Who will pay for the Philippines' top 10 infrastructure wants?

Roads, rail and airports are the initial priorities for the Philippines' government’s offerings to infrastructure investors, but questions remain about who will provide the funding.

The Philippines has spent 2.7% of GDP on infrastructure in the past 10 years, which pales by comparison with regional peers. From 1990 to 2008, the Philippines spent just over $1 billion on infrastructure, 40% of which was on energy projects, 31% on telecommunications, 17% on transport and the remainder on water and sewerage.

The Philippines government has outlined plans to establish an infrastructure fund to conduct public-private partnership projects, as revealed in a conference jointly staged by AsianInvestor and FinanceAsia in Manila last month. The government has prioritised 10 projects that it hopes will alleviate traffic snarl-ups, develop Manila's railway network and improve some of the country’s regional airports.

A précis of the top 10 names are as follows:


1)      Cala Expressway – Cavite Side Section  ($262 million -- May 2012 to December 2015)

A 27.5km road that will provide access between Cavite Province and Manila.

2)      NAIA Expressway – Phase II  ($235 million -- November 2011 to September 2015)

A 5km road that will link Manila’s airport and the Manila-Cavite Coastal Expressway.


3)      LRT Line 2 – East Extension project  ($251 million -- 2011 to 2014)

A 4km eastern extension of the light rail transit from Santolan in Pasig City to Masinag Junction in Antipolo, Rizal, plus two additional passenger stations.

4)      Privatisation of MRT/LRT Line 1  ($171 million -- 2011 to 2014)

Privatisation of Line 1 operation and maintenance to a private sector service provider

5)      Privatisation of MRT/LRT Line 3  ($140 million -- 2011 to 2014)

Privatisation of Line 3 operation and maintenance to a private sector service provider

6)      LRT  Line 1 south extension project  ($1.55 billion -- 2011 to 2015)

Extension of the existing 15km LRT Line 1 system by an additional 11.7km southward to Bacoor, Cavite plus eight new passenger stations.


7)      New Bohol Airport  ($168 million -- 2012 to 2014)

New international airport on the island of Bohol.

8)      Puerto Princesa Airport  ($168 million -- 2012 to 2014)

Improvement and upgrading to international standards of the airport in Puerto Princesa, Palawan.

9)      New Legaspi Airport  ($71 million -- 2012 to 2014)

Acquisition of land and the construction of a new airport,

10)  Privatisation of Laguindingan Airport  ($33 million -- 2011 to 2013)

Privatisation of the operation and maintenance of Laguindingan airport


In his speech at the conference, Rogelio Singson, the secretary of the department for public works and highways also mentioned another project, the $467 million link-road connecting the North Luzon Expressway with the South Luzon Expressway. “We’re choking to a traffic standstill in Manila,” he said. “Traffic speeds here today are below 20km per hour.”

Investors in attendance showed tentative interest in the proposals.

"We’d be interested to co-invest as a minority investor with strong local partners in brownfield projects, perhaps special situations undergoing restructuring,” says Bobby Bhatia CEO of Sentinel Capital, a regional infrastructure investment firm.

Yet there are so many problems. For example, only Philippine nationals can extract water, so awkwardly, a nominee Filipino has to extract water which he then hands to a foreign infrastructure supplier.

“There is an absence of maps and surveys, an inability to identify owners [and their heirs], judges apply different rules in deciding right-of-way cases and there is often a delay in releasing funds,” says Samson Lazo, president of the Private Infrastructure Development Corporation, which built and now maintains the Tarlac-Pangasinan Union Expressway.

These other problems still pale in comparison to the biggest one, namely who will pay for it all?

¬ Haymarket Media Limited. All rights reserved.

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September 2016 Magazine
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