PPPs can add 2% to GDP annual growth – DOF

MANILA, Philippines ­– The Philippines’ gross domestic product (GDP) can increase by 2% annually if the public-private partnership (PPP) projects (PPPs) in the pipeline are implemented, the country’s finance undersecretary said.

“We’re currently implementing 11 PPP projects worth about $5 billion, with an additional 50 more in the pipeline. If we can fully implement them, we should see a boost of 2% each year for about 6 years,” said Department of Finance (DOF) Chief Economist Gil Beltran during the Asia Finance Summit Tuesday, April 21.

Beltran added that the 50 projects in the pipeline represent about 10 to 12% of the GDP, and it would take about 6 years to fully implement them. He added that it would be the responsibility of the next administration to complete them.

“It’s easy for them as the projects are ready for implementation. The pipeline is long and the projects have already been identified,” he added.

Beltran said the progress of PPP projects in the country is in contrast with the previous transition, when the Arroyo administration left the accruing of projects to the current administration.

“This time around, the next administration will have a pipeline, and it will represent a big portion of the economy,” he said.

Beltran also said that economic gains will be maintained due to sound economic fundamentals, a low fiscal deficit, and increased infrastructure spending.

“Of course, the next elections are coming and this administration is aiming to finish many of the PPP projects it wanted to implement,” he said.

Beltran added that analysts predict GDP growth between 7% to 8%, but leaning more toward 7%. He also called the World Bank estimate of 6.5% “conservative.”

Local money pumps economy

Meanwhile, Philippine Stock Exchange (PSE) president Hans Sicat echoed the theme of continued economic growth due to sound economic fundamentals and importance of local investment in economy.

“Net foreign transactions always gets attention due to the image of money coming into the country, but from 2013 to 2014, the share of domestic transactions to foreign transactions has been roughly even with local money at 51% and foreign at 49%,” he said.

Sicat also highlighted the fact that in the first part of 2015, 55% of participation in the market was actually driven by local funds.

Local money directly or indirectly through banks, mutual funds, and insurance companies are directly coming into the stock market a faster rate.

“That’s a very healthy trend. What that means is that locals believe that the fundamentals of the economy are stronger,” he said.

Sicat remarked that that is actually why foreigners are coming into this market as local confidence drives in foreign money.

The PSE, on the back of a fast start, predicts another strong year.

The local market is going to be strong this year, even going into 2016 unless there is a major bump in global markets, Sicat said.

He expects continued consumption spending, which will be reflected in bond and equity issuances that will be coming soon.

A lot of the activity in equity markets will be in infrastructure, with companies needing to raise money for their projects, he added.

“At this stage, the coming elections doesn’t matter, the majority views in the financial sector believe that economic fundamentals will be the driver,” Sicat said. – Rappler.com