Thinking bigger

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Ben D. Kritz

Ben D. Kritz

The infographic presented as a sidebar to yesterday’s installment of this week’s Times special report on ports in the Philippines was a good illustration of the unproductive imbalance in this country’s economic environment: While Manila accounts for very little of the country’s activity in terms of ships and people moving around, it serves as the gateway for most of its traffic in goods.

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About 44 percent of the country’s cargo in gross volume terms passes through Manila; for containerized cargo, that figure approaches 75 percent. Yet Manila only accounts for a little more than 2 percent of the country’s seaborne passenger traffic, and a little more than 5 percent of vessel traffic.

The reason for this disparity is obvious enough. Most of the activity in the rest of the country is on a granular scale—many small ships carry relatively small loads of freight or passengers between small seaports—whereas Manila is the only port which is really equipped for large-scale international shipping; it is about five times larger in terms of capacity than the country’s next-largest port in Cebu.

Interestingly, the Port of Manila is still considered “tiny” (according to an October 2013 article in the Journal of Commerce) for a metropolis of this size. The recent port congestion, which is gradually clearing but is by no means solved yet, only emphasized the fact that no matter how well developed and efficient the existing port facilities are or can be made to be, Manila’s port is an economic bottleneck. The amount of commerce that has to pass through it just to serve the needs of the metropolis is already too great; for it to still be serving as the main seaport for the entire country is completely unreasonable.

That the Philippines, an island nation where no point on land is farther than about 100 kilometers from the sea and whose people are globally known for the seafaring experience should have such an underdeveloped maritime infrastructure is discouraging. The problem is not the fault of the ports themselves, which are generally regarded as being well managed, or the various shipping companies that serve them, which simply respond to demand, but rather a lingering colonial perspective toward development which still regards the rest of the Philippines as being a very large appendage of Manila.

The point was made several times in the special report that a real solution to the specific problem of a congested Manila is to disperse economic activity throughout the country, which also happens to be the same solution offered as a fix to the country’s persistent poverty, income inequality, and hollow economic growth model based on consumption and labor export. That’s obviously easier said than done. The country’s past efforts to disperse business and industry away from Metro Manila through the creation of economic zones, though basically sincere, have been limited in scope and as a consequence have had virtually no impact in decongesting the capital or spreading the economic advantages concentrated there more equitably with the rest of the country.

That’s because there is a limit to how many incentives can be offered to an enterprise to relocate to virgin geographical territory. There are very few companies altruistic enough to be willing to be true pioneers and gamble on moving into an area without certain basic requirements in place, such as a workable utility infrastructure, a transport infrastructure that provides acceptably cost-effective access to markets, and the availability of a workforce. The post-1986 government of the Philippines has never had the resources to be able to guarantee those things on a large scale, which is why enterprise zones are comparatively small areas, and has certainly never had the institutional stability to disperse the zones very far from the centers of power, which is why the only really successful zones are relatively close to Manila, Cebu, or Davao.

In terms of port development—and the same likely applies to other developments such as airports, roads, and utility networks as well—growth toward the sector’s actual potential is retarded by a catch-22: The infrastructure cannot be developed without the presence of commercial activity to support it, and the commercial activity won’t appear until the infrastructure is in place. And so business and economic growth continues to swell Manila beyond its capacity, while most of the rest of the country is forced to make the best of insufficient and unsatisfactory half-measures like “livelihood programs.”

If real, sustainable development and economic growth is to ever happen in the Philippines, there has to be an enormous shift in the country’s perspective and a much broader approach to building for the future.

One way this can be started is through the government freeing itself from the developmental hobbles of having to rely on the private sector for the development of systems that should be institutional responsibilities. Although the public-private partnership model is promoted heavily by multinational institutions, such as the World Bank and International Monetary Fund, it hasn’t worked here—neither the pace nor the quality of development has been adequate, and there is no indication that it will improve.

Whether it can or not is debatable, but whether the country should permit itself to continue to be an experiment to answer that question shouldn’t be—the answer should simply be no. Too much developmental policy has been dictated by profit aims, and things like clogged ports, dangerously faulty commuter trains, poorly-built airport terminals, and an unreliable and expensive electric power supply are the sorts of things that have resulted from it.

If the country is now truly as fiscally sound as the government has repeatedly claimed, then it is time for it to start investing in itself. Build the ports, build the roads, build the airports, put up the hospitals and schools, and don’t do it based on where they will collect a return on the investment in the soonest possible time, but based on where they will need to be 10, 20 or 100 years from now. Only if the country’s leadership—in government, in the private sector, in the media and academia—starts thinking bigger, beyond the end of the fiscal quarter or the current presidential term, will it start to achieve anything lasting.

ben.kritz@manilatimes.net.

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8 Comments

  1. To think Big and to also have “Continuity”.
    We are first in using the “quarterly profit’ type of management. Like the Wall Street companies the bottomline is the maximized profit by the “transient shareholders” – the winners of the election. A rehashed program is started after every election. Even the building of tiny canals, foot bridges and bought 2nd dump trucks have names of politicians stamped on it.
    A wholesale reform of the system has to be done just like what Thailand has been doing every time they have a Coup de Etat.
    We need a new “Clique” of purpose-driven, smart, influential “makabayan” leaders who will push these country out of the rut that it has been for the past 450 years. It will be a difficult task but with “Continuity”, I am sure we will get there.

  2. When I see the first plan that talks about 20, 30, or 50 years from now, then I will know we finally have someone who doesn’t have his head stuck in the round. We need that leader.

  3. Ben,

    I share with your sentiment that people should really start thinking big. Few years ago, when the issue of decrepit NAIA first came up & post-Typhoon Pedring & Typhoon Quiel aftermath were the rage, I posted a comprehensive plan on how to address these (and more) by doing mega-projects that are intertwined with each other. This plan even included some ideas on how to finance these megaprojects and the policies needed to make it work and how to provide continuity without interference by the incumbent and partisan politics. Perhaps take a look ( browse thru page 6-9 on http://www.pinoyexchange.com/forums/showthread.php?t=537060&page=6 )

  4. victor m. hernandez on

    Port of Manila is too small but almost all ships discharge their cargoes in Manila. The government built Batangas International Port precisely to address this issue but its effort is not enough. It lacks the implementing policy to instruct the importers and exporters to shift their shipments to Batangas port. The bureacracy and government agencies are operating in silos and do not coordinate In fact it allowed ICTSI of Razon’s to expand its operation in Manila. And the government agency in charge approved it without thinking. What a dumb job.

  5. We have to ditch the IMF-World Bank model of development first, which is an invitation for the Americans to impose sanctions, followed by a bombing raid by her Air Force, followed by an invasion. Now you know the real root of our problems.

  6. Its not really a catch 22 or chicken and egg situation. I believe that the most important element that we have missed out on since 1986 is to invest in our people. Food security, peace and order, health, education and jobs must come before anything else. We disregarded the basics. Im not a marxist, but under Mao China put her people ahead of everything else (except perhaps for the atomic bomb to discourage the Americans from attacking her). Before Mao people had nothing to eat, but look at her today. We could have achieved as much if only we gave priority to the needs of our people, instead of surrendering to the greed for mega profits of big business. Trickle down economics is already a proven hoax. We are like a man counting his mango harvest even before he has planted the tree. Actually, what we need is to think small, not big.

    • Say what? 42 million people — 9 million in the year 1960 alone — STARVED to death in China under Mao’s “Great Leap Forward”. Not really a good model to follow.

    • You must be referring to Deng not Mao. Mr. Kritz is right, the Great Leap forward is the great leap backward for China.