425386153 Position Paper Build Build Build Program PDF

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DUTERTENOMICS’ BUILD BUILD BUILD PROGRAM: A BRIDGE TO THE PHILIPPINES’ ECONOMIC GROWTH ECONOMIC DEVELOPMENT

RICHARD VINCE MARFIL DEPUNO LADY ANN SOLAS LEONIDA

JAKE A. ABATAYO, CPA PROFESSOR

INTRODUCTION “IS IT THE ROAD TO THE PROGRESS?” In the past administrations, Philippines has experienced dramatic acceleration in infrastructure spending. This might happened because of ‘Teka-Teka’ behavior (wherein it takes time to take effect the infrastructure government,

project)

most

and

especially

underspending during

the

issues

term

of

faced

former

by

the

Presidents

Gloria Macapagal-Arroyo and Benigno Aquino III. In addition to that, under the leadership of President Rodrigo Roa

Duterte,

the

infrastructure

Southeast

boom

not

Asian

recognized

archipelago since

the

is time

undergoing of

the

an late

President Ferdinand Marcos, in which the portion of the infrastructure spending in the Gross Domestic Product (GDP) during 2017 has increased to 5.4%. In order to resolve the problems encountered by the previous regime,

the

National

Government,

in

coordination

with

National

Economic Development Authority (NEDA), Department of Public Works & Highways

(DPWH),

Department

of

Transportation

(DOTr)

and

Bases

Conversion & Development Authority (BCDA), proposed a reform regarding the abovementioned problems which is the ‘Build Build Build Program’. The said program focuses on establishing 75 flagship projects, which include six airports, nine railways, three bus rapid transits, 32 roads and bridges, and four seaports, with an expected spending of $ 180-billion. It was considered as the “Golden Age of Infrastructure” under Duterte’s governance.

PROS In relation with this agenda, this can be beneficial: (1) improve rural

incomes,

(2)

decrease

cost

of

production

and

encourage

countryside investments, (3) make the movement of goods and people to be

more

efficient, (4)

lessen

borrowings

from

different

financial

institutions, and (5) create job opportunities.

Improve Rural Incomes Referring to Duterte’s infrastructure plan, there will be a ten water

resource

system

that

projects

will

as

support

well the

as

improvement

agricultural

in

outputs

the in

irrigation the

whole

country. In regards to that, the increase in productivity and raise in income are expected to happen and benefited by the farmers in rural areas. Decrease Cost of Production and Encourage Countryside Investments The ‘Build Build Build Program’ aims to decrease the production cost and convince the potential investors to conduct business with out country. Through this project, we will be given an opportunity to encourage them to invest highly modernized machineries and innovations that will truly help the Philippine government to execute the plan. As a

result

incurred

of

this

during

the

negotiation, process

of

the

production

cost

the

infrastructure

that

will

be

system

will

be

diminished since the properties supplied by these investors will play a significant role in achieving our goal. Make the Movement of Goods and People to be More Efficient Under this program, the newly-built roads and bridges connecting from rural to urban areas will make the transfer of outputs convenient and

efficient.

Furthermore,

the

transactions

between

firms

and

households will be conducive. Lessen Borrowings from Different Financial Institutions Under the new tax reform package of the government, so-called Tax Reform for Acceleration and Inclusion or TRAIN Law, the taxes received

by the government would be generate a lot of revenue to help finance the aforementioned program and improve the capacity of the government to reduce borrowings for the development of economy. Create Job Opportunities Lowering unemployment rate is one of the targeted goals of the administration. Thus, ‘Build Build Build Program’ offers various job opportunities to cure the aforementioned issue. Several construction companies

will

be

needed

a

lot

of

workers

to

make

the

project

feasible. This project will be a stepping stone to the progress of the economy, as well as in increase of income of every individuals.

CONS On the other hand, the said program has its negative impacts, not only on the individual aspects, but also in the economy as a whole. The disadvantages emphasize (1) economic risks (i.e., inflation), (2) interest

rate

issues,

(3)

contractor

risk,

and

(4)

unavoidable

scenarios that will most likely to happen.

Economic Risks The expected production cost from the time the plan was executed will be adjusted to the current prices if the country will experience rising

inflation

rearrangement

of

attention

the

of

rate.

Moreover,

country’s

this

priorities.

government

will

be

scenario It

could

actually

moved

to

lead

means

other

to

the

that

the

aspects

like

education, national defense and interest payments. Interest Rate Issues As

the

government

has

insufficient

fund

in

constructing

the

projects, they will tend to borrow long-term investments from the...