Comprehensive and Integrated Infrastructure Program Philippines Development Forum Cebu City, Philippines March 8, 2007

Comprehensive and Integrated Comprehensive and Integrated Infrastructure ProgramInfrastructure Program

Philippines Development Forum

Cebu City, PhilippinesMarch 8, 2007

Promoting Global Competitiveness and Promoting Global Competitiveness and Exports to Create JobsExports to Create Jobs

To strengthen and sustain our global competitiveness and create

10 million jobs, we will focus on five strategic measures:

1. Make food plentiful at reasonable prices to make our labor cost globally competitive.

2. Reduce cost of electricity to make cost of running our machines and our manufacturing processes regionally competitive.

3.3. Modernize physical infrastructure and Modernize physical infrastructure and logistics system at least cost to ensure logistics system at least cost to ensure efficient movement of goods and people.efficient movement of goods and people.

4. Mobilize and disseminate knowledge to upgrade our technologies and increase our people’s productivity.

5. Reduce red tape in all government agencies to reduce transaction costs.

CIIP Investment CIIP Investment Requirement by Financing Requirement by Financing

SourceSourceTotal investments = PhP 1,983.9

billionPrivate SectorPhP663.2 B33.4%

Other SourcesPhP86.7B

4.4%

National GovernmentPhP848.5 B42.8%

LGUsPhP44.4 B

2.2%

GFIsPhP3.7B0.2%

GOCCsPhP337.3 B17%

Private SectorPhP663.2 B33.4%

Private SectorPhP663.2 B33.4%


4.4%


4.4%



LGUsPhP44.4 B

2.2%

LGUsPhP44.4 B

2.2%

GFIsPhP3.7B0.2%

GFIsPhP3.7B0.2%

GOCCsPhP337.3 B17%

GOCCsPhP337.3 B17%

National Government National Government Total Budget Requirement Total Budget Requirement

(CIIP vs. DBM Proposed Budget 2006-(CIIP vs. DBM Proposed Budget 2006-2010) 2010)

-

- 0 100 200 300 400 500 600 700 800 900

Total CIIP (2006-2010+)

Budget (2006-2010)

(PhP Billion)

` TotalP848.5

Req’t. 2006-2010P429.7

Req’t. beyond 2010P418.8

Spill-over implementation

of some projects beyond 2010 can be accelerated.

Total 2006-2010 = P605

SurplusP175.3

- 0 100 200 300 400 500 600 700 800 900

Total CIIP (2006-2010+)

Budget (2006-2010)

(PhP Billion)

` TotalP848.5

Req’t. 2006-2010P429.7

Req’t. beyond 2010P418.8

Spill-over implementation

of some projects beyond 2010 can be accelerated.

Total 2006-2010 = P605

SurplusP175.3

Criteria for Selection(List of Selected Priority Infrastructure

Projects)

a) Must be in the Comprehensive and Integrated Infrastructure Program (CIIP)/SONA

b) Ready-to-Go Projectsc) Reasonable Rate of Returnd) No Major Issuese) High Socio-economic impact

Location:Bicol Region

1. BICOL EMERGENCY POWER RESTORATION PROJECT (Facilities damaged by typhoon Reming)

Description: Component 1: Installation of temporary 230 KV by-pass sections & repair of 887 wooden & steel poles.

Component 2: Replacement of 116 toppled steel towers & repair of other damages to substation facilities & equipment.

Implementing Agency: TRANSCO

Total Project Cost: PhP 1,115 Million

Financing Mode: Loan

Implementation Period: Immediate

Remarks: Approved in principle by ICC-CC on 13 December 2006 due to emergency nature.

1. BICOL EMERGENCY POWER RESTORATION PROJECT (Facilities damaged by typhoon Reming)

Description: Component 1: Installation of temporary 230 KV by-pass sections & repair of 887 wooden & steel poles.

Component 2: Replacement of 116 toppled steel towers & repair of other damages to substation facilities & equipment.




Implementation Period: Immediate

Remarks: Approved in principle by ICC-CC on 13 December 2006 due to emergency nature.

2. PALAWAN SOUTH ROAD (Junction Irawan-Narra-Abo-Abo Section-Bataraza-Rio Tuba Section)

Description: Rehabilitation/improvementof the 217.18 km road, which serves asthe main trunkline of the SouthernMunicipalities of Palawan.

Implementing Agency: DPWH

Total Project Cost: PhP 3,130.62 Million


Implementation Period: 2007-2010

Remarks: Endorsed by ICC-TB on 5 December 2006 for ICC-CC approval. EIRR = 29.66 %; NPV @ 15% = PhP 2.441 Billion

Location:

3. PANGUIL BAY BRIDGE

Description:Construction of main bridge,approach viaducts, & approachroads that provide directtransport link between CentralMindanao & Northern Mindanao.



Financing Mode: GOP/PPP


Remarks: Project approved by the ICC on 18 January 2007.

MisamisOccidental

Lanao DelNorte

Tubod

Tangub

Project Location

Location:Sucat,Paranaque& Binan, Laguna

4. BINAN-SUCAT 230 KV T/L PROJECT

Description: Installation of an additional14 kms of 230 kV line at Biñan & Sucat substations to increase the power transfercapacity of the existing Biñan-Sucat line.


Total Project Cost: PhP 870.43 Million

Financing Mode: Loan or PPP


Remarks: Approved by the ICC – CC on 15 February 2007. FIRR = 28.23%; FNPV = PhP 5.62 B at WACC = 11.67% EIRR = 63.54%; ENPV = PhP 35.47 B at SDR = 15%

4. BINAN-SUCAT 230 KV T/L PROJECT

Description: Installation of an additional14 kms of 230 kV line at Biñan & Sucat substations to increase the power transfercapacity of the existing Biñan-Sucat line.


Total Project Cost: PhP 870.43 Million

Financing Mode: Loan or PPP


Remarks: Approved by the ICC – CC on 15 February 2007. FIRR = 28.23%; FNPV = PhP 5.62 B at WACC = 11.67% EIRR = 63.54%; ENPV = PhP 35.47 B at SDR = 15%

5. LINE 1 NORTH EXTENSION PROJECT

Description: Construction of a 5.4-kmelevated line seamlessly fromMonumento Station of Line 1to North Avenue Station of Line 3.

Implementing Agency: LRTA


Financing Mode: BT


Line 1 North Extension(Monumento-North EDSA)

Proposed for Construction:

Existing Light Rail Network:

MRT 3(North EDSA-Taft)

LRT Line 1 (Monumento-Baclaran)

NCR

Line 1 North Extension(Monumento-North EDSA)

MRT 3(North EDSA-Taft)

LRT Line 1 (Monumento-Baclaran)


Existing Light Rail Network:

LRT 1 North Extension

6. NORTHRAIL-SOUTHRAIL LINKAGE PROJECT (Alabang to Calamba, 27.1 kms) Phase II

Description: Rehabilitation of theExisting 27.105 km into a doubletrack railway & the acquisition offive (5) new 3-car train sets.

Implementing Agency: DOTC / PNR




Remarks: Approved by ICC on 13 December 2006.

EIRR = 18.39%; NPV @ 15% = PhP 871.6 M

7. LRT LINE 6 (Line 1 South Extension)

Description: Extension of the existingLRT Line 1 from Baclaran station to thecities of Parañaque, Las Piñas, & Adjoining municipalities of Bacoor, Imus, & Dasmariñas in the Cavite province.

Implementation Agency: LRTA


Financing Mode: Loan/GOP/BOT


Remarks: Approved by ICC-CC on 13 December 2006 & NG budgetary requirements is being discussed.

EIRR: 20% (high VOT assumption), 16% (low VOT assumption)

NCR


Existing Light Rail Network:LRT Line 1 (Monumento-Baclaran)

Line 1 South Extension/Line 6(Baclaran-Bacoor)

LRT Line 6

8. AGNO RIVER INTEGRATED IRRIGATION PROJECT

Description: Rehabilitation of AgnoRiver Irrigation System (ARIS) &Ambayaoan-Dipalo River IrrigationSystem (ADRIS) with a total of34,450 has. service areas inPangasinan, Region I. Riceproduction is projected to increaseby 120,000 metric tons per yearbenefiting around 28,000 farm families.

Implementing Agency:National Irrigation Administration (NIA)




Remarks: Already approved by the NEDA Board.

Location:Pangasinan, Region I(service area)

9. NORTH LUZON EXPRESSWAY EXTENSION PROJECT (NLEEP-I)

Description: Construction of an 84.5 km road; 12 interchanges & toll collection facilities; &2 major bridges crossing Agno & Bued Riverstotaling 2.85km, to support socio-economicactivities in Regions I, III, CAR & Metro Manila,& help decongest traffic at McArthur Highway.



Financing Mode: GOP/BOT


Remarks: Revised proposal is being prepared with scaled-down cost of ROW requirements & proposed implementation arrangement thereof.

10. QUIRINO HIGHWAY

Description: Improvement/rehabilitation of the existing 91.192 km road, of which 69.537 km is Proposed for improvement to PCCP &application of Asphalt Concrete (AC) overlay, & the remaining 21.655 km PCC pavement in good condition for applicationof AC only.





Remarks: ICC-TB endorsed the project on 5 December 2006 for ICC-CC approval. EIRR = 29.75 %; NPV @ 15% = PhP 1.205 Million

Camarines Norte

Camarines Sur

Region 5

Micro-Economic ReformsMicro-Economic Reforms

• Transportation (Air and water services, including

port services)

• Telecommunications

• Power

Cost of BusinessCost of Business

POWER: 10-25 % of costs

LOGISTICS: 25-30% of costs

TELECOMMUNICATIONS: 5% of costs

ADB on ImprovingADB on ImprovingPhilippine CompetitivenessPhilippine Competitiveness

• Infrastructure

-Ranks behind Malaysia and Thailand in ICT indices

-Power cost in RP highest compared with Thailand, China and Singapore

Comparative Indices and Rates

Country

ICT Indices (2005) Commercial Electricity Rates

(2005)

US cents/KWh

WEF-Network

Readiness

EIU-IBM e-

Readiness

PhilippinesThailandChinaSingapore

7034502

5144

11

13.67.28.2

10.6Source: NSCB and WESM, Senate

ADB on ImprovingADB on ImprovingPhilippine CompetitivenessPhilippine Competitiveness

• Logistics

-Relative quick export time and customs clearance but highest cost to export among ASEAN and China

Trading Across Borders

CountryTime forexports (days)

Cost to export (US$ per

container)

Average days for customs

clearance (air)

PhilippinesThailandChinaSingapore

1824186

1,336848335382

4542

Source: World Bank

End of Presentation

http://www.neda.gov.phhttp://www.neda.gov.ph

CIIP Investment CIIP Investment Requirement by Sector Requirement by Sector

Total investments = PhP 1,983.9 billion

TransportationPhP952 B

48%

Support to ARCsPhP18.1 B0.9%

Social InfrastructurePhP177.8 B

9%CommunicationsPhP33.1 B

1.7%Water ResourcesPhP346.9 B17.5%

Power and Electrification

PhP456 B23%


48%


48%




9%


9%CommunicationsPhP33.1 B

1.7%

CommunicationsPhP33.1 B

1.7%Water ResourcesPhP346.9 B17.5%

Water ResourcesPhP346.9 B17.5%


PhP456 B23%


PhP456 B23%

NG Investment Allocation of NG Investment Allocation of PhP429.7 BPhP429.7 B for 2006-2010 for 2006-2010

(by Super Region)(by Super Region)

12%

21%17%

50%

43%

21%18%

3%15%

0%

10%

20%

30%

40%

50%

60%

North LuzonAgribusinessQuadrangle

Luzon UrbanBeltway

CentralPhilippines

AgribusinessMindanao

Cyber Corridor

% GDP Contribution

NG Investment Allocation

P64.63B P183.33B P92.26B P76.61B P12.85B

12%

21%17%

50%

43%

21%18%

3%15%

0%

10%

20%

30%

40%

50%

60%

North LuzonAgribusinessQuadrangle

Luzon UrbanBeltway

CentralPhilippines

AgribusinessMindanao

Cyber Corridor

% GDP Contribution

NG Investment Allocation

P64.63B P183.33B P92.26B P76.61B P12.85B

(2006 to 2010)

Civil Aeronautics Board (CAB)Civil Aeronautics Board (CAB)

Investment Effect:• Hotels, resorts, and other related businesses

Competitiveness Effect:• Cost of Air Transport

Total Economy:• Tourists Arrivals• Employment Generation• 1 million additional tourists means 1 million new jobs

Investment Effect:• May discourage investment by

competitors

Competitiveness Effect:• Cost of Cargo Handling• Turnaround Time

Total Economy:• Logistics Efficiency• Export Cost

Philippine Ports Authority (PPA)Philippine Ports Authority (PPA)

Maritime Industry Authority (MARINAMaritime Industry Authority (MARINA))

Investment Effect:• Investment in Shipping

Competitiveness Effect:• Cost of Sea Transport

Total Economy:• Logistics Efficiency• Inter-island Trading

National Telecommunications CommNational Telecommunications Commission (NTC)ission (NTC)Investment Effect:• Investment in Telecommunication Facilities• Call Centers, BPOs

Competitiveness Effect:• Cost of Telecommunications (reduced because

of VOIP, but further reduction possible)

Total Economy:• Business transaction costs and efficiency

Energy Regulatory Commission (ERCEnergy Regulatory Commission (ERC)/EPIRA Legislation)/EPIRA Legislation Investment Effect:• High cost may discourage investments in machinery

Competitiveness Effect:• Cost of electricity

Total Economy:• Labor productivity• Wages/workers’ income• Household/consumer welfare

Civil Aeronautics Board (CAB)

Philippine Ports Authority (PPA)

Maritime Industry Authority (MARINA)

National Telecommunications Commission (NTC)

Energy Regulatory Commission (ERC)

Agencies Prone to Regulatory Agencies Prone to Regulatory CaptureCapture

Documents

Comprehensive and Integrated Infrastructure Program Philippines Development Forum Cebu City, Philippines March 8, 2007