IN FOCUS: Infrastructure and development

One of the key factors for the economic success of East Asian countries is infrastructure quality. Research suggests that when infrastructure is inadequate or infrastructure services are unreliable, investments and growth are constrained. East Asian countries that have invested on infrastructure have a competitive edge over others. The Philippines, unfortunately, has underinvested in infrastructure over the years, and is only now beginning to scale up investments via public-private partnerships or PPP. The country’s infrastructure investments have averaged at just two percent of gross domestic product in recent years, way below the five-percent level in neighboring countries in the Association of Southeast Asian Nations (ASEAN). In the Global Competitiveness Report 2012-2013 of the World Economic Forum, the Philippines ranked 98th among 144 countries in terms of quality of overall infrastructure.  It got the lowest rank in terms of quality of port infrastructure (120th) and air transport infrastructure (112th).

Research by PIDS has identified opportunities for the country and factors inhibiting investments in infrastructure projects. A study by Gilberto Llanto, PIDS president, found a significant link between rural infrastructure and agricultural productivity, and that electricity and roads are significant determinants of agricultural productivity. Moreover, access to electricity creates various income-earning opportunities for rural households. A separate paper by Llanto on Mindanao’s high-value crops sector points out that “better and more reliable road and transport infrastructure will help to expand production, increase value-added of those commodities, generate employment, and contribute to poverty reduction.” To do this, the Philippines needs to widen its fiscal space such as using more cost-efficient approaches like PPP.

At the regional level, PIDS senior research fellow Adoracion Navarro has helped put together a clear pathway for energy market integration, a cross-border infrastructure initiative under the plan for ASEAN Energy Market Integration, which is envisioned to solve the energy crisis in Southeast Asia where 130 million people still lack access to electricity. Navarro notes that an ASEAN accord on energy market integration can assist ASEAN countries in identifying technical solutions that are best suited for the types of demand when defining their sources of financing toward improving the availability of and people’s access to cleaner and more efficient energy sources. Investment requirements and financing options should consider the needs of the energy-poor, she adds.

Know more about what PIDS studies have to say about infrastructure and development. Understand the issues related to the country’s build-operate-transfer scheme, the role of transport and logistics infrastructure in interregional trade, local service delivery of potable water, and others. Visit the SocioEconomic Research Portal for the Philippines to access the latest PIDS research on infrastructure as well as related topics. Simply type ‘infrastructure’ in the Search box.

• The impact of infrastructure on agricultural productivity
• Does poor rural infrastructure constrain agricultural productivity?
• How critical is transport and logistics infrastructure to interregional trade? The case of high-value fruits and vegetables in Mindanao
• An assessment of the local service delivery of potable water in Dumaguete City and selected areas of Agusan del Sur province
• It’s all in the contract: A closer look at BOT
• A review of build operate transfer for infrastructure development
• Governmental fiscal support for financing long-term infrastructure projects in ASEAN countries
• Interregional trade of high-value fruits and vegetables: Issues on transport and shipping
• Investing in local roads for better mobility of people, goods, and services
• Water financing programs: creating incentives for private sector participation

NEW PUBLICATIONS

PJD Vol. 38, Nos. 1-2: Special Volume on International Labor Migration

This special volume of the Philippine Journal of Development (PJD) focuses on the major findings and recommendations of the project entitled “Different Streams, Different Needs and Impacts: Managing International Labor Migration in ASEAN” implemented by the PIDS with the support of the International Development Research Centre (IDRC). The project covers three labor-receiving countries—Malaysia, Singapore, and Thailand; and three labor-sending countries—Cambodia, Indonesia, and the Philippines. Policy research institutions that have a track record of being players in domestic policy discussions were selected for each country. It is envisioned that research collaboration among these institutions will flourish into a continuing collaborative effort in the study of international labor migration issues in the ASEAN.  Click here for the introduction

RPS 2013-02: The ASEAN Economic Community and the Philippines: Implementation, Outcomes, Impacts, and Ways Forward
by Melanie S. Milo

As 2015 draws near, assessing ASEAN’s progress toward the ASEAN Economic Community (AEC) as defined by the AEC Blueprint is necessary and instructive. This paper constitutes the Mid-Term Review (MTR) of the AEC Blueprint for the Philippines. The Philippines Country Report presents the results of surveys related to the MTR on trade liberalization and facilitation, services and investment liberalization, labor mobility, and agriculture. In assessing the progress of the implementation of the country’s commitments under the AEC, a scorecard mechanism is applied. The report also covers two case studies as well as discussions on the role of the private sector and small and medium enterprises, and concludes with recommendations to raise the implementation rate of AEC measures in the country.  Click here for the full article.

PN 2013-20: Strengthening Mortgage-Backed Securitization in the Philippines: The Role of the National Housing Mortgage Finance Corporation (NHMFC)
by Daisy S. Dulay and Marife M. Ballesteros

With stricter risk management for banks and financial institutions and the need to address the housing gap of nearly three million units annually, strategies that will provide long-term funds and expand home finance specifically to the low- and moderate-income households are essential to ensure the sustainability of housing finance. One potential option is to develop mortgage-backed securitization to strengthen the private securities market and the capital market. This Policy Note discusses the role of the National Home Mortgage Finance Corporation (NHMFC) in developing securitization in the country. With the approval of the Securitization Act of 2004 and improvements in the financial sector, opportunities to engage in securitization have opened up. The NHMFC has taken this opportunity to undertake securitization as a strategy to expand home finance. Click here for the full article.

PN 2013-19: Getting Ready for AEC 2015: Standards and Conformance in the Philippines
by Veredigna M. Ledda

As consumers, we expect the products we use and the food we ingest to meet certain safety and quality standards. Countries rightfully enforce the application of national standards and technical regulations on both domestically produced and imported goods to safeguard public welfare. However, from the trade perspective, excessive or very strict application of these standards can impede the flow of goods being traded among countries. With the realization of the ASEAN Economic Community (AEC) in 2015 drawing closer, harmonizing national standards is increasingly a focus of regional efforts. This Policy Note aims to give a brief introduction to standards and conformance in the Philippines as well as to ASEAN initiatives aimed at facilitating trade flows. Click here for the full article.

PN 2013-18: PJEPA: Highlights of an Initial Ex-Post Review
by Veredigna M. Ledda and Erlinda M. Medalla

The Philippines-Japan Economic Partnership Agreement (PJEPA), which is considered a "new age" free trade agreement (FTA), is the first and, so far, the only bilateral economic partnership agreement entered into by the Philippines. Not quite five years into the implementation of the agreement, what has been PJEPA’s impact on the Philippines thus far? This Policy Note summarizes and updates the main points of a recent PIDS discussion paper on the subject. Given the limited time that has elapsed, it is not possible to undertake a comprehensive assessment. This initial analysis relies on present trends and qualitative factors that already give some indication of the PJEPA’s impact from certain key perspectives.Click here for the full article.

PN 2013-17: Best Practices in Mortgage-Backed Securitization for the Underserved Housing Market: Lessons for the Philippine Housing Finance
by Marife M. Ballesteros, Jasmine V. Egana, and Daisy S. Dulay

The development of mortgage-backed securitization (MBS) in many developed countries started as a strategy to expand and facilitate housing finance to the underserved housing market, primarily the low- to moderate-income families with limited access to financing from traditional sources. In particular, these countries established secondary mortgage institutions to purchase housing loans originated by banks or other financial institutions and convert these loans into debt securities. This Policy Note presents lessons drawn from best practices in MBS in selected countries. These best practice examples were among the financial institutions that have remained resilient in the recent subprime financial crisis. The US MBS system, which triggered the subprime mortgage crisis, is also discussed to draw insights on securitization practices that should be avoided. Click here for the full article.

DEVELOPMENT RESEARCH NEWS

DRN 2013 Vol. 31, No. 4: Economic Growth Must Translate to Better Health Outcomes

This issue of the DRN, which is the final issue of the revamped DRN for 2013, chronicles the proceedings of the nationwide celebration of the 11th Development Policy Research Month (DPRM) last September. With the theme "Making health more inclusive in a growing economy", the DPRM events highlighted policies aimed at making health more inclusive. An important recommendation is for the Philippines to hike health expenditures to the minimum five percent recommended by the World Health Organization from the current 3 to 3.5 percent. Other DPRM-related articles feature effective tools for evaluation of the impact of antipoverty and development projects, best practices in health financing and innovations, the government’s Universal Health Care program, inequalities in maternal health and child care, and public-private partnership arrangements in health. Click here for the full article

PRESS RELEASES

Inclusive growth must be asserted in AEC 2015

The inclusive growth mantra has to be further asserted in the ASEAN Economic Community (AEC), said Dr. Cielito Habito, former director-general of the National Economic and Development Authority (NEDA) and chief of party of the USAID Trade Related Assistance for Development, during the 4th Final Workshop of the ASEAN Beyond 2015, a project of the Economic Research Institute for ASEAN and East Asia (ERIA). State think tank Philippine Institute for Development Studies (PIDS) co-organized the event held at the Carlos P. Romulo Hall, NEDA sa Makati Building.

According to Habito, ASEAN trade relations must be competitive rather than complementary. "The Philippines has a predominantly intra-industry trade with the rest of the ASEAN countries, especially with its major trading partners in the region, meaning we trade in products within the same industries. The Philippines' top exports to its major ASEAN trading partners are petroleum products, electronics, and chemicals, the same products that we import in the region," Habito noted. Read more

Competition law for Phl needed for consumers and poor

Competition agencies and nongovernmental organizations across the globe celebrated World Competition Day on December 5 under the theme "Impact of Cartels on the Poor". This day coincides with the day the United Nations General Assembly passed the UN set of principles and rules on competition. Cartels are motivated by greed and the desire to reduce competition. Without competition, cartels steal and rob from the public.

In the Philippines, cement is one sector where perennial price increases have always been a complaint despite the removal of tariffs. Other competition issues include exclusive dealing in canned tuna, interconnection problems in telecommunications, and high cost of shipping. Weak competition is detrimental particularly to ordinary consumers and especially small and medium businesses. Read more

OUTREACH

• Seminar on ASEAN Integration for NEDA-Caraga
  Organized by NEDA-Caraga
  Date: 15 January 2014
  Time: 9:00 a.m. - 4:00 p.m.
  Venue: NEDA-Caraga, Butuan City
  Resource speakers: Selected PIDS research fellows

• ASEAN Economic Community: Implications for the Philippines and the World
  Organized by the UPLB Agricultural Economics Circle
  Date: 20 January 2014
  Time: 1:00 - 4:00 p.m.
  Venue: Function Hall, College of Economics and Management, UPLB
  Resource speakers: Selected PIDS research fellows

• Planning-Workshop on the Updating of the Industry Cluster Roadmap
  Organized by NEDA-RDC XI
  Date: 22-23 January 2014
  Time: 9:00 a.m. - 4:00 p.m.
  Venue: NEDA XI, Davao City
  Resource speakers: Selected PIDS research fellows
  
  

DATABASE UPDATES

Gross Domestic Product and Gross National Income

The National Statistical Coordination Board (NSCB) reported that gross domestic product (GDP) posted a 7.0 percent growth in the third quarter of 2013. This was driven by the services sector, with the robust performance of real estate, renting and business activities, trade, and financial intermediation, and sustained by the accelerated growth of the industry sector. Gross national income (GNI) expanded by 7.8 percent in the third quarter of 2013 from 7.3 percent in third quarter of 2012.

For the time-series data on GDP and GNI, please refer to this link:
http://econdb.pids.gov.ph/tablelists/table/405

Source:National Statistical Coordination Board

Exchange Rate

The monthly average peso-dollar exchange rate went up to Php 43.5546 in November, from Php 43.1825 in October.

For the time-series data on the monthly average peso-dollar exchange rate, please refer to this link:
http://econdb.pids.gov.ph/tablelists/table/49

Source: Bangko Sentral ng Pilipinas

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© 2013 Philippine Institute for Development Studies.