The new leadership, stabilizing economic conditions worldwide and connectivity gains from the Subic/Clark facilities in the North and the Batangas port in the South are making key business players bullish about the much-touted Luzon corridor, which is expected to make the country a viable gateway to accelerated growth in the region.

The whole country is enthusiastic about the renewed opportunity to take off once again, especially with China’s decision to revalue the yuan, which makes pesos more competitive. There’s renewed confidence from partners abroad, and global markets appear to be on their way to recovery. We should not let this opportunity slip through our hands once again, by assuring that all sectors are marching to the same beat.

The inter-modal logistics corridor project aims to connect the three fastest-growing regions in Luzon: Subic, Clark and Batangas. Once details are ironed out, the master plan proposal will be presented to President Aquino for approval and implementation.

In 1995, former President Fidel V. Ramos identified Luzon as a potential major supply chain and logistics hub in Asia, paving the way for a slew of large-scale infrastructure projects, including expressways, airports and linkages.

Decongesting Manila

The Subic-Clark-Tarlac Expressway (SCTEX), the expansion of the Diosdado Macapagal International Airport in Clark, and the ongoing rehabilitation of Edsa are all key in spreading economic activities outside of Manila to maximize the sorely under-utilized international ports in Clark, Subic and Batangas, said Meneleo Carlos of the NCC Infrastructure Working Group in charge of developing the master plan.

Meanwhile, the newly started Tarlac-Pampanga-La Union Expressway (TPLEX), the NLEX-SLEX linkage through C-5, and continuing rail projects are expected to reduce transportation costs for businesses in the corridor en route to creating “seamless movements of goods and people,” he added.

Already, the combined regional economies of NCR, Central Luzon, Southern Tagalog, and Calabarzon account for about 60 percent of the country’s gross domestic product (GDP) and 80 percent of the national cargo throughput. It is crucial then, Carlos said, to fast-track the development of the corridor to “further catalyze economic growth” in the region.

“The opportunities for the 8 Sunrise Industries in Luzon become so much brighter with a competitive logistics corridor,” he added.

If things go according to plan, he predicts Clark will be the new major air gateway of the country rather than Manila, which is already the third biggest megalopolis in the world and one of the most densely populated.

Changing Asia

The further development of the Luzon corridor, however, cannot come sooner as the Asian region is rapidly changing, said Michael Raeuber, supply chain expert and European Chamber of Commerce of the Philippines director.

“The pace that China has developed is staggering. There are already high-speed rail plans in Malaysia, Thailand and Vietnam. The Philippines must not lag behind,” he emphasized. “We have been held back by frustrations in the past. We need to be ambitious and look at things in the long term.”

But proponents of the plan must work doubly hard, as the Philippines is not a natural transshipment point to and from anywhere, said Brian Lane of the American Chamber of Commerce of the Philippines.

“In fact, transshipment in the Philippines is discouraged,” he said. “There is excessive bureaucracy, smuggling is rampant, and transactions are prone to corruption. There is tough regional competition.”

Batangas has no connection to Singapore or Kaohsiung, he noted. This makes it imperative to encourage the use of its port, while discouraging docking in Manila. Already, there are about 1,000 locators in Calabarzon, particularly automakers that are logical candidates to transfer their shipments to Batangas if costs and service are attractive.

The country, however, does hold some advantages over its neighbors. There is significant shortage of airspace in the Chinese, Taiwanese and the Korean peninsula, making the Philippines a potential distribution center, something that can be maximized by competitive value-added services, such as housing.

Governance is key

Institutional reforms will need to be put in place if these ambitious plans are to be realized, said National Economic Development Authority (Neda) Assistant Director-General Ruben Reynoso.

“Good plans can end up shelved without good governance,” he said, adding that he hopes the Aquino administration will put an emphasis on transparency and accountability.

The National Competitiveness Council (NCC) is forging a strong collaboration between the public and private sectors, with the private sector leading the way to coordinate activities of the program. The 16 key Business chambers, all stakeholders of NCC, will be utilized in the procurement and monitoring of services. NCC also targets the plan’s inclusion in the Medium Term Philippine Development Plan.

Dr. Dante Canlas, former director general of Neda, explained that the development of a master plan for this megaregion will lead to increased transparency and improved governance since it will avoid duplication and wastage between agencies and provide private sector oversight with the single minded alliance of 16 major business chambers in the National Competitiveness efforts.

Competitive logistics will open up both services and industry sectors in the region, especially agriculture which will enable the Philippines to be a global agribusiness player.

Dr. Fiorello Estuar, the co-champion of this project and former DPWH secretary of President Cory, emphasized that transparency and governance will be the major features of this plan where standards are currently being put in place.

“There are many so-called master plans gathering dust in several agencies which need to be inventoried to identify common good points,” he said.

Perhaps in the next decade, the Philippines will regain its position as an economic powerhouse as its growing set of firms build up their world-class capabilities in value-addition supply chain as a result of competitive logistics infrastructure. Then these firms will be known as emerging giants ready to challenge global rivals. In so doing, the unemployment gap will be bridged and poverty will be halved in line with MDG target, within the term of President Aquino.

By Cesar B. Bautista
Philippine Daily Inquirer
First Posted 01:50:00 08/23/2010

(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is the present private-sector co-chair of the National Competitiveness Council and former secretary of the Department of Trade and Industry. Feedback at map [at] globelines [dot] com [dot] ph. For previous articles, please visit .)