Bidding ₱30 Billion LRT extension begin to stop losing $3.27Billion USD due Manila Traffic mess

 

DOTC open Bidding ₱30 Billion LRT extension to Southern Manila

The notorious traffic on Metro Manila's roads is not just a daily annoyance that millions of Filipinos have to live by.  The country loses billions of dollars worth of human productivity, according to a transportation official.

 

A recent study showed that Metro Manila traffic could cost the Philippine economy $3.27 billion a year in productivity due to wasted man hours and higher freight costs, among other problems, the Department of Transportation and Communications (DOTC) said.

 

Citing the study's findings, DOTC Undersecretary Rene Limcaoco said this highlighted the need for the government to accelerate the rollout of transportation-related projects to catch up with the country's ever-expanding needs

 

"The obvious thing the Philippines needs is to expand its infrastructure to meet the country's economic goals," Limcaoco said, speaking at the 2012 Philippine Energy and Infrastructure Forum on Tuesday.

 

"Our infrastructure stock is clearly insufficient," he said. "It drives a certain point home for us in government," Limcaoco added.

 

The study covered the year 2011, and was conducted by the DOTC together with the University of the Philippines National Center for Transportation Studies.

 

Limcaoco said traffic does not only lead to thousands, if not millions, of wasted man-hours on a daily basis, it also adds "friction" to trade by making the movement of goods from one point of the country to another more difficult.

 

Bulk of the country's imports and exports still pass through the international cargo terminals in Manila port district in Tondo.

 

Fortunately, the Aquino administration has taken the appropriate steps to remedy the country's situation by allocating more than two-thirds of the government's infrastructure budget for transportation-related projects under the DOTC, according to Limcaoco.

 

"Properly implemented infrastructure raises overall productivity reduces the cost of production, and most important for us, greatly enhances opportunities for the poor," Limcaoco said.

 

The best way to solve Metro Manila's traffic situation was the development of the country's train lines, which has become the DOTC's number one priority, Limcaoco said.

 

He said the DOTC would start accepting bids for the P30-billion civil works component of the Light Rail Transit (LRT) line 1 Cavite Extension project by next month. The prequalification stage to screen interested bidders ends this week.

 

The other half of the LRT 1 project, which will cost another P30 billion, will involve the purchase of 156 new train coaches that will be funded through an overseas development assistance (ODA) loan.

 

Another priority project that recently secured approval from the National Economic and Development Authority (NEDA) was the LRT line 2 East Extension to Antipolo.

 

Both projects are expected to benefit the dense populations in the areas they serve, which are on the outskirts of Metro Manila.

 

"Mass transportation is an effective equalizer. It creates new living spaces. With reliable rail systems, additional residential areas are made liveable," Limcaoco said. "Now, a less affluent person can live farther away and have cheaper home expenses, but still be able to work in the city same as someone more affluent who might live closer," he said. "This equalizes the playing field between rich and poor," he said.

 

Inquirer

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Oxford Business Group – Philippine Economy Motors Ahead

Growth in the Philippines is expected to continue at a steady clip over the next two years, spurred by proactive government and central bank measures to improve governance and boost macroeconomic performance. There is concern, however, that slowdowns in Europe, the US and China could dampen full-year growth figures.

 

Economic expansion in the first half of the year came in at 6.1%, with GDP expanding 6.3% in the first quarter and 5.9% in the second, according to the National Statistical Coordination Board. The expectation among analysts, officials and international institutions is that robust growth will continue through the rest of the year and into 2013, though forecasts of the exact rate differ. Some expect the current pace to be maintained, while others see a slight cooling to just below 5% for the full year.

 

The economy has been supported by a number of factors, including government spending on construction, which was up 46% on the first half of 2011, according to international press reports, and strong domestic demand, stimulated in part by growing remittances from Filipinos living abroad. As the IMF noted in a statement at the end of its July staff mission to the country, a spike in net exports and fixed investment earlier in the year have also helped drive growth.

 

A recent report note by HSBC economist Trinh Nguyen suggested that the continued success of the country's business process outsourcing (BPO) industry, which has benefitted from companies in the developed world looking to lower costs during the crisis, had contributed to GDP expansion from the private sector.

 

Proactive policy-making by the government and central bank has also been important. The Bangko Sentral ng Pilipinas (BSP) has cut interest rates three times in 2012 to record-low levels to support growth and curb rises in the Philippine peso, one of Asia's best-performing currencies thus far this year. In its September meeting, the BSP kept rates unchanged, at 3.75% for overnight borrowing and 5.75% for overnight lending.

 

The government has won considerable praise for its management, including reforms of governance and efforts to tackle corruption, as well as maintaining a steady macroeconomic course. As the IMF said, "macroeconomic conditions remain generally sound and the authorities' policy management is supporting confidence".

 

Solid economic management puts the government in the enviable position of being able to loosen fiscal policy if the global economic situation worsens considerably. It has also helped the Philippines achieve ratings upgrades, enhancing the country's appeal to investors, as well as bringing in the resources to finance much-needed infrastructure investments that should help ease economic bottlenecks and underpin longer-term growth.

 

Arsenio Balisacan, the economic planning secretary, has told the international press that he expects the economy to prove resilient, despite global uncertainties, with full-year growth at the upper end of the government's 5-6% target range.

 

Similarly, the Capital Market Research Centre, a Philippine think-tank established by a local investment firm and a university, expects growth to reach 5.5%-6% in 2012, despite economic difficulties in Europe and the US, both of which are major export markets for the Philippines.

 

The centre's upbeat forecast is based on the expectation of a continuation of strong domestic demand and government spending, as well as smoother bank lending, offsetting a possible slowdown in exports. While the organisation expects a slowdown in the third quarter, in the final three months of the year, it sees growth picking up again, helped by the stimulus effect of pre-election spending both in the US and at home. Relatively low inflation expectations should benefit consumer spending, it added.

 

The economic outlook is thus positive, but authorities and investors alike are aware that this good news should not mask downside risks and structural weaknesses. Despite the impressive first-half growth figures, the stock market's reaction seemed to focus on the fact that year-on-year growth slowed from the first quarter to the second, and quarter-on-quarter growth was only 0.2%, despite government spending, low interest rates and high credit growth.

 

Perhaps the biggest short-term risk is a worsening of the global economic climate: in addition to concerns over Europe and the US, China's medium-term growth and stability prospects are also worrying. The international outlook is the main reason the IMF takes a more cautious view than some on the Philippines; in its July statement, it said, "growth is expected to stabilise around 4.8% and 4.9% in 2012 and 2013, respectively, in line with soft global economic conditions".

 

Longer-term issues hampering the country's economic performance also persist: efforts to overhaul the administration, address corruption and upgrade infrastructure all reflect long-standing weaknesses and will take some time to run their course. Reforms to increase tax take and tackle anti-competitive practices are also priorities.

 

Oxford Business Group

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