According to a report by Nomura, a Japanese firm, the Philippines is expected to witness further acceleration in infrastructure development over the next few years under the Marcos administration’s plan to increase annual spending. Nomura stated that infrastructure implementation in the region is on a fast track.
Nomura expressed optimism about the medium-term acceleration of infrastructure spending and execution, particularly in the Philippines, India, and Indonesia. The firm highlighted the progress made by governments that prioritized infrastructure development and adopted a more strategic approach to project execution.
Nomura projected an average GDP growth rate of 6.5 percent in the Philippines between 2024 and 2028, surpassing the 6.3 percent average between 2021 and 2023 and the 6.4 percent average from 2010 to 2019. This growth surge was attributed to the reopening of the economy and the lifting of strict COVID quarantine measures, leading to a GDP growth rate of 7.6 percent in the previous year.
Although comparable infrastructure data was not consistently available, Nomura pointed out positive indicators such as the increasing share of the construction sector in GDP for Indonesia, India, and the Philippines. On the other hand, Thailand experienced a gradual decline in capital outlays, potentially reflecting less conducive political environments.
Nomura emphasized that transport-related infrastructure, including toll roads, airports, seaports, and railways, constituted the majority of projects in Indonesia and the Philippines. The overarching objectives of these projects were to alleviate congestion in economic centers and contribute to poverty reduction efforts.
To enhance execution, Nomura noted that these countries had addressed past issues of underspending, improved planning processes, simplified procurement rules, streamlined land acquisition, increased involvement of state-owned enterprises (SOEs), and strengthened project monitoring systems. The firm maintained an optimistic outlook on infrastructure development in these countries in the coming years.
In the Philippines, the government aimed to sustain annual infrastructure spending at five to six percent of GDP until 2028, an increase from the pre-pandemic average of 4.7 percent. The Marcos administration unveiled plans for 194 flagship projects worth P9 trillion, with 45 of them set to be financed through partnerships with the private sector.
Nomura acknowledged the progress made in executing public infrastructure plans, which had attracted participation from local and foreign sources, thereby alleviating fiscal funding constraints arising from the pandemic. Governments, including the Philippines, have also expanded the role of public-private partnerships and implemented regulatory changes to drive higher commitments. In the Philippines, 32 percent of the flagship projects were planned to be financed through PPP schemes, and the government was amending the implementing rules and regulations of the Build Operate Transfer law to enhance transparency and effectiveness.
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