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

• Published date: 01 July 2016
• Date: 01 July 2016
• DOI: http://doi.org/10.1111/aepr.12142
• Author: Hal Hill

Comment on “Philippine Infrastructure and

Connectivity: Challenges and Reforms”

Hal HILL†

AustralianNational University

JEL codes: H54, O18

Gilbert Llanto (2016)has written a comprehensive and authoritative analysis of Philippine

infrastructure and connectivity issues,from both “insider”and “outsider”perspectives. He

clearly shows that, like most developing countries, but unlike much of East Asia, the

Philippineshas struggled to meet its infrastructure challenges.As the second most populous

country in ASEAN, and the world’s second largest archipelagic state, its record and the

lessons learnt are therefore of wider relevance.

Llanto commences with some comparisons of access and quality of infrastructure. The

Philippinesdoes not compare wellon the comparative rankingspresented in Llanto’s( 2016)

Table 2. Of concern for the world’s second largest archipelagic nation, with over 7000

islands, it ranks lowest among the eight countries with respect to port and air transport.

The broader range of comparative information and communications technology (ICT)

indicators presented in Llanto’s (2016) Table 3 confirms the conclusion that the Philippines

performs better in this domain. Llanto emphasizes the importance of the major

telecommunications reforms of the 1990s, and their role in the country’s successful business

process outsourcing (BPOs) industry. The industry has evolved from simple call-center services

to a wide range of increasingly sophisticated information technology (IT) services, drawing on

the country’s educational strengths,its strong US connections, and its large international diaspora.

Llanto then develops the links between connectivity and infrastructure, and a broader

set of development issues. At an economy-wide level, the under-provision is holding back

growth. It retardsnational economic integration,especially of the more remote and isolated

regions, which are alsogenerally the poorest. There are also indirecteffects, for example in

the relationship between roads and school attendance.

The author notes some grounds for hope. Public infrastructure expenditure, while

lagging in comparative terms, has been increasing in recent years under the Aquino

administration.However, the low tax effortcontinues to constrain fiscal spaceand therefore

public expenditures. Privatesector participation throughpublic private partnerships(PPPs)

is rising, although the political incentives to micro-manage andmeddle in projects already

agreed to remain high.Llanto’s (2016) Box 1 giv es a flavor of the complexity of these issues

as they affect infrastructure.

Llanto also provides a set of helpful policy recommendations, based on his long policy

advisory experience. The first is measures to improve the scale and effectiveness of PPPs,

including especially better dispute-resolution mechanisms. Second,the technical capacities

†Correspondence: Hal Hill,Arndt Corden Department ofEconomics, College of Asia andthe Pacific,

The Australian National University, Canberra 2601, Australia. Email: hal.hill@anu.edu.au

doi: 10.1111/aepr.12142 Asian EconomicPolicy Review (2016) 11, 262–263

262 ©2016Japan Center for EconomicResearch

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