BWorld 75, How to profit from urban congestion

* This is my 2nd article in BusinessWorld special Anniversary issue last Monday.

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Worsening traffic congestion in Metro Manila and other big cities in the Philippines has led people to believe that this will negatively affect people’s health, temper, and eventually, the economy. Thus, the solution is to decongest heavily urbanized cities and spread out development and modernization to the peripheral cities and provinces.

This subject was partly tackled during the first BusinessWorld Economic Forum last July 12, 2016 during the panel discussion about succession and transition. Among the speakers were Ernesto M. Pernia, Socioeconomic Planning secretary; Kevin L. Tan, senior vice-president & head of Megaworld Lifestyle Malls, Megaworld Corporation; Bienvenido V. Tantoco III, president of Rustans Commercial Corporation; Nina D. Aguas, CEO of Insular Life; and Wilfred Steven Uytengsu, Jr., president and CEO of Alaska Milk Corporation.

Although the focus of the discussion was about how companies prepared for smooth corporate succession, the speakers also provided a wider perspective and tackled some national issues and transition. All agreed that Metro Manila is very congested and that developments should be driven to less urban and rural areas. Mr. Tan in particular highlighted that many real estate developers are going out of Metro Manila because there are more developments in several provinces and big cities, more BPOs, other businesses.

If we look around the world, each country has one or more political and/or financial capital and these places experience congestion where the demand for certain services outpaces the supply. This happens because congestion is natural and part of human nature’s demand for socialization and interaction. It is faster and easier if the office, the kids’ school, the bank, grocery store, car repair shop, etc. are just a few kilometers away instead of dozens or hundreds of kilometers.

Let us check the degree of congestion of the Philippines compared to other ASEAN nations, and from two small, highly congested neighbors. A 50-year gap, 1964 to 2014, table is constructed. The per capita income in purchasing power parity (PPP) valuation over a 30-years gap is also shown.

What the above table shows are the following:

1. Highly-congested Singapore, Macau, and Hong Kong also have very high per capita income. There are many explanations for this and the efficiency gains of having almost everything nearby is definitely one of them. Brunei is a different case, small population but relatively big land area rich with energy resources for export, like natural gas.

2. Less-congested Cambodia, Myanmar, and Laos also have low per capita income of only $5,100 or less. Again, there are many reasons for this and the inefficiencies and inconvenience of being far from various economic units like big banks, big grocery stores, etc. should be one of those reasons.

3. The Philippines is second most congested country in the ASEAN after Singapore. Its population has more than tripled over the past 50 years.

Let us check the numbers for Metro Manila. From 636 square kilometers originally, the megacity now has a land area of 644 square kilometers (owing to reclaimed areas at the CCP-SM MOA) and a population of 12.877 million, as of the August 2015 census. Based on these numbers, its population density is 19,995 persons/sq. kms., comparable to that of Macau.

But one report says World Bank data shows that Metro Manila has a 1,300 square-kilometer land area as of 2010. Or a population density of 9,906 people per sq. km. in 2015, still higher than those in Singapore and Hong Kong.

So if congestion is natural for people, how can we optimize and benefit from the presence of many people per square kilometer of land?

ACDimatatac-301. More land reclamation. The 800 or so hectares in the CCP-SM MOA-Entertainment City have created lots of businesses and jobs for Filipinos. The planned additional reclamation projects in Manila Bay should proceed, and at a fast rate.

Aside from creating new lands in the sea, there is also a need to remove huge volume of silt, mud, and solid wastes in river beds of the Pasig, Las Piñas, and Marilao rivers that drain into Manila Bay. These smelly solid wastes cannot be brought to dumpsites where most LGUs declare a “not in my backyard” (NIMBY) policy.

2. More skyways, elevated interchanges and U-turns, tunnels. Traffic congestion is an engineering problem with engineering solutions. Such solutions should veer away from hiring more traffic officers and officials, avoid having more stoplights. Instead, officials should build more hard infrastructure that can provide service to the public and motorists 24/7 for decades to come.

3. More trains, LRT/MRT, running along C5 and C6, above ground and underground, extending north and sound, east and west, of Metro Manila. In Tokyo, Seoul, and Singapore, it is common to see multi-level train stations and shops underground. Public Private Partnership (PPP) schemes are already existing to encourage more private funding and construction of these projects.

4. More low-cost medium- and high-rise residential condos. This immediately frees up space for more urban forestry and public parks, unlike in horizontal low-cost housing. Multiple regulations and taxation by both national and local governments should also decline. These are costs that are ultimately passed on to condo unit buyers and renters, that make vertical housing less affordable to the poor and lower middle class.

People and businesses respond to incentives and disincentives. If there are many disincentives and inconvenience in taking (often multi-ride) public transportation, then more people will drive their cars or motorcycles, which contribute to heavy traffic congestion. Government taxation and regulations that distort the market for urban transportation, housing, and other services should be reduced.

Bienvenido S. Oplas, Jr. (@noysky on Twitter) is a Fellow of SEANET and President of Minimal Government Thinkers.

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See also:
BWorld 72, Economic integration and disruption, July 25, 2016 
BWorld 73, Transco and the big beneficiaries of feed in tariff, July 27, 2016
BWorld 74, Pres. Duterte's anti-corruption programs and Transparency Intl., July 30, 2016

Land Reclamation in Manila Bay

I support land reclamation in Manila Bay. Remove those thick silt, mud, sand, other solid wastes in river beds near the bay. Also the thick lahar deposits in Bulacan rivers that contribute to frequent street flooding. I am indifferent who should do the reclamation project, the important thing is that someone should do it, soon.

There are two (or more?) proposed land reclamation projects in Manila Bay. The Solar City project by the Manila Goldcoast Development Corp. in Manila City area, and the SM project in Pasay City.

Another view of the proposed Solar City. This seems to be the extension of the CCP complex, which itself is a huge land reclamation project of the Marcos administration some 3-4 decades ago.

The front area is not wide, it is elongated towards the sea.

In Pasay City, The SM group seems to have already bagged the project, 600 hectares of new land in the sea. Good. But Ayala Land is contesting the awarding to SM Land.

This is the proposed project of SM Land. Whether it is SM Land or Ayala Land or Megaworld or Federal, etc., I am indifferent. Just remove those silt and mud in river beds, make the rivers deep again. At no cost to taxpayers.

A friend in Marilao, Bulacan told me that in many barangays, the local government has constructed new roads that are around 1 to 1.5 meter (3-4.5 ft) high from the original road to spare them from flooding. Houses and shops cannot be raised that much, so these structures will endure horrible flooding every year. Lahar deposits in many Bulacan rivers are thick. There is only one viable solution -- large-scale, massive, sustained, dredging of the rivers. Remove the sand, stones and rock deposits in river beds and make them deeper again.

Pinatubo erupted in 1991, and brought down hundreds of millions of cubic meters of sand, soil, stones and rocks via lahar for 24 years now. 

Last October, I and some friends tried to climb Mt. Pinatubo via Porac River, Pampanga. We saw these, so many hills or even mountains of sand waiting to go down for the next 20 or 30 years more perhaps. That means flooding in Bulacan rivers will worsen in the coming years. Unless massive, large scale dredging of those rivers are done regularly.

Not only Bulacan but some Pampanga municipalities too, would be courting more frequent street flooding as the rivers are getting more silted. More sand deposits waiting to go down in the coming years. And this is in Porac River alone. The other rivers of Tarlac and Pampanga have huge deposits of sand and rocks up there.

These sand, mud, other silt on river beds need to be removed. Where to throw and dump them? Not in Metro Manila, not in Bulacan or elsewhere, but in the sea, via land reclamation. And more structures, more roads, more jobs, will be created in the near future.

MMDA and the city governments of Metro Manila, instead of hiring more employees, they should focus on regular, annual dredging of drainage, creeks and rivers in their localities. But they may also be asking, "So where do we dump/throw the hundreds of trucks of silt, mud and solid waste from river beds?"

Land reclamation is a good solution to that problem. Developers of land reclamation projects abroad usually buy soil and rocks from nearby islands or countries. No need to buy here, just use those thick and  huge volume of solid waste and river silts. Even the garbage disposal problem of Metro Manila can be partially solved by compacting these solid wastes and use them as filling materials.

Again, there are market solutions to market problems of flooding and  solid wastes disposal. But people should allow players with resources and ambitions to develop certain areas, and not just oppose and oppose to new initiatives.

* See also, Solid Waste Management to Save the Planet, February 09, 2012