Mobility choke points are slowing Manila's rapid growth

Mobility choke points are
slowing Manila's rapid growth

by MIKE HRYMAK | Jul 9, 2015

One of the fastest growing economies in Southeast Asia is now being slowed by insufficient infrastructure. The Philippines is facing a serious problem when it comes to its major hubs of transportation. Its main airport consistently ranks as one of the world's worst; its major port in the capital Manila, is causing billions of dollars in lost revenue. Traffic congestion on the country's major roads routinely turn a 15-minute trip into a two-hour slog. Regional and global economic experts agree that major changes are needed if this area engine is to continue booming. 

Manila at Night: Energy is pulsing through the Philippine capital, but growth is outpacing existing infrastructure.

Already, the economy is decelerating, growing at its slowest rate since 2012. Most observers blame poor infrastructure. Stifling congestion in the Port of Manila cost the city an estimated $1.6 billion from April 2014 - December 2014, according to ASEAN Confidential, a new research arm of the Financial Times. Similarly, the 2.2 million cars that crawl across the jammed streets of Manila daily cause an estimated $20 billion annually in lost productivity, according to a recent study by the Japan International Cooperation Agency. Overall, Philippine infrastructure is the second worst in the Association of Southeast Asian Nations (ASEAN) and ranks 98th out of 144 countries globally. 

Aquino Airport often ranks as one of the world's worst. 

Ninoy Aquino International Airport, which services Manila and environs, is one problem. It has only one primary runway for international flights, and just one secondary runway for smaller aircraft. The undersized, poorly rated airport struggles to manage the nearly 500 departures and arrivals it deals with every day. This earned it the dubious honor of being ranked worst airport in the world from 2011-2014 by 'Sleeping In Airports'.

On sea, the gridlock that is the Port of Manila has become a serious drag on the economy. More than two-thirds of the country's inbound and outbound shipments pass through. Unfortunately, logistical obstacles can severely delay the release of containers even after they've cleared customs; sometimes taking up to 45 days. These disruptions in shipping chains have led to inflated costs, as freight operators have been forced to raise rates to negate the costs accumulated due to extended off-loading. Already, trucking companies have doubled fees because of the time wasted waiting.

Packed port: Shipping is well-past capacity now, as some containers can wait as much as 45 days for unloading.

Overall, HSBC Global Connections estimates infrastructure investment requirement in Asia over the next 15 years will total over $11 trillion. Improvements are currently under way at both the airport, which just renovated its Terminal 1, and at the capital's over-worked port. 

Recently, a number of public-private partnerships also have emerged. Nine such projects have been awarded funding so far, while another 45 are currently in the planning process. More information on these projects are available on the Philippines Public Private Partnership website. 

All in all, public and private voices agree: greater levels of investment in infrastructure must be executed, and soon, if growth, job creation, competitiveness, and social progress are all to continue. 

For more, check out these introductory remarks from the 4th annual Arangkada Philippines forum, a public-private partnership on investing in Filipino infrastructure below. Below, Ebb Hinchliffe, executive director of the American Chamber of Commerce of the Philippines, introduces the event. "The public sector is the enabler of growth," said Hinchliffe. "The private sector is the engine."