Massive infra spending a firewall to US recession- Villar

Government should resort to massive infrastructure spending as it can be a " firewall" that can stop the " US contagion" from downing Philippine business , Senate President Manny Villar said today.

"But whether America 's in recession or not, the government should go on a building-spree , to perk up the economy and lay down the infrastructure foundation of economic expansion, " Villar said.

"Matagal na dapat ginagawa yan. But it becomes more imperative with what's happening in the States right now," Villar said.

Villar advised the government not to panic . "Steady lang tayo . Kung humihingal ang Amerika, then we should not hyperventilate."

He said government consumption expenditures, mostly in infrastructure, partly triggered the 7.5 percent GDP growth in the 2nd quarter last year , the biggest surge in 21 years.

Aside from pump-priming the economy, infrastructure spending is the government's way of carrying out its promise that proceeds from higher taxes , such as VAT , will be plowed back to the public in the form of social services and public works, Villar explained.

Villar said government construction can also provide jobs , "considering the fact that one in every three members of the labor force is either unemployed or underemployed."

But to make infrastructure spending a "job generator, " Villar urged the government to implement Republic Act 6685, which requires contractors to hire from the residents of the province, town or barangay percent where the project is to be undertaken 30 percent of the skilled labor and 50 percent of the unskilled labor needs.

Villar said more government orders can help "upstream industries" of construction , like producers of building materials, to weather any economic slowdown the US recession may cause on the Philippines .

But Villar downplayed the possibility that the above can happen as the country's link to the global supply chain is diverse and not just concentrated on the United States . "Our eggs are not in one basket alone."

Public sector spending this year is projected to be at least P180 billion, consisting of national government spending of P116 billion; GOCCs, P25 billion,; LGUs , P40 billion.

The above doesn't include variants of Build-Operate-Transfer (BOT) projects which, although undertaken by private entities , are covered by sovereign guarantees.

But even at that "level and pace" of spending , "it would still probably take a century for the country to totally wipe out the huge backlog in road, communications, rail, air and water transportation , and social infrastructure, " he said.