Comment on “Philippine Infrastructure and Connectivity: Challenges and Reforms”

• Date: 01 July 2016
• Author: Jin Wakabayashi
• DOI: http://doi.org/10.1111/aepr.12143
• Published date: 01 July 2016

Comment on “Philippine Infrastructure and

Connectivity: Challenges and Reforms”

Jin WAKABAYASHI†

Japan International CooperationAgency

JEL codes: H54, O18

Llanto (2016) starts by highlighting the broad challenges for the Philippines by

contextualizing the growth and success of the service industry, that is, the business process

outsourcing (BPOs) industry as well as e-commerce. These new types of infrastructure and

connectivities have certainly led the recent growth trajectory of the Philippines. It is important

to note that such growth was achieved despite limited growth in foreign direct investment

(FDI) due, in part, to constraints in the development of labor intensive manufacturing in

the domestic market. Moreover, other infrastructure provision, such as transportation (roads,

railways, ports), power, and water, have not progressed well enough in attracting FDI despite

the various incentives that have been introduced. For example, the power sector experienced

an initial development with public–private partnership (PPP) investments, but later on

stagnated due to fiscal constraints imposed by the government through privatization as well

as policy changes to inhibit such infrastructure provision. In addition, the development of the

power sector has been constrained by other factors such as stagnating investment in the

bottleneck infrastructures such as transmission lines or gas pipelines, a lack of economics

of scale, and an incomplete market design and regulatory regime.

Llanto also suggests the importance of overcoming regional disparities through

regional convergence strategies such as the Road- Roll-On Roll-Off Transport System

(RRTS). As described, infrastructure provision and improvements in logistics have a

positive correlation with and impact on both macro- and micro economic dimensions.

Given the fact that high poverty incidence in rural and conflict affected areas as well as

regional disparities continues to persist in the Philippines, appropriate infrastructure

provision to enhance intra-country connectivity should also be linked with policy

considerations for renewed industrial policies to enhance mobility and employment

opportunities by taking into account the comparative advantages of industrial clusters

across the country. Moreover, how to deal with infrastructure provision in urban areas

from the viewpoint of the development of cities as industrial or population clusters and

centers of growth is also critical. Because urbanization is one of the major developmental

challenges, the provision of quality and adequate infrastructure to provide intra- as well

as inter-city connectivity in enhancing the productivity of the urban city areas should

not be overlooked.

†Correspondence: Jin Wakabayashi, Japan International Cooperation Agency (JICA), Nibancho Center

Building 5-25, Niban-cho, Chiyoda-ku, Tokyo 102-8012, Japan. Email: Wakabayashi.Jin@jica.go.jp

doi: 10.1111/aepr.12143 Asian EconomicPolicy Review (2016) 11, 264–265

264 ©2016Japan Center for EconomicResearch

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