MANILA, Philippines – The local business community is urging the Aquino administration to spend more and speed up projects under the public private partnership (PPP) program to boost the economy.
Ramon del Rosario Jr., former Finance secretary and now chairman of the Makati Business Club (MBC), stressed the need to spend more to stimulate economic activity in the country.
Del Rosario blamed the slowdown in the growth of the country’s gross domestic product (GDP) in the first half of the year to the heavy underspending by the National Government.
“The drop in infrastructure spending brought down GDP and employment in the first semester,” he stressed.
The country’s GDP growth slackened to four percent in the first half of the year from 8.9 percent in the same period last year due to weak global trade and heavy government underspending.
“Government spending must now be pursued aggressively for sustainable growth and job generation. The private sector is doing its part. The government should do no less,” he added.
Latest data from the Bureau of Treasury showed that the National Government posted a budget deficit of P34.5 billion from January to August this year or way below the programmed shortfall of P234.35 billion for the first eight months of the year.
For the first eight months, government revenues were up 13.89 percent at P912.751 billion, while spending was still down 8.12 percent. Both revenues and spending were below targets of P1.04 trillion and P1.28 trillion, respectively.
For his part, Bankers Association of the Philippines president Aurelio Montinola III also stressed the need for the Aquino administration to focus on spending to boost economic activity in the second half of the year.
Montinola pointed out that the government should aggressively pursue projects under the PPP scheme as several investors during the recent trips of President Aquino in China, US, and Japan have signified interest in the infrastructure projects.
“Most of all we need the PPP program as well as other forms of government spending to jumpstart the economy in 2012. Clearly the international trips of the government to the US, China, Japan and other countries have raised significant investors interest but they need complete progress to investment in and we have been talking about PPP for over a year,” he added.
Despite its launching, PPP projects have been delayed as government agencies continued to review the costs as well as procurement procedures.
Montinola, who is also president of the Ayala-controlled Bank of the Philippine Islands (BPI), pointed out that the Philippines has a unique opportunity to attract investors due to the fragile economic growth in advanced economies led by the US and Europe.
“All it has to do is improve infrastructure, including developing the power sector, and to raise the cost of living. The government should not only focus its resources on helping the poor through conditional cash transfers but also helping the middle class through better infrastructure.” he said.
According to him, robust economic activity through the PPP program would help offset the projected slowdown in consumption on the back of easing remittances from overseas Filipino workers (OFWs).
“At some point, overall number (amount of remittances) will plateau and the peso will appreciate. Given this, the focus of economic growth should focus on the G for government spending and the I for investments,” Montinola said. –Lawrence Agcaoili (The Philippine Star)
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