Senator Loren Legarda sponsored on Tuesday the committee report seeking the Senate's concurrence in the ratification of the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB). Senators approved the report on second reading.
Legarda, who chaired the hearing of the Sub-Committee on Foreign Relations for the AIIB Treaty, said that membership to the AIIB would help achieve its growth targets through accelerated infrastructure spending.
"Development of infrastructure is crucial for enhancing our trade competitiveness. Resilient and adequate infrastructure will reduce the costs of trade and strengthen our competitiveness. These would impact on our future growth," said Legarda in her sponsorship speech.
The Senator noted that the Philippines ranked 95th out of 138 economies in the 2016-2017 World Economic Forum's global competitiveness index on infrastructure, highlighting how much the country has lagged behind other economies.
"The absence of good infrastructure - from road networks, transportation systems, airports and seaports, electrification, water supply, to telecommunications - has had dire consequences on our nation's growth; above all, on our people's well-being," said Legarda.
The World Bank estimates that a 10 percent increase in capital investment into infrastructure projects contributes to a 1 percent growth in GDP.
Legarda highlighted the importance of being a member of the AIIB, which like the Asian Development Bank (ADB) and the World Bank, is a multilateral lending institution, owned by sovereign-member countries, which aims to promote economic development in Asia. It aims to foster economic development and promote regional cooperation.
She explained that AIIB membership would bring in a host of benefits such as additional source of financing to implement better and resilient infrastructure and to support rural and value chain development to increase agricultural and rural enterprise productivity and rural tourism of the country. It will also accelerate the Philippines' annual infrastructure spending to account for 5% of GDP, or even higher, and improve competitiveness through better infrastructure facilities that will attract investments into the country.
The Philippines is expected to also realize other benefits from its membership in the AIIB, such as:
Increased opportunities for Filipino contractors / professionals for infrastructure projects in the Philippines and abroad
More employment opportunities for Filipino workers due to heightened infrastructure spending
Reduced trade costs of about 15.6% of trade value and real income gain of about US$220 billion
"Infrastructure bottlenecks have stifled our growth potential for many years. More investment is required not only to build new projects but also to maintain existing infrastructure. The AIIB can broaden our infrastructure funding source," Legarda stressed.
She likewise explained that the AIIB adheres to sound banking principles in its operations, consistent with principles of transparency, openness, independence, and accountability. It is also guided by environmental and social sustainability safeguards similar to what the World Bank and the ADB have established.
"Let me underscore, however, that financing alone will not solve all our problems. Still, the fundamental issues have to be set right. We need to simultaneously create an environment with a predictable legal and regulatory framework, buttressed by transparent governance and decision-making processes. Let us take, however, this crucial step to be part of the AIIB to help address one of the most pressing issues facing our infrastructure sector," Legarda concluded.
Source: Senate of the Philippines