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 project) and underspending issues faced by the

government, most especially during the term of former Presidents

Gloria Macapagal-Arroyo and Benigno Aquino III.

In addition to that, under the leadership of President Rodrigo

Roa Duterte, the Southeast Asian archipelago is undergoing an

infrastructure boom not recognized since the time of the 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 projects as well as improvement in the irrigation

system that will support the agricultural outputs in 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 of this negotiation, the production cost that will be

incurred during the process of the infrastructure 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 rate. Moreover, this scenario could lead to the

rearrangement of country’s priorities. It actually means that the

attention of the government will be moved to other 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

foreign countries that will be a big part of the national budget,

hence, the latter will impose higher interest rates as a major

consequence in the near future.

Contractor Risk

The wrong choice of contracting parties will result in a failure

of performing the original objectives and incur higher cost.

Corruption may be one of the cause of the poor implementation of

projects because of its contractor failure. This could also happen

whether the source of budget is the national budget itself or some

private contracts (public-private partnership).

Unavoidable Scenarios that will Most Likely to Happen

Failure to identify the real problem during the recognition stage

will make the program less effective. Like for example, there’s an

instance that the roads which are well-constructed will be destroyed

as part of the infrastructure projects in the locality. The program

must enter into legislation wherein the contract will be executed from

the Congress and Senate to be approved by the President. Despite of

this fact, the President Duterte’s action plan to answer the case of

economic development has a negative implication as it did not follow

the due process.

OUR POSITION/OUR STAND

After gathering all the facts regarding the positive and negative

impacts of ‘Build Build Build Program’, it is favorable to implement

this Pres. Duterte’s infrastructure plan. The rapid increase in the

country’s Gross Domestic Product (GDP), the avoidance of underspending

as well as in infrastructure projects and the high demand for

employment are the expected outcomes of the said project once it will
be implemented. Overall, the major concern of the administration

focuses on the Philippines’ economic development.

Every country’s GDP using expenditure approach is computed by

adding the household consumption (C), investments (I), government

expenditures (G) and net exports (XN). The idea of so-called ‘golden

age of infrastructure’ is to enrich these components, most especially

investments and government expenditures, because as observed in the

administration of Pres. Benigno Aquino III in his first year of

presidency (2010), the percentage of infrastructure spending as

indicated in the GDP is at 2.1%. The objective of the recent

administration is to drive up the GDP before his term ceased.

During the last two years of Pres. Aquino’s term, the

underspending rate is 14% and 12.6%, respectively. This implies that

the projects for that particular years were not been performed. As

pertaining to the essence of the scheme, this aftermath must be

prevented and the proposed blueprint of the government will not remain

“drawing” until the end of Duterte’s leadership.

According to the FED Chairman, Janet Yallen (2018), the

Philippines suffers from unemployment and poverty because of poor

infrastructure. Considering the intention of aforesaid proposition,

there will be a high potentiality that the unemployed Filipino

citizens will be given a chance to grab job opportunities which

eventually result to GDP increase in household consumption category

and will lead to a major decrease in the current unemployment rate.

CONCLUSION

To summarize all the information relevant to the topic, the

impact of this program may have a positive or negative effect to the

Philippine economy. The so-called President Duterte’s Infrastructure

Plan opens a realization that there will be a job opportunities

welcoming the unemployed individual to hinder poverty and lower the

unemployment rate of the country. In addition to that, the

Philippines’ GDP in the future time is expected to grow. Thus, this

will have a negative implications in terms of change of contractors in

its execution, major adjustments in budget due to rising inflation and

some unavoidable scenarios that will most likely to happen as the

government’s gameplan turned into reality.

Pres. Rodrigo Duterte addressed those words during his 2nd State

of the Nation Address last year, "We will make the next few years the

golden age of infrastructure in the Philippines to enhance our

mobility and connectivity, and thereby spur development growth"

equitably. In other words, we are going to build, build and build."

The Build Build Build Program could be the one of the much-awaited

platforms of the President Duterte be implemented in the near future

because all people will be benefited in terms of efficient means of

negotiation (i.e., delivery of goods), improve the lives of the

Filipinos due to the employment opportunities and a lot more that will

surely enjoy by every Filipinos.

Apparently, the abovementioned plan has a better feedback when it

comes to the government itself. Once the construction has been well-

established, a positive reaction from the productive countries is

expected in which the potential investors from different parts of the

world will invest millions of dollar and highly-innovated machineries

and equipments and build large corporations in the country. As a

result, the expected boom of GDP will occur since investments and

government consumption will surely rise when the plan has been turned

into the great development of the whole economy.

Through this BBB Program, Philippines’ road to social and

economic progress seems assured.

REFERENCES

 Heydarian, Richard (2018). Duterte’s Ambitious ‘Build Build Build

Project To Transform The Philippines Could Become His Legacy.

www.forbes.com/sites/outofasia/2018/02/28/dutertes-ambitious-

build-build-build-project-to-transform-the-philippines-could-

become-his-legacy/#786432a51a7f

 Sicat, Gerardo (2018). Economic Risks of Build Build Build

Program. https://www.philstar.com/images/authors/1336383.jpg

 Mawis, Sara Mae (2018). Understanding the ‘Build Build Build’

Program. https://business.inquirer.net/254682/understanding-

build-build-build-program#ixzz5i87sbGjS