'm talking about you know have equipment operators and the sort clearly for the low semi skilled and go skilled laborers there are a lot there know but just to a point on the because I think it's a concern by Andrea Chinese laborers coming in I don't think that's going to happen because first of all Chinese labor already is more expensive also I don't think China can will it's economically smart for China to bring their workers here no but in terms of skilled laborers those where we actually have a shortage of then that's where you you will most likely have some Japanese Korean or maybe even Chinese skilled labor coming in to ensure that the projects are implemented quickly yeah and well the other challenge there is the short word visas were these appears but anyway Adria we're going to talk about poverty poverty reduction also right yeah one question I have is obviously poverty reduction is probably at the very top of the agenda for obvious reasons but when you have these infrastructure projects there tend to be a sort of they close around one area how do you trickle down the benefits of infrastructure into the into the remote urban rural areas to make sure that all Filipinos get the benefit of this infrastructure boom we also have a lot of rural projects actually agricultural agriculture related projects so they would be open to employing those in in rural areas yeah so so as I've said there are so many projects out there that are going to be and from the top down the the coordination between the state and the local provinces how closely you're working with them because I know this was a success in China the development of China they worked hand-in-glove the central authorities sort of spread spread the love if you like are you adopting that sort of more here no we are not a centralized type of bit what I mean is that the central government managed to manage to involve the local authorities local provinces at every stage of China's sort of governments local governments would be involved to write local government provincial governments local governments should be involved in in those local projects and by the way in our construction our build build build program we are or not 24/7 24/7 work mode meaning three shifts so that that's why it's going to employ more people as well as speed up the completion of projects faster speed okay well multiplier effect and I want to bring the private sector panelists in here at Francisco Romulo Baloo's and Garrett Davis are you seeing increased or broader economic activity because of build build build right now this early in the game two years into into the deuteron administration that I can share also anecdotal evidence also our loan books have grown significantly and it's a little because of the multiplier effects when the government announces new roads if Mark is going to build a new road what we're seeing is the customers are already buying the land they're already buying the vans for the deliveries some of the businesses and are building hotels so in anticipation of the infrastructure that our team here is doing the private sector is borrowing so we've seen that in the loan growth and that's why we're having six seven percent GDP growth but our loans are growing at around 18 percent it's because the local Filipinos believe in this government also in fairness Lee may I share as well with the the projects that we are rolling out because of the number of projects we do have we have to employ more more skilled laborers as well as those of the semi skilled area and our contractors are also building up their workforces to to keep up with the schedules that are imposed to us as well to meet deadlines notwithstanding the challenges we do have given our projects but yes there is a buildup of the labour force I think if you just travel around visibly you'll see much more economic activity outside and I think that's a good thing looking at the country at a hundred and four million people and growing scattered over so many islands I think we really should be thinking how do we build up forty you know good sized cities acting as engines of growth for the country we right now we're so heavily concentrated on so few places and and you see it in the GDP share of the country is locked in around metro manila bitter region 3a bitter region for about maybe I think roughly two-thirds it's right there in that in that core I think if we begin to consciously target forty cities outside that we bring up because the guy you see the gap from a mega city down to the second and third and fourth city the the orders of magnitude is huge in terms of population and economic activity so if we concentrated and dispersing it and I think this is where infrastructure can can can really play a huge role in in job generation and in lowering poverty this is I think truly what inclusive business and inclusive growth looks like when we disperse opportunities and it's also good for investors because then we don't have to look at only two or three sites for investment sites now we're looking in our radar screen maybe at 40 or 50 sites and that's a that's a good sign when investors start looking at 40 or 50 places for sure there will be economic activity and job generation there [Music] let's all about corruption first it's again in many many many countries it is a perennial question now with 8 billion pesos in projects being launched over the next four to five years up until 2022 and I'll put this to you first of all secretary budget secretary transparency obviously is the best way to fight this how are you going to embed transparency into these processes of awarding substantial loans well that's the instruction of the president no corruption right at the TPM we are also adopting a new project called project time this is digital imagery monitoring and evaluation system where we will use the satellite the drones to really monitor in real-time all existing projects ok so we were going to launch it maybe in a few months does any of the other panels have anything to say on this point God is two most senior here yeah in terms of transparency number one we have changed the processes on bidding and procurement these are all in live stream never before have you heard of bidding on live stream before when we started live streaming processes we just thought that we live stream the actual bidding we went beyond that man even procurement now even pre bid is a live stream that accounts for transparency number two it's all in our webpage all the projects how much when do we expect to finish the status everything it's all there it's open and transparent and then we try to address the issue of bidding and procurement we ask third parties to come in to participate in the process to make sure that it will be transparent in other words there things being done in the processes to make the bidding and procurement process transparent very very accountable never has this been done before it's being done now earlier mr. Luce raised two issues the right of way later on maybe mark can handle that because we have designed a scheme for the right of way and the other is the shortening of processes no less than the president is very firm and very aggressive in saying all processing procedures must become he imposed timelines of three days and seven days and to put emphasis on what he wants only two days ago sir we signed the anti red tape into law never before has this been done and he has instructed cabinet members to put in technology all processes within 30 days from signing two days ago this is an indication that the leadership it's no nonsense in shortening processing time and as it shortens processing time it is no nonsense on transparency and accountability Sabrina Presidente Aguila Newton Galileo secretary mark Billy R let's let's talk about DB WH and geo-tagging because for the longest time in the past Cuba the problem was ghost projects now you're going to make everything transparent that's your promise well our our promise is that these ghosts these ghost projects are will are a thing of the past because I am strong I'm a strong and we all are we're strong believers that that we can defeat corruption and inefficiency through technology and analytics specifically in terms of the DP wh we're implement we're already in the last stage of implementation of our construction management software it's called PCM it's other PCM a it was designed with the help of the World Bank and it utilizes we've incorporated not only drone technology also geotag photos what are geotagged photos these are Saturday at these monitored by satellite absolutely cannot be faked in fact we have an application for the iPhone that our engineers use when they take the picture it's instantly uploaded to our software so at any point I can I have access to the any any project USB if you what's happening here in this certain project in the certain province no matter how how far because we have any sense of organization we have more than 180 district engineering off we have more than 10,000 engineers all of them monitoring all these projects now they'll be able to upload that to our central system they already are so no one can lie to you no one can light unless they find a way to defeat the satellite software I can't imagine not any way that they can get away with that so well we wanted to ask Secretary Gary Davis about this you know if I might want to clarify something yeah taking note of secretary burns optimism I was wondering whether what if I see a different situation takes place on the second half or the next year in terms of how how's the inflation rate will taper off or slow down and whether there are demands that we haven't anticipated now it's might crop up whether there might be some adjustments in the wages either through the present set up for a Regional Council what if these things happen would government still consider perhaps allowing the private sector to take another look at even the approved projects which the fraud with the government might have already said I'm committed to those projects but putting certain conditions I eat time cause employment generation and say hey private sector you can participate because there are other things that we might have to address which might draw on our resources and therefore it might be welcome for the private sector to come in and assist the government in this infrastructure in their world I'd like to see a situation also secretary Poorna that if these things do not pan out as we are expecting that's conveyed by a secretary ban would we still be at pace with our Poverty Reduction program I think you did mention through a newspaper account that the GDP would have been a little higher if the inflation rate were a little slower so this has a bearing on the poverty reduction program this is a bearing on job generation so it might be useful to consider a plan B approach where in the private sector will be ready and available to assist the government even in those approved projects and where the government says I am committed to it now but I'm willing to make adjustments provided the private sector will meet these conditions which will be ruin win for all of us let me answer first before for that the budget transparency there's an organization called open government partnership consisting of close to a hundred countries in terms of transparency our budget system is the best in Asia number one in Asia number 19 globally all right so we have a very transparent budget system now on the matter of whether if we made some calculation what will be our response well this is as you notice my third stint in government I know how we make some adjustments in the middle of the game and you know what the result is half-finished projects okay we won't do that we will go full steam ahead and construct all the projects that we have chosen the way we we have figure out the financing so whether there is a maybe a hiccup somewhere we will continue the project finish the project time is of the essence you know the congestion caused in Manila is 3.5 billion T we got to address that all right and we are interconnecting the whole country from the zone the Visayas to Manila and so we plan to do that so speed and full full speed ahead are the key words for bill bill bill and a bank attorney secretary to God that our secretary we are that there is a way that you're handling this definitely be the mechanism is there government has the mechanism to resolve these issues it's just a matter of rationalizing management what does this mean we have eminent domain we can we can easily if there's a property we can always we have the means to procure the property creation and we can utilize that and you know the courts are quite fast you know as soon as we get the rid of possession from the court we can we can already start construction we can enter the property it's not a long process and this is available to the government that's why it then becomes a problem with project management which is something that with the help of the whole economic team we've been able to address with the support of the DBM who's given us additional personnel funding and you know in terms of planning these are all things that have been done and you can see this reflected in the speed in which I think a lot of our projects are being done now for instance the ones that we're opening now we've acquired 90% of the right-of-way and this was done in a very short period of time secretary mark is it with private property owners or their own informal settler communities of all kinds sometimes it's informal sometimes it's what sometimes they don't like the price sometimes it depends for the in the case of informal settlers of course they expect to be compensated because they have to move of course they're so in we have we have mechanisms for that for landowners of course they want to receive the best compensation for their property for buildings or whatever they built on it so you know there's mechanisms for giving them what we feel is fair compensation and if we don't agree then we'll expropriate their property we have we will move to expropriation proceedings which can be done fairly quickly so if you're if like I said it then becomes a project management issue so what we've done specifically is we have task forces for every major project in the build build build and even outside of build build build all major projects have specific task forces for right-of-way so then they become accountable for whatever they whatever goals that we whatever goals that we give them and then that's how we move forward these projects because the mechanism is there I mean it's not you know people maybe there's this perception that though right-of-way it's it's impossible it's it we have the mechanism it's a matter of management and political will but before we go I would like to ask for a few words from all of our panelists starting with our private sector panelists first of all just we've been listening for an hour and a half now on a very extensive conversation about this infrastructure about build build build and perhaps mr. surveys if I could start with you from what you've heard today and if we can go down the line after mr. teves from what you've heard today keep it short how optimistic are you that we are now seeing a game-changer in the Philippines on a scale of cautiously optimistic very optimistic yeah we're seeing a major change if you want to use the word game-changer there's just some tweaking perhaps that needs to be done and there are always some some things that might happen and therefore some adjustments will have to be made earlier been said that when they've started the project they will push it I was really referring to a project that has not can been started but actually the government was intending to order resources into it but perhaps now that things happen differently perhaps they could be open so I think there will be probably more chances of getting these things done if the private sector were to participate in most of this process okay thank you like well I think there's no little question we are on the cusp of a game-changing event but I'm always mindful of looking at what the rest of the competition is doing and it's in that context so when we move fast we have to be clear that we're moving faster than than others because we're in we're behind so we're we're a bit in the catch-up and in leapfrog mode so we've got to be looking close mostly what neighboring countries are doing in ASEAN and asia-pacific and if we can achieve things faster then that's a game changer if we just achieve that a slightly slower pace the same pace we have to be we have to remember they are also moving fast at Francisco I guess regardless of which organization were with we're very hopeful with this administration as a Filipino I'm hopeful that I will see new subways and new airport so and I hope and that's a way to convince my children and the OFWs to come home because there would be jobs and they'll be will be I I guess infrastructure outside Metro Manila which is what you're doing so I mean I'm very optimistic well just to share the experience of San Miguel I I can attest that between all the secretaries that are here today we have a total coordinated cohesive plan now when we do meet as a concessionaire compared to how it was before that it was a little more piecemeal and add hawkish now there is a more cohesive movement and we're moving in the right direction and I remain as my colleagues do very optimistic that we can achieve what we set out and before we've always say goodbye oh just like a very brief comment from our ministers as well what was starting with you Vince what makes you so optimistic that this can be done this government can do it when we have there have been fall storms before what's different this time well like I said earlier it's the bold will to get things done it's the fast action that we've drawn and I think it's the unity that this government has shown under the leadership of president Authority and just to and I think you know I there's an old Arab proverb that says dogs bark but the caravan moves on and believe us when we say president to tear this build build build caravan is going to move on and there's nothing that's going to stop it really quickly I think that these men here I can say they work these are men who put themselves on the line for this goal from this whole administration from the down you can see that we are united in our purpose and firm in our resolve and all of us who put ourselves on the line our reputation everything to make sure that this bill bill bill happens secretarial I've never been in government before except for that briefest in that the clerk Development Corporation but this I can say you have a president in a leadership that has political will that chance corruption that is committed to transparency and accountability and shortening processes given this and partnered with equally committed members of the cabinet it gives me high optimism that we can build something for the future something that will last as a legacy today we are witnessed a very good dialogue dialogue between the business private sector and government the good dialogue produce good feelings I hope that the good feelings arising from the good dialogue can breed a better working relationship to achieve the common goal para sabayon ho paura subpoena Pino yes well I myself is virtuously impatient I want to get things done I want to see change during my lifetime while you know and my kids of course we want them to enjoy a better life just to go back to Gary Davis's actually we have four thousand five nine hundred ninety five projects including the seventy-five flagship projects and they are available in the website the public investment program online people and so if there are projects there that the private sector is interested and there is a good financial rate of return acceptable to the private sector I think you there's nothing to prevent you from presenting yourself in to to offer help or to do the project yourself so that that's so in other words we are open to cooperation from the private sector this this may our feeling even more optimistic because of the willingness of the private sector to to join hands to us Andrew as I said this is my third stint on the same job and I've seen them all and so with this very strong cohesive team and the ideal conditions low debt to GDP ratio low interest rates I think nothing can stop us now a great way to finish and that wraps up our our presentation this evening we'd like to thank so much our very very honored guests budget secretary Bend Janka social economic planning secretary and Nita chief ernesto / nia transportation secretary art - Guardi Public Works and highways secretary mark villi our and Vince dizon president of BC DEA and our private sector panelists please join us here on stage SURS Gary Davis ed Francie score builders and join us send to all of you here at the maybank Performing Arts Center thanks so much for joining us we hope you've answered all you've you've heard the answers to some of your questions and we look forward to doing this again on whatever topic is of interest to you thanks so much for joining us and ladies and gentlemen to our guests I'm beyond embarrassed and I am Andrew Stevens thank you very much everybody [Music] [Music] [Music]

Channel: CNN Philippines

Views: 675,264

Rating: 4.6747122 out of 5

Keywords:

Id: PZxSxLB6jh8

Length: 88min 52sec (5332 seconds)

Published: Fri Jun 01 2018