Infra projects to sustain RP's growth

MANILA, Philippines - Britain-based Hongkong and Shanghai Banking Corp. (HSBC) said the strong economic growth in the Philippines can be sustained if the government immediately undertakes infrastructure projects.

“If the new government fulfills the infrastructure commitments it made, growth will be stronger or faster,” Tony Cripps, HSBC chief executive officer for the Philippines, said.

HSBC expects the Philippine economy to grow five percent this year, and between 4.5 to five percent in 2011.

Cripps, however, stressed that it was likewise imperative that the commitments be implemented in a highly transparent manner and that there is a consistency in policy.

He said government must also increase infrastructure spending as a percentage of gross domestic product (GDP). The Philippines is widely perceived as lagging behind its regional neighbors in terms of infrastructure spending.

The Philippine government earlier said it needs an estimated P3.126 trillion worth of investments to finance various infrastructure projects from 2009 to 2013.

Of the total cost, around P400 billion are commitments arising from public-private partnerships (PPP), which is being pushed by the Aquino administration to ease pressure on the budget deficit.

HSBC has vast experience in the region and globally in the area of financing for infrastructure projects in general, and infrastructure-related projects in the sectors of power, utilities, water, tourism, and telecommunications.

Cripps said there is high demand for foreign capital in infrastructure projects.

HSBC anticipates double-digit growth for foreign direct investments (FDIs) and a stronger equity market as foreign investments are expected to find the Philippine equity markets still attractive.

Meanwhile, HSBC also urged the Philippine government to take a serious look at tourism and tourism-related infrastructure projects.

Cripps said there is a developing regional hub in Southeast Asia which can put the Philippines in the middle of the region’s tourism thrust. The hub will reduce the cost of traveling to Southeast Asia’s tourism destinations.

“However, the Philippines is still not getting its share of tourist flow due to lack of infrastructure and tourism-related infrastructure development,” the HSBC official noted.

The government’s five-year Comprehensive and Integrated Infrastructure Program (CIIP) envisions financing coming from official development assistance (ODA), corporate budgets, the General Appropriations Act, and the public-private sector partnerships.

The biggest share will go to power and electrification projects, followed by transportation, water resources, agrarian reform communities, social infrastructure, communications and re-lending programs.

The public-private partnerships will focus on transportation, water resources, social infrastructure and communications.