Build, Build, Build Program Position Paper

Introduction

The “Build, Build, Build” program is controversial and very debatable issue for the proposed 2018
project. The budget allocates P1.097 trillion, nearly 30 percent over the 2017 allotment. This huge amount for
2018 will fund various road and highway networks, railways, airports, and seaports. The issue with the BBB
project is the lack of capacity of our construction industry. Such undercapacity is shown by the persistent
infrastructure underspending of P355 billion a year from 2011 and 2016 between 2011 and 2016. Of course,
underspending may not be solely due to incapacity of contractors. It may also be due to red tape, right-of-way
questions, or weather.

The huge doubts assailing the lack of capacity is because the infrastructure projects under the “Build, Build,
Build” program involve large number of manpower, both skilled, technical, and common labor. But even now,
just listening to real estate developers and construction firms, they are hard-put looking for skilled workers,
electricians, welders, and plumber — and even more difficult to recruit foremen, mid-level managers, and
supervisors.

Explaining largely the current lack of manpower, the country’s labor force participation rate (LFPR) has been
falling to such degree that in the past five years, only 415,000 people have entered the labor force every year.
True, there are over 15 million and underemployed Filipinos of working age. But they do not possess the
necessary skills or training for these massive public works projects.

The BBB program is supported by President Rodrigo Duterte saying that this
program aspires for high impact projects to connect people, create jobs and
bring down the cost of doing business through logistical support and
infrastructure. He said, it is hoped that agriculture can be modernized and
industrialization expanded to give farmers, producers and manufacturers more
efficient and cost-effective access to internal and external markets,” the
statement read.The second major issue is the sourcing of funds for the “Build, Build, Build” program.
It appears that the major funding source is through taxes. For instance, the TRAIN (Tax Reform for
Acceleration and Inclusion) expects to raise the bulk of the revenues to support the infrastructure funding.

It seems to me that sourcing the bulk of funds to finance this gargantuan infrastructure program from taxes
does not make sense at all. It should be sourced principally from Official Development Assistance (ODA),
from the private sector through PPP, and borrowings, especially for income-enhancing public works. Relying
mainly on taxes is not only bad economics but also psychology.