The World Bank recommends investment in infrastructure as the long-term measure for the Philippines to solve the worsening congestion problems on roads and in ports in Metro Manila.
In its “Philippine Economic Update January 2015” edition, the multilateral financial institution said Metro Manila has experienced high and sustained economic growth in the last decade, “but infrastructure deficits have led to worsening road congestion.”
“This costs the economy around 8 percent of GDP annually,” World Bank pointed out.
To address congestion, World Bank noted that the national government and various city governments have implemented ad-hoc measures to limit the number of vehicles on the road, “sometimes with inadvertent and occasionally severe consequences, as the Manila port congestion of 2014 demonstrated.”
The bank was referring to, among others, the Manila daytime truck ban which had restricted the movement of cargo trucks and delayed deliveries.
“… the real solution lies in taking measures to create new and better road networks and mass transit systems,” the report stated.
Other issues that need resolution, according to the World Bank: truck ban on Roxas Boulevard, complex importer and customs broker clearance requirement, 15-year truck age limit
World Bank said the current work to connect the north and south expressways is “a step in the right direction, but more is needed, such as connecting the Port of Manila directly with the north-south expressway via a dedicated elevated expressway.”
For ports, World Bank said there is a need to decongest the Port of Manila by developing the nearby ports of Batangas and Subic.
“Integrating the domestic and international berths will also help decongest the Port of Manila by avoiding inefficient transfers of goods between domestic and international ships and harbors,” it added.
To complement these long-term measures, World Bank said “reforms to improve competition in domestic shipping, as well as cabotage liberalization, are needed.”
The report also pointed out the “urgent need to expand and modernize the country’s mass transport system,” which includes bus rapid transit systems and road connectivity between major business districts and residential areas through investing in elevated expressways, as Bangkok and Jakarta have done.
World Bank noted that measures done by the government and the private sector, as well as the lifting of the Manila City truck ban in September last year, reduced congestion in Manila ports in October 2014. However, it said that several key issues remain unresolved, and recent moves to limit truck movement could make the situation worse yet again.
These include the six-month truck ban imposed by the Metropolitan Manila Development Authority on Roxas Boulevard and the complexity in securing importer and customs broker clearance from the Bureau of Internal Revenue (BIR).
To its credit BIR very recently reduced the documentary requirements for importers and customs brokers wanting to transact with its sister agency, the Bureau of Customs.
The government’s plan to phase out trucks older than 15 years, which constitute around 70% of the total trucking fleet, poses another threat to the industry.
“As many of these trucks are still road-worthy, this move could paralyze the logistics sector,” World Bank said. Truckers have said that granting of franchise for trucks should be based on roadworthiness and not age since refurbished trucks are as good as new. Also, a brand-new truck costs millions of pesos.
The report likewise pointed out the need to encourage more competition so as to level the playing field for firms of all sizes. “This will raise productivity and create more jobs,” World Bank said.
These reforms include continuing to liberalize key sectors of the economy that directly impact poor Filipinos, further opening up the economy to more foreign competition, strengthening regulatory capacity, and crafting and implementing a clear competition policy.
For reforms in the medium term, World Bank recommended the liberalization of rice and domestic shipping, two key sectors that have a significant impact on the poor. – Roumina Pablo
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