Kevin Tan, CEO, Alliance Global Group: Interview

Kevin Tan, CEO, Alliance Global Group

Interview: Kevin Tan

What role can public-private partnerships (PPPs) play in meeting the country’s infrastructure needs?

 KEVIN TAN: The 75 big-ticket projects included in the government’s Build, Build, Build infrastructure programme are to be completed in the short term. However, certain studies argue that the Philippines needs to implement three times that number to meet the requirements and expectations of the population over the next 10-20 years. While GDP has grown at over 6% in recent years, and population growth has reached 2%, the Department of Public Works and Highways says that new infrastructure – for example, bridges and roads – has only increased by between 0.6% and 1% per year. As such, the projects announced so far pave the way for us to explore more growth opportunities to meet infrastructure demand. There are plenty of opportunities to implement projects through PPP agreements. Private companies have a high level of liquidity and are wellsuited to certain projects. Unsolicited proposals provide the fastest way to achieve this and private players take on the risks in the initial phases of these projects. This in turn allows the government to save money and time. A combination of official development assistance, PPPs and unsolicited proposals can help fast-track the country’s development efforts.

How can the country’s infrastructure development programme incorporate sustainable urbanisation principles and promote inclusive growth?

TAN: While the population has increased significantly since 2016, infrastructure spending has also accelerated, giving rise to a massive influx of people into the major cities. Economic development in rural areas and the creation of new urban centres has now become a viable initiative to spread wealth beyond Metro Manila. Roughly 38% of the country’s GDP is concentrated in the National Capital Region, but locations including Cavite, Cebu, Iloilo, and various areas in Mindanao are also experiencing significant growth. Infrastructure development is key to helping drive investment into new areas and promoting more inclusive growth. The development of new airports is a particular priority to help strengthen connectivity across the Philippines. For example, Cebu is located just 30 minutes by plane from most provincial locations in the country.

Which sectors can attract foreign investment and promote economic growth beyond Metro Manila?

TAN: The business process outsourcing industry has competitive potential and is generating economic activity across different regions. New office space, improved broadband capacity and a competitive labour force are all helping drive the growth of this sector. Cavite, Iloilo, Bacolod and Pampanga City, along with Clark, Cebu and Davao City, all provide attractive alternatives to Metro Manila, where the high price of real estate may affect profit margins. Through the continuous collaboration of the local government and the private sector, we will soon be able to develop a roadmap to help promote further growth. Tourism is another sector with huge growth potential. The Philippines hosted 7.5m foreign visitors in 2018, in addition to 97m domestic holidaymakers. Tourism from China, with its annual outbound tourism figure of over 130m travellers, represents a particular opportunity. We can take advantage of our geographical position, particularly through investment in new airports. The Philippines is only a four-hour flight from 75% of destinations in Asia and is expected to attract a total of 10m foreign visitors per year by 2023.

In addition to this, manufacturing presents an attractive business opportunity. The current global trade climate provides the Philippines with a bigger opportunity to become an integral part of the global supply chain. An expanded range of incentives will help attract manufacturing firms to the country, which boasts a large pool of labour and land that is available for new projects. Investment aimed at upgrading roads and ports will also help promote further development.

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The Report: Philippines 2019

Economy chapter from The Report: Philippines 2019

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