Decongesting M. Manila key to sustained growth

The heavily congested metropolis and the insufficiency of infrastructure to support the pace of development pose significant threats to the sustainability of the Philippines’ upward economic trajectory, a real estate consulting firm said Wednesday.

In a briefing, officials of KMC Mag Group said local policy makers need to focus on decongesting Metro Manila and building the necessary infrastructure in order to stay ahead and to sustain the momentum it was enjoying.

“The long-term economic growth of the Philippines is dependent on whether or not it can address the issue of decongestion and make smart, sustainable decisions to improve its infrastructure,” KMC Mag Group managing director Michael McCullough said in a statement.

“If the Philippines can bring the growth in Manila to other areas within the country and support that with infrastructure, then we see no reason why it wouldn’t fulfill its promise of being the next Asian miracle,” he added.

Amid this warning, the firm said the Philippines’ continuing economic growth has enabled it to become one of the more popular investment destinations in Southeast Asia.

While other countries are still recovering from the effects of the 2008 financial crisis, the Philippines has grown steadily, posting a 6.2-percent growth in the second quarter of 2014 and getting credit rating upgrades from international ratings agencies.

The real estate services company said efforts to decongest the metropolis had e become more visible of late, with business parks and special economic zones being built in provinces such as Cavite, Laguna and Batangas, and in areas outside of Luzon, such as the cities of Cebu, Davao, Cagayan de Oro and Zamboanga.

Within Metro Manila, developers are exploring Quezon City and the so-called ’Bay City’ on the reclaimed area by Manila Bay as potential central business districts, which could potentially spread out job opportunities, foot traffic, and even investments more evenly.

In particular, McCullough noted that Quezon City has shown a lot of potential, given its size, the presence of government institutions, educational institutions, and major broadcasting networks, and its extensive road and railway network.

To support these decongestion efforts, McCullough recommended that—as more urban areas be set up outside of Metro Manila—the government must invest in infrastructure to improve the transportation network and integrate the different networks around the country.

“The Philippines has the best credit ratings it has ever had,” he said. “It also has the knowledge and support of institutions such as the Japan International Cooperation Agency, among others. The only thing the Philippines needs is the political will to make these large-scale changes possible.”

As the Philippines works on decongesting Metro Manila and creating pockets of growth outside of the capital, one area that it will need to focus on is building the necessary infrastructure, which remains a sore spot for the country, the firm said.

The World Economic Forum 2014-2015 Global Competitiveness Report showed that the Philippines still ranked low in terms of transport infrastructure, with its seaport infrastructure ranking 101st and its airport ranking 108th.

“Filipinos are looking to the government and to developers to help them make traveling to work, school, or to their homes easier, to develop spaces for them to live, play, and work,” McCullough said. “The aging roads and the declining quality of the public transport system are deterrents for both the locals and the expats who live and work in the Philippines. If that’s the first impression they get, it will be more difficult to get them to buy into what else the Philippines offers.”

McCullough shared that support infrastructure is critical for the manufacturing and services sector.

“The industry and service sectors contribute to over 70 percent of the country’s economic output,” he said. “The government has to ensure that manufacturers have the roads and transport networks they need to move raw materials and finished goods from one area to another, and that they its citizens enjoy a high-quality public transport system.”

Another key industry that requires support infrastructure is tourism.

With the Department of Tourism having dubbed 2015 as “Visit the Philippines” year, and with visitor arrivals to the Philippines increasing steadily, the country will have to invest in this area in order to grow the industry and compete with its Southeast Asian neighbors.

“The hotel and leisure industry is all about access,” McCullough pointed out. “The biggest hindrance to growth for this sector the lack of and the quality of the infrastructure. The Naia renovation has been purely cosmetic, and there is still a need for more runways or airports in order to absorb more transit arrivals. We also need to increase the supply in order to accommodate more international visitors, otherwise the shortage would result in less tourist-friendly room prices.”