BY  KRISTA ANGELA M. MONTEALEGRE

CONSUMERS have long been clamoring for a third player to break the duopoly in the telecommunications market plagued by poor service quality and slow Internet speeds.

President Rodrigo R. Duterte has threatened to open up the sector to foreign competition if incumbent operators PLDT, Inc. and Globe Telecom, Inc. do not improve their services. But having a new entrant in the mature market is easier said than done given the massive financial resources needed to be able to mount a competitive stand against the two major players.

With the bandwidth-hungry public becoming more impatient by the day, the government is doing its share to boost Internet connectivity across the country, especially in far-flung areas. Could the government become that elusive third player?

“It’s not an impossible dream especially if the government would use creative solutions to bringing Internet connectivity. The mind-set that Internet service can only come from a telco needs to change,” said Mary Grace Mirandilla-Santos, lead convenor of the Better Broadband Alliance.

The Department of Information and Communications Technology (DICT) plans to offer free wireless Internet service in public areas such as national and local government offices, schools, hospitals, airports and parks, among others. This forms part of a broader government initiative called the National Broadband Plan aimed at accelerating the deployment of fiber and wireless technologies to increase Wi-Fi speeds and bring down the cost of Internet connection.

GAP IN THE MIDDLE MILE

The free Wi-Fi initiative is envisioned to enable the public to get better access to services in education, health, agriculture, and other sectors. It bridges the digital divide, allowing those who cannot afford to subscribe to broadband service get into the digital bandwagon from an education and business standpoint.

The Pipol Konek program entails the installment of an estimated 250,000 hot spots nationwide in six to seven years — a seemingly tall order considering that the project has only reached more than 800 sites as of early October.

The slow progress could be traced to the gap in the middle mile, or the domestic backhaul that brings bandwidth from the landing station where consumers get most of their capacity to the provinces and municipalities before it reaches the access network, said Ms. Mirandilla-Santos, also the vice-president for policy at the Internet Society – Philippines Chapter.

“Even in first- and second-class municipalities where you would expect good connectivity (due to proximity to the urban centers, population density, and relatively high income of residents), plug and play was not possible as the telcos’ presence did not translate to enough capacity required to connect the public Wi-Fi,” she said.

DICT Undersecretary Eliseo M. Rio attributed the sluggish start to the birth pangs of the project and manpower issues, noting that the agency can now go full blast on its implementation after President Duterte signed into law Republic Act No. 10929, or the “Free Internet Access Program” in August.

The government is bidding out contracts to put up free Wi-Fi hot spots covering specific areas using the technology of their choice, Mr. Rio said. The service will have an average speed of “not less than 10 megabits per second.”

Aside from PLDT and Globe, the free Wi-Fi project has attracted smaller players like AZ Communications Network, Inc.; Converge ICT Solutions, Inc,; and We Are IT Philippines, Inc., providing an opportunity for third players to make an impact in the market.

“If the government is by your side at least the barrier to entry for third players [that have] technology but who may not have the capital has been eradicated. It opens an opportunity for these third players to come in,” said Rens V. Cruz II, analyst at Regina Capital Development Corp.

Analysts have said the free Wi-Fi program may force the telcos to level up and offer higher value services to keep their subscribers.

GOV’T AS THIRD TELCO PLAYER?

For the DICT, the government should not be seen as a competitor, but a partner that will enable the telcos to expand their services and subscriber base.

Unlike in other jurisdictions, the private sector owns most of the country’s telecoms infrastructure. Many remote areas have had difficulty securing Internet service because providers cannot justify the cost of building out infrastructure to areas with few people to serve.

“It’s like [the whole Philippines], [our] roads are privately made and charge tolls [that’s why] telecom services [are expensive]. The analogy is the government must make roads for its citizens,” DICT’s Mr. Rio said.

The government, however, has had a terrible track record in building and operating telecom networks, the latest of which is the National Broadband Network deal with ZTE Corp. of China that fell through due to corruption allegations.

“If we considered these factors – high capital requirements, economies of scale, and sunk cost – as the only givens in network infrastructure, government would indeed be the best candidate to do the job. But these are not the only things that need to be considered. The government’s capacity, track record, and performance in similar initiatives (e.g., MRT) cannot and should not be ignored,” she said in a blog entry for Telecom Asia.

With the free Wi-Fi program still at the early stages, the government is relying on existing infrastructure to deliver free Wi-Fi in select locations. PLDT and Globe have joined forces to provide free Wi-Fi in transportation hubs such as airports, train stations, and seaports. They are also behind the free Wi-Fi on EDSA, the country’s major thoroughfare.

PLDT Chief Revenue Officer Eric R. Alberto admitted that while the program may cannibalize its offerings, they are complementary.

“You’d find that data use will be a fixture in your habit and by the time that happens — we hope that happens sooner than later — there will be propensity for you to top up,” Mr. Alberto said.

“Nothing is free so when you log in, you’re giving me your data. By opting in, it tells us you’re allowing us to perform analytics to serve you better in the digital world,” he added.

Aside from being the largest supplier of bandwidth for the project, the telcos’ own mobile broadband service can be offloaded to Wi-Fi hot spots through interconnection agreements with community wireless ISPs that will deploy the Wi-Fi networks in their respective areas. This will allow the telcos to serve their subscribers in areas where they would not have any signal otherwise, Ms. Mirandilla-Santos said.

FREE WI-FI TO IMPROVE CONNECTIVITY

The presence of another connectivity option could allow mobile base stations to breathe especially during peak hours, thus, improving the quality of service of mobile data in areas where both services are available, she added.

“In the long run and the government’s plans around free public Wi-Fi and improvement of connectivity expected to improve the digital milieu in the country, the telco incumbents should recognize the long-term return or benefits to their businesses once the entire country picks up and embraces digital transformation in a few years time,” IDC Philippines Country Head Jubert Daniel Alberto said.

IDC Philippines welcomed the strategic ICT push of the government to improve technology adoption from an overall perspective.

However, the government should review its policies, followed by rules on peering and infrastructure sharing among telco incumbents, and explore areas where the government can partner with them for a more holistic view.

“If the implementing agencies succeed in identifying key options for this project and coaxing telcos into long-term partnerships, we may well see improvement in the next five years,” IDC Philippines’ Mr. Alberto said.

Krista Angela M. Montealegre is the national correspondent of BusinessWorld.

BY MARIFI S. JARA AND CARMELITO Q. FRANCISCO

IT’S AN OLD IDEA — a Mindanao railway — dating as far back as the late 1930s after the Luzon rail was completed.

Then the Second World War came along and “it was put on the back burner,” National Economic and Development Authority-Davao Region Director Maria Lourdes D. Lim narrated, citing historical information based on government archives that are contained in the latest feasibility study for the Mindanao Railway System (MRS).

Rehabilitation of the Luzon rail was made a priority post-WWII and it wasn’t until 1957 that a train system for Mindanao, the country’s second biggest island after Luzon, was again considered.

A project study was undertaken by the Philippine National Railways (PNR), identifying a 1,570-kilometer (km.) track that would have required a P2.6-billion budget at that time.

It was probably the cost, but no one can say for sure now why the transport system was never pursued. It would remain shelved for more than three decades.

It was under former President Fidel V. Ramos, who started his six-year term in 1992, that the Mindanao
railway got back on the national government’s radar.

But more than two decades later, after numerous plans and studies under different administrations, the railway remained on the drawing board.

“In the past, we were never listened to; sometimes (the national government pretended listening but it was only lip service,” said Vicente T. Lao, chair of the Mindanao Business Council.

Ms. Lim explains that the way government works is that localities and regional agencies basically “compete” for funding and prioritization, particularly for big-ticket projects, and decisions are ultimately made at the national level with socioeconomic, technical as well as political considerations coming into play.

“It helped a lot when President Duterte won,” she said, referring to former Davao City mayor Rodrigo R. Duterte, the first from Mindanao to be elected president.

“And infrastructure investments are really a focus of this administration,” said NEDA-Davao Chief Economic Development Specialist Mario M. Realista.

TRAIN SYSTEM FINALLY TAKING OFF?

The Duterte government is looking to put up as much as P9 trillion worth of infrastructure projects from 2017 to 2022.

In June this year, the NEDA Board’s Investment Coordination Committee (ICC) approved three major railway projects with a combined cost of more than P532 billion.

Two are in Luzon: the P285-billion South Line of the North South Railway Projects and the P211.43-billion Malolos-Clark Railway Project, both planned for funding through official development assistance (ODA).

The third is Phase 1 of the MRS, a 102-km. track covering the Tagum-Davao-Digos (TDD) segment, with the P35.91-billion budget to be sourced from government funds.

Mr. Lao — who, like most in the Mindanao business community he represents has seen and been through a roller coaster of hopes and disappointments from government plans and promises — carries his optimism for the MRS with a grain of salt.

“This time, I hope it will get realized,” he said in an interview before the Department of Transportation (DoTr) announced in mid-August that the House of Representatives’ appropriations committee has already earmarked an initial P6.58 billion to jumpstart the MRS TDD segment.

Rep. Johnny T. Pimentel, a member of the appropriations committee who comes from the Mindanao province of Surigao del Sur, said he is glad to see the project “finally taking off and not being kicked around anymore.”

For the operation and management of the MRS, the House committee on government enterprises and privatization and committee on transportation jointly approved earlier this year several bills, which all seek to create the Mindanao Railways Corp. (MRC)

“The (MRC) bill was originally filed in 1987, during the 8^th Congress. It was continuously refiled in the succeeding Congresses, but always failed to reach the Plenary. But now in the 17^th Congress, with our President coming from Mindanao and the proposal being among the top legislative agenda of the House, the long-awaited dream may come true with the construction and operation of the Mindanao railways system,” Mr. Sarmiento said.

Senator Juan Edgardo “Sonny” M. Angara, chair of the ways and means committee, said he understands that the MRS is a dream come true for Mindanao’s people.

“A train system can be a ticket out of poverty for many of them. Cheap, reliable and fast movement of goods would increase incomes and value to products,” Mr. Angara said, “It is also a driver for peace because as communities become interconnected, economies are linked, growth spreads, and travel brings cultural exchanges.”

Mindanao’s dream would come at a cost, not just in terms of capital expenditure but also in the first decade of operations.

Based on the NEDA Secretariat’s assessment, the TDD segment would need an average of P290 million in government subsidy for the first 10 years of operations. Construction is scheduled to start by 2018 and completion within two years.

Romeo M. Montenegro, deputy executive director of the Mindanao Development Authority (MinDA), said while the first track of the MRS won’t be immediately profitable, the “long overdue” project should be seen more as a “catalyst for Mindanao’s growth”.

STARTING IN THE SOUTH

The Tagum-Davao-Digos segment within Davao Region, located in the southeastern part of Mindanao was recommended to become the starting point for construction — rather than the Iligan-Cagayan de Oro section in the Northern Mindanao Region as considered in earlier plans — given the “high sectional volumes” in terms of passenger and cargo traffic.

Davao Region’s gross regional domestic product (GRDP, at constant 2000 prices) was higher in 2016, as in the two previous years, at P333.02 billion against Northern Mindanao’s P305.45 billion. In terms of GRDP growth rate, Davao has also been faster at 9.4% compared with Northern Mindanao’s 7.6% last year.

The TDD segment was also considered for its connectivity to the growth areas of General Santos City, Koronadal City, and Cotabato towards the east, and San Francisco, Butuan City, and Surigao City towards the northwest.

Mr. Montenegro, who has been with MinDA and its predecessor Mindanao Economic Development Council since 2001 and been part of the MRS discussions over the years, said the government has to put in infrastructure and transportation systems to encourage private investments, especially in areas that have been neglected.

“With a better transportation system, there will always be someone who will take advantage, to explore areas never been explored,” he said. 

While only Phase 1 of the MRS has so far been included in the government’s “Build, Build, Build” priority list, the Duterte administration aims to have at least the funding in place, possibly all through ODA, for the rest of the rail segments.

NEDA Director-General Ernesto M. Pernia has said that China and Japan have expressed interest in the MRS.

Based on the MRS Development Framework, the train system will have an 830-km. main loop and 702 km. in spur or branch lines.

The main circumferential line, aside from the TDD, is composed of the following segments:

Butuan-Nabunturan-Tagum (208 km.)

Iligan-Cagayan de Oro-Butuan (285 km.)

Digos-Iligan (234 km.)

The spur lines are:

Butuan-Surigao (109 km.)

Kabacan-General Santos (141 km.)

Iligan-Zamboanga (338 km.)

Iligan-Dipolog (114 km.)

Cost for each of the planned segments has yet to be determined.

The TDD — the shortest segment at 102 km., with eight stations, one terminal in Davao City and a depot that will be built on a 10-hectare area in Tagum City — will have an average cost of P343 million per km. Using the TDD average as reference, the entire 1,532-km. Mindanao railway would need an investment of about P526 billion.

“What we (in government) have to look out for is the enabling environment and conducive policies to do business here… This (MRS) is a demonstration of the commitment to address infrastructure support. Mindanao has really been behind in competitiveness in terms of infrastructure,” Ms. Lim said.

Mindanao’s six regions — Zamboanga Peninsula, Northern Mindanao, Davao, Soccsksargen (South Cotabato, Cotabato, Sultan Kudarat, Sarangani, General Santos), Caraga, and the Autonomous Region in Muslim Mindanao — had a combined 14.3% contribution to the gross domestic product in 2016. This is in comparison to the regions where the two other railway projects approved by NEDA-ICC are located: the National Capital Region contributed 36.2%, Central Luzon with 9.3% and Calabarzon (Cavite-Laguna-Batangas-Rizal-Quezon) with 17.2%.

Ms. Lim said the goal is to boost intra-Mindanao commerce as well as exports through complementing industries among the regions.

PEACE AND ORDER ISSUES REMAIN

As for security concerns, the feasibility study on the TDD segment notes that the Digos-Cotabato-Iligan section is considered to have peace and order issues, which is why it has not been recommended for immediate implementation. “It is hoped that in time, the current situation shall improve,” the study said.

For the TDD, Ms. Lim said the Davao Regional Development Council, where she sits as vice-chair, has already undertaken initial coordination with the security sector, and the military’s 10^th Infantry Division has committed to create a special task force to look after the project once it gets rolling.

Secretary Datu Abul Khayr Dangcal Alonto, chair of MinDA, said in November last year that the MRS is intended to serve as a uniting tool for Mindanao.

The Marawi City-born Mr. Alonto, the first Muslim to head MinDA, said not even the crisis in his birth town should deter development programs in Mindanao.

“We cannot let terror, lawlessness, and violence shatter what we have built for Mindanao all these years. We call on our fellow Mindanawons to stay the course – be vigilant, but continue to be warriors of peace by spreading hope not fear,” said Mr. Alonto, who also served as chair of the former anti-government group Moro National Liberation Front.

Back in November, he said, “If a person can have his breakfast in Zamboanga, eat his lunch in Iligan, then dinner in Davao, that is the one, connected and united Mindanao we envision. That is home.”

Marifi S. Jara is BusinessWorld’s Mindanao bureau chief and Carmelito Q. Francisco is BusinessWorld’s Mindanao correspondent.

BY KRISTA ANGELA M. MONTEALEGRE

AS THE BATTLE for consumers shifts online, Philippine conglomerates are marching into unchartered territory by taking over logistics companies to ride the emerging e-commerce wave.

LBC Express, Inc. is unfazed by the entry of the big wigs, drawing strength from its expertise honed by decades of moving lives, businesses, and communities.

“Diversified offerings and solutions are a by-product of increasing competition in this sector — which is always a good thing for consumers. But for LBC, I’m proud to say that our heritage and years of experience in this industry is really what sets us apart,” LBC President and Chief Operating Officer Mike A. Camahort said.

Founded in 1945, LBC operated as a brokerage and air cargo agent before evolving into an express delivery service. It became the first Filipino-owned private courier company to provide time-sensitive deliveries and pioneered 24-hour door-to-door express delivery in the Philippines.

LBC is now a household name in express delivery after mastering B2B, B2C, and parcel delivery. It boasts of an extensive retail footprint servicing capability, with a network of over 6,400 locations, partners, and agents in more than 30 countries.

“The country’s logistics industry has been steadily expanding, thanks to globalization and the rise of e-commerce. These definitely contribute to the opportunities that our industry has for growth and is expected to reshape the business in a big way,” Mr. Camahort said.

Online purchases make up only less than 1% of total retail sales in the Philippines. With e-commerce expected to take off, conglomerates are future-proofing their businesses and logistics is a crucial part of their strategy.

While the new entrants are still on the drawing board, LBC is in a unique opportunity to showcase its ability of not only fulfilling deliveries, but also customizing solutions that meet the needs of small to medium enterprises.

“All things considered, I’d say that despite challenges, there are far more opportunities that will pave the way for continued growth in the logistics sector. This is an industry that will continue to challenge us, and adapting to these changes is critical to making sure we continue to achieve our targets and serve our customers,” Mr. Camahort said.

LBC is not resting on its laurels. The logistics service provider is relentless in taking a more proactive approach towards refining systems and processes to better serve the market.

The company is improving its IT infrastructure and automating key facets of its services. For instance, the company is implementing back-end service and systems innovation focused on customer convenience. Couriers are using handheld units during deliveries and SMS alerts are automatically sent to recipients and consignees after packages are scanned and sent out for delivery.

LBC, likewise, is ramping up its expansion by going deeper into untapped areas where the need for a reliable express delivery service is critical. About 100 stores are planned for opening this year, nearly double the 48 branches rolled out in 2016.

To grow the business, LBC is working on sealing key partnerships, leveraging on automation, fleet modernization, and growth and development of its team members. It is also rolling out additional products related to warehousing and the whole supply chain.

The integration of Southeast Asian economies also excites LBC, as open access to manpower, raw materials and other key resources will boost demand for the company’s services.

With more robust regional economic activity, the entire industry is pegged to grow by a staggering $41.3 billion over a four-year timeline. That means a lot of collaboration — not just internally for individual brands, but between industry players — must take place to maintain the growth trajectory.

“It’s exciting to see how the integration will play out among larger, heritage brands and smaller start-ups and how this can possibly pave the way for more innovation in the logistics sector,” Mr. Camahort said.

Krista Angela M. Montealegre is the national correspondent of BusinessWorld.

BY LOUINE HOPE U. CONSERVA

BUSINESS LEADERS in Western Visayas remain hopeful of one day seeing a railway system chug through the region’s mainland, Panay.

Understanding the cost of such an undertaking, they bear no ill-feelings for the President, who mentioned the possibility of reviving Panay Railways during his first State of the Nation Address in July 2016, even though it was later excluded from the priority list for its “Golden Age of Infrastructure.”

As a result, although the project may no longer get the government’s full support, it could still be pursued through a public-private partnership, Iloilo Business Club Executive Director Lea E. Lara said.

“It entails a huge cost which would need an investment from a private partner,” she said in an interview.

Cesar S. Capellan, director of state-run Panay Railways, Inc., the firm that used to operate the 117-kilometer railway in the 1980s, earlier said that a Chinese firm has expressed interest to conduct a new feasibility for the project.

Ms. Lara said a thorough study would definitely be needed, particularly on the return on investment.

“If the revenue will solely depend on passenger fees without cargo, it will not be cost-effective to investors. It should be complemented by agricultural produce… It becomes a white elephant if we cannot sustain it,” she said.

The retired railway — which was constructed starting back in 1907 and closed down in 1983 — used to transport agricultural produce and other cargo within Panay Island, composed of the provinces of Aklan, Antique, Capiz, Iloilo, and the city of Iloilo.

Ms. Lara said the business sector would like to see improved access between Iloilo City, the commercial and political center of Western Visayas, to other provinces to level economic development across the region.

“Anything that can improve the travel time would incredibly help. Having the railway would cut your travel time from four hours to only about 30 minutes to one hour,” she said.

Dona Rose O. Ratilla, president of the Philippine Chamber of Commerce and Industry’s (PCCI) Iloilo chapter, agrees that rehabilitating the railway would bring down transport cost and improve logistics, which would then motivate the agricultural sector.

“Farmers will be encouraged to produce more since they will have bigger markets,” Ms. Ratilla said, adding that PCCI-Iloilo is willing to pass a resolution expressing support to pursue the project.

“While there is still no definite plan for it, the concept of having it is there and we look forward to that. We also passed a resolution before in support of the Jalaur megadam,” she told BusinessWorld.

BEYOND BORACAY

Ms. Ratilla also said that a cheaper, faster and more convenient means of transport as provided by a rail system would give Panay provinces better opportunity to share in the tourists attracted by popular island destination Boracay, located off the mainland’s northwestern tip.

Western Visayas — which has a 5.5 million arrivals target this year, up from the actual 5.193 million tourists recorded in 2016 that brought in P114 billion in tourism receipts — has hit the two-million-visitor mark in the first half of 2017, based on partial data from the Department of Tourism’s regional office (DoT-6).

Aklan, including Boracay, continued to be the most visited province with 1.1 million tourists from January to June, followed by Iloilo City with 410,061 from January to May, and Bacolod City with 269,232 in the first four months.

However, Antique, which is adjacent to Panay and has diverse nature attractions, had just 43,277 tourists from January to March.

“DoT Region 6 takes into consideration these numbers because this is where we align our tourism products and services to make Western Visayas one destination with diverse culture,” said DoT-6 Regional Director Helen J. Catalbas, adding that campaigns are directed towards promoting areas that Boracay’s crowd could look into.

Antique Governor Rhodora J. Cadiao, also the chairperson of the Regional Development Council (RDC)-Western Visayas, said she, likewise, continues to look forward to having a railway in Panay.

“The train would be able to service even the far-flung areas in Antique,” she said.

Western Visayas’ gross regional domestic product (GRDP) growth rate slowed down to 6.1% in 2016 from 8.3% in 2015, the second fastest that year.

The deceleration in 2016 is attributed mainly to a drop in the agriculture, hunting, and fishery sector’s performance, which DoT’s Ms. Catalbas said also has an impact on the tourism sector.

Ms. Catalbas said a broad review of data indicates that the net income from the 2016 tourism receipts could have been higher if dining establishments were able to source more local raw supply.

“This is money spent on products that came from outside Western Visayas,” she added.

Under the Western Visayas Regional Development Plan for 2017-2022, the end-period GRDP target growth rate is 9.8% to 11%. Among the main strategies to achieve this is expanding agri-fishery production, developing tourism circuits and destinations, and enhancing public infrastructure efficiency.

HIGHWAYS VS. RAILS

Iloilo Governor Arthur D. Defensor, Sr., meanwhile, pointed out that a feasibility study on the railway undertaken during the time of President Fidel V. Ramos indicated that the project would not be viable.

Highway-widening projects from Iloilo to Capiz continue to be undertaken, he said.

Nonetheless, he added, it would be worth finding out the real score through another formal assessment.

“I hope they can find ways to make these projects viable,” he said.

National Economic and Development Authority Western Visayas Regional Director Ro-Ann A. Bacal, for her part, said the construction of an expressway, instead of a railway, is being considered.

“We started talking to business groups and they expressed apprehensions on the multiple handling cost when it comes to the railway. They are thinking of an elevated expressway from Iloilo to Capiz,” she said.

Ms. Bacal stressed that various ideas are in the “conceptual stage” and will be undergoing brainstorming within the regional and national levels.

“We’ve been asking our representatives in Congress and even the local leaders on their thoughts about the idea of having an expressway or railway,” she said.

In the meantime, three big-ticket projects in Western Visayas have been listed under the administration’s “Build, Build, Build” program: the Iloilo International Airport improvement amounting to P30.4 billion; Panay-Guimaras-Negros Island Bridge worth P27.156 billion; and the Panay River Basin Integrated Development Project in Capiz with a budget of P19.3 billion.

Ms. Bacal said the government is committed to implement these projects, possibly finish before the end of the Duterte administration, as they are considered “critical to make sure that the goals, objectives and target of PDP (Philippine Development Plan) are achieved.”

And for now, Panay’s community is looking forward to seeing these promised infrastructure get off the ground.

Louine Hope U. Conserva is BusinessWorld’s Mindanao correspondent.

BY  ARRA B. FRANCIA

METRO MANILA traffic continues to spawn Internet memes and has been the stuff of everyone’s rage, humor, and urban angst.

This can only be fueled by the daily congestion on EDSA, the Philippines’ busiest avenue, and the long lines at the MRT, the train system traversing the same highway.

In an area populated by over 12.5 million people combined with more than 2.5 million vehicles, traffic and the throng of people trying to avoid it have become nothing but the new normal.

In a bid to solve this perennial problem, the government crafted a plan to push businesses out of the metro and into the provinces. The idea was to establish other areas of development outside the country’s capital, so citizens would seek employment in their home provinces and minimize migrations to the big city.

In 2013, former President Benigno S. C. Aquino III led the groundbreaking for the first government-led project of this kind, called the Clark Green City in Pampanga. The National Economic and Development Authority had initially approved the master plan presented by state-run agency Bases Conversion and Development Authority (BCDA).

Situated within 36,000 hectares of military base land rented by the United States until the Senate rejected an agreement to extend it in 1991, the sprawling 9,460-hectare development has been slated to become the next big business district outside Metro Manila.

Now called New Clark City (NCC) under President Rodrigo R. Duterte’s administration, the BCDA is once again set to submit a new master plan for the project, consisting of three phases that will run in the next 50 years.

MASTER PLAN FOR NEW CITY OUTSIDE METRO MANILA

While Metro Manila has practically no concrete master plan to speak of that would piece together the development of its 15 cities and municipalities, NCC has the BCDA, which is careful to avoid the errors that have caused the perennial Metro Manila traffic.

“I don’t see a comprehensive Metro Manila plan. What I see is an individual land use plan or master plan for each of the CBDs or municipalities here in Metro Manila so on that aspect you can see that they make their own plans without regards to the other plans kaya nagkakaproblema sa transportation, density development,” BCDA Senior Vice-President for Business Development and Operations Joshua M. Bingcang said in an interview.

The lack of a concrete master plan made Metro Manila the victim of its own progress and development.

In a report prepared by property consultancy firm Colliers International Philippines entitled “Shifting Orbits,” the company explained that the development of satellite master-planned communities would help relieve the metro of its population growth and poor public transport systems.

“These issues continue to constrain Metro Manila from achieving its full growth potential. Developers are bridging infrastructure gaps and unlocking opportunities by building master-planned communities that have the potential to become major catchment areas for business activities in the country’s capital,” read the Colliers report.

The blueprint for the entire development would allow BCDA to correctly time the sequence of projects for NCC. For instance, phase one would target only around 500 hectares out of the entire estate. This includes the infrastructure for power and water services, the construction of which is targeted to start by October this year.

“We’re just targeting core development,” Mr. Bingcang said.

Other than the necessary utilities, Phase 1 would also include at least five government buildings, three schools, and mixed-income housing projects. The first phase of development will span five years until 2022.

Another key component for the city would be the creation of a mass transport system that would remove people’s dependence on cars.

“So the top priority will be mass transportation and least priority will be cars. If we can discourage the use of cars in the city, we might as well do that. [Of course, we can’t just remove cars.] But we’ll provide an efficient mass transportation network,” Mr. Bingcang said.

The executive cited the current state of Bonifacio Global City (BGC) to exemplify the need for a mass transport system in a business district.

More than two decades since it was developed by the BCDA in partnership with the Ayala Group, the area is falling prey to the traffic problems in other areas in the metro, making travel in the 240-hectare estate more time-consuming than it’s supposed to be.

“We take pride here in BGC, we have a master plan here. But we still lack spaces for mass transportation [which is causing traffic because of the lack of mass transportation]. Unlike in Clark City, the priority, the hierarchy will be mass transportation,” Mr. Bingcang said.

Once in place, mass transport will make traveling easier for the 1.2 million citizens BCDA looks to attract. The cap for the city’s population will be put in place to ensure low density in the area, roughly comparable to the combined land masses of San Juan, Mandaluyong, Makati, Pasig, and Pasay cities. In contrast, the population of the five cities combined currently stands at over three million.

“So we don’t foresee congestion on human population. So those are some of the features in our master plan, that we take note of the problems here in Metro Manila,” Mr. Bingcang said.

ALTERNATIVE TO METRO MANILA

With the master plan for its development already set, the next question to ask is whether companies would be willing to locate and expand into Clark.

Currently, Gotianun-led Filinvest Land, Inc. has two estates set to be developed in the Clark area, one of which is located inside NCC spanning 288 hectares. Meanwhile, another project called Clark Mimosa spanning 200 hectares is being pursued with Clark Development Corp.

“Most of our big-ticket projects now are in Clark, it’s for efficiency managing [them also]. The Clark airport, NCC, transportation requirements, the railway. [That’s the] necessity on why [companies] should be in Clark,” Mr. Bingcang said when asked why investors should take their expansion plans to the Pampanga area.

Several big-ticket projects under President Duterte’s aggressive “Build, Build, Build” program are located in Clark as the area has already been being eyed as the alternative to Metro Manila, given its congestion problems.

For instance, the P12.55-billion Clark International Airport expansion will be the among the first infrastructure projects to finally see progress following the government’s search for bidders for its operation and maintenance.

Additional capacity to be shouldered by the expansion of the Clark airport would be welcome relief, as the Ninoy Aquino International Airport in Manila has long been accommodating passengers well beyond its capacity. In 2016, NAIA reportedly handled 39.5 million passengers, higher by a third than its average capacity of 30.5 million.

The P300-billion railway project connecting Manila to Clark is also gaining ground, after the Department of Transportation named the first six stations for the project earlier this year. The transport department looks to start construction by the end of the year.

Moreover, major toll roads currently link Clark to other areas of growth. The Subic-Clark-Tarlac Expressway (SCTEx) covering 93.77 kilometers has helped spur economic growth in the Central Luzon Region by reducing travel time from Clark to Subic to 40 minutes and Clark to Tarlac to 25 minutes.

The expressway also serves as the pathway linking Subic Seaport and Clark International Airport, pushing Central Luzon to trade directly with international markets.

The SCTEx has further prompted the construction of the 88-kilometer Tarlac-Pangasinan-La Union Expressway, which aims to shorten travel time from Manila to northern parts of the country.

As long as the elements needed for Clark to accelerate its growth are properly set in motion, it may not be too long before the Philippines sees a new, world-class metropolis rise in Pampanga.

Arra B. Francia is a reporter for BusinessWorld. She covers the Philippine Stock Exchange and the Securities and Exchange Commission.