BWorld 176, Road trips and PPP projects

* This is my column in BusinessWorld last December 28, 2017.

For the third straight year, I drove my family from Makati City to Iloilo City via roll-on roll-off (RoRo) vessels during the holidays.

The road trip came with its own set of inconveniences that were nevertheless offset by several benefits: It allowed my family to carry more cargo (compared to flying) and also allowed my two daughters to enjoy boat rides.

In December 2015 and 2016, I drove days before Christmas, to avoid the long queues of vehicles at the ports of Batangas and Roxas or Bulalacao, Oriental Mindoro. This year, I drove early morning of Dec. 25 and I noticed two improvements.

First, toll fees were no longer collected that day (or at least in early morning) in the three tollways — South Luzon Expressway (SLEx), the SLEx extension, and the Southern Tagalog Arterial Road (STAR) and I wish to thank the tollway operators for that Christmas gift.

As expected, travel was smooth and safe on these tollways, indicating once more the beauty of privately operated infrastructure and user-pay principle.

Last but not the least, only a few cars queued at the Batangas and Roxas ports although there were also fewer boats that day.

Roads from Calapan to Roxas in Oriental Mindoro are generally good although motorcycles and tricycles — especially in big municipalities like Calapan, Naujan, and Pinamalayan — delayed travel.

Likewise, the highways in Aklan province were smooth. In Capiz, roads have generally improved but several portions have remained bumpy. Motorcycles and tricycles on these roads have also increased significantly, extending travel time.

These bring up two important subjects.

First, the need to expand and modernize our roads via tollways, constructed and operated by the private sector through the public-private partnership (PPP) scheme.

Existing roads will remain and will be maintained by the DPWH and local governments but there should be an alternative thoroughfares for motorists who are willing to pay for faster and safer travel.

Here is a list of potential new tollways that currently have big vehicle traffic volume. I am not sure if there are already unsolicited proposals for these tollways.

1. Calapan-Roxas, Oriental Mindoro. This covers 126 kilometers with additional entry/exit in larger municipalities such as Naujan and Pinamalayan. Vehicle volume has practically exploded with the 24/7 operations of RoRo boats between Batangas-Calapan and Roxas-Caticlan. Many tourists and visitors from Metro Manila and nearby provinces are travelling to the islands of Mindoro (Oriental and Occidental provinces) and Panay (Aklan, Capiz, Antique, Iloilo provinces).

2. Caticlan or Kalibo, Aklan-Iloilo City. Caticlan hosts the main seaport and airport for hundreds of thousands of yearly visitors who go to Boracay. Panay island has many tourist attractions besides its already substantial population.

3. Escalante-Bacolod-Dumaguete, Negros island. The Escalante-Bacolod route connects the two provincial capitals of Negros Occidental and Cebu while the Bacolod-Dumaguete route connects the two provinces’ capitals. There are four sea connections from Negros to Cebu with rising commerce and investments between the two islands. Escalante-Tabuelan, San Carlos-Toledo, Guihulngan-Tangil, and Dumaguete-Bogo or Oslob.

Second, the Duterte government shouldn’t have reversed the previous policy of integrated PPP (building/construction + operation and maintenance, O&M are under a single entity) and change to hybrid PPP (building/construction and O&M done by two separate entities, the former usually China-owned firms via China ODA).

Many Philippine-based construction companies need more experience and infrastructure portfolio that further strengthen their technical and financial capability to do more PPP nationwide and regionwide. Our emerging economic neighbors Indonesia, Vietnam, Cambodia, Laos, and Myanmar have started some large projects in the past and will soon undertake even bigger developments — provincial tollways, city skyways, big airports, and seaports, water, and power projects, school buildings and other civil structures.

ASEAN-based infrastructure and construction firms will have the advantage compared to those outside the region.

And pretty soon, fast-developing countries outside the region like India, Bangladesh, and Pakistan will also embark on large-scale infrastructure development via PPP as the scheme will significantly free their fiscal resources while having big, capital-intensive projects at the same time.

Philippine-based construction firms with large portfolio of finished and on-going projects in the Philippines and ASEAN neighbors will have some advantage because of evolving trade and investment partnerships among Asian countries.

It may have been wrong for the Duterte government to reverse previously planned integrated PPP and change to hybrid PPP just to accommodate China ODA and firms.

After all, there should be less government intervention in sectors and activities where market competition and innovation is present and can be further strengthened. Bigger government is reserved for promoting the rule of law and respecting and enforcing contracts and obligations between and among competing and regulated entities.

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See also:

BWorld 173, Energy favoritism under TRAIN, December 30, 2017 

BWorld 174, MMDA towed my car even with my kids inside, December 31, 2017 

BWorld 175, Trends in global and Philippine trade, January 05, 2018

BWorld 103, How to improve the RORO system

* This is my article in BusinessWorld last December 28, 2016.

The Roll-on, Roll-off (RoRo) boat system of transporting trucks, buses, and cars from one island to another is among the best inventions for archipelagic countries like the Philippines. Vehicles go inside the boat, passengers come onboard, and the boat travels to another island where it docks, unloading passengers and their cars on the way to their destinations.

My first RoRo experience was in the late 1990s when I took the bus from Cubao to Iloilo City. It was an adventure to see for the first time Oriental Mindoro outside Puerto Galera, Panay island from north to south, and the Aklan-Capiz-Iloilo provinces. It was a 25-hour trip because there were few RoRo boats that plied the Batangas-Calapan then Roxas, Oriental Mindoro-Caticlan, Aklan routes. It was exhausting but fun.

My second RoRo experience was in 2003 when I traveled by bus from Sweden to Netherlands via Denmark and Germany. Our bus entered a huge boat somewhere in Denmark, the boat traveled to and docked in Hamburg, then we boarded the bus again and traveled to The Hague, where I visited a friend.

There was a big difference between the Denmark/Germany and Philippine RoRo system of course.

First, since the boats in the former are huge, the vehicles -- once onboard -- aren’t cramped unlike in local boats.

Second, waiting time at the port in Denmark was short and didn’t take hours.

Last Dec. 21, I drove again like December last year from Makati to Iloilo City with my family, lugging cargo that weighed 300 kilos. Since it was the holiday season, there were lots of travelers who took their cars, unduly extending the waiting time for vehicles to get onboard.

Now there are only three RoRo shipping lines plying the Batangas-Calapan route: Montenegro, StarLite, and FastCat. Last year, there was a fourth player, Super Shuttle, and there was a RoRo boat plying the Batangas-Muelle/Puerto Galera route. Both are gone now.

In Roxas port, a duopoly, Montenegro and StarLite shipping lines, serve the Roxas-Caticlan route now; last year, there was SuperShuttle as the third player.

When I arrived at Roxas port, there were many cars trying to get to the next Montenegro boat while StarLite ticket office was still closed, so I drove one more hour from Roxas to Bulalacao, Oriental Mindoro, to take the Bulalacao-Caticlan route that was served only by FastCat. So FastCat is the third player to serve passengers and vehicles going to Caticlan but it’s on a different, farther seaport.

For those planning to try this adventure for the first or second time, here are the costs to bring your car to Panay island.

1. Toll fees: Makati to Batangas via SLEx, SLEx extension, STAR tollways about P320.

2. Batangas port fees: Philippine Ports Authority (PPA) terminal fee for cars P129, for passengers P30/head, children below 12 years old are free.

3. Montenegro boat: P1,920/car (jacked up from P1,500 due to the Christmas season), passengers P192/head, P120/child from 7-12 years old while children 6 years and below are free. Car driver is also free.

4. Bulalacao port: PPA terminal fee for cars P129, for passengers P15/adult, P12/child.

5. FastCat boat: P3,380/car, passengers can take the economy, premium or business classes. The latter is P500/head, P400 for students, P250 for children. Car driver is free but only for economy seat. Upgrade to business class is additional P125.

6. Fuel/diesel, Makati to Iloilo, 500+ kms, depending on car fuel consumption. My pickup consumed about P1,000.

I spent a total of P9,000 all in all, one way, from Makati to Iloilo, which is cheaper than flying for four people -- my wife, two kids, and me -- especially in December when fares are high. That doesn’t include the airport terminal fees, baggage check in charges, and taxi fares to and from the airport.

So driving a car via RoRo with about 300 kilos of cargo is cheaper.

Although long car rides tend to be inconvenient, it was nevertheless fun for my passengers, especially for my two girls who enjoyed the boat ride.

Some ugly experiences that one may encounter if driving during the holiday/Christmas season:

1. Waiting for one or two hours or more outside the gate of Batangas port as there are many cars and trucks queuing to board a boat to Calapan. Cars going to destinations other than Calapan (Abra de Ilog, etc.), they can go in anytime, no long queues for them.

2. New security bureaucracy at Batangas port. All bus passengers and car drivers must alight and go through a security check along with their hand carried bags, get the signature of an officer, go back to their vehicles and drive to the queue area for the boat ride to Calapan or other destinations. This was not done last year and previous years.

3. The Roxas, Oriental Mindoro municipal government acts like a typical extortionist. It collects P50 for each car entering and exiting Roxas port. Zero public service for visitors because the port and the roads were made by the national government, and it has a share from the various fees paid by the shipping lines. Many local governments that host ports behave this way too.

Three possible reforms to modernize the country’s RoRo system are the following.

One, consider RoRo system as a bridge, not as a seaport.

Allow unhampered movement of vehicles from one island to another as if they are just crossing a bridge and quickly proceed to their destinations. This implies that RoRo development and streamlining be put under the DPWH, not under DoTr. I heard this proposal during the Manufacturing Summit 2016 last November sponsored by the DTI and BOI.

Two, allow more shipping lines, more players to serve important routes like Batangas-Calapan, Batangas-Caticlan, Roxas-Caticlan, Sorsogon-Samar, and so on. More routes mean more options for motorists and passengers. Government should reduce the bureaucracies and taxes for new players to come in, or for existing players to expand and modernize their fleet.

Three, allow private developers, shipping lines and/or bus lines to put up their own ports, meaning deregulate and demonopolize the PPA.

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See also:
BWorld 100, Multinationals in the PH, what do they want? January 03, 2017 

BWorld 101, Christmas lights, energy mix and electricity production in Asia, January 09, 2017 

BWorld 102, Top 10 news of 2016, January 10, 2017

BWorld 35, Inter-island shipping and the PPA, Coast Guard

* This is my article in BusinessWorld yesterday.

The Philippines is the second largest archipelago in Asia-Pacific in terms of number of islands and islets, next to Indonesia. Air and sea travel therefore is very important for many inhabitants of different islands. Continued modernization of existing airports and seaports and the creation of new ones is a must.

I traveled with my family last Sunday, Dec. 20 -- land trip from Makati to Iloilo via the Nautical highway. The route is as follows:

1. Car -- Makati to Batangas (around 110 kilometers; km)

2. Boat -- Batangas to Calapan, Or. Mindoro (1.5-2 hours)

3. Car -- Calapan to Bulalacao, Or. Mindoro (around 190 km)

4. Boat -- Bulalacao to Caticlan, Aklan (3-6 hours, depending on the shipping line)

5. Car -- Caticlan, Aklan to Iloilo City (around 210 km).

Batangas port, operated by the Philippine Ports Authority (PPA), was congested that day with vehicles going to Calapan, Oriental Mindoro. Inside the gate, there was another long queue of cars. Guards said there were many cars already queuing inside for all boats going to Calapan. Buses are given priority to board the boats.

This photo shows the queue of vehicles planning to enter Batangas port to go to Calapan, Oriental Mindoro on Dec. 20.

After waiting for about 30 minutes in this area where the queue was hardly moving, I decided to go to Mindoro via Puerto Galera as there was no queue for vehicles.

Before loading the car to a roll on, roll off boat going to Puerto Galera, a friend who is working at Fast Cat shipping line called me and said that he can accommodate us in their next boat which is bigger, faster and more modern.

Another staff of Fast Cat said that their boat which left 12 noon for Calapan was not full and that they could have accommodated up to 10 cars more so he wondered why the guards held up so many cars at the gate saying that boats for Calapan were already full.

The Fast Cat boat was supposed to leave Batangas at 2:30 p.m. but it arrived late. When the boat was already full with vehicles and passengers, the boat was not allowed to leave with standing passengers because authorities wanted everyone to be seated.

It seems a suspicious decision because all the buses that came were full and have many standing passengers in them as this is the holiday season. Helpless to argue with the coast guard, the crew asked the excess passengers to go back to their buses. We then finally left Batangas port at almost 4 p.m., a few hours delayed. My friend commented that the coast guard does not or seldom implement strict rules on older shipping lines.

It was already evening when we arrived Calapan. Many parts of the city, the surrounding municipalities were dark, some areas looked eerie. The destruction of the recent strong typhoon were still evident -- lots of fallen and uprooted big trees, fallen or leaning electrical posts, many houses destroyed, dark roads and standing houses.

The main and old port that serve the boats plying the Mindoro-Aklan route is in the town of Roxas. About three shipping lines use this port and are always congested. I did not go there; I tried to catch the past-10 p.m. boat at Bulalacao port, about 50 km further south of Roxas and is geographically closer to Caticlan. (See map)

Bulalacao is the last town of Oriental Mindoro in the south; next to it is San Jose, the capital of Occidental Mindoro. The road from Roxas to Bulalacao was surprisingly very smooth and modern. I did not expect to see such smooth road when it’s far from the capital, Calapan.

Bulalacao port is very basic -- no passenger terminal, only the boat anchored and vehicles entering it. The shipping line’s ticket office, PPA and coast guard stations are in a temporary structure at the gate. Since this is a new and lesser known port, there are not too many vehicles that board here. The bureaucracy and inspections are minimal.

As a result of the trip, I have learned several lessons and have come up with possible policy reform suggestions.

1 The PPA seems to remain inefficient in handling or facilitating big volume of vehicles that come to Batangas port during the holiday season. The case of long queue at the gate of cars going to Calapan was inconsistent with the fact that at least one boat departed with many vacant slots.

2 Could it be the PPA’s guards deliberately held up many cars so that one shipping line will have less revenues, then allow the cars to come in for the other shipping lines to earn bigger revenues?

3 The coast guard also practiced typical bureaucratic behavior at Batangas port. Having standing passengers inside the boat at this season is expected as all the buses that come in have excess, standing passengers in them. Besides, the weather was fine, no signs or forecast of big waves or weather disturbances affecting the route.

4 The Philippines is an archipelago and many people rely on inter-island shipping for their mobility. Government authorities should become more passenger-friendly, business-friendly, and not impose unnecessary prohibitions and regulations that slow down the mobility of goods and people.

Bienvenido S. Oplas, Jr. is the head of Minimal Government Thinkers, and a Fellow of the South East Asia Network for Development (SEANET).

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See also:

BWorld 31, Comparative electricity exchange market in Asia-Pacific, December 13, 2015 

BWorld 32, RCEP and TPP for the Philippines, December 16, 2015 

BWorld 33, Computing rise in tax revenues if rates are cut, December 17, 2015 

BWorld 34, Solar power and supply instability, December 24, 2015