Home » SCMAP Perspective » The Future is Already Here

“Infrastructure must come before industry.”

 

I am most likely paraphrasing, but that was the message from Undersecretary Ma. Catalina Cabral of the Department of Public Works and Highways. She once again joined us to speak at Supply Chain Perspective last May 17 in Clark, updating us on the government’s ambitious infrastructure investment program, with a particular focus on road projects for Central Luzon. Talking about how infrastructure networks should be in place to support industry, she admitted that the government is now playing catch-up, as the economy continues to boom while croaking under its weight. She expressed hope that the Duterte administration’s vow to hike infrastructure spending—in 2017 it was at 5.4% of gross domestic product, as opposed to an average of 2.5% across the past fifty years—would not just relieve the stress of businesses currently in the country, but attract new ones from here and abroad.

 

This certainly seems to be the case in the Clark/Subic corridor, which for the past couple of decades has seen strong growth—and, with the government focusing its resources on the region in its bid to decongest Manila, it’s set to grow even further. It has attracted major companies over the years because the ingredients are already there: robust infrastructure linking the free ports to the rest of the world via sea and air; a favorable investment climate brought forth by incentives and tax breaks; and a young, educated and adaptable population they can tap.

 

We visited the corridor for this year’s Supply Chain Immersion because there is a story to tell: of how a region that seemed to be in the doldrums after the explosion of Mt. Pinatubo in 1991, and the departure of American forces (but not their infrastructure) right after, is now poised for greater things. We visited the region’s biggest locators and most important logistics facilities and there is optimism all around. The Clark International Airport’s development master plan is ambitious: the addition of up to two runways, three more passenger terminals and expanded cargo facilities are seen to bring in up to 80 million passengers annually—and the growth of a robust ecosystem for business and leisure. The staff of the New Container Terminal in Subic are actively wooing shipping lines to avail of their facilities, in order to spur the port’s growth—and hopefully decongest Manila, which still suffers from lackluster infrastructure outside of the ports, undoing considerable investment within them.

 

Particularly enlightening was our visit to the Texas Instruments facilities in Clark. The semiconductor company has been in the Philippines for decades, first establishing itself in Baguio, before building their state-of-the-art assembly facilities in Clark ten years ago. 40% of the multinational’s revenues goes through the country—products that make possible many of the world’s most advanced technologies from automobiles to communications. This is made possible by the company’s belief in the Filipino labor force: they cite the Filipino being well-educated and competent as the main reason for first investing here, and later expanding their presence.

 

We tend to think of the Philippines as being left behind by our neighbors in the regional arena, but come to think of it, we already are a staging ground for most of the technologies that enable the future. Texas Instruments is just one example: the country is already home to many companies enabling technologies and innovations that make our lives better now, and should, ideally, make it even better in the future. Whether it be our strong workforce or our favorable location—or the good old tax cut—they have chosen to make the Philippines an important part of their global value chains, despite support being less than optimal. They have long chosen to bring the future to the Philippines.

 

Of course, we can still do better—which brings us back to the government’s infrastructure plans, and how they aim to spend billions of pesos in the next six years to improve linkages between regions, between businesses, between people. That’s just one plank. How do we ensure our people continue to receive the best education that allows them to become valuable components of the global economy? How do we ensure a competitive business environment, one where policies are not changed on a whim (or regime change) and where processes adhere to a streamlined plan rather than who can grease the gears faster? How do we guarantee all this is possible not just in Manila, but in every part of the country? The recent release of this year’s World Competitiveness Yearbook—which saw the Philippines slide significantly, down nine places to 50th out of 63 countries—stresses the lengths we have yet to go.

 

Clark and Subic are in a great position, but things aren’t as perfect as they look. The second tranche of tax reforms threaten incentives provided to locators there. Uncertainty over transportation policy—especially with regards to air travel and cargo—means Clark’s airport may not fulfill its full potential. But the story the region tells is of how things can only go up when the right ingredients are in the right place. As it stands, central Luzon is getting there, and the story is essentially the same in Iloilo, in Cebu, in Cagayan de Oro. Can we fully bring the promise of the future, one that’s already here, to every Filipino? Keep watch.

 

Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in-chief of the organization’s official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.

No comments yet... Be the first to leave a reply!

Leave a Reply

Your email address will not be published. Required fields are marked *

five × two =

Close
Please support the site
By clicking any of these buttons you help our site to get better
Social PopUP by SumoMe
Copy Protected by Chetan's WP-Copyprotect.