Foreign investments key to infra growth
A Fitch Group unit on Friday highlighted the importance of private and foreign investments for the Philippines’ flagship infrastructure program.
“The Philippines’ infrastructure needs will be partially met by President Rodrigo Duterte’s Build Build Build program, but its large infrastructure deficit means that the country will have to attract more private and foreign investments into the sector to close the gap,” Fitch Solutions said in a report.
Large-scale infrastructure development is a priority for the current administration under Build Build Build, which includes 75 priority projects.
That said, the macro intelligence solutions provider pointed out that the Philippines would benefit from its improving bilateral relations and deepening cooperation with China following the visit of Chinese President Xi Jinping to the Philippines in November 2018.
“This puts the country’s construction sector in a good position to benefit from agreements signed between the two leaders,” Fitch Solutions said.
During Xi’s visit, Manila and Beijing signed 29 agreements, including the memorandum of understanding on jointly promoting cooperation in key infrastructure projects in the Davao region.
Fitch Solutions also said foreign financing would remain key to the growth of the country’s infrastructure sector over the next decade, noting Japanese funding to the sector.
Japan is currently the largest foreign contributor of funds to the infrastructure sector, accounting 40 percent of the share of foreign financiers.
The Fitch unit said the Japan International Cooperation Agency was the key provider of funds, making more than 250 commitments totaling 2.8 trillion Japanese yen, or about $260 million on a cumulative basis, to the Philippines.
“Chinese funding pales in comparison with that of the Japanese, but going forward, we expect Japanese dominance to slowly erode over time, and Chinese funding to play a greater role in project financing, especially with the Philippines now part of the BRI,” said Fitch Solutions, referring to Beijing’s Belt and Road Initiative.