Regional Focus

  • The wheels need to roll to support growth.

02.09.2016 By: Dirk Ruppik

Artikel Nummer: 15651

New ways to success

The strong growth registered in the Philippines recently will only be maintained if the country’s transport infrastructure, including its roads and ports, are improved. Dirk ­Ruppik had a look at the logistics situation and the projects of the future for the ITJ.

The Republic of the Philippines is one of the fastest-growing countries in Southeast Asia. According to the World Bank its improvement came to 5.8% in 2015, a figure which is expected to rise to 6.3% in 2016 / 2017. The nation’s rating, accor­ding to agencies such as Moody’s, is also satisfactory – the republic has been rated Baa2 since the end of 2014. The World Economic Forum’s assessment of the infrastructure on the 7,107 islands with approximately 100 million inhabitants, however, ranks the Philippines worst for its railway, port and airport infra­structure, behind Vietnam. Only its road network does not come last.


Inadequate roads and railways

In the Logistics Performance ­Index, in turn, the country slipped from 57th to 71st place in 2016. According to the World Bank the government has to dramatically increase its budgeted outlays for the country’s infra­structure if it wants to maintain its overall economic momentum. A study conducted by the Asian Development Bank has established that around EUR 116 billion needs to be invested in the Filipino infrastructure between 2010 and 2020.


Most goods are hauled by road in the Philippines. The state of the network is never­theless frequently inadequate and ­traffic jams abound, especially in greater Manila and on the densely populated ­Luzon group of islands (with around 50 million inhabitants). Many roads are burdened to capacity, according to KPMG. The Japan International Cooperation Agency has reported that the average speed attained in the Manila area comes to 10–20 km / h. In 2015 investment in the road network came to EUR 6.2 billion. The public works and highways department is planning to tarmac 32,000 km of national roads by 2016.


Ever more Filipinos buy goods online these days too. Besides partially still rather weak as well as expensive internet ­connections, a lack of transport and ­logistics ­options also represent a hurdle for the sector. Courier networks have been developed for parcel deliveries in metropolitan Manila and on the main island of Luzon. Services to other parts of the country, especially for large consignments, are still limited or expensive, however. It is difficult for mail-order firms to guarantee rapid delivery.


Railway lines are underrepresented in the Philippines. Luzon still has most tracks – around 500 km. Almost every rail project focuses on urban railways for greater Manila.


Relief from Subic Bay and Batangas

Manila, the Philippines most important maritime gateway, is hopelessly congested. The hub handled 4.23 million teu in 2015. Mohamed Ghandar, the managing director of the Manila International Container Terminal, says that the problem of inade­quate road networks will become more acute as the economy continues to boom and there continues to be a long list of major infrastructure projects lined up.


The Subic Bay and Batangas sites are expected to be drafted in to help relieve ever-growing transport requirements. The Subic Bay Metropolitan Authority is set to expand the port’s capacity from 600,000 to 1.2 million teu over the next three years. The port of Batangas in ­Central Luzon, the gateway to and from the Mindoro and Visayas Islands, is also being expanded.


The purchasing power of large parts of the population is not only growing steadily on the economically-strong main island of Luzon. The maritime port in Davao Sasa, on the island of ­Mindanao, is also being modernised through a public-private partnership. The project’s budget comes to around PHP 19 billion (EUR 366 million).