THE “BUILD, BUILD, BUILD” PROGRAM: SOLUTION FOR ECONOMIC RECOVERY

Sorsogon State University

School of Graduate Studies
Sorsogon City

PA 503 – THEORIES AND PRACTICES IN PUBLIC ADMINISTRATION

THE “BUILD, BUILD, BUILD” PROGRAM: SOLUTION FOR

ECONOMIC RECOVERY
TITLE

LEVY ALVAREZ EBID

MAMPA Student

ERROL G. DE CASTRO, PhD

Professor

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 THE “BUILD, BUILD, BUILD” PROGRAM: SOLUTION FOR ECONOMIC RECOVERY

CONTENTS

Section Page

Abstract ---------------------------------------------------------------------------- 4

Introduction ------------------------------------------------------------------------------ 5

Objectives ------------------------------------------------------------------------------- 6

Methodology --------------------------------------------------------------------------------- 7

1. What is BBB program ----------------------------------------------------------- 7

2. BBB Programs -------------------------------------------------------------------- 10

2.1 Infrastructure Flagship by status ------------------------------------------ 11

2.2 Infrastructure Flagship Project by Location----------------------------- 12

2.3 Infrastructure Flagship Project by Sector-------------------------------- 13

3. Funding BBB Program ------------------------------------------------------------ 17

3.1 Public Spending ---------------------------------------------------------------- 19

3.2 Status Implementation -------------------------------------------------------- 20

3.3 IFP’s Funding Source -------------------------------------------------------- 20

4. The BBB Projects ------------------------------------------------------------ 22

3.1 Road Links & Bridges --------------------------------------------------------- 22

3.2 Covid-19 Response Facility -------------------------------------------------- 24

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3.3 Food Control Projects & Classrooms --------------------------------------- 25

4. The BBB Economy ----------------------------------------------------------------- 26

4.1 Muted Global Economic Recovery ------------------------------------- 26

4.2 Growth Forecast of the Philippines ------------------------------------ 27

5. The BBB Impacts --------------------------------------------------------------------- 29

5.1 Impacts on the Economy Programs ---------------------------------------- 30

5.2 Impacts on Money & Inflation Rates ---------------------------------------- 31

5.3 Impacts on Philippine Employments ----------------------------------------- 32

5.4 Impacts on Philippine Trade -------------------------------------------------- 33

6. The BBB Risk ------------------------------------------------------------------------- 34

6.1 Economic Risk ---------------------------------------------------------------- 34

6.2 Inflation or Rising Prices----------------------------------------------------- 35

6.3 Exchange Rate: The pesos External Value----------------------------- 35

6.4 Interest Rate Increase-------------------------------------------------------- 36

6.5 Contractor’s Risk-------------------------------------------------------------- 36

6.6 Abruptly Corruption ---------------------------------------------------------- 37

7. BBB Successes ---------------------------------------------------------------------------- 38

8. Conclusions and Recommendations -------------------------------------- 40

9. References ---------------------------------------------------------------------------- 42

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Abstract

Amidst the economic recession being experienced by the Philippines and the world at

large caused by the COVID-19 pandemic, infrastructure development through the “Build Build

Build” (BBB) program of the Duterte administration is said to be one of the key drivers if not

the main driver of the economic recovery of the country. As the demand for better

infrastructures to cope with a developing nation's growth intensifies, the government launched

the Build, Build, Build Program as its response. It will ease the much-needed improvement of

the nation's roads, bridges, and other structures, but it also aims to give thousands of jobs to

the Filipino people. Through public-private partnerships (PPP), several segments of this

massive infrastructure began. Several areas of the public sector became the focus of this

massive government project. With President Ferdinand Marcos Jr administration entering the

year, the “Build, Build, Build” program continues to deliver its promise of creating infrastructure

that improves the lives of Filipinos in the face of the Covid-19 pandemic and other challenges.

The study will examine the Country’s economic growth through the Build, Build, Build program.

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Introduction

The “Build, Build, Build” program should be clearly defined in terms of what it is and what it

covers. Based on available data and information, the study examines the implications of these

projects on the PDP targets. Such understanding is envisioned to guide the crafting of future

economic recovery to accelerating infrastructure development and also, prioritization of

infrastructure projects. The BBB program is intended to address persistent issues and

challenges in the infrastructure sector. More specifically, the projects under the BBB program

are meant to support the attainment of the targets set in the PDP Results Matrices 2017-2022

(i.e., NEDA 2017b, hereafter PDP Results Matrices). NEDA (2017b) defined the PDP Results

Matrices as an instrument to provide results orientation to the PDP based on the results-based

management strategy. The focus is on performance with highlights on achievements of

outcome and impact. The “BBB” program consists of around 20,000 infrastructure projects

nationwide, involving roads, highways, farm-to-market roads, airports, seaports, terminals,

evacuation centers, lighthouses, hospitals, schools, government centers, and the like. It is the

centerpiece and one of the top-priority programs of the Duterte administration, which has been

allocated a budget of around PHP 8 trillion (US$164.7 billion) for six years (2017-2022) The

“BBB” program is anchored on Duterte’s long-time conviction and advocacy for a more

balanced and responsive regional/countryside development for the country. which stressed

that the only solution to address the worsening congestion and traffic situation in Metro Manila

and the skewed development favoring Metro Manila and the traditional urban centers of the

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country is through the dispersion of economic activities. And this is the compelling reason why

his administration is accelerating infrastructure development. Such budget allocation on

infrastructure is thus far the highest in Philippine history to date.

Objectives

This research aims to discuss the following:

1. What is the Build Build Build Program and the Program’s Goal?

2. The effect of Build Build Build program to Philippine’s Development Growth

2.1 Employment Rate in the Philippines

2.2 Trading & Industry

2.3 Economic Growth

2.4 Inflation Rate

3. Discuss the current status of Buil Build Build Program before the Marcos

administration sit in.

4. The risk & Setback of Build Build Build Program

5. What is the Philippine’s Growth forecast with regards to Build Build Build Program?

6. How Covid 19 Pandemic affects the implementation of Build Build Build Program?

7. The Build Build Build Program success despite of critics and Covid 19 Pandemics.

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Methodology

The research Method for this study is Descriptive Design, this method

includes Data Collection from different agencies, such as NEDA, Philippine Statistic Authority

& etc., this method also includes Data analysis, and presentation. It lets the researcher clearly

present the problem statement & Objects to allow others to better understand the need for this

research.

Discussion

THE BUILD, BUILD, BUILD PROGRAM

What is the “Build, Build, Build” (BBB) Program?

Introduced in 2017, with 75 planned projects, the program aims to improve the

sectors of transportation and mobility, power, water, information and communications

technology, and urban development and renewal. An effort towards achieving the

administration's medium-term goal to increase the GDP of the Philippines to 7.3 percent by

2022, the government would be spending around Php 8 trillion (Lamentillo, 2018). One positive

aspect to this government project is that, compared to previous efforts made, the Build Build

Build program would be addressing infrastructure gaps not only in the National Capital Region

or in Luzon, but also the infrastructure gaps in Visayas and Mindanao. The Build Build Build

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program would help improve the connectivity among the various islands in the Philippine

archipelago which aims to facilitate the flow of capital, goods, and people. Observably, the

primary focus of the program revolves around the transportation and mobility sector.

A good understanding of the BBB program is critical in examining its implications on

the PDP targets. The BBB program should be clearly defined in terms of what it is and what it

covers. According to NEDA, it covers the priority infrastructure programs/activities/projects

(PAPs) under the Public Investment Program (PIP) 2017-2022 (i.e., NEDA 2018, hereafter

PIP) that are consistent with the objectives and strategies set out in the PDP. As mentioned

earlier, the BBB program is aligned with PDP’s Chapter 19, i.e., accelerating infrastructure

development. However, NEDA (2018) noted that its other chapters contain additional

infrastructure PAPs, which are supportive of the goals and outcomes of social development

(e.g., housing requirements), peace and security, and environment and natural resources

sectors. It recognized that infrastructure development is a cross-cutting strategy to sustain the

growth momentum, safeguard a clean and healthy environment, and provide support to other

productive sectors of the economy. In addition to the priority infrastructure PAPs in the PIP,

the BBB program also consists of the Infrastructure Flagship Projects (IFPs) that include major

capital project undertakings, which are meant to help usher in the “Golden Age of

Infrastructure.”

In November 2019, the government revised its list of flagship infrastructure projects under

Duterte's "Build, Build, Build" program, expanding it to 100. It was revised again in August 2020,

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bringing the total number of projects to 104, expanding its scope to include health, information,

and communications technology, as well as water infrastructure projects to support the country's

economic growth and recovery from the effects of the Covid-19 Pandemic. As of September 11,

2020, 24 projects are still in the approval & planning stages, while 80 were under implementation.

As of July 2021, 214 airport projects, 451 commercial social and tourism port projects, 29,264

kilometers (18,184 mi) of roads, 5,950 bridges, 11,340 flood control projects, 11,340

evacuation centers, and 150,149 classrooms had been completed under the infrastructure

program. The numbers cited include newly-built infrastructure, and projects involving the

repair, rehabilitation, widening, and expansion of existing infrastructure.

However, despite the massive expenditure program and with only two months left before

Rodrigo Roa Duterte leaves office, as of April 28, 2022, only 12 out of 119 Flagship Build Build

Build projects have been completed so far. Officials were quick to point out that despite the

low completion rate of projects, the current administration has consistently spent more on

infrastructure than past administrations. The remaining projects will be passed on to

Ferdinand Marcos Jr.’s administration for completion and consideration.

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Table 1 (Source: International Momentary Fund)

Despite the deterioration in 2018 and 2019 relative to 2017, the improvement in the

infrastructure outlays to GDP ratio relative to earlier years reflects the Philippine government’s

determination in enhancing infrastructure in the country (Figure 1). Various reports in the past

underscored the insufficient and underdeveloped infrastructure in the country. “Insufficient

infrastructure has been a major constraint to economic growth and poverty reduction in the

Philippines”. Inadequate infrastructure, particularly in electricity and transport, was identified

as a critical constraint to investment and growth in the country.

The BBB Program

The “BBB” program consists of around 20,000 infrastructure projects nationwide,

involving roads, highways, farm-to-market roads, airports, seaports, terminals, evacuation

centers, lighthouses, hospitals, schools, government centers, and the like. It is the centerpiece

and one of the top-priority programs of the Duterte administration, which has been allocated

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a budget of around PHP 8 trillion (US$164.7 billion) for six years (2017-2022). Such budget

allocation on infrastructure is thus far the highest in Philippine history to date.

Over the past six administrations, the country’s infrastructure spending-to-Gross

Domestic Product (GDP) ratio only averaged 2.6 percent of GDP. To note, from 2001 to 2010,

the average percentage of infrastructure budget to GDP was 1.6 percent or PHP 100.3 billion

(US$2.06 billion), while from 2011-2016 it was 3.0 percent or PHP 378.3 billion (US$7.7

billion).

When Duterte took office in July 2016, his administration reversed this “long-neglect” in

infrastructure investment. To cite, from 2017 to 2019, the average percentage of infrastructure

budget to GDP was 6.0 percent or PHP 932 billion (US$19.1 billion). In 2020 the budget

allocation for the “BBB” program was 4.6 percent of GDP or PHP 972.5 billion (US$20 billion).

Hence, these numbers indicate a far more augmented budget for infrastructure development

compared to the previous administration; illustrating the fervent resolve of the Duterte

administration to not only accelerate infrastructure development but to deliver the much-

needed infrastructure projects to bridge the infrastructure gap in the country.

Infrastructure Flagship Projects

Infrastructure Flagship Projects by Status

. Fifteen projects have been completed as of January 3, 2022, seven of which were part of the

previous lists5 approved in 2017, 2019 and 2020, 6 while the other eight (recently completed)

were part of the updated list, these are: 1) Light Rail Transit (LRT) 2 East Extension; 2) Metro

Manila Skyway Stage 3; 3) Bonifacio Global City (BGC)- Ortigas Center Link Road Project; 4)

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China Grant Bridges (Binondo-Intramuros Bridge and Estrella-Pantaleon Bridge); 5) Japan

International Cooperation Agency (JICA)-funded Marawi Transcentral Road Phase 1; 6) Land

Transportation Office (LTO) Central Command Center; 7) General Santos Airport

Development Project; and 8) Bicol International Airport. Meanwhile, 77 projects are still in the

construction stage and 27 projects are currently in the pipeline.

Infrastructure Flagship Projects by Location

Economic literature supports the idea that to provide impetus for outward economic

development in the regions, more infrastructure investments should be allotted to areas

outside of the National Capital Region (NCR). 7,8 In recent years, there has been a push to

increase public infrastructure spending in Mindanao (which now has 26 projects worth

PhP543.7 billion) and the Visayas (with 16 projects worth PhP339.3 billion). It is notable

though that majority of infrastructure projects are still concentrated in Luzon, with 57 projects

(amounting to PhP3 trillion), 26 of which are in the NCR (with a total cost of PhP645.6 billion).

Meanwhile, there are 13 projects classified as nationwide projects (worth PhP159.6 billion)

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relating to the information and communications technology (ICT), water resources, health, and

transport mobility sectors.

Infrastructure Flagship Projects by Sector

Majority of the government’s infrastructure projects are in the Transport and Mobility sector,

accounting for about 91.2 percent of the total project cost. Two health-related projects are also

included in the list amounting to PhP41.4 billion—the Health System Enhancement to Address

and Limit (HEAL) COVID-19 Project and the Philippines COVID-19 Emergency Response

Project (PCERP)

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In 2020, infrastructure disbursements amounted to P869.5 billion, equivalent to 4.8 percent

of GDP, despite construction delays due to COVID-19. While lower than the previous year's

P1 trillion infrastructure disbursements, this is a far improvement from the P100 billion

average spending (based on obligations) per year from 2001 to 2010 (1.6 percent of GDP).

Funding the Build Build Build Program

Funding such projects is a complicated task. Merely relying on the currently available

government funds is not ideal for a couple of reasons. First, it is simply not enough. Other

government projects and initiatives would have to be implemented too. Next, the government

might have to resort to increasing taxes on various goods which would result to higher prices.

A reasonable increase in taxes is justifiable. Though with the amount needed to cover the

expenses of the Build Build Build program, if the government were to rely solely on taxes, that

would result to drastic price hikes which is not ideal nor necessary. The government could

resort to taking loans through the Official Development Assistance (ODA) (Ide, 2018).

However, the Philippine government should be careful when taking this route.

The Philippines is no stranger to the effects of taking loans from other countries. During

Marcos' time, the Philippines had experienced a short-lived shoot up in the Gross Domestic

Product. Shortly after, the Philippine economy had suffered significantly because the

succeeding administrations had to deal with the massive debt left behind by the Marcos

administration. Not that taking loans should not be considered, but the government must

carefully analyze its future effects and the government must have a solid plan on how to repay

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their debt. Another course of action that the government could take is funding through the

Private-Public Partnerships. The issue with this is that partnering with private entities is not

exactly a "no string attached" agreement. As explained by the Undersecretary of the

Department of Finance, Karen Singson, "unwarranted obligations" can be imposed on the

government as a part of the agreement brought about by the PPP (de Vera, 2019). Such

obligations could protect and benefit the interest of capitalists instead of the larger population.

Therefore, similar to that of the ODA, careful and thorough consideration of such agreements

is necessary to protect the interest of the majority. Instead of resorting to one funding solution,

the Duterte administration has decided to use different funding solutions on different projects.

According to NEDA's status report last July, it reveals those 21 projects (worth P187.6 billion)

from the 75 projects is expected to be finished by 2022. As for the other 54 project,

implementation could begin during Duterte’s term. In fact, by mid-2019 46 projects were

undergoing various stages of implementation. According to reports, 52 projects are to be

financed through Official Development Assistance (ODA) loans, 14 through the General

Appropriations Act, 8 through Private-Public Partnerships, and 1 will be funded by a certain

private sector (de Vera, 2019). Currently, the number of target projects has increased to 100.

Still, most of these projects are focused at addressing concerns from the transportation and

mobility sector (de Guzman, 2019).

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Public Spending on Infrastructure.

With the government’s infrastructure drive, the share of infrastructure disbursements1 to

total GDP increased from 3.9 percent in 2016 to 5.4 percent in 2019. However, it dropped to

4.8 percent in 2020 as the imposition of quarantine restrictions and the realignment of the

national budget to address the Coronavirus Disease 2019 (COVID-19) pandemic resulted in

the discontinuance and delays in the implementation of infrastructure projects. For 2021, the

government plans to disburse a total of PhP1.02 trillion for infrastructure, 79.2 percent

(PhP807.5 billion) of which have already been disbursed from January to September. 2

Infrastructure disbursement for 2022 is projected to be PhP1.18 trillion or 5.3 percent of GDP,

lower than the original target of 7.0 percent.

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Status of Implementation.

The Infrastructure Flagship Projects (IFPs) is a sub-list of priority projects under the BBB

as identified by the National Economic and Development Authority (NEDA) Board Committee

on Infrastructure (INFRACOM) and the Investment Coordination Committee (ICC). There were

75 projects identified in the IFPs’ list in 2017 but these have now increased to 112 as of May

2021. The list includes some projects that were conceptualized and started in the past

administrations.3 From the PhP1.6 trillion total project cost in 2017, the IFPs now cost a total

of PhP4.7 trillion. The list has been revised several times to remove and add new projects

based on feasibility, cost-benefit considerations, and the inclusion of new projects of national

(and regional) importance. From the initial list of 75 IFPs, 37 projects remain in the updated

list.

IFPs by Funding Source.

Almost half (54 projects) of the 112 flagship projects are to be funded via the official

development assistance (ODA) which would cost PhP2.6 trillion. The Duterte administration’s

initial aversion to public-private partnerships (PPPs)stem from problems that slow down

implementation of PPP projects. The administration wanted to fast- track “shovel  ready”

projects. Only two projects from the original list of 75 have PPP as funding source.

Nonetheless, in the latest list, 23 projects are to be funded via PPP and 25 projects to be

funded by the General Appropriations Act (GAA). Nine projects with a total cost of PhP268.2

billion are indicated to have mixed funding source (i.e., ODA and GAA, PPP and GAA, etc.)

while two projects are to be privately financed.

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The top five most expensive projects in the IFPs’ list are the following: 1) New Manila

International Airport (PhP735.7 billion); 2) North-South Commuter Railway Project9

(PhP628.4 billion); 3) Metro Manila Subway (PhP357 billion); 4) Laguna Lakeshore Road

Network Project (PhP177.9 billion); and 5) Bataan-Cavite Interlink Bridge (PhP175.7 billion).

The first one is to be funded via PPP modality and the latter four via the ODA

Japan and China are the two biggest sources of ODA loans, financing 15 and 13

projects, respectively. The Asian Development Bank (ADB) would be funding 10 projects,

followed by the World Bank (WB) with 5 projects, and Korea with 6 projects.

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The “Build Build Build” Projects

Road links, bridges

The DPWH said 5,950 bridges were completed and included in the works those have

been widened (1,366); retrofitted (1,805); rehabilitated (1,389); replaced (297) and some 738

local bridges have been constructed.

Among them are the Lucban Bridge in Cagayan, the Marcos Bridge in Marikina, the

Sicapo Bridge in Ilocos Norte, the Anduyan Bridge in La Union, the Tallang Bridge in Cagayan,

the Bolo-Bolo Bridge in Misamis Oriental, the Caguray Bridge in Occidental Mindoro, the

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Tinongdan Bridge, the Pasac-Culcul in Pampanga, the Aganan Bridge in Iloilo, the Maddiangat

Bridge in Nueva Viscaya and the Pigalo Bridge in Isabela.

Last month, the DPWH also opened the Sta. Monica-Lawton Bridge known as

Kalayaan Bridge which connects Lawton Avenue in Makati City and Sta. Monica Street in

Pasig City.

Through the Kalayaan Bridge, motorists will be spared from traffic congestion going

in and out of Makati and Bonifacio Global City in Taguig and Pasig, and Mandaluyong City.

Meanwhile, the Estrella-Pantaleon Bridge connecting the cities of Mandaluyong and

Makati and the Binondo-Intramuros Bridge Project, both China-funded projects, is set to be

completed soon.

As of June 22, the four-lane Estrella-Pantaleon Bridge is 93 percent complete. It

would be a 506.46-meter pre-stressed concrete rigid frame bridge with corrugated steel webs,

replacing the temporary two-lane box truss bridge made of modular steel components

dismantled in 2019.

Meanwhile, the Binondo-Intramuros Bridge is now 70 percent complete, with its

substantial completion expected in December this year.

The iconic structure will connect the historic districts of Binondo and Intramuros in

Manila and will carry extra traffic of around 30,000 vehicles per day. It will also help extend

the life of existing Jones, Delpan, and MacArthur Bridges by decongesting traffic.

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The projects are part of the Metro Manila Logistics Improvement Program to address

the traffic gridlock on major roads by constructing new bridges crossing Pasig and Marikina

Rivers and Manggahan Floodway.

Earlier in July, President Rodrigo Duterte led the inauguration of the Central Luzon

Link Freeway which connects Tarlac and Nueva Ecija within 20 minutes.

It is part of the Luzon Spine Expressway Network, which is aimed at reducing travel time from

the northernmost part of Luzon, Ilocos, to the southernmost part, Bicol, by over 50 percent via

the construction of a 101-kilometer high standard highway network.

In his 2017 State of the Nation Address (SONA), Duterte said the government is

targeting to increase government spending on infrastructure from 5 percent of GDP in 2017 to

7 percent of GDP by 2022, amounting to nearly USD180 billion (PHP9 trillion) in infrastructure

projects.

“We will make the next few years the ―Golden Age of Infrastructure in the Philippines to

enhance our mobility and connectivity and thereby spur equitable growth and development in

the country. In other words, we are going to ‘Build, Build and Build’,” he added.

Covid-19 response facilities

As the country’s journey to progress made a sudden turn due to the coronavirus

pandemic last year, the DPWH has also played a vital role in responding to the pandemic as

it spearheaded the construction of facilities for patients and medical workers nationwide.

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Based on DPWH data, over 653 Covid-19 facilities such as modular hospitals, off-site

dormitories, and isolation facilities have been erected near health facilities and on government

lots. These facilities have a bed capacity of 23,117.

The DPWH aims to build a total of 816 facilities with a total bed capacity of 27,267.

The most recent mega quarantine facility that has been turned over to the local government

unit was the newly-converted Zamboanga Convention Center in Pasonanca, Zamboanga City.

It has 188 beds and will provide management, monitoring, and treatment of asymptomatic and

moderate Covid-19 patients.

Among the other mega facilities are located in the National Capital Region (NCR) such

as in the cities of Quezon, and Parañaque.

The first batch of health facilities is the Rizal Memorial Coliseum particularly the Ninoy

Aquino Stadium in Manila; the Philippine International Convention Center (PICC) Forum Halls

and the World Trade Center (WTC) both located in Pasay City.

Flood control projects, classrooms

The DPWH also completed a total of 11,340 flood mitigation structures since June

2016 which aimed at protecting flood-prone areas across the country.

Those that have been constructed include the Mandaluyong Main Drainage Project,

the pumping stations in Barangays Wawang Polo and Coloong, the Flood Risk Management

Project for Cagayan River, the Flood Risk Management Project for Tagoloan River, the

Leyte Tide Embankment Project, and the Pasig Marikina River Flood Control Project.

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A total of 150,149 classrooms for elementary and secondary schools were built

nationwide while another 17,647 classrooms are in various stages of implementation.

The “BBB” Economy

The Build! Build! Build Program initiative is estimated to cost US$180 billion, with 75

projects planned. These projects include a new Manila airport terminal, Manila’s first subway

system, a 102-kilometer railway in Mindanao, and more. Most of the infrastructure is planned

to relate to transport, which Duterte hopes will help enhance mobility and connectivity in the

country.

The Build! Build! Build! The program has been positively received by economists

citing its potential to boost growth in the country, with the government anticipating up to eight

percent growth for the economy this year, according to Socioeconomic Planning Secretary

Ernest M Pernia in a December 2017 press conference.

The country is expected to increase 1.4 percent annually due to new infrastructure projects

created by the program. Meanwhile, the Asian Development Bank has supported the project

with a US$100 million loan for the Infrastructure Preparation and Innovation Facility (PIF). The

Asian Development Bank estimates that projects under the IPIF will add as much as US$10

billion to the country’s GDP between 2019 to 2024. The BBB Program is expected to generate

an average of 1.1 million jobs annually.

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Muted Global Economic Recovery

Since the 2008-2009 global financial crisis, global economic growth has been sluggish,

without any immediate prospect of renewed economic vigor.1 From an average growth of 5.1

percent in 2003-2007, global output growth slowed to an average of 3.2 percent in 2008-

2015.2 After a weak outturn in 2016 (estimated at 3.1%), economic activity is expected to

accelerate slowly in the medium term. Overall, though, the global economy is seen to remain

weak, with average growth rising only slightly to 3.6 percent in 2017-2021. Moreover, the

outlook is clouded by uncertainty about the policy stance of the new administration in the

United States of America, which may have global repercussions.

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Growth Forecast for the Philippines

The Philippine economy is forecast to grow faster than initially expected in 2022,

following the relaxation of COVID-19 mobility restrictions in the country, the expansion of the

COVID-19 vaccination program, and a rebound in investment and household consumption

(Asian Development Bank).

The Philippine economy will grow at least 6.5% in 2022, up from the bank’s April

forecast of 6.0%. The growth projection for 2023 remains at 6.3%. Downside risks to growth

in the second half of 2022 may come from sharper-than-expected slowdowns in major

industrial economies, possible sustained elevated global commodity prices, and tighter

financial conditions. “The Philippine economy’s growth momentum has accelerated close to

its ideal growth path,” said ADB Philippines Country Director Kelly Bird. “Strong domestic

demand supported by a pick-up in employment and remittance inflows, private investment

expansion, and large public infrastructure projects will underpin the country’s recovery from

the economic impact of the pandemic.”

Source: Asian Development Outlook (ADO) 2022 Supplement

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“Build Build Build Impacts

The Build Build Build Program's Impact on the Economy

By implementing an expansionary fiscal policy through increased government spending

which is brought about by the Build Build Build program, the Duterte administration is

subjecting the Philippine economy to growth. When government spending increases, it will

result to more money circulating and more jobs. When less people are unemployed, firms'

bargaining power on wages goes down. It will result to higher wages which in turn, will result

in an increase in consumption. When people's consumption increases, in the short-run, prices

would increase since firms do not change their level output right away. As in basic law of

supply and demand, when demand is high and supply is low, prices are bound to increase.

The higher prices would eduzaurus.com 2 / 5 then incentivize firms to produce more. All of

these effects would then push for economic growth. Putting theory into context, the various

on-going infrastructure projects has given jobs to architects, engineers, and construction

workers. In addition to this, the Build Build Build program has injected capital into construction

firms, hardwares, and others which then goes to the wages of their workers and to investments

on construction equipment. Those wages would then circulate as those workers and

employees increase their consumption since they now have more money to spend. Eventually,

prices would increase due to the increase in demand for various consumer goods. This will

push firms to expand production.

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The Build Build Build Program's Impact on Money and Inflation Rate

On inflation, the Philippines might experience inflation. As explained earlier, along with

the increase and jobs and wages, consumption might increase along with it. Increased

aggregate consumption could drive up prices in a phenomena known as demand-pull inflation

(Mill, 2016). Nonetheless, the government can put up policies to ensure that this would not

happen. Since inflation can be countered by reducing income or by encouraging people to

save (Pettinger, 2019). When bonds appear more appealing to hold than cash, people are

encouraged to save their money in the form of bonds. When people purchase bonds, the

money supply circulating is then reduced. Therefore, to combat the possible inflation brought

about by the increase in aggregate demand, the government can implement a contractionary

monetary policy. High inflation rates in the Philippines could decrease the value of the

Philippine Peso. Then again, if the Philippine government were to implement a contractionary

monetary policy after their implementation of the expansionary fiscal policy, they could counter

the depreciation of the Philippine peso. Furthermore, when interest rates are high, lenders are

provided with higher returns. As a result, it attracts foreign capital which gives rise to the

exchange rates (Twin, 2019). Still, the government must closely monitor inflation rates as it

can easily offset the advantages that is to be gained from having high interest rates.

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The Build Build Build Program's Impact on the Philippines' Employment

The Build Build Build Program aims to improve existing infrastructure in the Philippines and

likewise create more infrastructure. Because of the different developments and building being

done, a larger number of manpower is required to finish these projects on time and properly.

The Build Build Build Program opens up more job opportunities for the Filipino people since

the program prioritizes its local skilled workers rather than foreigners. The job opportunities

may give way for different unemployed engineers, contractors and construction workers to

have jobs. For example, due to the congestion caused by the construction of the Skyway

extension, the government is required to hire more workers in order to finish the project on or

before the given date announced to the public. It is said that the Build Build Build Program has

been able to generate a total of 4,199,228 jobs for the Filipino people since the program

started in 2016 (Unite, 2019). Along with the Build eduzaurus.com 3 / 5 Build Build Program,

the Duterte administration also launched online site Jobs, Jobs, Jobs which aims to

consolidate all available jobs under the given program. Due to the higher employment rate

caused by the implementation of this program, this entails that unemployment rate decreases

which may indicate a growth in the economy as a whole through an increase in GDP because

of higher tax collection which may increase government expenditure towards different

programs like the Build Build Build.

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The Build Build Build Program's Impact on Philippine Trade

Since the Build Build Build Program aims to improve public infrastructure by building and

expanding roads and highways, the government cannot source all the materials locally,

therefore they must source their materials from countries outside the Philippines which

increases the imports of the country. Due to this increase in imports, the program is said to

have caused a wider trade deficit for the country. It is said that there has been a decrease in

exports of goods such as coconut oil, machinery and transport equipment, and electronic

equipment (Vera, 2018). Along with the decrease of this is the increase in imports caused by

the construction of infrastructure for the project. Due to the widening of trade deficit wherein

imports are greater than the amount of goods exported by country, this would cause the

country to loan money from other countries or the International Monetary Fund (IMF) in order

to pay for the deficit. Together with the trade deficit comes the devaluation of the Philippine

Peso. When the Peso loses its value, this entails cheaper exports that make it more appealing

to the global market and will cause an increase in its demand, imports will likewise be more

expensive and reduce the demand for these. With this comes an increase in Aggregate

Demand (AD) as well as an increase in inflation rate as time passes due to an increase in

costs

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“BUILD BUILD BUILD” RISKS

Even if there were no external and political risks facing the Build Build Build program of

infrastructure, economic risks present themselves in several forms. (CROSSROADS

(Toward Philippine Economic and Social Progress) - Gerardo P. Sicat)

“Economic risk.” The chance that an economic factor or variable turns out to be different

from its usual expected behavior essentially describes what we call economic risk. The

management of risk is important for the nation not only to control costs but also to achieve

potential benefits.

I single out several likely economic risks at present: (1) inflation; (2) exchange rate changes;

(3) interest rate changes; (4) the contractor choice; and (5) absorptive capacity.

Other economic risks could be elaborated with any of the above. For instance, under more

strained economic conditions, a balance of payments crisis or a debt crisis could be

discussed.

“Inflation, or rising prices.” Rising prices threaten the cost of projects and could lead to

the rearrangement of priorities. Changes in priorities might arise from an effort to curtail the

inflationary spiral within a macroeconomic framework.

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In general, inflationary rates such as what we currently experience – the recent surge in

prices around four to five percent per year – might not yet be due cause for alarm. But higher

rates of inflation would induce stronger anti-inflation counter-measures.

Such concerns could initiate cutbacks in fiscal spending, or of reduction of overall credit.

When spending cuts are in order, the priorities of spending become more important,

requiring a trade-off between current programs (consumption) and investment. Which wins

depends on the strength of society’s needs.

Also, it might become a trade-off among specific projects. Which ones proceed, and which

ones get postponed, reduced, or chopped off.

“Exchange rate: the peso’s external value.” The peso exchange rate could be the

channel for the risk. The peso’s fall in value – a depreciation – could also induce other

outcomes, some not wanted, others wanted. Under current conditions, a depreciation of the

peso is more likely than an appreciation since large expenditure activities tend to create

additional demand.

The undesired consequence would be rising domestic prices. Unwanted too would be an

increase in the value of foreign debts that are incurred or to be paid: depreciation means

more pesos to pay a given foreign dollar.

A depreciation of the peso however could also trigger a rise in export incomes as the value

of exports to foreigners fall. This would be a positive development. Another impact is that the

depreciation of the peso raises the cost of imports, also a positive development if imports

need to be reduced.

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(Recent experience in Indonesia and Vietnam has seen impressive growth of exports in the

presence of the depreciation in their currencies and the high rates of domestic inflations they

have experienced. These developments propped up their balance of payments position.

(Such expansions of their exports have been triggered by high inflows of foreign direct

investments in their export sectors. Relatively, they have less restrictive regulations covering

direct foreign investments than ours. Moreover, this channel of relief might not be as certain

today, given that there is a global cloud of a trade war.)

“Interest rate increases.” Rising interest rates are more likely to happen in the present

scenario. During the last few years, interest rates have been low globally, thanks to the effort

to spur economic recovery after the great recession of 2008. The immediate problem now

involves a program of rising interest rates foreseen as a natural adjustment in the US for the

return to economic growth.

The Philippine program of interest rate adjustments, which echo or follow those taken by other

central banks, is a defensive measure undertaken by our central bank to protect the economy

from investment outflows, thus creating counter-measures to make investments at home less

vulnerable.

A major consequence of rising interest rates is to increase project costs directly for borrowed

funds. This changes the incentive patterns for many economic development projects since

they are most often financed partly from debt.

Most development projects in infrastructure are financed from debt. The blend of current funds

to debt is heavily in favor of borrowed money. When TRAIN, package 1, generated a lot of

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revenues to help finance the Build-Build-Build program, it mainly improved the capacity of the

government to backstop its borrowing program for economic development.

“Contractor risk.” There is always the possibility that a project could have a higher cost or

incur some failure of delivery of the original objectives because of the wrong choice of

contracting parties. This could happen whether the source of financing is official development

assistance or some private contracts, as in PPP (public-private partnership) projects.

Corruption contributes to the prevalence of poor implementation of projects because of

contractor failure. Ill-prepared government agencies could become sources of poor

governance of contracts.

Political culture in the nation’s governance might be a big contributor to the cases of poor

outcomes in contractor choices in the past. There is a nexus between corruption and political

culture. But this is not to say that the move toward a better system is not happening.

In the course of time and experience, the nation has learned from some of the big mistakes.

Also, there has also grown a larger community of contractors for government projects,

especially in the public works area. The vigilance of society also improving.

But so far, most of the big PPP projects currently under implementation have been dominated

mainly by current big business groups in the country. There have been no big projects in which

reputed outside, foreign groups with high reputations have been heavily involved.

The best way to improve the contracting system is to allow greater participation of more

bidders for government contracts, including of course the most important infrastructure

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projects of the government. Improving the rules of contracting would encourage a wider list of

potential contractors to the government.

“Absorptive capacity.” An important factor that abets poor choices of contracting as well as

poor performance in the implementation of big projects is the problem of absorptive capacity.

We have too many obstacles in the regulatory framework, procurement processes, and in

labor force regulations that restrict absorptive capacity. One important need is to acquire these

skills through s more open framework of economic liberalization.

BBB Successes

Despite the lockdown and quarantine measures in the past few months due to the

COVID-19 pandemic, a number of flagship infrastructure projects were completed. These

include (1) the Angat Water Transmission Improvement Project; (2) the Tarlac-Pangasinan-

La Union Expressway Rosario Exit; (3) the newly opened four-lane Sorsogon City Coastal

Road; (4) New Clark City [Phase 1A]; (5) Harbor Link; (6) Sangley Airport; (7) Broadband

project with Facebook [Luzon Bypass Infrastructure]; (8) Bohol-Panglao International Airport;

(9) Laguna Lake Highway; (10) Cagayan de Oro Port, the country’s biggest passenger

terminal port; (11) TPLEX Rosario; (12) TPLEX Pozorrubio; (13) New World-Class Terminal

in Mactan-Cebu International Airport; (14) Lal-lo International Airport; and (15) Puerto

Princesa International Airport.

Likewise, infrastructure developments for the domestic airports of Virac, Marinduque,

Tuguegarao, San Vicente, and Busuanga in Luzon; Maasin, Tacloban, and Catarman in the

Visayas; and Ipil, Camiguin, and Siargao in Mindanao, have also been completed.

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In more than four years since the “BBB” program was launched in 2017, it has already built

roads, bridges, classrooms, and flood control facilities among others, that to a considerable

extent, have improved the lives of many Filipinos. To note, the “BBB” program was able to

complete around 121 airport projects – 114 are ongoing and 75 are for procurement; 369

commercial, social, and tourism seaports – 108 are still in the process of completion; 23,657

kilometres of roads; and 4,959 bridges.

Since the end of 2019, the “BBB” program was also able to complete 71,803 classrooms

across the country that has benefited more than 3.2 million students. A total of 4,536 flood

mitigation structures were also completed to expand protected flood-prone areas across the

country, while 82 evacuation centres were built by the DPWH in 52 provinces while 55 more

are underway.

The construction of six railway projects is also underway, while additional railway

projects are also in the pipeline. Once all the railway projects are completed, the number of

stations across all railway systems will increase to 169 from 59, the number of trains to 1,425

from 221, and daily ridership to 3.26 million from 1.02 million. The international airports in

Davao, General Santos, Zamboanga, Iloilo, Kalibo, and Laoag are also undergoing

improvements.

Infrastructure projects under the “BBB” program will help in the economic

rec0overy that shrank for the second consecutive quarter and fuel economic growth in the

coming months.

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Based on DPWH data, it is estimated that the “BBB” program had created five million

jobs from 2016 to 2019. It is estimated that it will generate more than 1.5 million jobs this year

despite the pandemic. This to some extent, will help in stabilizing and boosting economic

activity in the country. As the World Bank expects Southeast Asia's highest Philippine Gross

Domestic Product (GDP) to grow by 6.7 percent in 2018 and 2019. However, the Duterte

administration hopes to nudge growth to the territory of 7-8 percent. Supporting the ‘BBB’

program with most of the world's Filipino skilled workers, by the government’s committee and

financially supporting local businesses to continue the process and its progress. This

program's success will pay off in the country's future. Corresponds to a statement of an

individual that were degrading its process; “A detained senator from the opposition has

described the Build, Build, Build program, ‘grossly inefficient,’ among other nonsensical

descriptives and false narratives,” the Palace official said in a statement. It could results on

delaying the program from the accusations that shouldn’t be done to stop the progress of the

event.

Conclusions and Recommendations

The delivery and completion of “BBB” projects within the target timeframe under the

current administration will not only steer and drive economic recovery of the country amid the

pandemic and in the post-pandemic era, but will to some degree enhance, improve and further

develop land, air, sea, and inter-island connectivity and mobility in the country.

This will also facilitate balanced development and to a greater extent diffuse

economic activities and development from the urban centres of the country toward rural areas

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or the countryside. The transport-related infrastructure projects will not only ease traffic and

road congestion in the National Capital Region (NCR) and other traditional urban areas like

Metro Davao and Metro Cebu but will also facilitate the transporting of people and goods from

one place/island to another.

The completion of all these infrastructure projects, in the long run, would not only to

a greater extent, sustain, accelerate, and achieve the desired economic growth of the country

but most importantly, will improve the Philippines’ global competitiveness.

The ' BUILD, BUILD, BUILD' program will be the big start on rising Philippine economy,

giving the Filipinos more opportunities to have jobs to support their needs. It speeds up

infrastructure and develops industries. Because the Government is aiming to build four energy

facilities to ensure stable energy supply at lower prices; ten water resource projects and

irrigation systems to increase agricultural output; five flood control facilities to help protect

vulnerable communities and boost their resilience to climate change impacts; and three

programs of redevelopment to deliver sustainable solutions that best meet urban population

needs. With all the results the people will have, it will surely satisfy how the program really

would help the economy.

Supporting this program will be the best way for the program to work, observe and

identify what the crucial part would be and make possible solutions is a great help for the

success of the ‘BBB’ Program. The problem facing the program is the lack of manpower, which

delays the implementation of the ambitious infrastructure plan of Duterte's administration, and

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urges Filipino builders working abroad to return home. That it meant stimulating overall

economic growth to a steady faster pace delays have been suffered due to a lack of workers.

That it meant stimulating overall economic growth to a sustained faster pace due to a lack of

workers, delays have been suffered.

References

1. PDP-2017-2022-10-03-2017.pdf (neda.gov.ph)

2. Philippines predictions for 2022 | Quantumrun

3. Heydarian, R. J.(2018). Duterte's Ambitious 'Build, Build, Build' Project To Transform

The Philippines Could Become His Legacy. Journal for Forbes Asia. Retrieved

from:http s://www.forbes.com/sites/outofasia/2018/02/28/dutertes-ambitious-build-2.

4. Sicat, G. P. (2018). Economic risks of the Build Build Build program. Journal for

Philstar Global. Retrieved from:

https://www.philstar.com/business/2018/07/11/1832347/economi c-risks-build-build-

build-programbuild-buildproject-to-transform-the-philippines.

5. Tadalan, C. A. (2019). Duterte flags ‘Build Build Build’ setback due to insufficient

workforce. Journal for Business World. Retrieved from:

https://www.bworldonline.com/du terte-flags-build-build-build-setback.

6. Build, Build, Build': the solid backbone for growth-President Duterte. (2018, April 16).

Retrieved from https://bcda.gov.ph/"build-build-build"-solid-backbone-growth—

presidentduterte.

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7. NEDA: Build, Build, Build key to Philippines' recovery after COVID-19 | GMA News

Online (gmanetwork.com)

8. MWSS’ Infrastructure Flagship Projects under the Build, Build, Build Program |

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM

9. Public-Private Partnership | Department of Public Works and Highways

(dpwh.gov.ph)

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