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PH transport sector seen to grow 9.5 % until 2021

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By Philippine News Agency

The Philippines’ transportation sector is seen to post strong growth from 2017 to 2021, with the annual average expansion of around 9.5 percent.

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BMI, a unit of Fitch Group, said in a research note that the Duterte government’s strong push for infrastructure spending, particularly on transportation infrastructure, was seen to hasten domestic expansion.

It noted that although the Philippines has favorable regulations governing foreign and private investment, the country’s transportation infrastructure poses challenges for supply chains and hinders development in more remote regions.

Lack of “sufficient road” and mass transportation further resulted in traffic congestion and air pollution, it said.

The Fitch Group unit said the current administration’s strong resolve to address the situation was a good news, with around 28 of the 50 projects included in the infrastructure program, focusing on transportation and had been deemed high-priority.

It cited, in particular, the government’s plan to construct long-distance train system going to the provinces, which are targeted to help elevate growth in these areas and cut poverty rate from around 22 percent to date to about 13 percent at the end of the Duterte administration in 2022.

”Even modest improvement to transport speeds and accessibility across the country have the potential to unlock faster economic growth,” it said.

Economic managers have said that most of these projects will be funded primarily by official development assistance (ODA) loans from China and Japan as these countries and the Philippines improve their relations.

The government said it would adopt a hybrid form of financing for its infrastructure projects wherein construction of the projects would primarily be shouldered by the government and the private sector may come in the middle of the process or only for the projects’ operations and maintenance.

BMI expects this funding scheme to fast-track the implementation of the projects.

“Both China and Japan have been highly receptive to investing in Philippine infrastructure projects, seeing them as opportunities to build relations with the government and for domestic construction companies to expand abroad,” it said.

“With foreign financing and expertise backing projects like the PNR North-South Project and the Mega Manila Subway project, we expect that they will move at a much quicker pace than projects facing less certain financial backing,” it added.

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