CEBU, Philippines - A research result has urged the Philippines to make a serious stance in improving its transport and logistics infrastructure to boost its export industry and seize new opportunities in the global market.
A study conducted by Gilberto M. Llanto, a senior research fellow of the Philippine Institute for Development Studies (PIDS) emphasized that while the Philippines has made a relatively improvement in transport and logistics performance, it has still lagged behind compared with those of neighboring ASEAN countries like Malaysia and Thailand.
The study entitled “Investing in Local Roads for Economic Growth” recommends that the Philippines should intensify its focus on making its transportation and logistics more efficient.
It said that exporting countries, which have been able to effectively address both border (like tariffs) and behind border issues (tranports and logistics), have been able to exploit new and bigger markets opened by globalization and trade liberalization.
Based on the 2006 study, it was found that improved road network quality was robustly associated with higher intra-regional trade flows. Its simulations suggested that an ambitious but feasible road upgrade could increase grade by a much as 50 percent.
Llanto stressed that an important dimension of transport infrastructure is the network or roads that provide a physical link to various communities in urban and rural areas with outside markets.
More investments to provide road network especially in the local areas are imperative in boosting trade and local economic growth, as well as keys to poverty reduction.
“A severe underinvestment in good quality roads has certainly contributed to the high cost of doing business in the country,” he said.
A good network of roads at the local level is indispensable in the timely movement of people and transport of goods with low transaction costs, he added.
Llanto underscored the need for the local governments to launch a vigorous revenue mobilization campaign, which may involve plugging tax leakages.
He said real property taxation is an underutilized source of local revenue in the country in contrast to its being a mainstay of local finances in more developed countries.
“Local revenues should be utilized to produce local public goods that serve the people and not a few vested groups,” he said.
He added that people will be convinced to support government efforts to raise revenues once they experience an improvement in public service.
However, weak governance and corruption erode the credibility of local governments, which may face strong resistance to attempts to increase the lovel of local taxation.