PPPs seen to make presence felt in ’14

Cavite-Laguna Expressway Route Map http://www.dpwh.gov.ph

Economic growth is expected to get a major boost this year as more big-ticket infrastructure projects under the Aquino administration’s public-private partnership (PPP) program get off the ground.

Three of the seven PPPs in the government’s pipeline were awarded in 2014.

Bids for two more projects—the Cavite-Laguna Expressway (Calax) and the Light Rail Transit (LRT) line 1 Extension to Cavite—have already been opened and contract awards are expected within the year.

“That’s enough to push GDP (gross domestic product) to a higher level,” said Gil S. Beltran, chief economist of the Department of Finance (DOF).

In the first three months of the year, the Philippine economy grew at a slower-than-expected 5.7 percent from the 6.3 percent reported in the previous quarter.

The government and most analysts projected a growth rate of at least 6 percent for the three months to March.

For 2014, the government is aiming a growth range of 6.5-7.5 percent. Last year, the economy expanded by 7.2 percent. By 2016, the government hopes to drive growth up to as high as 8.5 percent.

Government statisticians blamed the slowdown on the lingering effects of Supertyphoon “Yolanda,” which ravaged the Visayas in November 2013.

While Eastern Visayas—the area worst hit by the storm—accounted for just a small portion of GDP, the government said effects of the damage on the country’s nationwide supply chain dragged the rest of the economy down.

National Economic Development Authority (Neda) Director General Arsenio Balisacan said the country could recover later this year, describing the first quarter as a one-off slump.

Beltran said if construction of PPPs were to be carried out as scheduled, the additional business activity that would emerge could be enough to bring growth back within the official target range.

This month, the International Monetary Fund (IMF) said it might have to lower its already conservative growth forecast for the Philippine economy following the release of disappointing first-quarter figures.

The multilateral lender previously saw the Philippines growing by 6.5 percent this year.

According to the study, domestic cigarette sales in the Philippines dropped 16 percent to 86.3 billion sticks annually since the imposition of higher sin taxes last year.

Despite the decline in usage, government revenues more than doubled.

The study showed that consumption in most price segments declined, led by low-priced cigarettes, which saw sales dip by 43 percent.

The “super low-price” segment, rose by 119 percent. Its market share also rose from 15.2 percent in 2012 to 39.4 percent last year.

Amid all this, Oxford Economics said, the share of illicit cigarettes in total domestic consumption rose to 18.1 percent in 2013, from 5.9 percent the year before.

Oxford Economics’ Illicit Tobacco Indicator study on the Philippines was a localized version of a previous report that covered 11 countries in the region.

Despite being funded by PM, Oxford Economics CEO Adrian Cooper, who was in Manila this month to present the results to tax authorities, said the think tank was given “academic freedom” in preparing its report.

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