Opening a new chapter in US-Filipino commercial relations, representatives of the two nations have signed a Memorandum of Cooperation calling for the creation of a new infrastructure collaboration platform to enhance US corporations' participation in Filipino infrastructure projects.
The agreement was born out of a June 2014 visit to Manila by US Secretary of Commerce Penny Pritzker, according to Arun Kumar, director general of the US and Foreign Commercial Service, who joined US Undersecretary of Commerce Stefan Selig, Philippine Ambassador to the US Jose Cuisia, Jr., and Philippine Department of Public Works and Highways Secretary Rogelio Singson in signing the memorandum.
“The impetus for this [agreement] came when Secretary Pritzker visited the Philippines back in June, at which point she met with a number of government leaders and business leaders all focused on and interested in the infrastructure situation in the Philippines,” Kumar said after signing the memo at the CG-LA 8th Global Infrastructure Forum in New York.
The Commerce Department's International Trade Administration and the National Economic Development Authority in the Philippines are to initiate the collaboration platform through the creation and widespread sharing with US corporations of public-private partnership (PPP) project lists, according to an agency release. The agreement supports President Barack Obama's National Export Initiative (NEI/NEXT), which aims to increase participation of US businesses in international trade.
Cuisia has been one of the leading proponents of the platform, and said he and his colleagues in government are confident that US corporations' financial, technical and scientific know-how will make positive contributions to his country's infrastructure development.
“It is my hope that the signing of this memorandum of cooperation sends a strong signal to the US government and the American private sector that the Philippine government accords great importance to attracting foreign investments, particularly in priority infrastructure projects,” Cuisia said. “The Aquino administration has indicated that they will increase infrastructure investments to 4 percent of the country's GDP for 2015, and ultimately bring this up to 5 percent of forecasted GDP in 2016.”
If the plan for increased infrastructure investment is executed as currently envisioned, it will amount to a quadrupling of Filipino infrastructure spending between 2010 and 2016, to P$800 billion (€16.2 billion; $18.2 billion) annually from P$200 billion ($4.53 ; €4.04 billion), Cuisia said.
In a recent study, Cuisia said, “the Japanese International Cooperation Agency (JICA) indicated that the Philippines could show losses of $20 billion annually if road repairs, traffic congestion and air pollution continue to exacerbate the situation.” Additionally, the US Asian Business Council recently estimated that the Philippines would need to spend $110 billion between 2013 and 2020 in order to meet its current infrastructure needs, he said.
“Limited investment in infrastructure will not only inhibit economic growth in our country, but will also contribute to infrastructure bottlenecks and therefore make current systems less effective,” Cuisia said. “It is in this context that we hope that this memorandum of cooperation will increase US firms' participation in the Philippines' infrastructure development.”