Build bigger, better, bolder — railways

FLORIAN VAN DUYN – UMSPLASH

AT the Philippine Infrastructure Summit held on Nov. 23, 2023, Undersecretary Cathy Fong of the Department of Finance (DoF) also highlighted the improvements in the new Public-Private Partnership (PPP) Code of the Philippines. She cited the integrated, simpler, and streamlined processing that will make the approval time shorter and that ensures sustainability of projects since the new Code protects the proponents from any substantial changes in policies and legal requirements that may result from changes in the Administration. From feedback that we got from the series of roadshows we conducted in Madrid and Barcelona in April and November of last year, one of the major complaints of investors who have had experience doing business in the Philippines was precisely the unsettling changes in policies and legal requirements affecting FDIs with every new Administration over the last 20 years or so.

These uncertainties that potential foreign investors faced especially hounded the railway sector where there were constant changes in policies from one Administration to another. No wonder, as Senator JV Estrada said in his Keynote Speech, in the latest available Global Competitiveness Report, we ranked 102nd out of 141 countries, with the score of 41.5 out of 100 in terms of our Transport Infrastructure. Among the Asian counties, the Philippines received the lowest rated railway service with the score of 2.5, ranking 86th out of 101 countries globally. Meanwhile, on the ground, this results in long lines at terminals, and congested roads. As we experienced during the Christmas season of 2023, Filipino commuters have suffered untold troubles in traffic jams, congested terminals, and other inconveniences while traveling because of an inefficient transport system.

Senator Estrada referred to a most relevant quote that gives light to the woes of Filipino commuters. He cited Gustavo Petro, President-elect of the Republic of Colombia: “A developed country is not a place where the poor have cars. It’s where the rich use public transportation.” Those who have visited the richest country in Southeast Asia, Singapore, know exactly what this means. In his presentation, the Senator gave the assurance that the present Administration has a very well-defined mass transport long-term plan. A slide in his Power Point presentation showed a growth triangle that will be the basis of a railway transport plan for the most populous island of the Philippines, Luzon. In this vision of a growth triangle, an entire mass railway transport system will emanate from a triangle connecting the Bataan-Subic Freeport in Central Luzon to Tutuban in the National Capital Region, forming a triangle by connecting with the Batangas Port in Calabarzon. This is in line with a study undertaken by the Center for Research and Communication (CRC) in partnership with USAID, more than 10 years ago identifying the Batangas Port as a replacement of the Manila Port as the gateway from Luzon to the rest of the Philippines and the rest of the world. The equivalent port in the Visayas is Iloilo, and in Mindanao it is Cagayan de Oro which has an advantage over Davao because of its greater geographical accessibility to sea transport.

The Philippines has a long way to go to be able to match the railway systems of Indonesia and Vietnam which already have functioning bullet trains for rapid mass transit. It would be ideal, as shown in Senator Estrada’s Power Point presentation, if part of the rail system going from La Union province in the north to Sorsogon in the south could already incorporate some bullet trains. These can be constructed by some of the prospective investors from Spain, Japan, and South Korea which have a great deal of experience in constructing rapid transit systems. Similar railway systems are being programmed for the island of Panay, and the second largest island in the archipelago, Mindanao.

It is a pity that the active participation of China in building a modern railway system in Mindanao has been canceled for political reasons. The Better Mass Transport Plan prepared by the Government already envisioned a Mindanao Railway Project (MRP) system connecting Zamboanga City in western Mindanao to Tagum City, Davao City, and Digos City in eastern Mindanao. The MRP is vital to make this second largest island, which is very well endowed with agricultural resources, the main food basket for both the domestic and foreign markets.

There is hope, however, that Japan can replace China as the main funding source for the MRP as recently announced by House Assistant Minority Leader Johnny Pimentel, who represents the second congressional district of Surigao del Sur and is a member of the House committee on flagship programs and projects. There is already a precedent: the Japan International Cooperation Agency (JICA) is already providing the Philippine Government with low-interest ODA to fund the Metro Manila Subway. Phase 1 of the MRP is projected to cost P83 billion and would involve the construction of a 102-kilometer train line linking Tagum City, the provincial capital of Davao del Norte, with Digos City, the provincial capital of Davao del Sur, through Davao City. Japanese consumers would benefit from more efficient transport in these areas because they are the sources of significant exports to Japan of bananas and pineapple products.

An integral part of the Mass Railway Transit Plan is to convert major railway stations into Economic Hubs that would include the components of a self-contained urban center such as areas for housing, a business district, a commercial area, an industrial estate, and an agri terminal.

It cannot be repeated too often that manufacturing is not the only route to the full industrialization of a country. Industry also encompasses infrastructure, construction, public utilities, and mining. Even if we continue to lag behind our East Asian neighbors in the manufacturing sector, we can still be a highly industrialized nation if we fully implement the Master Plan Priorities presented by Senator Estrada in his Keynote Address.

These priorities have been clearly outlined by the Marcos Jr. Administration: the Transport and Logistics Infrastructure Program; the Energy Infrastructure Program; the Water Resources Infrastructure Program; the Information and Communications Technology (ICT) Infrastructure Program; the Social Infrastructure Program; the Agri-Fisheries Modernization and Food Logistics Infrastructure Program; and Asset Preservation and Maintenance Strategies.

The view of the Department of Public Works and Highways was presented by Undersecretary Maria Catalina E. Cabral, Undersecretary for Planning and PPP Service. From her we get a more micro view of the Strategic Infrastructure Programs aligned with the Philippine Development Plan (PDP) 2023 to 2028.

There are three strategic objectives of the PDP: 1.) a Traffic Decongestion Program; 2.) Seamless and Inclusive Connectivity via National and Local Linkages; and, 3.) Resilient and Sustainable Communities. Under first objective, the following are the necessary construction projects: a.) high-standard highways and expressways; b.) by-pass and diversion roads; and, c.) flyovers, interchanges and underpasses. For the second objective, the following must be addressed: a.) the Daang Maharlika Highway (N1); b.) the inter-island linkage bridge program; c.) gaps and missing links along national roads; d.) nautical highway network; and, e.) convergence programs with the Departments of Tourism, Transport, Trade and Industry, and Agriculture.

Hopefully this last objective can make a significant contribution to the effective performance of the task assigned recently to Secretary Frederick Go. He is assisting President Ferdinand Marcos, Jr. ensure that the policies and programs of the various agencies directly involved in economic development are in synch with one another. This is so that the Philippines can effectively attract foreign direct investments (FDIs) into the infrastructure sector — it has the potential of drawing in $15 billion to $20 billion of foreign equity funds.

A frequent complaint I get from potential foreign investors is that sometimes they get the impression that the right hand of the government does not know what the left hand is doing. This is why I fully support the creation by President Marcos Jr. of this new super-agency headed by Secretary Go.(To be continued.)

BERNARDO M. VILLEGAS has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.bernardo.villegas@uap.asia