Bernardo M. Villegas
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Crumbling Infrastructures Good for Growth?

           Chris Ibasan, a 24-year-old employee of a shipping company, gained international fame by being featured in the International New York Times (August 4, 2014) in a front-page article authored by Floyd Whaley who wrote that “crumbling infrastructures inhibits growth in the Philippines.”  Mr. Whaley described the horrors of moving from one place to another in the National Capital Region.  Mr. Ibasan has to travel two hours every day to get to work.  He is quoted as lamenting that “there are too many people going to work, too many vehicles and not enough roads…And taking the train is like lining up to see a movie star.  You wait for hours.”  Mr. Whaley calculates the cost to the national economy:  “The 2.2 million vehicles a day that grind away on Manila’s crumbling road system cost the country 876 billion pesos a year, or more than $20 billion, in lost productivity and wasted energy, according to a recent study by the Japan International Cooperation Agency.  That is a serious drain on an economy of about $250 billion.”

          As the eternal optimist, I see the crumbling infrastructures of Metro Manila as good for national growth in the medium term.  Even the mess that Mayor ERAP Estrada has created in Manila may actually be good for such other regions as Batangas, Zambales, Cagayan de Oro, Cebu and Iloilo.  Here, I quote a Spanish proverb I learned while living in Barcelona:  “No hay mal por donde bien no venga” (there is no bad thing from which no good thing results).  Let me be very specific.  Because of the horrendous congestion in the Manila ports resulting from the truck ban in the City of Manila, during the second quarter of 2014, the volume of container cargoes at the Batangas Container Terminal (BCT) surged by 264 percent, compared to the same period in 2013.  This growth followed a 194 percent increase in the first quarter.  BCT announced that the performance of the Batangas Port since the fourth quarter of 2013 had already exploded even prior to Manila’s expanded truck ban.  This trend is indicative of the natural shift of cargoes going to the CALABARZON area being shipped to the Batangas port.  This is to be expected since the South Super Highway and the STAR Tollway from Sta. Rosa, Laguna to Batangas City are lined up with hundreds of manufacturing enterprises located in the numerous industrial zones in Southern Luzon.  This is part of the decongestion of the National Capital Region that has been going on for at least two decades.    I should know.  I come from Batangas. The loss to Manila is the gain of Batangas. 

          I consulted Dr. Henry Basilio, one of the leading transport economists in the country, and he gave more encouraging news:  There are new shipping lines calling at Batangas Port:  MCC (from 1 to 3 ships), NYK, SIDC, ACL/RCL, and CMA-CEM.  There are now 28 trucking companies serving the Batangas Port.  ATI rates in Batangas are now lower than what it charges in Manila.  Yamaha, EPSON and other locators of LIMA land (a leading industrial estate in Malvar, Batangas) are already considering the Batangas Port for their cargo shipments.  Empty containers coming from Manila are now diverted to Batangas Port.  There is a similar movement towards the Subic Port.  ICTSI is already looking for empty container depot outside of Subic Port.  Another depot will be developed in Bulacan.  APL and RCL are now calling weekly at Subic Port; NYK and Wan Hai are co-loading.  OOCL also plans to co-load with APL and Wan Hai to that they can increase the volume in Subic, thus attaining critical mass.  Subic Super Shuttle is now transhipping cargoes from Manila to Subic, three times a week sailing.   SBMA reduced the cargo handling rate by 53%.  Nestle and SMC are now using Subic Port; Yokohama plans to shift 50% of its cargoes to Subic.  Serious discussions are being held for Terminal in Subic.  In a recent Investors Forum in Clark, three important agreements were reached:  a. for shippers/exporters/importers to specify in the Bill of Lading the discharge of their shipments at Subic.  This will force the foreign shipping lines to call at Subic; b.  Clark/CDC will offer an area for container depot; and c. a workshop will be held to determine the volume of containers that can be shifted to Subic.   Over the medium term, all these good things happening in Batangas and Subic as a result of the “crumbling infrastructures” in the traffic hell that is Manila will also spread to Cebu, Iloilo and Cagayan de Oro, other international ports that can help to decongest the National Capital Region.

          Another good news that Dr. Basilio shared with me is that the crumbling infrastructures in Manila has strengthened the political will of the Aquino Administration to speed up the implementation of the Laguna Lakeshore Expressway-Dike (LLED)  Project, the biggest public-private partnership  (PPP) project to date, with 14 companies expressing interest to bid for the contract.  Among these 14 are heavy weights like Ayala Land, Megaworld Corp., Metro Pacific Investments Corp., GT Capital Holdings, Inc., Filinvest Land, Macquarie Capital Securities and San Miguel Corporation.    The project has two components, i.e. road-dike and land reclamation.  The LLED will mitigate flooding in the Laguna Lake coastal town, particularly in Southern Metro Manila and Laguna, improve the environmental condition of the Lake, and promote economic activities through efficient transport of goods and people.  A new business and residential district can be developed in the reclaimed areas.  This will attract business and households away from Manila, increasing further the growth of the Gross Regional Product of Southern Tagalog even as growth decelerates in the National Capital Region.  The Feasibility Study for LLED was funded under the Advancing Philippine Competitiveness (COMPETE) Project of the United States Agency for International Development (USAID) and has been evaluated by the NEDA and the PPP Center.  All these favourable developments over the next five to ten years, going beyond the term of the present Administration, help to give an affirmative answer to the question posed by the title of this column:  Indeed, crumbling infrastructures of Metro Manila are good, not only for national growth in the medium term but also to a more equal distribution of income in the country.    For comments, my email address is bernardo.villegas@uap.asia.