Reform needed to improve progress on regional infrastructure growth: Report

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A new highway under construction in Blang Bintang, Aceh.
APRIL 23, 2020 - 6:57 PM

INFRASTRUCTURE plans in Indonesia and the Philippines need a major overhaul to achieve their ambitious growth goals, according to research from Oxford Economics.

Vocational training, streamlined regulations and a wider pool of commercially viable projects would help both countries make more headway and boost longer-term production capacity, economists Thatchinamoorthy Krshnan and Jung Sung-Eun wrote in a report, as they called for a more conducive environment for private investment to help pick up the slack.

The analysts noted that progress on infrastructure was slow even before the ongoing novel coronavirus pandemic stymied Philippine leader Rodrigo Duterte’s US$180 billion public works ambitions and Indonesian President Joko Widodo’s similar US$430 billion plans.

The Philippines is grappling with the public sector’s limited ability to fully implement allocated infrastructure budgets, while Indonesia is curtailed by inadequate public funding sources and an unfavourable environment for private investors, they added.

To be sure, these infrastructure projects are still expected to contribute strongly to growth and “should keep Philippines and Indonesia among the fastest-growing emerging economies over the medium term”.

“Gross impact on (gross domestic product) is sizeable but could be substantially larger if implementation rates pick up,” the analysts said.