Page last updated at 03:02 Asia/Manila, Tuesday, 08 August 2017 PH
In a board meeting of a Philippine conglomerate to which we both belong, a former Secretary of Finance surprised me when he criticized me as being too pessimistic when I forecasted that the number of foreign tourists coming to the Philippine would double from 7 million to 14 million from 2016 to 2022, the end of the Duterte Administration. This top banker resides in Singapore and is very much aware of the much larger figures for foreign tourism of such countries as Thailand, Malaysia and Singapore. I was surprised with his comments because in many previous forecasts I made in the same board, I would always be the optimist and he the pessimist. This time the tables were turned. He thinks that by 2022, foreign tourism in the Philippines could be a lot closer to today’s figures for Thailand (33 million) or Malaysia (27 million).
I am willing to go along with his optimism on condition that the expectations about the “golden age of infrastructures” associated with “Duternomics” would really be realized, especially as regards international airports and seaports. As analyzed in the CSLA study, the improvements should begin with the Ninoy Aquino International Airport (NAIA) in Manila, which has been subjected to much criticism, including being labelled by travel site “The Guide to Sleeping in Airports” as the world’s worst airport from 2011 to 2013. Major complaints have been about delayed flights, frequent power outages, air-conditioning issues, uncomfortable and inadequate seating and complicated terminal transfers. Under the present leadership of Department of Transportation (DOTR) Secretary Arthur Tugade, there have been already significant improvements addressing these complaints. The root problem, though, is that the NAIA is operating way above its design capacity. The four terminals of NAIA handled a total of 39.5 million passengers in 2016 vs its design capacity estimated at 31.5 million passengers annually.
There should be alternative gateways that could be as successful as the Mactan-Cebu International Airport (MCIA), the country’s second largest which the consortium of Megawide and the Bangalore-based GMR Group won in a tightly contested auction last December 2013. Since then GMR-Megawide Cebu Airport Corporation (GMCAC) has gained international acclaim for the modernization of MCIA, which has been recognized as the most successful PPP in the Asia-Pacific region. A second terminal is being built in MCIA, which would boost annual passenger handling capacity from 4.5 million to 12.5 million. I am glad to learn that this consortium has expressed interest in other airports in the country, including the Fernando Airbase in Lipa, Batangas.
It was a good omen that among the first PPPs to be approved under the Duterte Administration were five airports in key cities of the Visayas and Mindanao where there is a proliferation of very attractive tourism destinations. These are the cities of Iloilo, Bacolod, Bohol, Cagayan de Oro and Davao. These are targeted to be auctioned by the middle of 2017. I am watching very closely developments in this regard. Like my friend, the former Secretary of Finance, I would be willing to up the ante in my forecast if the auctions of these five airports would proceed without the usual political bickerings and influence peddling. I would also turn more optimistic about tourism in the next five years if the present Administration avoids the “paralysis by analysis” syndrome that characterized the last one by entertaining too many alternatives to the NAIA, the country’s premier international airport. With due respects to proponents of sites like Cavite or Bulacan, it is a no brainer that to decongest Metro Manila, the most ideal alternative international airport is the Clark International Airport in Central Luzon. I am glad that it does not matter to the Duterte Administration that Clark is named after the former President Diosdado Macapagal.
Clark has the most important attribute of an alternative to NAIA: almost unlimited runway which addresses the greatest handicap of NAIA. Clark is equipped with a big aviation complex with two runways in parallel configuration with a length that could be easily extended to 4.0 kilometer each (from 3.2 km currently). The first and second runways have widths of 61 million and 45 million, respectively, which can easily accommodate new generation wide-bodied aircrafts. In order to ensure the viability of the project, it is imperative that the Duterte Administration implements without the delay the plan to build a railway that will create quicker access for passengers that will be coming from Manila. Clark can accommodate 4.8 million passengers in its current configuration and handled less than 1 million in 2016. Two conglomerates, Metro Pacific and San Miguel, should be encouraged to put up new toll roads that will significantly reduce the commute time of those traveling north, by as much as six-fold. The next six months will see whether or not the present Administration can improve on the track record of the last Aquino Government in finally resolving the dilemma about the alternative airport to NAIA. Cavite and Bulacan are too close to Metro Manila to solve the serious congestion problem of the National Capital Region. Besides, both alternatives to NAIA will require very expensive reclamation of land which can be ecologically damaging in the case of Cavite; or in the case of Bulacan, worsen the problem of vanishing agricultural lands about which the Secretary of Agrarian Reform has been complaining.
I could also be more optimistic about the number of foreign visitors in 2022 if the airport development program described above will be complemented by making more seaports in the country friendlier to international cruises. A study funded by USAID entitled “Developing the Philippines as a Cruise Destination: National Cruise Tourism Strategy” outlined bright prospects for the international cruising market if more of our international ports which are gateways to tourism destinations are rendered more cruise ready. The principal ports ideal for cruising are Manila, Subic Bay, Cebu, Davao and may I add Batangas City (which is the gateway to some of the most attractive beaches in the Southern Tagalog area). The secondary ports are Bohol (Tagbilaran and Catagbacan), Puerto Princesa, Coron (and surrounding islands), Boracay (Caticlan) and Ilocos Norte and Ilocos Sur (Currimao and Salomague). Our major markets will be China, Japan, South Korea and Taiwan. Over the longer run, there will be increased traffic for cruises within the ASEAN Economic Community since our neighboring countries, especially Indonesia, Vietnam, Thailand, and Myanmar are experiencing a rapid increase in their middle-income households who will have more discretionary income to go on cruises in the region. In the study funded by USAID, the ports identified as most attractive for the cruising industry are as follows in the order of readiness: Puerto Princesa, Palawan; Caticlan, Boracay, Manila (Pier 15); Coron, Palawan; Subic Bay; Tagbilaran, Bohol; Currimao, Ilocos Norte; Cebu; Davao; and Salomague, Ilocos Sur. Whether or not these potentials will actually be exploited in the next five years will depend on the ability of the Duterte Administration to cut through the red tape, bureaucracy and political intrigues that unfortunately torpedo the best laid plans. We will know in the next five years whether I was being too conservative when I projected just a doubling of foreign tourists by 2022. For comments, my email address is email@example.com.