Manila Adding 1,700 People a Day Spurs Transport Upgrade: Cities

Apr 10, 2014 2:55 am ET

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April 10 (Bloomberg) -- Joshua Mercado is waiting for a train at the end of a kilometer-long queue that snakes down three stories from Manila’s elevated Quezon Avenue station to the sidewalk below. It’s part of his five-hour daily commute.

“All I do is wake up, go to work, go home, eat, sleep,” said Mercado, 24, who rises at 4 a.m. for a trip by motorized tricycle, minivan, train and bus to his office in Makati, the capital’s business district. “All these hours of commuting and the frequent breakdowns are really stressing me out.”

Manila’s commuters are victims of a decade of neglect that President Benigno Aquino is trying to reverse with the capital’s biggest transport upgrade since the 1990s. He’s responding to Asian urbanization that’s bringing 1,700 more people a day to his capital and will add a billion residents to the region’s cities in the quarter century to 2030, according to data compiled by Bloomberg.

“If the government fails to address the infrastructure gaps, this will become an unlivable city,” Gil-Hong Kim, the Asian Development Bank’s director of sustainable infrastructure, said in an interview in Manila. “Traffic jams will become a nightmare, more people will move into slums. Its wealth and business opportunities will be gone.”

The population of Greater Manila, which includes the 17 cities and municipalities of Metro Manila, will rise to more than 30 million by 2025, from 22.7 million, making it the world’s third-largest urban area after Tokyo and Jakarta, according to forecasts by Belleville, Illinois-based Demographia.

Regional Race

To counter congestion and cater to a growing populace, Aquino plans to spend at least $15 billion to help Manila catch up to regional rivals like Jakarta and Kuala Lumpur.

Asia’s cities will add about 1.1 billion residents between 2005 and 2030, the Manila-based Asian Development Bank said in a report. As the Philippines’ average economic growth accelerated to above 6 percent since 2010 from less than 4 percent in the previous two decades, people flocked to the capital, where more than a third of gross domestic product is concentrated.

The metropolis is a sea of low-rise buildings and slums packed into about 640 square kilometers (250 square miles) of land sandwiched between Manila Bay to the west and Lake Laguna and the San Mateo Mountains to the east. In the center is a cluster of skyscrapers that marks the financial district of Makati, where HSBC Holdings Plc and Citigroup Inc. have their Philippine headquarters.

Soaring Population

The original settlement of Manila City, on the bay where U.S. Commodore George Dewey destroyed a Spanish fleet in 1898, is home to both the presidential palace and a shanty town called Smokey Mountain, built on a vast pile of trash.

The years of neglect have dragged on Manila’s economic prospects. While the city climbed 12 notches to rank number 79 out of 120 urban areas in an Economist Intelligence Unit report last year that sought to predict their competitiveness in 2025, it still trails the biggest cities in Malaysia, Thailand and Indonesia.

Kuala Lumpur and Bangkok both have plans to add rail lines more than 100 kilometers long. Jakarta is building two elevated railways and expanding the capacity of its Soekarno-Hatta International airport, Asia’s third-busiest.

Aquino, who steps down in 2016, made infrastructure one of his key goals, with plans to boost spending on public works to 5 percent of GDP, a ratio the World Bank says is needed to cut poverty and strengthen the economy.

Juddering Jeepneys

In Manila, cars and motorcycles jostle for room in the streets with buses and the ubiquitous brightly painted jeepneys, souped-up passenger vehicles originally made from converted U.S. Army Jeeps. The number of vehicles in Manila rose to 2.1 million last year from 1.67 million in 2008, an increase of 26 percent, according to the Land Transportation Office.

Marlon Balalio, 48, has been driving a jeepney for 20 years, taking up to 20 passengers at a time. His 15-kilometer route used to take 30 to 40 minutes. Now it takes two hours.

“Who would have thought the streets would become this crowded?” he said. “There’s just too many vehicles and too few roads. You step on the clutch, you step on the gas, you move a few meters, then you stop again. It’s very exhausting.”

Metro Rail Transit Corp. carried an average 561,650 passengers a day during weekdays in 2013, compared with a designed capacity of 350,000, according to the operator. To ease congestion, new coaches have been ordered, with delivery expected beginning next year, according to transport department spokesman Michael Sagcal.

San Miguel

Manila completed its first elevated highway and the 16.9- kilometer Metro Rail in 1999. Since then, many public works stagnated. Now, Aquino is getting companies to help fund the new highways and rail lines.

San Miguel Corp., the Philippines’ largest company by revenue, in February began construction of a 26.6 billion-peso ($592 million) elevated expressway intended to cut travel time between the Makati and Quezon districts to 20 minutes from almost two hours. The company, a century-old brewer that has transformed itself with investments in oil, power and infrastructure, also is building a road connecting the airport terminals to expressways.

Ayala Corp., the country’s oldest conglomerate, and Metro Pacific Investments Corp. are building other highways in the capital. Ayala shares rose 1.1 percent today and Metro Pacific climbed 1.9 percent, more than the 0.6 percent gain for the benchmark index.

Work probably will start this year on a railway to Bulacan, about 30 kilometers to the north, and an extension of a line in Manila, Sagcal said.

‘Game Changer’

“It’s a sign that the government is finally delivering on its promises,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore. “But for it to be a game changer, the rest of the country should not be left behind.”

Development has concentrated around Manila partly because of the difficulty in building over an archipelago of more than 7,000 islands. The Philippines has one of the youngest and fastest-growing populations in Asia. It’s set to cross 100 million this year and reach 150 million by 2045, according to the government.

All rail lines are on the main island of Luzon, where Manila is. There is less working rail track than before World War II, when much of the infrastructure was destroyed.

Still, the new road and rail projects will make only a dent in the congestion.

Bureaucratic Delays

The Japan International Cooperation Agency, which supports economic programs in developing countries, is working on a proposal that indicates the Manila area will need a 2.6 trillion-peso upgrade by 2030, including 1,260 kilometers of expressways and roads, 318 kilometers of rail lines and a new airport, according to Shizuo Iwata, author of the study.

Efforts to improve infrastructure also are hampered by bureaucracy and delays. Submission of bids for a 35-billion peso expressway connecting Cavite and Laguna provinces has been postponed to May while the awarding of the Cebu airport project was delayed for months.

With only two years left in Aquino’s presidency, “there are risks that policies may not be continued by the next administration,” said Jeff Ng, a Singapore-based economist at Standard Chartered Plc. “This year represents a golden opportunity. If a lot of these construction projects are implemented or implemented faster than expected, there could be an upside to growth this year.”

Improved transportation is key to development, said Makati Mayor Jejomar Erwin Binay Jr.

‘Important Drivers’

“Infrastructure is one of the most important drivers of competitiveness,” Binay said in an interview. “While these projects initiated by the national government will benefit Makati, we are also taking initiatives to ensure a sustainable urban-transportation system.”

Makati plans to spend 18.5 billion pesos this year to upgrade roads, street lights and flood control. While the country’s wealthiest district has 530,000 residents, its population swells to about 4.2 million on weekdays.

In Quezon City, Mercado has finally got to the train platform after queuing for 30 minutes.

“I can’t wait for them to finish all these projects,” he said. “Maybe a Manila without traffic is too much to ask for. But hey, this is a beginning.”

--With assistance from Suttinee Yuvejwattana in Bangkok.