MAPping the Future

November 6, 2013

Game Changers for Last Half of the Game

It is not often that we read the Philippines in favorable light in international newspapers or magazines. It is even less often that it is featured as the main story.  But recently, its economy has been tracked on the radar screen for its exceptional performance.

And for the country to be the subject of a case study by the Harvard Business School adds icing to the cake. Last August, a team of case writers composed of Professor Richard H.K. Vietor,  Carol Dominguez (AMP 182), daughter of  Leocadio Dominguez ( HBS 59), and researcher Tully Moss, wrote the case “The Republic of the Philippines: The Next Asian Tiger?” Since the case was developed from published sources, we are familiar with the observation that “the economy’s strength: high growth (6.6 percent in 2012-doubling GDP since 2004), low inflation (average 5.4 percent from 2005 to 2011), and manageable debt levels (debt- to- GDP ratio down to 39 percent from a peak of 74 percent in 2003), had not been accompanied by poverty reduction and commensurate growth in job creation. The population growth rate required a net increase of roughly two million jobs annually, but since job creation had not kept pace, Filipinos would more likely continue to seek jobs abroad, thereby swelling the ranks of our 10 million strong Overseas Filipino Workers (OFWs). The “jobless growth” has been described as hallow for being both “narrow and shallow” by former NEDA Secretary Cielito Habito. The poor who make up roughly a quarter of our population, number over 23 million people, in addition to a large proportion who subsist just above the poverty line. With these as backdrop, the Professor would most likely ask: If you were President  Benigno Aquino III,  what would be your game-changing strategy to join the Asian Tiger Economy?

Low Hanging Fruits Revisited

With barely three years left until he steps down on July 1, 2016, the President would be best advised to attend to the “doables,” which I refer to as low hanging fruits.

1. First in my list now is the construction of the Low Cost Carrier (LCC) or Budget Terminal at the Clark International Airport. The Bases Conversion and Development Authority is best poised to implement the project having the institutional authority (RA 7227) and financial capability without going to Congress for budget allocation. Having completed the Subic –Clark- Tarlac Expressway (SCTEx), it still has the Engineering Department and field organization to oversee the construction work of the terminal. But the Clark International Airport Corporation was transferred to the DOTC three years ago. We are glad that the DOTC is now reviving the project with Airport du Paris doing the design and technical and financial feasibility of the 15 million passenger- capacity terminal. But since the budget of P7.2 Billion is yet to be approved by Congress, the target date of 2016 for the President to cut the ribbon will be tight.

2. No other project could be more strategic and game changing than linking up the airports of Manila and Clark, and at the same time solve the horrendous traffic problem of Greater Manila. NAIA has exceeded the scheduling limits of 36 movements (take offs and landings) per hour. But whether we have one airport or a dual airport system for the Greater Capital Region (GCR) like Tokyo, KL, Bangkok, London or D.C., any talk of a link up will remain idle talk unless we solve the connection problem between NAIA and DMIA.

Fortunately, building a high speed rail connection between Clark and Manila is no longer a pre-condition. The elevated connector between NLEx and Skyway to be constructed under PPP by both the Ramon Ang and Manny Pangilinan groups would suffice. It is important that it be completed at the same time as the CIAC Terminal.

 This elevated expressway connector would make travel for motorists between NAIA and DMIA, a distance of 100 kms, a mere 70 minutes instead of the 2 or even 3 hours that it takes now. It will also decongest EDSA and C5. While it won't be as fast as an express train, this would partly address the connectivity issue between the 2 airports. This was also the case for Haneda and Narita where for some 10 years only an expressway served as connection between the two airports before the express rail was completed.

Clark - Gateway to Subic and Central/North Luzon

With Budget Airlines Tiger Air, Cebu Pacific, Jin Air, and Seair serving short hops within Asia, and long haul carriers Asiana Airlines, Dragon Air Cathay Pacific, Emirates Airlines and Qatar Airlines already connecting to the Middle East and onward to 150 countries, Clark can serve as gateway to Central and Northern Luzon. It will also be the gateway to Subic for Philippine Sea cruises in the manner that Barcelona is gateway for the Mediterranean and Copenhagen for Baltic cruises. Cruise ships cruise at night and dock in the morning for the passengers to tour the city. One reason why International Cruise Ships do not call on Subic port is the two nights they have to spend at sea because of the distance between Hongkong or Kuala Lumpur to Subic. But with Clark as gateway to Subic port, island cruises to Palawan, Cebu, Boracay, Bohol, etc. for Koreans, Taiwanese, Japanese and Russians tourists may become feasible. Our island destinations can rival Phuket, Penang and Pattaya which serve as destinations for Star Cruises.

All the above infrastructure projects serve not only industry and commerce but tourism as well as the Government aims to increase the number of tourists from the present 3.8 million to 10 million annually.

3. Another game changer is the elevated monorail project that will link the CBDs of Taguig (Global City) and Pasay (Airport City) which are under the jurisdiction of  BCDA, and that of Makati. The monorail loop will connect with the MRT at EDSA, the LRT at Taft and the PNR line at Osmena, thus virtually serving the 13 million population of Metro Manila. Tokyo's monorail that was constructed when it hosted the Olympics, still serves the City and runs through a few steps from the departure lounge of Haneda airport. Sydney, with only 3.5 million people, operates a monorail.

A concept study has been done for an application for a feasibility study grant from JICA. The project can be completed, hopefully during the President’s term.

This project is another game changer as it would address the traffic problems between the CBDs, connect them to the NAIA airports, and serve Mega Manila as the LRT and MRT expands into Cavite and Rizal.

Someone remarked that the hallmark of a developed country is not when all of its citizens drive their own cars to work but rather when they, rich or poor, can take public transport to work. With the MRT, LRT, PNR connected to the Monorail loop, business class coaches may be offered to commuters for them to leave their cars in the garage.

4. Creating jobs should be a continuing task of Government. To this end, the Philippine Economic Zone Authority (PEZA) should be given all the support to establish Ecozones in viable areas outside of Calabarzon and Central Luzon to spread out job opportunities. Todate, PEZA already has surpassed the 1 million workers employed in 296 private sector funded and maintained Ecozones. They account for 86 percent of total manufactured exports. Requiring no funding support, Government should not compete by establishing Government funded Ecozones and Freeports. Rather, Government should support PEZA in increasing its value added by establishing linkages with the domestic economy.

The BPO sector, mostly comprised by offshored call centers where the country has already overtaken India, employs 770,00 workers generating $13 billion in service exports. The case writers recognize the “English language skills of Filipinos, their familiarity with Western culture, and their patient, empathetic and cheerful personalities that made them naturals for call center work.”  But they also noted that “India had done a better job of moving up the value curve: 2.8 million Indians were generating $100 billion in BPO revenues- an average of $36 thousand per worker, in contrast to Philippine BPO workers who were generating on average only $17 thousand.”

Creating jobs is what we should focus on.  Jobs not only give our poor the opportunity to work but also dignity that the most benevolent welfare state cannot confer.

Felicito C. Payumo

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author was a three-term congressman of the First District of Bataan. He was also chair and administrator of the Subic Bay Metropolitan Authority and subsequently, chair of the Bases Conversion Development Authority until he ran for Congressman in the last election. He is currently chair of the Board of Trustees of the University of Nueva Caceres. Feedback at map@globelines.com.ph and fcpayumo@gmail.com.)