[ANALYSIS] The moving goalposts of Duterte’s Build, Build, Build



This week the Duterte administration’s overly ambitious Build, Build, Build (BBB) infrastructure program came under heavy fire. And for good reason.

With only 9 of the 75 flagship projects underway, Senator Franklin Drilon called the program a “dismal failure” in a recent hearing.

“We only have two years and a half left in this administration, I don’t think any substantial progress insofar as that program is concerned will be achieved,” said Drilon.

In return, Palace Spokesperson Salvador Panelo said the criticism is “baseless,” adding the patently false claim that “not a single infrastructure” project was built in the previous administration.

This was followed by a press conference by Bases Conversion and Development Authority (BCDA) chief Vince Dizon, who defended BBB using plenty of misleading claims about economic growth under the Duterte administration.

I already discussed before the disappointingly slow pace of BBB (READ: The pipe dream that is Build, Build, Build).

But now the economic managers are also moving BBB’s goalposts in the middle of the game. The Filipino people must cry foul.

Dubious 'facts'

But before anything else, let’s debunk a number of macroeconomic “facts” touted by Dizon in a recent press conference.

First, he said the economy’s growth – as measured by gross domestic product or GDP – is projected to fall between 7-7.5% (or possibly 8%) by the time Duterte steps down in 2022.

Dizon said this projection comes not just from government but also from multilateral agencies like the World Bank (WB) and Asian Development Bank (ADB).

This is far too rosy. 

Figure 1 shows that while growth fell within target last quarter at 6.2%, we’re far from reaching 7-7.5% soon. In fact, we breached 7% growth in just two of the 13 quarters since Duterte took office.

The WB and ADB’s Philippine growth forecasts also only go as far as 2021, and both agencies currently project that growth by then will be at 6.2% (not between 7-7.5% as Dizon claimed).

 

Figure 1.

Second, Dizon boasted that our economy has been growing, thanks largely to government spending.

But as I discussed in my previous piece, last quarter, less than a fifth of growth came from government spending. Instead, more than half of growth actually came from the spending of private households and individuals. (READ: Is the Philippine economy in the pink again? Not exactly)

Dizon also bragged about the respectable growth of the construction sector – particularly public construction – last quarter.

But if you crunch the data, you’ll see that contrary to his claim, much of construction growth was led by the private sector, not government (Figure 2).

Third, Dizon claimed that the share of public infrastructure spending in GDP went up to 6% in the past two years. But this hides the fact that such share recently went down from 6.3% to 5.5%.

Figure 2.

 

Revised, bloated list  

Apart from spewing misleading economic claims, Duterte’s economic managers have also revised the list of BBB’s flagship projects to be completed – or at least jumpstarted – by 2022.

It finally dawned on Duterte’s economic team that they have been overly optimistic about BBB’s prospects. They promised us a “golden age of infrastructure.” Instead we got a dud.

It was Socioeconomic Planning Secretary Ernest Pernia who first admitted to Rappler they’re drawing up a revised list of flagship projects under BBB to exclude wholly unfeasible projects – leaving them up to succeeding administrations – and to instead include smaller, more doable projects.

They are also now allowing more projects to be public-private partnerships (PPPs), something they had shunned before because projects funded by foreign loans and grants (also called official development or ODA) were supposedly faster.

But how wrong they were. Last year Secretary Pernia was already quoted as saying that under this new ODA-reliant regime, “We thought that things would move fast, but they are not moving as fast as we expected.”

Although this rare display of humility is very much welcome, the revised list of BBB projects is arguably bloated in a couple of ways.

1) Unfeasible projects

First, the economic team conveniently removed projects that turned out to be practically impossible to do. These include inter-island “link bridges” – say, between Bohol and Leyte and Cebu and Negros – that will have to be built across very deep waters using exceedingly complex engineering.

If these projects are so unfeasible, why include them in the first place?

2) Carryovers

Second, a number of projects added to the new list are, in fact, carryovers from previous administrations.

These include the LRT-1 Cavite Extension, the MRT-7 (found along Commonwealth Avenue), and the NLEX-SLEX Connector Road. These and others just happened to be inaugurated or completed during the Duterte administration.

How convenient for the Duterte team to fold all these into BBB.

3) Hodgepodge of projects

Third, almost all projects under BBB were about roads, expressways, bridges, airports, seaports; in other words, transportation and logistics infrastructure.

Now, bafflingly, BBB includes a hodgepodge of projects that are glaringly not about transportation and logistics.

These include the Philippine Identification System (more commonly known as the National ID System) and the Safe Philippines Project Phase 1 (a project with the Chinese government to set up CCTVs throughout Metro Manila and Davao City).

Heck, they also added at least one project to be built by the private sector: the Wawa Bulk Water Supply Project.

Is this their way of lengthening the project list?

4) Broken window fallacy

Fourth and last, the revised list includes projects related to the reconstruction of Marawi City, which was left in shambles by a protracted urban battle against militants affiliated with ISIS.

Attaching the reconstruction efforts to BBB leads us straight to the so-called “broken window fallacy.”

Simply put, the fallacy tells us we should not be so happy that post-war reconstruction boosts the economy and creates jobs. If there were no war to begin with, the same resources could have been spent on new things rather than just rebuilding old things.

Don’t misunderstand me: Marawi City needs to be rebuilt fast, and government must pour in money to help the Maranao recover as soon as possible.

But we should beware of the broken window fallacy. Otherwise, the Duterte government might grow used to the false idea that destruction is a path to growth.

Moving goalposts

More than halfway through Duterte’s term, the economic managers have nothing much to show where BBB is concerned. Rather than try to meet their original goals, they just decided to come up with a revised list.

Moving the goalposts in this manner is ill-advised. Not only does it render BBB practically impossible to evaluate – as originally laid down – but it also serves as a convenient excuse for the economic managers’ sloppy conception and implementation of the program.

This behavior – which really comes down to cheating – is actually unsurprising.

In the wake of similarly disappointing economic growth figures, the economic managers quietly shifted their GDP growth targets as if nobody would care. Funnily enough, they still couldn’t meet their own discounted targets, as shown in Figure 1.

Will the same fate befall BBB? – Rappler.com

 

The author is a PhD candidate at the UP School of Economics. His views are independent of the views of his affiliations. Follow JC on Twitter (@jcpunongbayan) and Usapang Econ (usapangecon.com).

 

JC Punongbayan

JC Punongbayan, PhD is a senior lecturer at the UP School of Economics. His views are independent of the views of his affiliations.

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