We look at three planned infrastructure projects set to boost local economies in the coming years.
Written by Aleks Sotero
The development of transport infrastructure is one of the most significant government initiatives in the Philippines in recent years. Its importance has been showcased through improved efficiencies in various sectors, like unlocking property values, improving local economic activities, and ultimately increasing the living standards of most Filipinos.
The previous administration’s “Build Build Build” program focused on accelerating initiatives for public infrastructure. Its main focus was on transportation and mobility through projects like the construction and completion of the NAIA Expressway connection to the Cavite Expressway; Skyway Stage 3; the Laguna segment of the Cavite-Laguna Expressway; and adding more exits to the Tarlac-Pangasinan-La Union Expressway.
Under the current administration, 123 infrastructure projects were approved, on top of the 71 projects supported by the previous administration. The approved new list of infrastructure projects is valued at about PHP 9 trillion. Most of these flagship projects are focused on continuing the push for mobility and enabling more local industries and communities through irrigation, water supply, and flood management projects.
The list also includes projects that prepare the country for better resilience on climate and health through digital connectivity, health, power and energy, and agriculture. These align with the administration’s 8-Point Socioeconomic Agenda outlined in the updated Philippine Development Plan for 2023-2028. Its main goals are to protect the purchasing power of families and to create more quality jobs.
In the near term, the PDP aims to ensure food security, alleviate traffic congestion, reduce logistics and energy costs, improve infrastructure, and establish livable and sustainable cities. These goals can be achieved through the cooperation of the public and private sectors by activating areas with diverse commercial and industrial activities.
For example, some real estate developers have invested in planning and building impressive industrial parks, residential subdivisions, and mixed-use developments near and around economic zones. Nationwide, there are at least 120 township developments, covering residential, commercial, industrial, and institutional development types. The majority of them are in Luzon, with at least 31 townships concentrated in the National Capital Region.
Most of the publicly listed real estate developers have built multiple townships with the vision of providing residential options, employment, and improved quality of life. Enhanced connectivity to and from NCR, where wages are higher and employment opportunities abound, would lead to firms thriving and higher levels of personal consumption.
Based on the 2020 census, CALABARZON registered 14.5 million households, the highest in the country. It also recorded the highest migration levels, with 6.23 million lifetime migrants compared to other regions in Luzon. Since Cavite and Batangas were among the pioneer provinces that supported the growth of the industrial sector, residential developers constructed many socialized and affordable housing types in the area since the early 1990s to support the needs of the growing labor market.
The completion of road projects like the Skyway and CAVITEX, as well as ongoing work on CALAX and the integrated passenger terminals for provincial and city buses, is set to boost connectivity to higher employment opportunities and wages in NCR. It also enables Filipinos to consider residing outside Metro Manila, opening up provinces like Cavite and Laguna for further investment.
Meanwhile, prospects from the technology and e-commerce industries also enabled faster and more efficient supply chains for goods and services to go beyond NCR, unlocking potential for provinces in both southern and northern Greater Metro Manila. Key locations are identified as best suited for sorting hubs. At the same time, other areas are more suited to house distribution centers that cater to smaller markets.
Based on PRIME Philippines research, overall stock of warehouses in the key provinces and cities of GMM, Visayas, and Mindanao showed a 4.67% increase in 2021. Northern GMM and Metro Davao saw the highest year-on-year growth with 12.5% and 3.6% increase in supply, respectively.
The limited supply of developable land located along logistics routes ideal for warehouse developments in southern GMM constrained developers to find land towards northern GMM. With government support in constructing new roads, widening existing roads, and building flood mitigation projects, the private sector responded by developing better and modern industrial and commercial facilities. Southern GMM registered at least 18.1 million square meters of warehouse supply by the end of 2022, while northern GMM reached at least 9.8 million square meters.
Finally, to ensure food and health security for the country and further support this subsector, the government has initiated the construction of cold storage facilities for storing fruits and vegetables. In fish ports, facilities are also provided to minimize post-harvest losses of fisherfolks and lessen the dependence on imported fish.
During the height of the pandemic, some cold storage facilities could not meet the storage requirements for COVID-19 vaccines, challenging the availability of vaccines in some areas. However, since 2022, cold storage pallet positions have grown by 9.41% as of the first quarter of 2023, with the highest growth seen in Visayas and Mindanao regions where agriculture & fishing activities are high.
For cold storage, adding more pallet positions will ensure continued movement of both finished goods and raw materials, and help minimize fluctuation of consumer prices during seasons of high demand. Situations such as the recent shortage of onions—where even the influx of imported products were not enough to satisfy demand and drive prices down—can be minimized. Investment in cold storage can also improve operating conditions both in storage facilities and in the routes that serve them, preventing spoilage of products.
Luzon: Bataan-Cavite Link Bridge
One of the critical IFPs in Luzon, the Bataan-Cavite Link Bridge spans 400 meters across Manila Bay. Construction of the PHP 175.7 billion bridge will begin in the fourth quarter 2023, and aims to be completed in 2028.
The bridge would complete the “Big Loop,” the network of integrated south and north roads between central Luzon, Metro Manila, and southern Luzon. It will connect the towns of Mariveles, home to the fastest-growing Freeport of Bataan, and Naic in Cavite.
Bataan hosts logistics, manufacturing, processing, and operations from the Bataan Export Processing Zone. It also represents 10% of employment in central Luzon, coming from the service industry. Thanks to its long coastline, Bataan is also primed to provide renewable energy sources, making it the top choice for power-generating companies looking to expand. This also makes the province ideal for medium and heavy manufacturing activities.
On the other hand, Naic is a highly competitive municipality that attributes most of its GDP to manufacturing. Alongside neighboring Tanza and Trece Martires, it supplies 189,000 square meters of warehouse space in Cavite, representing only 3% of the province’s warehouse spaces. Traveling to Naic improved recently with the widening of Centennial Highway.
As the gateway to Ternate and Nasugbu in Batangas and Trece Martires, Indang, and General Trias in Cavite, Naic makes an ideal location for those looking to participate in the supply chain of goods and services for those areas.
The bridge can further support existing and planned seaports in both provinces and position it as a premier and international shipping gateway to the country. It is also poised to improve tourism by redeveloping the famous Corregidor Island as a tourist spot.
Visayas: Panay-Guimaras-Negros Bridge
The Panay-Guimaras-Negros Bridge project will catalyze connectivity between the major islands in Visayas towards the Northern part of Mindanao.
The interisland bridge spans a total length of 32.47 kilometers and will be composed of two components. The first link will connect Panay and Guimaras islands via a 4.97-kilometer sea-crossing bridge and roads totaling 8.03 kilometers. The second link will connect Guimaras and Negros with a 13.11-kilometer sea-crossing bridge and roads totaling 6.36 kilometers.
The bridge was first promoted in 2005. With the help of 19 members of Congress from the Visayas, the project was prioritized in 2012. It aims to enhance regional tourism activities, reduce transportation costs, improve accessibility, and foster new economic activities.
Once completed, it will allow convenient travel between the islands of Panay, Guimaras, and Negros by reducing travel time of commuters, motorists, and goods vehicles via ferries and RORO vessels to less than an hour.
The PHP 189.53 billion bridge project will begin construction in 2025 after the Investment Coordination Committee’s approval of its detailed engineering design.
Mindanao: Improving the Growth Corridors in Mindanao Road Sector Project
Around 23% of the national road network remains in poor condition and requires rehabilitation. In Mindanao, only 70% of national roads are paved compared to Luzon (82%) and Visayas (89%). The government, with the support of Asian Development Bank, aims to address these factors through the Improving Growth Corridors in Mindanao Road Sector Project (IGCMRSP).
The project involves paving, repairing, widening and strengthening existing roads, as well as construction of new bridges that will improve an estimated 300 kilometers of roads in Mindanao. This aims to support development of conflict-affected areas, strengthen resilience to climate change, and improve and promote road safety community awareness.
The project also seeks to address infrastructure gaps in the Bangsamoro Autonomous Region of Muslim Mindanao to promote economic development, reduce vulnerability, and advance human capital development, all of which is outlined in the 2017-2022 Philippine Development Plan.
One of IGCMRSP’s sub-projects is the construction of two bridges in Tawi-Tawi and Zamboanga. Firstly, the Nalil-Sikkiat Bridge in Tawi-Tawi, aims to provide a direct link between the existing growth center in Bongao, and future growth centers in Panglina Sugala and Papahag islands. The bridge is expected to complement proposed investment in industrial and residential developments there, including a proposed large-scale seaweed processing plant.
According to the Philippine Economic Zone Authority, the first ecozone in Tawi-Tawi will be 218.9 hectares and located in Barangay Kalupe, in Panglima Sugala. Another proposed development is the Malassa International Port, which aims to address the island’s economic potential as it lies along the path of international shipping containers. The proposed bridges will open up the tourism and fishing industries there, and also strengthen local and regional market connectivity in this corridor to encourage more investment.
The second bridge, the Guicam Bridge in the Zamboanga Peninsula, will connect three municipalities in Olutanga island—Mabuhay, Talusan, and Olutanga—to the rest of the Mindanao, through the municipality of Alicia. It not only aims to improve connectivity, but also to facilitate economic development, improve security and peace in conflict-affected areas and prompt more public and private investments.
Infrastructure projects in the Zamboanga peninsula will provide employment opportunities that should aid and reduce the financial distress brought upon by the pandemic that resulted in the large-scale migration of locals from cities to rural areas or provinces.
Aleks Sotero is assistant vice president for research and advisory of PRIME Philippines. Krisa Marquez, Ally Lucas and Rhea Tablo contributed to this article.
PRIME Philippines is the leading real estate consultancy firm for emerging markets with offices in Manila, Cebu, and Davao. To learn more, visit www.primephilippines.com, or follow them on Facebook at www.facebook.com/PRIMEPhilippines.