CIRCULATING COPY TO BE RETURNED TO REPORTS DESK DRAFT '0r 1098-PH FILE COPy URBAN S=TOR SURVEY MANILA (In three Volumes) VOLUME II MAIN REPORT (Part B) February 25, 1975 Urban and Regional Economics Division Development Economics Department MANILA URBAN SECT OR SURVEY Table of Contents Page No. Volume II CHAPTER FIVE: HOUSING PROBLEMS AND POLICIES IN THE PHILIPPINES AND THEIR IMPACT C METROPOLITAN MANILA I. Introduction 1 II. The Housing Problem 2 III. Institutional Arrangements 11 IV. Constraints on Solutions to the Housing Problem in Metropolitan Manila 19 Statistical Annex CHAPTER SIX: METROPOLITAN MANILA: THE URBAN TRANSPORT SYSTEM: .PROBLEMS AND POLICIES I. Introduction 1 II. Characteristics of the Eisting System 4 III. Jeepneys 17 IV. Buses 24 V. Proposal for Reforms 32 VI. Metropolitan Manila Transport Plan 35 VII. Recommendations 45 CHAPTER SEVEN: THE METROPOLITAN FISCAL AND GOVERNMENT STRUCTURE I. Local Government Structure: Layers of Local Government 1 II. Budget Structure and Responsibility 4 III.. Revenue Structure and Growth 5 IV. Expenditure Structure and Growth 20 V. Intergovernmental Fiscal Relations 23 VI. Recent and Impending Reforms in Local Goverment Finance 27 VII. Metropolitan Fiscal -Problems: The Proposed Metropolitan Government Solution 30 Table of Contents, Volume II (cont'd) Page No. CHAPTER EIGHT: PLANNING IN METROPOLITAN MANILA I. Introduction 1 II. National and Regional Development Planning 2 III. Metropolitan Planning 10 CHAPTER NINE: A SUGGESTED PROGRAM FOR PANK INVOLVEMENT IN METROPOLITAN MANILA I. Introduction 1 II. The Policy Framework 4 III. Policy Issues and. Optiona IV. Elements for an Initial Program 12 V. Proposed Tondo Foreshore Urban Rehewal Project T4 VI. Associated Studies 23 CHAPTER FIVE HOUSING PROBLEMS AND POLICIES IN THE PHILIPPINES AND THEIR IMPACT ON METROPOLITAN MANILA I. Introduction A combination of the rapid growth of populatiop in Metiopolitan Manila, an already inadequate housing stock, the absence of a coordinated institutional framework to guide the response to housing needs, and relative inactivity of the public sector in constructing and financing housing have resulted in a large and lkely inciasing housing "shortage" 1/ in Metropoli- tan Manila. The intent of this chapter is to describe Manila's housing problem through: (a) analysis of the evidence on the magnitude of the housing shortage; (b) description of the institutional framework which is supposed to deal with this shortage; and (c) analysis of the supposed and real constraints to a more appropriate level of activity in the public housing sphere. In view of the limited amount of hard information of the kind required for such analysis, this chapter is primarily descriptive. Clearly the whole question of the housing problem in Manila is quite complicated and begs intensive study. Compared to what would be desirable, the analysis which follows does little more than scratch the surface in an attempt to 1/ The notion of housing shortage is difficult to quantify. A proper quantification would require knowledge.of the demand and supply functions for housing of different quality levels and by families in different income categories. Unfortunately,-in most countries, adequate information to construct these functions is not available. Accordingly, the housing shortage estimates.mentioned below are based on the concept of housing "needs" or requirements, rather than housing "demand". Thus we do not know the extent to which the estimated housing shortage is really shortage in the micro- economic sense. Housing "needs" are usually estimated on the basis of assumptions about what constitutes "acceptable housing standards". All such assumptions are to a certain degree arbitrary, not least when an attempt is madeto base them on internatiohal standards. In practice, "acceptable standards" can vary from country to country, due to variations in culture, climate, degree of urbanization, and a number of other factors, such as the level of economic development of the country and the social attitude toward the question of what constitutes an "equitable" distribution of income and wealth. -2- convey to the reader a general appreciation of the problem. In keeping with the urban survey focus of this report, the discussion which follows is pWrticularly concerned with the spatial aspects of the housing shortage, i.e. with planning that describes the location of public housing activity as well as with planning that describes the number of houses to be built. II. The Housing Problem Metropolitan Manila's housing problems are not easily separable from those of the nation as a whole. The primacy of the MMA, which has resulted from heavy in-migration; the authority for housing planning and implementation, which has been given to central government agencies; and the pivotal role of the Central government in all financing decisions, including those affecting housing, are all factors which make inevitable a close interrelationship between national and local public policy toward housing. More simply put, decisions as to how much to invest in housing, what proportion to invest in Metropolitan Manila, what kind of housing to build, where to build it, and how to finance it, are all primarily national government decisions. Accordingly, the general description of the housing problem in this chapter begins with a framing of the issues on a national basis and then moves to specific consideration of their impact in Metropoli- tan Manila. The Nation The combination of very low average incomes, high natural rates of population growth, rapid urbanization, the past inadequacy of policies, and public sector inactivity in the low cost housing field has caused an accentuation of the housing problem in the Philippines. The shortages of adequate housing are particularly acute in the larger and faster growing urban centers, as evidenced by high concentrations of squatters. Although the housing problems of the Philippines certainly are not unique, i/ they appear to be more serious than in at least some other-developing countries 1/ See Chapter Two, pp. 22. -3- in the region where the rate of urbanization has not been very high (e.g., Malaysia), or where the government has played an important role in the housing sector (e.g., Singapore). Housing Shortage The estimation of current housing shortaes is hampered by the fact that the complete results of the 1970 housing census are not yet available. 1/ Advance reports, though available for only seven provinces, suggest that the growth in the housing stock over the past decade is considerably below that "needed" (see Table V.1). Table V.1: DWELLING UNIT INCREASE IN SEVEN PROVINCES COMPARED TO POPULATION INCREASE Increase in Population Dwelling Units Population for Every- % In- % In- one Dwelling 1970 1960 crease 1970 1960 crease Unit Increase Bataan 33,388 24,120 38.42 216,210 145,323 48.78 7.65 Albay 110,652 87,470 26,50 673,981 514,980 30.88 6.86 Romblon 29,350 24,669 18.98 167,082 131,658 26.91 7.57 Cebu 290,627 254,560 14.18 1,634,182 1,332,847 22.61 8.35 Aklan 46,672 42,615 9.52 263,358 226,232 16.41 9.15 Batanes 2,185 2,164 0.97 11,398 10,309 10.56 51.86 Mt. Prov. 19,421 20,496 (5.24) 93,112 85,866 8.44 (-6.74) 532_295 456,094 16.71 3,059,323 2,447,215 25.01 8.03 Source: Jacob S. de Vera, "Housing Need Up to the Year 2000 and Its Financing Implications". NEDA, National Conference on Housing, Development Academy of the Philippines, Tagaytay City, 19-21 October 1973. 1/ This is but one illustration of the fact.that data problems with respect to housing in the Philippines are substantial. What are presented in this chapter are the results of a study of housing conditions in seven provinces. Though these results probably represent the best information .available to the Bank mission and the Philippine government at this time, they can at best be viewed as illustrative of problems. -4- Using these data, it is possible to "rough out" some very crude estimates of the implied growth in the housing shortage in these provinces over the docade. There are at least three approaches to developing shortage estimates. First, the number of new dwelling units necessary to keep the occupancy rate at its 1960 level of 5.37 persons per dwelling unit might be calculated. Using this criterion, 113,986 new units were needed by 1970, 50 percent more than the actual amount (76,201) constructed during the period. By this simple technique it is possible to estimate an increase in the housing shortage for these seven provinces of 37,785 units. In addition to the crude assumptions, conkerning housing quality, standards, etc., necessary to use an "occupancy" approach to estimating shortage, there are two further limitations: (a) there may have been non-registered building activity which was not captured in these statistics, in which case the housing shortage would be overstated by that amount; (b) the use of an average occupancy rate may distort the estimation because some dwelling units may house multiple households. De Vera has attempted to correct for the latter problem by introducing a second estimate of the dwelling shortage. 1/ This attempts to measure the number of new housing units that would be needed to eliminate multi-household dwelling units. 2/ Taking the total number of households from the Population Census and the total number of occupied dwellings from the housing census, he reasons that the. excess of households over dwelling units should indicate the number of additional dwelling units 1/ These estimates of housing shortage consider as unacceptable all barong-barongs (makeshift construction using mostly waste materials); all conventional rural-type dwellings using grass, reeds and bamboo when they are located in urban communities with 20,000 people or more; and that part of certain buildings of mixed materials (i.e., partly using light materials and partly using strong materials) which consists of inappropriate -materials. "Involuntarily" doubling- up with other households is also considered as unacceptable. The estimated average size of households was 5.6 for the sum of the seven provinces. 2/ De Vera, op. cit. -5- needed. His results, presented in Table V.2, show an overall shortage of 19,644 dwelling units, or about 25 percent more than were constructed (see Thbie V.2). Yet a third way to review the housing shortage is in terms of the structural adequacy of the existing housing stock. In this case, the con- cern is more with the overall shortage of the existing hotsing stock than with evaluation of additions .to the stock. In general, two types of dwell- ings are considered unacceptable: barong-barongs, or makeshift shacks, and urban dwellings whose walls or roof,are made of light and very inflammable materials, e.g., bamboo, nipa, cogon. In the seven provinces for which housing data are available in 1970, the number of barong-barong units is estimated at about 3.3 percent of total dwelling units and "unacceptable urban structures account for 58.1 percent of total dwelling units. In total, then, over 60 percent of the existing housing stock is considered inadequate. By this obviously unrealistic measure, the housing shortage is enormous, and dwarfs the estimates presented above. -6- Table V.2: NUMBER OF HOUSEHOLDS AND NUMBER OF OCCUPIED DWELLINGS: SEVEN PROVINCES, 1970 Householdsla Provinces Urban Rural Total Aklan 4,673 42,461 47,134 Albay 15,238 100,226 115,464 Bataar 8,055 29,221 '37,276 Batanes 0 2,241 2,241 Cebu 111,353 182,819 294,172 Mt. Province 524 18,823 19,347 Romblon 3,539 25,819 29,358 Total 143,382 401,610 544,992 Occupied Dwellings 134,128 391,523 532,245 Dwelling Units Needed 9,254 10,087 1964 Percent of Total Dwelling Units Needed 47.85 52.15 100.00 Percent of Population 31.8 68.2 100.00 /a Including hidden family nuclei. Source: De Vera, op cit. These results are only for seven provinces and the estimation is crude. Nevertheless, if they are at all representative, the results do underline the substantial magnitude of the housing shortage in the nation, suggest that it may be particularly serious in urban areas and imply that it is unlikely that the government can appreciably reduce the shortage in the near future, even if substantial resources are devoted to the housing sector. Projected Requirements If it is assumed that concrete dwellings have a life span of 70 years, wooden dwellings 50 years, and other structures only 25 years, the dwelling unit "replacement needs".for the period 1970-2000.are as shown in Table V.3 for the seven provinces.for which housing data are available. -7- Table V.3: REPLACEMENT SCHEDULE, 1970-2000: SEVEN PROVINCES Replace- Wood/GI Ratio to Wood/GI Bimboo Ratio to ment Year dws. Urb.Dws. dws. etc.dws. Rural Dws. 1975 x x x x x 1980 x x x 7,368 1.58 1985 x x x 7,368 1.58 1990 840 0.98 2,605 37,332 8.59 1995 3,712 4.34 7,299 37,332 9.60 2000 9,014 10.53 14,996 59,681 16.06 Total 13,566 15.85 24,900 149,080 37.41 Source: De Vera, . cit. These estimates are used by De Vera to calculate the replacement needs for the country as a whole, 1/ as shown in Tables V.4 and V.5 below. 1/ De Vera, op. cit. To do this, he estimated the total number of dwelling units in the Philippines in the year 1970 by attributing to the country, the urban and rural population of which is known for 1970 (i.e., 31.8 percent and 68.2 percent of total population, respectively), dwellings to population ratios for urban and rural areas adjusted from those observed in the seven provinces., He also adjusted these "normal" replacement needs for the future incremental needs expected to be generated by the anticipated population growth and the shift of families to urban centers. A similar estimate of total housing shortages in the Philippines appears in: G.V. Tobias, "Pre-Fabrication of Housing Components in the National Housing Corporation", NEDA, National Con- ference on Housing, 19-21 October 1973, Development Academy of the Philippines, Tagaytay City. -8- Table V.4: REPLACEMENT SCHEDULE, 1970-2000: PHILIPPINES Year Urban Rural Total 1975 x x x 1980 x 55,906 55,906 1985 x 75,906 75,906 1990 17,187 358,310 375,497 1995 76,115 400,440 476,555 2000 184,677 669,902 854,579 Total 277,979 1,560,466 1,838,443 Source: De Vera, op. cit. These estimates indicate that, in order to replace obsolete and "un- acceptable" housing stock and to provide adequate housing for the growing population, 125,000 dwelling units would have to be constructed annually in urban areas and 227,770 would have to be built annually in rural areas. Table V.5: ESTIMATED TOTAL HOUSING NEED, PHILIPPINES, 1970-2000 (Preliminary, based on housing data of 7 provinces) Urban Rural Total A. Housing Backlog: 1. Doubled-up & Hidden Families 67,054 156,373 223,427 2. Unacceptable Dwellings: a. Barong-barongs 28,354 165,988 194,342 b. Urban dws. of light materials 639,442 x 639,442 Sub-total of Backlog 734,850 322,361 1,057,211 B. Future Need 3. Future Households up to 2000 2,593,871 4,929,355 7,523,226 4. Future Losses due to a. Dilapidation 277,979 17560,464 7,523,226 b. Fires & Typhoons 9-000 21,000 30,000 Sub-Total of Future Need 2,880,850 6,510,819 9,391,669 Grand Total of HousinR Need 3 615,700 6.833,180 10,448,880 Source: De Vera, o. cit. -9- One can only speculate about the usefulness of such estimates. The assumptions are crude and based on data for seven provinces which are pr6bably not representative. These very considerable shortcomings not- withstanding, these rough estimates do make two points very clear. The first is that the housing construction needs of the Philippine population are apt to be enormous over the next two decades. The second is that the current level of government activity in the low cost housing field is po low that it is almost inconsequential. As noted above, the construction of housing has not kept pace with population growth. The Presidential Assistant on Housing and Resettle- ment Agency (PAHRA) has estimated that the present pace of housing construc- tion in the country does not exceed two dwelling units per one thousand people. De Vera's estimate, on the other hand, suggests that to satisfy future housing needs more than 6 dwelling units per one thousand people need to be constructed annually. This discrepancy is extremely discouraging; it suggests that, unless drastic measures are taken, housing conditions will continue to deteriorate at an alarming rate. Nor is this to say that, even if some means were found to close this "construction gap", the problem would be "solved". Far from it, for the large discrepancy between estimated housing requirements and production reflect a fundamental discrepancy between the current conditions of supply and demand in the housing market. Though, as has been stated, this dis- crepancy cannot be measured with any degree-of precision, its magnitude may be illustrated. According to PAHRA estimates, between 80 and 90 percent of housing production in the Philippines is provided through the private sector. However, only a very small percentage of families can afford housing at current market prices. The PARRA estimates that only 14 percent of urban families, i.e. those with. annual incomes of at least P 10.000 1/ can afford market housing currently provided by the private sector. 1/ This is equivalent to $1,500 per annum ($125 per month), or roughly two-and-one-half times the median family income in the Tondo Foreshore area. See Chapter Three, Table 111.8, pp. 50* - 10 - The Manila Metropolitan Area The limited information which exists strongly suggests that tld housing problem is particularly serious in the Manila Metropolitan Area. The rapid growth of population within the MMA has aggravated the pre-existing imbalance between housing demand and supply and, in the absence of adequate legal outlets, has led to the rapid expansion of squatter settlements..1/ It is estimated that the squatter population of the MMA increased by 190 percent during the period 1958-1963, reflecting a growth rate of squatter population several times that for total urban population during the same period. Between 1963 and 1968 the absolute increase was even higher, than in the previous five years; the percentage increase over 170 percent. In addition to the shortages created by rapid growth, the sheer size of Metro- politan Manila's population makes the dimensions of its housing problem extremely difficult to handle; that is, the area is very great, the popula- tion and the conditions by sub-area within the MMA are both heterogeneous, housing and transportation considerations are linked in a complicated manner, etc. Impressions about the major features of the housing problem of Metropolitan Manila depend on the area considered. In central parts of the city, it has mainly taken the form of overcrowding and high densities (e.g., Tondo), extensive squatting, and dilapidated buildings; and, in many areas, the absence of basic services, e.g., sewerage. On the urban periphery the distant location of resettlement projects 2/ has resulted in long and expen- sive journeys to work, and the basic services tend to be inadequate. Although no accurate data on the housing shortage in the MMA are presently available, inferences based on some rough,estimates suggest that it accounts for the bulk of the national shortage. A fact sheet on housing, prepared by the PAHRA, shows that about half the national housing shortage in 1970 was concentrated in Manila City and the urban portions of Rizal 1/ See Chapter Three, Section V, pp. 40 and Table 111.22, Statistical Annex pp. 16. 2/ See Chapter Four, Section V, pp. 23. - 11 - province 1/ (see Table V.9). Though there are almost certainly errors 2/ in these hastily collected data, they do illustrate -- even if they overstate -- the basic phenomenon. Housing production is not keeping pace with rapid population growth in the MMA. 3/ The total number of households in the MMA may be estimated at 730,000 as of 1970. Earlier surveys (some of them no more than impression- istic) suggest that the number of non-permanent dwelling units or permanent but dilapidated units is on the order of 230,000 (of which 124,000 are barong-barong units, 60,000 alum dweller units, and 56,000 permanent but dilapidated units). If the housing shortage is estimated in this fashion. i.e., in terms of physical inadequacy, the shortage of 230,000 dwelling units constitutes about 30 percent of the housing stock of the metropolitan area. Merely to prevent this shortage from rising to an even higher level, about 45,000 units would have to be constructed each year (assuming con- tinued population growth at an annual rate of approximately 5 percent and 6 persons per dwelling). This is triple the past and present rates of housing construction. III. Institutional Arrangements Delivery Institutions There is a great proliferation of institutions directly and in- directly involved in housing. These may be divided into two broad catego- ries: (a) government agencies directly responsible for performing housing and resettlement functions and (b) government agencies indirectly involved in the provision of housing and related services and facilities. Falling in the first category.are: the People's Homesite and Housing Corporation (PHHC); the Presidential Assistant on Housing and Resettlement Agency (PAHRA); 1/ Those municipalities falling within the MMA. 2/ In particular, under-recording of squatter and unregistered housing construction. 3/ The PAHRA figures indicate that the studied areas contain 11 percent of the national population, but only 5 percent of the national housing stock. - 12 - the Home Financing Commission (HFC); the Central Institute for the Training and Relocation of Urban Squatters (CITRUS); the Presidential Committee on Hod0ing and Urban Resettlement (PRECHUR); and the National Housing Corp- oration (NHC). Falling in the second category are: the Government Service Insurance System (GSIS); the Social Security System (SSS); the Development Bank of the Philippines (DBP); the Department of Public Works, Transportation and Communications (DPWTC); the Department of Social Welfare (DSW);and a few other agencies. The history and main characteristics of these institu- tions are outlined in Appendix VIII. The existence of so many different agencies causes serious problems of coordination. Moreover, the accomplishments of these agencies in general have been modest. For a variety of reasons, many of these agencies have demonstrated very little activity, although they have been established as long ago as 1948 (PHHC), or 1956 (HFC). Perhaps most important of all, there have been substantial distributional shortcomings in the work of these agencies, e.g., imbalances in the geographic distribution of housing assist- ance and resulting housing construction, and inadequate provisions for assistance to the lower income groups. Concern with the housing situation in the Philippines was expressed forty years ago, and has been discussed with increasing frequency since World War II. Over this period, various suggestions have been made in national plans. 1/ However, not only have these not led to substantial improvements in the housing situation, because of the lack of a common thread in the approach, they have also led to a great proliferation of agencies charged to work in the "housing field" and competing for the very limited (human and financial) resources so far allocated to the task. Thus, there is at present both a continuing unmet need for the improvement and clarification of policies affecting housing and a need to consolidate an increasingly complicated institutional environment. One such proposal for the reorganization of the institutional framework for housing planning and delivery calls for consolidation of the 15 to 18 agencies now engated in 1/ See Appendix IX. - 13 - housing into a three-tier organization. 1/ The three levels would be: national or central; regional or provincial; and metropolitan or local. The objectives of the national or central authority would include formulating national housing and urban land policies, programs and schemes. It would initiate the required legislative measures and suggest means of providing adequate public funding for houstng, especially for "!social" housing. 2/ It would decide on building standards, coordinate with the building industry in the promotion of building research and the training of planners and housing experts, and exercise overall supervision of activities of the regional and metropolitan housing bodies, including evaluation of various scheme and programs. The main responsibilities of the regional and metropolitan bodies would be to undertake planning and preparation of local housing programs, to collect housing statistics and to conduct housing sur- veys, as well as other socio-economic studies. 3/ This and other proposals notwithstanding, and despite the import- ance (one might say urgency) of reform in this sphere, a complete or even a major reorganization of the institutional framework related to housing will be very difficult to achieve and to implement. Though it is likely that the legal aspects of such an endeavor could probably be arranged more easily under the present regime of Presidential Rule, it would not be appropriate to opt only for haste. The issues involved are difficult and complex, and -- whatever the procedure by which laws are made -- due deliberation by those possessing expert knowledge on the various components of housing supply and demand will be needed if a truly effective approach is to be formulated. 1/ See Josefina M. Ramos, "Housing Policies of the National Government", op. cit., p. 24. 2/ That for which some amount'of subsidy would be required. 3/ Ramos, op. cit. p. 24. - 14 - Financial Institutions GSIS: Of the housing finance institutions in the public sector, G§iS is the largest. It has five financing schemes which vary as the com- bination of terms of periods. To qualify for financing of a house and lot, the applicant must be a bona fide member in good standing of the GSIS must not already own a house and lot, and must have an earning capacity of at least P 400 per month. (This latter is a family requirement, which may be shared by both spouses.) No down payment is required, and monthly amor- tization payments range from P 80 to P 240 over a period of 10-25 years, with an interest rate of 6 percent to 8 percent per annum. There are two types of GSIS "low-cost" housing: 1/ assisted and administered. Assisted housing is developed by private developers, who make use of one of the five financial schemes. The administered projects are the result of foreclosure proceedings on mortgage properties acquired by the GSIS. Presently, there are 6 administered projects, with 3 more in the planning stage, and 46 assisted projects distributed throughout the country. The major difference between the two types of housing projects is that the monthly amortization rates are lower on administered than on assisted projects. This is because, in the former type, the profit element is eliminated, as the primary goal is merely to regain the previous invest- ment on the mortgaged property. Information on the aggregate magnitude of the two types of projects appears in Table V.10. Though its program to data has been entirely in single-storey (mainly) detached housing, the GSIS has recently shown some interest in high-rise dwellings, primarily because of rising land costs. It has started by experimenting with the construction of high-rise shells, leaving the actual design and finishing of the dwelling units to the occupants. The most ambitious such project is the development of a condominium prototype 1/ As will be discussed in some detail a bit later on, GSIS housing is not really low cost, nor -- in view of the above conditions for receiving a GSIS loan -- is GSIS housing made available to low income citizens. As will be seen, the same is true of the SSS program. - 15 - located in Santa Mesa. The plan involves the development of a high-rise housing community composed of 2,393 units in a 7-hectare lot along the Pasig River. At the same time, the GSIS continues to develop land for single detached housing units. The latest such property that is now in the plan- ning stage, is a 103-hectare estate in Las Pinas intended for the lowest income members of the GSIS, earning P 300 per month and below. This project is intended by GSIS to be the lowest priced of all its low-cost housing projects and provides only for the construction of the basic shells of the house, leaving the construction of partitions, the ceiling, and the painting of the house to the occupant. The house and lot will be priced at P 12,000, 2 with the construction cost estimated at P 150 per m . The GSIS considers this project as the answer to the demands for lowering the existing P 400 per month minimum requirement. In general, from the point of view of the government employees who can participate in the GSIS housing programs, the main benefits are the availability of credit to which, otherwise, they would have no access, and the subsidized interest rates. Although they are charged 6-8 percent per annum, this is considerably less than the 12 percent or more that they would have to pay (if they had access) to commercial lending institutions. SSS: The Social Security System's involvement in housing goes back to 1958. Between that year and December 1972 the system has financed a total of 32,638 units, involving a total outlay of p 690,825,000. Of this, 78.7 percent or 25,683 units were financed (for P 512,839,000) from 1966 to 1972. The average loan per.unit from 1958 to 1972 was p 20,401. 1/ The SSS housing program has as its primary objective the promotion of home ownership among its membership through direct housing loans to covered employees, giving priority to the low-income groups. Fulfillment of the distributional element of the objective is extremely important, since 88 percent of SSS members have monthly incomes of less than P 500. 2/ 1/ See Reynaldo J. Gregorio, "The Social Security System and the Housing Program of the New Society", NEDA, National Conference for Housing Development Academy of the Philippines, Tagaytay City, 19-21 October, 1973, p. 2. 2/ The distribution of salary and income of SSS members are shown in Tables V.11 and V.12. - 16 - The performance to date, however, indicates that much remains to be accomplished on this front, for only a very small percentage of SSS ibans have in fact gone to families at the lower end of the income distribu- tion scale. Thus, in 1967, 88 percent of total housing loans went to members earning P 500 or more, although that category constituted only 9 percent of total SSS membership. Despite certain measures for liberalizing housing loan policies that have been adopted in the interim, the situation today does not appear to be significantly better. The main "liberalizing" measures introduced since 1967 have been: (1) the change, through a series of gyrations, of the loan ceiling (initially pegged at P 70,000) from P 60,000 in 1966 to P 30,000 in 1969; (2) the exten- sion of the mortgage repayment period from 15 to 25 years, in order to decrease the monthly amortization amount; and (3) the reduction of the equity requirement to 10 percent. Many further amendments were introduced by Presi- dential Decree No. 24 (19 October 1972), which (1) deleted the provision in the old law restricting housing loans funds to only 40 percent of total SSS investible funds; (2) increased the loanable value of a house and lot from 60 percent to 90 percent; 1/ and (3) authorized the SSS to act as the insurer of insurable mortgaged properties as well as the lives of principal borrowers. The interest rate has been maintained at 6 percent per annum. As with the GSIS programs, the terms currently in effect (6 percent annual interest and 25-year repayment period) make the SSS housing 1/ Before the amendments, the SSS could grant loans up to 90 percent of the appraised value of the house and lot, but only on account of the guarantee of the Home Financing Commission. In such cases, the interest rate was increased to 7 percent, the excess of 1 percent going to the HFC. - 17 - program most advantageous for the borrower. 1/ As mentioned in the case of the GSIS, market rates are considerably higher and access to other sources of housing finance is very limited even for those middle and low income families that could manage the mortgage payments. The housing loans of SSS include a subsidy since the SSS funds could have been invested in higher yielding assets at almost no administrative cost. Concern has been expressed about the possibility that the substantial amount of subsidy inherent in GSIS and SSS housing loans may encourage delinquencies in the repayment of princi- pal, as borrowers would be likely to prefer either to pay off other loans involving much higher interest rates or to invest their funds in assets earning higher rates. Private Institutions In addition to the above public institutions, a number of private institutions are also involved in one way or another in housing. Private financial institutions include commercial banks, savings and mortgage banks, insurance companies, building and loan associations, and savings and loans associations. Commercial Banks: The participation of commercial banks in housing finance is fairly recent. Their involvement is generally through collaboration with private housing and real estate developers. Banks that have joint ventures with private developers include the following: China Banking Corporation (Tahanan Village, Paranaque), Citizen's Bank (Victoria Homes), Manufacturers' Bank and Trust Company '(Victoria Valley), Bank of Philippine Islands (Teresa Homes), and Rizal Commercial Bank Corporation (Marikina Housing Village). 1/ However, it appears quite clear that the above measures and amendments have had the effect mainly of extending the range of benefits already available to and being principally captured.by a privileged -- middle income -- group. The,argument, in the case, e.g., of the loan ceiling, which stood for a period (1968-69) at P-15,000, runs as follows. The lower income groups can't afford anything like this amount (P 10,000 is a more appropriate-ceiling for them) and -- in the absence of some other criterion, e.g. reserving a portion of total funds available to those with incomes below a certain amount or to loans below a certain ceiling amount -- a ceiling that is inappropriately high, coupled with a down-payment requirement as low as 10 percent, simply serves to funnel the entire amount available to the higher-income - 18 - Savings and Mortgage Banks: As of 1972, the total assets of private 1AVings and mortgage banks amounted to P 894 million, 48 percent of which came from Banco Philippino. Banco Philippino, through its sister company, BF Homes, has one of the largest investments in housing. Three of its housing projects in Caloocan, Paranaque an4 Las finas were developed within the last five years. They contain at least 1,055 dwelling units, representing a total investment of about P 35 million. Insurance Companies: The Philippine-American Life Insurance Company has developed at least three Philamlife Homes projects in Quezon City, Las Pinas, and Baguio City. Total investment in these three projects, containing 1,400 dwelling units, is about P 32 million. Savings and Loan Associations: According to Presidential Decree No. 113, these include any corporation engaged in the business of accumulat- ing savings of members or stockholders and using such accumulations, together with the corporate capital, for loans and other investments, provided that such loans or investments shall be primarily devoted to servicing the needs ,of households by providing personal, long-term financing for home building and development. Savings and Loan Associations may also help any member to build his own house financed by his own deposits plus a salary loan equiva- lent to four months' salary, payable in twenty years at interest rates permitted by law. The estimated total assets of Savings and Loan Associations for 1973 amounted to P 300 million. Building and Loan Associations: In the Philippines these were started in 1904, with the founding of the Manila Building and Loan Associa- tion. They are organized as special corp6rations 1/ whose purpose is to accumulate the savings of their stockholders; to repay to said stockholders their accumulated savings and profits upon surrender of their shares, to encourage industry; frugality, and home building among its stockholders; and to loan its funds, and funds borrowed for this purpose, to stockholders on the security of unencumbered real estate and with the pledge of shares of 1/ Similar in many respects to mutual insurance companies in the U.S. - 19 - the capital stock owned by such stockholders as collateral security. Only 9tockholders of the association can borrow from these institutions. Loans are concentrated on real estate mortgage loans. The total assets of building and loan associations in 1972 reached about p 27 million. A substantial amount of these, about 75 bercent. reoresented real estate loans. IV. Constraints on Solutions to the Housing Problem in Metropolitan Manila The low level of family income on one hand and the high and rising cost of land and construction, as well as the shortage of credit, on the other, are at the heart of Metropolitan Manila's housing problems. The government's response to this dilemma has thus far been indecisive. No clear policies and no appropriate programs to alleviate the problems of low income groups have been articulated, and government investment in the housing sector has been woefully inadequate. The Income Constraint The underlying problem is obviously that people in need of housing cannot pay the prevailing market price for housing. The dilemma may be illustrated roughly by using family expenditure data (see Table V.6). Assume a family with an annual income equal to the national average family income (P 3,746 or $564) 1/, no savings, and 55 percent of total income spent on food. 2/ After food expenses, the family has P 1,690 ($254) left to meet other living needs. It seems reasonable to assume that a "low price" house 1/ Approximately one-third of MMA families and 45 percent of Tondo fore- shore families earn less than this amount. 2/ The percentage is considerably more than this for the lowest income groups, and even this (approximately two-thirds) is lower than the "expected" value based on such international comparisons as have been made to date. See, e.g., C. Lluch and A. Powell, "International Comparisons of Expenditure and Saving Patterns," unpublished IBRD Draft, January 1973. - 20 - of P 28,000 1/ ($4,217) is beyond such families' means, as, even under mdderately concessional terms (10 percent down-payment and 10 percent interest over 20 years), this would involve an annual outlay of just under 80 percent of total income and one-and-three-quarter times "available" income. 2/ If the situation is tight for this, the average resident, it is hopeless for the poor. Table V.6: FAMILY EXPENDITURE, 1971 Total Expense Family Under P 500 P 3000 to P 6000 & Group Expense to P 2,999 P 5,999 over Amount (P 1000) 28,430.424 10,192.246 7,811.987 10,426.191 a. Food 53.7 63.6 54.7 42.5 b. Clothing/wear 6.2 5.4 6.4 6.6 c. Housing & Furnish- ing 17.7 14.1 16.6 22.6 d. Recreation pers. care 5.2 3.9 5.2 6.8 e. Educ., transp., com. 6.6 3.6 6.5 9.6 f. Miscellaneous 10.6 9.5 10.6 11.9 100.0% 100.0% 100.0% 100.0% Source: BCS and De Vera, o. cit. p. 22. This income constraint on increases in the, housing stock is becoming more severe because the costs of certain components, such as land, building materials and construction, have been rising faster than the average level of family income. 3/ The cost of dwellings has also been affected by the gradual adoption (and often impositfon) of higher construc- tion standards. 1/ This is about the lowest priced house currently being brought to the market in Manila. See pp..17.21-2. 2/ This is a crude calculation, based on crude estimates of cost of house, income and percentage of income which might.be available to purchase housing. For a considerably more detailed, but thus far only an illus- trative treatment, see Chapter Nine, Section II, pp. 4; and Appendix XIV. 3/ See Table V. 7. - 21 - The Land Cost Constraint A second constraint affecting increases in the housing stock is the high cost of land. Moreover, until the recent introduction of measures intended to restrict land speculation, the price of land had been rising at an extremely rapid pace. Land values in Manila increased by 27 times between 1940 and 1969, whilst the national increase was equal to 12-15 times. In Quezon City, the average increase during the same period was 35 times and the maximum about 50 times. 1/ It has been reported that the recent measures imposed by the government requiring land owners to self-assess their land (facing the possibility of stiff taxes if they declare a high price, or the risk of having to agree to government expropriation at a low price if their assessment is low) has slowed the rise in land prices, but probably only temporarily. Clearly this conclusion is based on impression. However, since these measures are very recent, it is too early to study their effects on price. The range of land values in different sections of Metropolitan Manila is wide. Though these land value variations are discussed above, 2/ it is worth mentioning that, even for land in very low-income areas, the periphery of Metropolitan Manila, land owners would charge a minimum of P 30-40 per square meter for land development, and no less than P 20 per square meter for raw land. 3/ Sales of land in private subdividions thus start at about P 50 per square meter. The government, on the other hand, has the authority to sell its lands at raw land acquisition costs which can vary between zero and P 5 per square meter on the periphery, plus development costs of about P 10-15 per square meter. If the government were persuaded to sell even some of its land for housing for selected (low) income groups, it would have to be more certain than it can be under present schemes that such groups would indeed benefit and, even then, would have to realize that these prices would be far below the market level, or true opportunity cost. 1/ See Ramon N. Casanova, 7A Land Policy for Low-Cost Housing", NEDA, National Conference on Housing, Development Academy of the Philippines, Tagaytay City, 19-21 October, 1973, p. 14. 2/ See Chapter Four, Section IV; and Map 8. 3/ De Vera, 2. cit., p. 2. - 22 - The Construction Cost Constraint Construction materials and labor costs have been increasing rapidly. No indices are available for Manila separately from the rest of the nation; however, increases in the annual indices for the country as a whole -- for materials, skilled labor and unskilled labor -- are shown in Table V.7, Table V.7:. INDICES OF CONSTRUCTION MATERIALS AND WAGE RATES PHILIPPINES, 1962-1971 Retail Price Money, Wage Year Index of Const. Rate Index Materials Skilled: Unskilled 1962 130.1 106.1 107.5 1963 138.7 109.3 113.4 1964 145.0 11.2 114.4 1965 147.4 114.4 122.5 1966 150.2 120.1 131.4 1967 151.9 125.7 137.6 1968 155.3 135.8 153.1 1969 157.8 143.0 160.3 1970 192.3 151.9 177.0 1971 225.3 158.9 189.3 (Source: Central Bank Bulletins) The current price charged by Philippine contractors varies within the following ranges: P 500-850 per square meter for a concrete, multi-storey structure (exclusive of foundation piles), P 400-600 per square meter for a luxury type one-storey bungalow, P 300-500 per square meter for the average "accesoria" or row house apartment, and P 200-300 per square meter for a stripped-down, low cost, one-storey dwelling -- or core house. Selling prices are higher depending on financing costs, repayment period and profit mark-up. 1/ Given the above cost considerations, the sales of dwellings in the open market start at about P 18,000 2/ and the associated lots start at about P 10,000. 3/ 1/ See De Vera, .2. cit., p. 23. 2/ 50 square meters x P 300, plus financing costs, profit and administrative costs. 3/ 200 square meters x P 50. - 23 - This raises the combined price, to P 28,000 which, as has been mentioned, is fAr too high for most families. 1/ The Credit Constraint Although there are a number of lending institutions operating in the housing finance market in the Philippines, there is a ser$ou4 credit constraint, particularly for low income families. This credit problem grows out of the inadequate resources of the lending institutions, inadequate interest rates, artificial limitation to lending to the poorer members of the population and misguided policies regarding subsidy. The GSIS housing programs cannot have a significant impact on the overall housing situation of Metropolitan Manila or other major centers because of the limited relative size of the programs compared to the total housing shortage, and because of restricted membership. As mentioned earlier these programs are only for government employees. They automatically exclude the overwhelming majority of people living in critical areas such as the Tondo Foreshore, because an insignificant percentage of them hold government positions. Furthermore, in the low income areas, only a small percentage of the families have income levels that exceed the minimum income required by the GSIS programs. For example, the PAHRA Survey of Luzviminda and Parcel III showed that only 15 out of 1,220 families (one percent) had monthly incomes of P 400 or more. The IPC and BPW surveys 2/ 3/ showed somewhat larger but still limited percentages. The monthly mortgage payments of P 80-240 would still be prohibitively high for most,low income families. The SSS program is equally out of reach for the low income groups. Despite the recent liberalization of terms, only a very small percentage 1/ As mentioned in fn. 2/ pp. 20, see Chapter Nine, Section II, and es- pecially Appendix XIV for a,more detailed treatment, which deals as well with the problem of building on much more valuable central city land. 2/ As has been pointed out in the preceding chapter. 3/ The more recent survey taken this year in connection with the project being prepared for Bank consideration showed just over 40 percent. See Table 111.8, pp. 50. - 24 - of SSS low-income members has so far been able to take advantage of its housing loans. One of the problems is the relatively high minimum monthly income requirement. For a member to qualify for the maximum loans of P 30,000 his minimum monthly income must be at least P 700. As was explained earlier, this is beyond the reach of all but a small percentage of SSS members. In fact, both the G515 and the 555 programs may, based on their actual results, be described as ill-conceived in terms of any distributional criteria. As a result, the overwhelming percentage of their benefits go to a selected -- middle and upper middle income -- group, and this group receives a substantial subsidy. As can be seen in Table V.8, this subsidy ranges from 16-44 percent -- depending on the program and the market terms assumed. Table V.8: VARIOUS HOUSING FINANCE SCHEMES: DEGREE OF SUBSIDY Present Degree Value of Total Annual of Total/ SAsidy Scheme Terms Cost Downpayment payment Payments- M_d /1 GSIS--- i= 6% 100 0 7.82 61.33 38.7 43.5 /2 t-25 yrs GSIS-- i= 8% 100 0 14.90 64.21 15.8 22.5 t-10 yrs SSS i- 6% 100 10 7.04 65.23 34.8 40.0 /1 t-25 yrs Market-- i=12% 100 20 10.71 100. - N/A /2 tz20 yrs Market- i-15% 100 30 13.94 108.78 N/A - /1 Most Favorable Terms. /2 Least Favorable Terms. /3 Downpayment plus tne sum of annual payments discounted to the present at 12 percent. /4 Based on most.favorable market terms. /5 Based on least favorable market terms. - 25 - The Government Policy Constraint Government has not so far succeeded -- directly or indirectly -- in making a significant impact on either the overall housing problem or the living conditions of Metropolitan Manila's urban poor. It has either not seen the problem as a serious one -- until, perhaps, very recently -- or has not seen it clearly. Certainly 1/ i has not viewed the total problem, as it must be viewed, in terms of overall (opportunity) costs of urban development -- in different locations and with different combinations of land use mix and transport links, And it has not perceived even the true character of the housing problem. The result has been lack of clarity as tq objectives or of the real cost (and implied subsidy) of attaining objectives, confusion as between ends and means, and the proliferation of institutions without clear mandates. These have operated without a large measure of coordination and, not surprisingly given their general starvation for finan- cial and human resources, indecisively. It is therefore not surprising that government programs have so far made little "dent" in the housing field, and what little housing has been supplied has so far largely failed to reach the poor. Since the subsi- dized housing programs have, whatever the intent, been designed for middle income groups, the subsidies -- and what little housing has been built -- have gone to middle income groups. When the poor have been "reached" by housing (or housing related) programs, it is far from certain they have benefitted. It has been seen that this has been the case with the resettle- ment program; 2/ it has also been seen above 3/ that the GSIS or SSS pro- grams, pushed to the limits of their apparent ability to serve the poor, might well have the same result. That is, to construct a house that can be afforded by the average Filipino family (i.e., with a monthly income of about P 300) they must move close to the urban fringe, i.e., in this case to Las Pinas. This is not the other side ot the moon; it is not even Carmona, 1/ As has been pointed out in the preceding chapter. 2/ See Chapter Four, Section V, pp. V.24-39. 3/ Pp. V.14. - 26 - or Sapang Palay; however, it is sufficiently far from the major employment cehters of the MMA that it is likely that, even if the family feels it can afford the house, it will be reluctant to make the move because of the in- creased transport element in their limited budget; and, even if they do take the plunge, they may fail to make ends meet. Conclusions This may give some idea of the magnitude and gravity of the housing problem in Metropolitan Manila -- and it is not jRst a housing problem. Even its modest amelioration will require imaginative and effective planning (to bring "representative" transport demands down and permit cross-subsidi- zation in the sharing of overall land costs) and it will require substantial advances on several fronts to narrow the demand-supply (income-cost) gap. A couple of examples will illustrate just how far Metropolitan Manila is from a solution: (a) Supposing, under present circumstances, government were to launch a program to assemble tracts of land on the urban fringe, devote it (at cost) to "low cost" housing, and reduce the space and construction standards such that each family would have 50 m2 of land and 40 m2 of house. 1/ As a result, the price of a "low cost" house could be reduced from approximately P 28,000 to approximately P 8,750. What would this mean to the average Filipino family -- those at the top of the lower third of the MMA income distribution, of the lower half of the Tondo Foreshore distribution. It would mean that, even with a twenty percent subsidy on the finance package, they would have to devote to housing 25 percent of total income and more than 55 percent of ihcome "available" after food expenditures are accounted for, and they would have to incur the high (time as well as money) costs of transport inherent in a decision to live on the periphery. 1/ As opposed to 100 mz1and-50 m2, respectively, under most present programs. - 27 - (W) What are the current prospects of achieving a better result by movthg to higher density (multi-storey) housing nearer the city center? The results are, as yet, far from conclusive. The transport coats of the peri- phery would be avoided; however,. the simulation model which may be used to guide the design of the Tondo Foreshore Urban Renewal Project 1/ has, under the lowest cost "solutions" so far developed, so far "churned out" the fol- lowing discouraging results: (i) If the extent of subsidy of total costs is not allowed to exceed 20 percent and the percent of the family's income devoted to housing is not allowed to exceed 20 percent, the average family cannot afford to purchase more than 15 m2 of living space. 2 (ii) If the subsidy is kept to 20 percent and a minimum of 40 m is to be purchased, 38 percent of the average family's income will be required. (iii) If a minimum of 40 m2 is to be purchased and no more than 20 percent of family income spent, 32 percent of total costs will have to be subsidized. 1/ See Appendix XIV. MANILA URBAN SURVEY REPORT CHAPTER FIVE Statistical Annex Table No. Annex Page No. V.9 ... .............................. 1 V.10 .....................2........... 3 V.1o ................. V.12 ................. Table V.9: HOUSING SHORTAGE BASED ON POPULATION AND AVAILABLE DWELLING UNITS, PHILIPPINES, MANILA AND URBAN RIZAL Percent Percent Share Percent Urban Share of of Urban Share of Philippines Manila Rizal Manila in Rizal in Philippines Manila Manila in 1970' 1970 1970 1/ Philippines Philippines 1960 1960 Philippines Population 36,590,068 1,323,430 2,672,522 3.61 7.30 27,087,685 1,138,611 4.20 Households 6,098,328 220,571 445,420 3.61 7.30 4,670,290. 196,433 4.20 Housing Stock 5,697,877 77,339 112,620 1.35 1.97 4,790,954 177,825 3.71 Barong-Barongs 389,873 2,224 1,880 0.57 0.48 515,898 6,597 1.27 Vacant . . - - - 142,709 - - Housing Shortage 790,324 155,456 3314,680 19.66 42.34 373,189 25,205 6.75 1/ Data not available ror iY00. Source: FAHRI, nracT. bnee6 on Housing", 1Y73. \0 e1.j Table V.10: CMBINED OUTPUT OF GSIS FINANCED AND A24INISTEED PROJECTS (As of August 31, 1973) Amount Amount Number of Number of Number of Number of Number of Name and Location Area Approved Released Units Units Units Units Units of Subdivision (hectares)(millions) (millions) Programmed Completed Turned Over Accepted Occupied a. GSIS assisted 1,229.5 221.1 152.2 33,660 3,592 1,560 1,oo 640 b.. GSIS administered 317.76 144.63 124.93 6,741 3,706 3,706 3,706 3,706 Grand Total 1,547.26 365.73 277.13 4o,4o1 7,293 5,266 ,746 4,346 Percent administered 20.5 39.6 45.0 16.7 51.0 70.0 78.0 85.o Source: Orola,. op.cit., Appendix o E rC+ 0c 4 Statistical Annex Page 3 Table V.111 Table V.11: SALARY DISTRIBUTION OF SSS MEMBERS (As of June 30, 1973) Percent o Monthly Sala;y Number of Members Total Membership Below F75 372,643 10 R 75 - P124 391,651 10 125 - P174 471,693 13 0175 - P224 572,245 15 1225 - 1299 571,876 15 1300 - P424 575,080 16 PY25 - R499 321,193 9 P500 and over 415,735 12 Total 3,692,116 100% Source: Gregorio, op.cit., Appendix Table V.12: DISTRIBUTION OF MONTHLY EFFECTIVE NOOME OF SSS MDMBER GRANTED HOUSING IDANS FROM JULY 1972 TO SEPTEMBER 1973 (Sample Size: 580) MONTHLY EFFECTIVE INCOME (Figures in Pesos) No. of Region Samples 250 & 251-350 351-350 451-550 551-650 651-750 751-850 851-950 951 & Taken below above 01 - - - 1 2 1 2 3 1 10 02 - - 1 - 5 3 4 1 6 20 03 2 7 8 26 30 80 75 48 124 400 04 - 1 - 1 4 4 1 5 4 20 05 - - - - 1 3 4 2 10 20 06 - - 1 1 2 4 6 3 13 30 07 - - - 1 7 6 9 4 3 30 08 1 2 1 1 4 3 5 - 3 20 09 - - - - 1 3 3 2 _1L 20 10 - - - 1 2 3 1 1 2 10 Total 3 10 1 32 58 110 110 69 177 580 Percentage .5% 1.5% 2% 6% 10% 19% 19% 11% 31% 100% Notes: The sample size of 580 represents approximately 10 percent of the total current housing loan account. The distribution of samples taken from the regional offices other than Region 03 (Metropolitan Manila and the provinces of Pampanga, Bataan, Cavite and Laguna) were divided proportionately from the approximate number of approved housing loan applications- in these areas. The figure on monthly effective income may be biased by the policy allowing:married children to act as co-applicants. Thus, two co-applicants with monthly incomes of R350 each will have a combined monthly effective income of P700. However, less than 10 percent of total housing loan x, applications involve this type of arrangement. CHAPTER SIX METROPOLITAN MANILA: THE URBAN TRANSPORT SYSTEM: PROBLEMS AND POLICIES I. Introduction Metropolitan Manila's growth has far outstripped the capacity of its transportation infrastructure, both the road network and mass trans- portation facilities. Rapidly increasing travel demands have been accommodated by a transport system whose nature has changed little since the turn of the century. As a result, Manila is almost entirely dependent on road-based trans- port (rail traffic comprises less than one percent of daily passenger trips), road space is inadequate, and severe traffic congestion has become the normal condition. Perhaps an even more important problem is the absence of any plan to help the transport system conform to the demands generated by the emerging distribution of metropolitan employment and residence locations. Proposed solutions to Manila's "transport problems" range from networks of high standard roads, to subways and elevated magnetic levitation systems for public transport to improved traffic control. Some of these options have .been studied extensively and others are simply ideas, but in any case little has been accomplished in the way of investment or management improvement to either expand the system or improve its operation. - 2 - The major transport works undertaken in Metropolitan Manila since the 1960's include the construction of circumferential road 0-4 and the two inter-city expressways emanating from C-4 to the north and south. The construction cost of C-4 cannot readily be estimated, as the road was constructed in stages and by sections over several years with federal, local and provincial fun4s. peyond the provision of C-k and the northern and southern expressways, which were built primarily to give better access to other economic centers in the country, up until the early seventies there has been only a minor upgrading of a few radial roads inside C-4. At present, some of the missing links, notably C-1, are being com- pleted, but road construction in the urban center moves at a snail's pace. This chapter describes the present transport system and operations, reviews and critiques transport planning activities, and discusses some policy issues which need early resoultion. In the case of the latter, specific attention is given to (a) the issue of the proper future role of jeepneys and (b) the organization and provision of bus services. 1/ The North Diversion Road and the South Superhighway respectively: See Map 11 (IBRD 10927), pp.VI.3. 111E. z.2I 124 127 --S NE.-.-. LUZON Phd,pp, S.a ............Cht- à s 12 12- R-.. : , .-2 RAPrD TRANSIT MINDANAO RAPLT 2- 2 - -23 eRA-ID TRANSER N I -3 A3po pnmr Dd B-4 --- - --- L- PeoadRpeswy .PMoe ANR Nnnoe IIInA 4C3 c6 --- E-2 B Ar nYm SOtR3l 8 A y---- R-4 -...... .. p...k D TRANSIT c3 { iNE-2 POPULATION DENSITY(perdsons/o) -More than 300 200 -300c5 100-199 500-299 Less than 50 -IE A-p PllPIE ... .....METROPOUITAN MANILA TRANSPORTATION SURVEY AREAS c aE.istimig pirimainryro.,ds Existsig secondory roods Ro unbers -- -- -Proposed primary roods Proposed expressways .----.-.--.... Proposed rapid transit system -Philippine National Railways ........... Proposed PN.R. commuter line *...... Proposed mnterchange improvemenl on ....... ircumfsrn~o roads ' RRD RAN A Screen line stations UINE-4 ...... . Cordon stations .... -..--.-----. Zone boundarles and numbers ....T -.-.Survey area boundaries andnrumbers E-3 -E-3 ......... 0 2 3 KILOMETERS R: r ~MILES e ........g II. Characteristics of the Existing System The Existing Road Network Tho net.work of Metropolitan Manila's major roads consists of four nm.-circumforential roads (C, C2, C3 and G4 ) all of which are around the Central Business District (CBD) and none of which is complete; plus 2/ nine radial roads, most of which are complete, extending from the CBD to outlying areas. - Most of these roads have either four or six lanes. In addition to the normal problems of attempting to maintain, expand and rationalize a system of narrow and of winding roads running through densely settled areas, the transport system serving Metropolitan Manila is in many ways further complicated by the presence of the Pasig River, which divides the city into north and south, and is currently spanned by nine bridge crossings of different capacities. Moreover, numerous esteros, waterways, and creeks stand as natural barriers, producing discontinuities in the road syste, and constraining traffic flows. Most of the existing roadashave been built be standards that are inadequate for today's traffic. Typical featires are narrow rights-of-way and lane widths, poor drainage and,for the most part, an antiquated grid pattern. Laid out long before the auto age and designed principally for convenient real estate platting and access to property, these obsolete rights-of-way are now crowded on both sides with commercial activities and dwellings. Most important, the concentration of traffic on narrow streets 1/ Radii at their furthest points from the city center are approximately 2 km (Cl), 5 kam (02), 8 km (03), and 10 km (Oh). 2/ They are: (i) Quirino Avenue-Roxas Boulevard; (ii) South Superhighway; (iii) Shaw Boulevard; (iv) Ortigas Avenue; (v) Aurora Boulevard; (vi) Quezon Boulevard; (vii) A. Bonifacio North Diversion Road; (viii) Rizal Avenue Extenpion-MacArthur Boulevard; and (ix) Juan A. Mabini Street. / See Map 11 kIBRD 10927) with many crossings makes it impossible to realize the speed and service potentials of the motor vehicle. Moreover, due to poor drainage and maintenance, road conditions are generally poor,with numerous potholes and cracked Surfaces. There are only a few grade-separated intersections on major corridors and an i4- significant amount of traffic controls. In the entire MMA, over a densely 2 urbanized area of approzimately 340 km , only about 65 intersections are signalized; many of these signals are poorly displayed and all are frequently out of operation. Motor Vehicle Use This antiquated system of roads has been strained for many years; additions to the network have offered very little relief, and that not for long; and the strains are becoming increasingly severe as the motor vehicle population and motor vehicle use continue to increase rapidly in hbat is Already 1/ a city with a high rate of motor vehicle use. Automobiles and other motorized vehicles in Metropolitan Manila have increased at an average annual rate of just over 8 percent (of an increased of 60 percent) between 1966 and 1972 (see Table VI.1). Total vehicles in 1972 amounted to 269,000 2/, of which 162,000 (or 60 percent) were automobiles. These represented 49.4 percent of the total national automobile registrations and 37.4 percent of the nation's total motor vehicles. The motoriBation rates Y/were 334 cars and 565 motor vehicles per thousand persons in Metropolitan Manila in 1972, as compared to 5 cars and 14 motor vehicles per thousand in the rest of the country. According to these statistics, the absolute change and the rate of increase in automobile registrations have been less in the 1969-1972 period than they were during 1/ See Chapter Two, pp. 11.2. 2/ Including 25,200 motorcycles. 3/ Ratio of vehicles to population. Table.V1.1: MTROPOLITAN MHLA: GR0WTH OF MOTOR VERICLES AND MUTOR VEICLES PER CAPITA .1966-72 I'MBER OMT- R VEICLES RDISTERED Ill RIZ&L, ANTILA, PASAY, CALOOCAN AND QUEWGN CIT Percentage Increase Type of Vehicle 1966 1967 1968 1969 1970 1971 1972 1966-1972 Cars 101,528 113,766 129,318 146,357 152,629 159,863 162,023 60.0% Taxis 7,931 9,832 6,781 7,508 7,h40 7,2j1 6,23h -21.4 Trucks 36,900 4l,761 43,768 51,824 52,210 52,735 54,180 46.8 Buses 1/ 3,058 3,143 3,338 4,132 3,285 2,714 3,301 7.9 Jeepneys 8,261 9,111 12,806 17,ol 13,797 13,451 18,256 121.0 Motorcycle 9,696 15,636 19,033 19,488 19,176 20,755 25,200 160.0 TOTAL 167,374 193,249 215,0h0 246,323 248,537 256,929 269,194 60.8 1 Trailers 3,537 3,239 3,031 4,o8o 5,631 6,17 ,876 37.9 GRAND TOTAL 170,911 196.488 218,075 250,403 254,168 263,108 274,070 60.4 Motor Vehicles per Thousand Persons Cars 280 299 324 349 347 --346 334 All Vehicles 471 516 547 598 578 569 565 Population in Metro- 3.63 3.81 3.99 4.19 4.40 4.62 4.85 politan Manila 2/ 1/ Figures include same provincial buses in intercity service. 2/ Estimated from 1970 population base and 1960-70 percentage annual growth rate of 4.9%. Source: Land Transport Commission. - 7 - 1966-1969. It would also appear that motorization rates have declined somewhat since the highest rate was achieved in 1969. The growing popularity of and demand for jeepney transportation are reflected in the rapid increase in the number of registered jeepneys. Between 1966 and 1972, the number of jeepneys in service increased by about 121 percent, though this growth has been neither even nor steady. There was a particularly sharp increase in 1969 when 17,014 jeepneys were regis- tered, reflecting a quick response to the first jeepney fare increase in nine years. Even though the Board of Transport maintains that no new cer- tificates of public conveyance have been issued since 1960, it is reasonable to conclude that the bulk of jeepney growth has taken place in the suburbs. Records are not very accurate, but many suburban-based operators were granted extensions of their authorized routes to enable them to reach central city areas. Many jeepney operators also applied for certificates in outlying municipalities which were not affected by a moratorium on new entries. The number of reg- istered jeepneys quoted above also includes the vehicles authorized to operate only in the provincial towns,and therefore overstates the actual units ope- rating in the metropolitan area. The number of registered buses in Metropolitan Manila increased by only 243 units during the six-year period beginning in 1966. These regis- tered buses represent about.30 percent of the total buses in the country, serving about 10 percent of the nation's population. Nevertheless, growth of bus registrations lagged far behind the average annual ratesof growth during the comparable period of both the MA population (5 percent) and the national motor vehicle fleet (14 percent). -9- Congestion With an inadequate road system that is only slowly being improved, with an already large vehicle fleet that is expanding rapidly, and without the help of effective management and control of vehicle flows, it is hardly surprising that Manila experiences severe and increasing congeptiop. Travel is slow and difficult throughout the city from early morning until evening., Average speeds by car in prolonged peak hours range from 13- 15 km per hour, while the average speed of buses is only about 10 km per hour. In some locations (Ernita, Quispo, major intersections on C-4), traffic crawls at 0-5 km per hour, slower than ordinary walking speed. The road lanes are often so saturated that failure of even a single vehicle causes massive traffic jams. The variations in average speeds maintained by different modes of transport can be illustrated by the time required to travel the 1 kilometer route along the most central corridor of Manila (South Harbor, through Quiapo, along Espana Avenue to Queson City). Although peak hour travel speeds by different modes do not vary a great deal, the differences become pronoun- ced during off-peak hours. Daring any time of day outside rush hours, the travel time by private automobiles is 15 minutes, by jeepneys 20-25 minutes, and by buses 45 minutes. This trip normally requires more than an hour under congested conditions. The chronic congestion observed in Central Manila is, of course, partly due to the capacity limitations of street networks. In addition, one might speculate about.other causes, notably:. - 10 - (i) the absence of effective traffic management; (ii) the lack of parking space and of specific loading areas at trip terminal points; (iii) driving practices in complete disregard of traffic laws; (iv) the frequency of serious flooding problems over large areas of the city and especally on flat streets that have clogged drainage in- lets; and (v) further reduction of usable street width by piles of garbage or unoontrolled business activities and pedestrian traffic. Additional congestion is caused by sUbstantial volumes of through traffic unnecessarily entering the CBD due to the lack of suitable bypass routes, and by other trips requiring transfers in the CBD due to the absence of direct interzonal links outside the core area. It is estimated that of the total daily intersonal trips originating in the metropolitan area (1971), 56 percent were related to the CBD, while another 29% entered the inner core to change modes, and 11% were through trips; the remaining four percent of trips related to CBD were intrasonal. Much congestion is observed on all major radial roads, but is es- pecially severe on A. Bonifacio (the northern extension of the XacArbhur Highway), and A. Mabini.- Both these roads have only two lanes, butast serve as major access roads connecting the CBD to the four-lane expressway in the north, the North Diversion Road. Since A. Bonifacio intercepts the four-lane North Diversion Road and the four-lane Dimasalong in the CBD, the traffic to and from the CBD using the North Diversion Road as a radial axis 1/ See Map 11 (IBRD 10927), pp. VI.. - 12 - Table VI.3: METROPOLITAN MANILA: TRAFFIC VOLUME AND CONGESTICN ON MAJOR HIGHWAYS AND BRIDGES, 1971 Congestion Location Vehicles/day 1/ Level 2/ Quezon Bridge 74,300 1.9 Bambang Bridge 21,200 1.9 Guadalupe Bridge 91,500 1.5 MacArthur Bridge 53,100 1.3 Panaderos Bridge 26,400 1.3 Espana Ave. Balic 73,300 1.2 Roxas Bould. Malato 73,000 1.2 Jones Bridge 49,200 1.2 Ayala Bridge 49,000 1.2 A. Bonifacio 24,900 1.2 Quezon Bould. 68,700 1.1 Rizal Ave. Extension 64,100 1.1 Aurora Bould. (San Juan River) 45,900 1.1 M1. Roxas Bridge 42,400 1.1 Taft Avenue (Malate) 54,800 0.9 Zapote 22,600 0.8 1/ Two directional flows. 2/ Congestion defined as: Estimated 'daily traffic volume (vehicles/day) 10,000 vehicles/lane/day by number of lanes where: 10,000 vehicles/lane/day = daily traffic capacity per lane. - 13 - Travel PatternB The origin-destination (0-D) survey, conducted in conjunction with the 1971 Metropolitan Manila Transport Study, provides a general picture of travel patterns in the metropolitan-area, although it is substantially out- dated for three principal reasons: (i) the numbers of motor vehicles and passenger trips have increased significantly since 1971; (ii) curfew under Martial Law was instituted in 1972,intensifying day- time traffic; and (iii) jeepney and bus routes have been altered several times. 1/ The 1971 survey estimated that the 3.9 million inhabitants of Met- ropolitan Manila made 6.7 million trips in a typical work day (a rate of 1.7 trips per inhabitant). The most important means of travel for the non- car owners were (and still are) jeepneys and buses, which together accounted for 62% of total passenger travel. Of all person trips (unlinked) taken in Metropolitan Manila, about 46% were by jeepney, making this by far the dominant transport mode. The second most important public transport mode was the bus which provided 16% of total passenger travel. Automobiles, on the other hand, accounted for 25% of total trips. The remaining trips were carried by taxis (5.4%), trucks (5.7%), and others (1.3%). (See Table VI.4). The analysis of the linked trips indicated that the average number of transfers per trip was 1.23. It.further indicated that a relatively 1/ The population figure used in the survey is smaller -than the 4.4 mil- lion used elsewhere in the report due to the different coverage of areas. - 14 - Table VI .4: METROPOLITAN MANILA: DAILY PERSCH AND VEHICLE TRIPS BY MDDE, 1971 (Unlinked Trips) Mode Person Trips Percent Vehicle Trips Percent Cars 2,091,000 25.1 697,000 40.8 Jeepneys 3,339,000 1!6.1 479,879 28.1 c,es 1, 36,000 2 6.4 3,100 ?.0 T'axi4 L1,000 5.4 22ý,500 13.2 Trucks h7h,000 r.7 237,000 OLhers 10:,00 1. 3 3',000 2.0 TotaI 8,32h,000 10.0 1,708,475 100.0 asic Ascumrptionsz: 1. Avernge daily passengcrs ir1uding drivers for cars = 3 2. "Ex2luding" jepneys = 8 tf " If 1' ' " bu e = L. If e f i taxis = 0.1 of ""icks e= 2 of vehicles =3 - 15 - large number of trips were made using both jeepneys and buses, although shorter trips and more frequent transfers were made between jeepneys than between buses. As for the passenger car, only a negligible number of passengers transferred from a private car to other transport modes. Table VI.4 indicates very substantial variations in the "efficiency" with which the various kinds of vehicles moved passengers. The starkest contrast is offered between buses, which required only two percent of vehicle trips to move 16 percent of passengers, and automobiles, which moved slightly more passengers (25 percent) but required over 40 percent of vehicle trips to do so. There was also a considerable range in modal usage by zone and district. Jeepney use was highest, accounting for 573,000 trips (51% of total) in the city core 1/, followed by 395,000 (44%) in Cubao, Quirino and Murphy and 380,000 (59%) in Tondo and a small part of Santa Cruz. The lowest jeepney traffic volumes were observed in the suburbs 2/ where private automobile travel dominated (60-80%). As for bus usage, the O-D Survey result showed that buses carried 610,000 daily person trips in Manila and 750,000 in its suburbs, a total of 1.36 million trips. In Manila proper, buses comprised 3.3% of total vehicular traffic,carrying 17.2% of the total person trips. The comparable figures for the suburbs were 2.7% and 15.8%. The same survey indicated that the vehicular composition of traffic at screen and cordon lines 3/ varied considerably. In the vicinity of the 1/ Quiapo, San Miguel, Binondo and San Nicolas. 2/ Obando, Marilao, San Mateo, Montalban, Cainta, Tagaytay and Imus. 3/ Screen lines were set up at the nine bridges.over the Pasig River leading to the central area,and twelve cordon stations were established on the major radial routes in the peripheral areas. - 1-7 - III. Jeepneys The jeepneys (PUJ) of Manila render a unique character to the metropolitan transport scene. The colorfully decorated vehicles are the most visual component of all surface traffic and the jeepney system offers some unique operational features that cambine bus and taxi capabilities to serve consumer demand effectively. Individually controlled vehicles carrying more than a taxi but less than a bus provide almost door-to-door services on fixed routes to more than half.the travelling public in the metropolitan area. They carry about three times as many passengers as buses or automobiles in both Manila City and the surrounding mmnicipalities. Jeepneys were originally constructed by converting surplus army jeeps to give appropriate seating and entry/exit arrangements for urban passenger service. They began to operate after World War II when certificates of public conveyance were issued on an emnergency basis to fill the vacuum cre- ated by the destruction of the prewar transport systems. The improvisation became permanent as the demand for transport services continued to outpace supply. The typical jeepney has a front seat that holds the driver and two passengers. In the back, upholstered benches run along each side, their length varying from four to six seating positions. The total capacity of the vehicle is thus 10 to 14 passengers, although during rush hours a few more squeeze in. Jeepneys are licensed to operate on fixed routes. The line - 18 - designator is prominently displayed on the outside and usually consists of three items: the two terminal points and the central node through which the vehicle passes. All jeepneys are privately owned and operated. As of January 1973, an estimated 3,500 owners or corporations were authorized to operate 7,800 l/ units in Greater Manila.1 The bulk of operators own about three to six units, and many own just one or two. An individual or corporation owning twelve or more units is considered a large operator. The driver is usually engaged under the so-called "boundary" system, a voluntary private arrange- ment in which the driver, in effect, rents the vehicle from the operator for a period of time and pays a fixed fee. Since the supply of drivers exceeds the demand by 2 or 3 times, employers have considerable freedom to bargain. The daily "rental" rates negotiated between owners and drivers range from P25 to P30 per day for a vehicle with a seating capacity of 12, P40 for a vehicle with seating capacity of 16 to 20. The driver pays for gasoline and oil, and the owner is responsible for maintaining the vehicle. Operating routes are regulated by the Board of Transport. Until the end of 1972, when a series of traffic experiments were initiated, jeepney and bus line networks overlapped on almost all the relatively wide streets, Jeepney routes also penetrated into densely developed areas, providing services on narrow secondary roads. There was hardly any section of the city within C-4 not traversed by either bus or jeepney lines. The average route length was about 10 km. This route structure has changed a few times since then, and the experimental actions are not yet over. At present, buses run on all major 1/ Rizal Pivince and the cities of Manila, Pasy, Caloocan and Quezon. - 19 - arteries and jeepneys on all seconoay roaas ana se.leced major routes. The data supplied to the Bank mission in October 1971, consisted of eight zone areas in Manila City south of the Pasig River and six zone areas hOth of the river. Within the zone areas in the southern section of the City,there were ten jeephey lines with a total length of 48.2 km, or an average of 4.8 km. In the northern section the coverage is much ereater: there were 39 lines totallin 147.8 km. with an averaie route leneth of 3.8 km. The combined.mean route length both north and south of the river was 4.0 In.; the range was frm less than 2 Im to 8 m. 1/ See Map 12 (IBmRDm1O50), pp. YEN* le. U. 2. OMA IL Is- 12- MIDANAO j ~jj~$ Alrpst ETROPOLITAN MANILA DALRAFFIC VOLUME 1970-1971 MAPhdlppine N1tional Raiways -ETROPOLITAN MILE5A - 21 - In the surrounding municipalities, jeepneys were providing compre- hensive coverage on some 5h routes. In addition to these authorized routes, jeepneys were allowed to ply on all other secandary streets which have not been officially specified, and could deviate from prescribed routes to pene- trate into tertiary roads in suburban communities if there was enough demand for their services. Thus, in outlying areas, because the principal alternative mode, the bus, provides infrequent service and travels only on major thorough- fares, jeepney transportation is more essential and more personalized than in the center city. The jeepney system, providing group riding and nearly door-to-door servLce by picking up or dropping off passengers on signal anywhere along pre- scr"bed routes, offers some unique operational features which make it an effective competitor with taxi, and particularly bus service. The combined factors of jeepneys' ready availability, assured seating (standing is not allowed) and rela- tively high speed, all at the same low fare as buses, have worked to reduce substantially reliance on the bus. The advantage of buses in terms of the utiliza- tion of street space, notwithstanding, riding habits and preferences incline the public towards jeepneys. The superior operational characteristics of jeepneys pose a threat to the bus transportation industry, ;which periodically proposes elimination of jeepneys from the major arteries where buses can provide higher carrying capacity. This attitude is understandable in view of the fact that bus revenues and ridership increased by 30 percent when jeepney competition was eliminated temporarily from major bus routes during recent traffic experiments. For 15 years, the now defunct Public Service Commission (PSC) and the Board of Transport (BT) which replaced it, have contemplated a program - 22 - or gradually ph iing out the jeepneys. The PSC shortened the period of franchise to Live years from the original 25, with the objective of accomplishing a full phasing out of jeepneys and their replacement by buses over a five-year period. At present, the BT issues no certificates but only grants special permits good for six months to a year when a franohise expires. The Board of Transport also adopted a new policy of sane- ticning illegally operating jeepneys (known as colorum and kabit) under certain stipulated conditions. The objectives are to determine the number of colorums and kabits operating on city streets and to have a better control over their services once they are legalized. It has been attempting, so far unsuccessfully, to induce jeepney owners to convert to bus operations by granting permits to operate one bus for every four jeepneys taken off the road. The major reason for this effort stems from the belief that jeepneys are the main cause of traffic congestion in Manila. This view needs reexa- mination. At least equally important causes are the capacity limitations of streets thtt have not changed substantially since the 1930's and the predominance of private passenger cars, which comprise 50 percent or more of the vehicular traffic in the center. Negative reactions to jeepney transporta- tion clearly do not come from the riding public, but rather from owners of private cars and bus operators who are inconvenienced by surface congestion and jeepney competition. This is not to say that there are no major problems associated with jeepney operations in-Manila. The problems include undisciplined driving habits; disregard for traffic regulations; stopping in the middle of the road to - 23 - take on or discharge passengers,; parking and waiting at street crossings, thereby interfering with the flow of traffic; occupying multiple lanes of busy streets to accumulate passengers; excessive competition in certain sections of the city; and the like. These negative factors give many the erroneous impression that jeepneys are the sole cause of chaotic traffic conditions. How- ever, these are not shortcomings of jeepneys as such,but rather indicate the need for pwoper traffic management and operational control of all vehicles, including jeepneys. Intelligent regulation and effective policing, together with minor physical improvements (such as parking and waiting space at trip terminal points), could considerably improve the performance of jeepneys with minimum disturbance to pedestrian and other moving traffic. Before deciding the future status of jeepney transportation in Metropolitan Manila, social cost and benefit calculations comprising all important considerations need to be made. One important consideration, in addition to the provision of superior operational features to meet the local demands for intra-city transport, should be the ability of the transport system to generate employment. At the present time jeepney-related employment ranges from manufacturing and servicing of vehicles to hiring of jeepney drivers. Because of very high import duties on all motor vehicles, most jeepney equipment is brought into the.Philippines in a CKD condition or as spare parts. Only engines, differentials, axle assemblies and similar complex parts are imported as separate items. Consequently, a sizable work force is engaged in the overhaul and assembly of the imported parts to produce a finished vehicle. The chassis and body are locally manufactured, - 24 - welded together, and combined with the mechanical parts to prodace a vehicLe. The new vehicle retails for P 12,000 to 20,000, depending on its size. Social considerations apart (such as the loss of the low-cost, con- venient, personalized public transport service), the economic consequences of a jeepney phase-out would be grave. A large investment has already been made in rolling stock, as well as in the facilities of an entire manufacturing, maintenance, and operating industry. Although the number of people employed in the jeepney and related industries cannot be determined without a major study, the Jeepney Association of Greater Manila estimated that at least 10 percent of the total labor force in Metropolitan Manila is earning a livelihood from jeepney operations and maintenance servicest The importance of defining a role for the jeepney industry which would imply a minimum of modifications in order to achieve the desired improvements and therefore permit it to retain its appropriate place in Manila's transport system should not be underestimated. f. BUSES In Metropolitan Manila all bus services (PUB) are privately operated by some 105 authorized companies and individuals. There has been no inven- tory of equipment, nor are there reliable data on the number of buses in service; however, operators estimated in 1973 that about 2,400 conventional single-deck buses were serving the metropolitan area, with the actual number of buses on the road on any given day less than 2,000. About half the oper- ators owned less than 10 units; one large company (JD Co.) operated 326 units. The average number or ouses operazea by one company was about 23. In the 1 This figure can be taken as no more than illustrative it inmlies a labor force of approximately seven to keep each jeepney on .he roa. - 25 five years since the volume of registered buses reached its peak in 1969, a number of large and small operators have gone out ,of business. This trend may accelerate in the near future unless present financial difficulties can be overcome. Route and Fare Structure As of July 1973, buses operated on 47 routes with a total length of 835 km. The route structure provides good coverage on all the major thoroughfares, with the exception of Roxas Boulevard where PUB vehicles are not allowed. The routes run radially as well as north-south and along Manila's major circumferential road C-4. The average length of bus lines is about 15 km, ranging from 6 km to 30 km. The relatively short lines (6-9 km) are found only in the CBD. The number of buses authorized to run on each line 2/ ranged from 10 to 110, with an average of 46. During peak hours, buses frequently run at less than half-minute intervals on lines along C-4 served by 250 mini- buses and 269 buses. On most routes, passengers may expect buses every few minutes,at least during rush hours, although buses may often be fully loaded. It is not possible to obtain growth trends in bus passenger traffic in the metropolitan area, as privately operated bus owners and companies have not kept records other than for revenues from fares. Although the declared income statements of the five largest bus companies showed an average 1/ In this year, the fares were increased for the first time in nine years (see para. 3 pp. VI25.. 2/ There were two lines on which less than 10 buses operated: the Baclaran-Quirino Avenue-Taft-MacArthur Brig-Rizal-Monumento line was served by 5 buses and the Murphy-Aurora Bonievard-bspana-quezohBridge-Quirino-Baclaran, by only 2. - 26 - annual rate of increase in fares of 10 percent between 1968 and 1972 (see Table VI.5 and para. 1 pp.V1.28), it is impossible to separate the effeots of changes in the average trip distance (zoned fare system), the fare increase in 1969, and changes in the number of passengers carried. Furthermore, it is not known what share of the total bus traffic was carried by the five companies reporting income statements. If the number of registered buses is any indication, bus patronage may not have increased substantially over the past several years. METROPOLITAN MANILA Table VI.5: COARAJIVE INCOME STATEMENTS FOR WJS OPEPAIO3 rOM 1968 to 1972 .. ee.Qr 2 0 J 17.965 2'Y . "L .c-26 ' . 3 17.3 3,559 16i3 2,806 15.62 2,5 .,1 5 Dr.vers' and Ccn,-v- : ., , 26.93 5,65D5 2 3.1 4,729 26.32 L,hh 2).ZL ,3h 27.6 T1rc .d atre , ~. W L.e2 70C ~:9 567 '.7 1 .- 3: r1 js nd e.3~ 2,70 2 2.9&6 11.33 1,63 11.72 ¯. Carriers' Tax L19 2.0 2 _ . 363 2.Q7 372 ?. 3' 2. Sub-Tsal :3,461. 6;.1 13,233 62.76 -10,61,6 59.26 9,157 6f.67 7,15 .d;.92 1,921 9.16 1,790 3 >3 1,63 9.6- 1,25! 6.50 _,3! 5.23 -.TC aa; PS' EiSnervision Pees 650 3.11 757 3.32 6h 3.61 633 1.19 5 3. SSS Prei': 391 1.87 309 1.; 225 1.27 204 1.35 2C1 i.31 'n-d aO--fice Supplies 119 .57 127 .j 101 .56 P0 .53 95 .6- -s-.r"ance Expýense 92 .-, 9k 5 7 .!11 57 .7 67 .5 - irs nd Mainte.ance - Othars 3 1,209 5. L 1,106 6.:6 652 1.3- . : .on I-Dvlnuc - ýMses 1,7 - .9L 1,873 .C 1,577 10.15 1,710 11.33 1,633 10. t - Others 3. 119 .7 115 103 .6 Am -!-ctztion .i 35 ..6 3l .19 27 .13 9 3 r7c>3 .5- h 693 3.36 1.76 3.16 55L 31 3 :-ub-Tot 1,539 -5.63 7, ,529 36.31 5,214 3l.73 , 3 T O'erati . Exene 201 .03 9'. 2 96,7 17,165 95E57 i1:01 95.L0 1.303 9 . neratin1 52b 2.51 5 3 800 1L3 695 14.60 723 L,U6 Otlaer Inome . "hanes erest ne ~~ (53) (1..12) (773) (3.67) (915) (1..51.) (723) (L.79) '951) (6.33) Other3 - Net 03 1.95 252 1:o 223 1.24 110 .66 37 2.0; - thr i-nco-e and Charge:- (,55) (2.17) (521) (2.k7) (592) (3.30) (623) (.13) (6hh) (1>.29 Iueo>n3 'efore Incore T=x 73 .31 224 1.0, 208 1.13 72 .1.7 51 .5 Pro-.- rn for Tncow.e Tx 5. .25 37 .13 b .21 1 .22 33 .22 ' _T_e 19 .09 137 .83 161h .9 39 .25 51 .33 1 Based on Annual Reports subaitted to BOT. - 28 - The fare structure for buses and jeepneys is the same, although a jeepney trip usually costs less because the average jeepney route length 1 1-6 km c ompared to 1- km for bus routes. Based on a zone system, buses are allowed to charge 2.5 centavos per km, with a minimum charge of 15 cen- tavos up to a 6 km distance. This results in charges ranging from 15 cen- tavos to 35 centavos for a distance of up to 15 Im. These fares compare to the 15-20 centavos commonly charged on a jeepney ride. There are no transfer privileges between different bus lines or between buses and jeepneys. A passenger must pay a new fare with every bus change or change to a jeepney. There are no special or reduced fares; children, the elderly and students all pay the same adult fares. The foregoing fare structure has been in effect since 1969 when it was raised from 2 centavos per km with a minimum charge of 10 centavos for buses. The lower rate had been in effect since 1960. Financial Position The financial position of most bus operators has been gradually deteriorating as fare revenues have not kept pace with sharply increased operating expenditures. One reason for this is that buses cannot compete effectively with jeepneys which offer the same low fares, outnumber buses by 6 to 1, and provide,mord convenient service. Another reason is that fares have remained the same over the last four years, during which period the consumer price index has increased by more than,:half. The exact extent of bus operators' plight is difficult to gauge because of conflicting income statements. One company reported that daily losses per bus averaged P38.13 before income tax. On the other hand,finaheial statements prepared by the 1/ five largest bus companies for the Board of Transport indicated that their 1/ J.D. Transit, De Dios Transportation, 114 Transit GT Line and Mapalad Lines. These companies had a total combined number of 6 7 authorized units, but actually operated 588 units, in 1973. - 29 - combined annual net incomes ranged from P19,000 to P187,000 during the 1969/ 1972 period (Tible VT.5), Phis is equivalent to annual earnings of P3,100-P31,000 per bus opernted. And, some mini-bus operators plying on C-4 declared they were "losing" 1100 per day of net profit per bus when vehicles were immobilized due to damages caused by severe floods in July 1972. Officially declared income statements show average annual increases of 10 percent in fare revenues against 11 percent in operating expenses during the 1968/1972 period, but annual patterns were erratic and largely unexplained. It is clear, howeve- that certain elements need to be carefully analyzed to identify the major causes of PUB's financial strains, and to adopt measures to promote a finan- cially sound transport industry capable of meeting service requirements. 'hile the fare structure has a tendency to be inflexible and any proposal for increased fares is confronted by strong public resistance, the bus operators have to contend with the three important items of operating,costs: (a) increased specific cost items, (b) taxes and fees, and (c) fuel and lubricants. Increases in costs: Data on the importation of trucks and buses reveal that the average per unit cost of vehicles increased by 200 percent from 1965 (P5,280) to 1972 (P15,600). More recently, the price of a Japanese-made bus chassis increased from P60,000 in.1970 to P100,000 in 1973, an Increase of 67 percent; and that of a Japanese-made bocdr from P15,000 in 1970 to P25,000 in 1973. During the same period, the minimum wage was increased from P6 daily to P8. The cost of financing suchpurchases also moved upward. In 1969 a bus company or an individual operator with good credit standing could obtain a copmercial bank loan at an annual interest rate of 20 percent, with 6-18 months for repayment. In 1973, the comparable rate for total finance charges, including interest and documentation and service fees, stood at 30 percent. - 30 - Taxes and fees: The PUB transportation industry pays a common darriers' tax, plus taxes on income, fuel, lubricants, tires, and tubes. The 2 porcont tax/g.rosn recoipts ia required regardless of not gain or loss. 0bher common carriers, such as airlines, the Philippine National Railways (PNR), and shipping lines do not carry the same tax burden. PUB transport industry taxes of various kinds amounted to P13.06 million in 1971, an in- crease of 25 percent over the 1970 level. The largest increase (29 percent) was registered by taxes on fuel and lubricants. These taxes constituted 60.5 percent of total taxes, followed by 28.7 percent derived from common carriers taxes. Income taxes accounted for 4.3 percent of the total. As shown in Table VI.5, carriers' taxes amounted to 2.1 percent of total annual operating expenses between 1968.and 1972. When income taxes are added, the percentage figure is raised to 2.4 percent, although in 1972 these two tax items totalled 3.5 percent of total operating expenditures. There are additional taxes sustained by the PUB industry, such as 1/ local real property taxes, franchise tax, and import duties on vehicles and spare parts. The industry also pays special vehicle registration fees to the Land Transport Commission and vehicle supervision or inspection fees to the Board of Transport. These items have generally accounted for 2-3 percent of total operating expenses. Fuel and Lubricants: The most important cost items in the oper- ation of PMB (after wages for drivers and conductors) are fuel and lubricants, which have averaged about 17-16 percent of operating expenses in the past. Diesel fuel accounted for only 11 percent of operating expenditures, compared to 17-18 percent for those operators using gasoline; profit or loss could well depend on the type of fuel. used. However, the high cost of 1/ A 1973 law passed in Manila, Caloocan and Quezon City. - 31 - a diesel-operated engine and its maintenance, given particulary the shortage of trained mechanics, have contributed to the continued use of gasoline buses. Tho recent steep hike in gasoline prices will further erode the financial condition of the PUB. An additional threat to the bus transport industry is insufficient gasoline supply, which may force a reduction of working hours, resulting in decreased revenues. According to the records of the Board of Transport, the PUB industry had total assets of P278.5 million in 1971 and ownerst equity of P39.9 million. Total revenues were P190.0 il.lion; income was P1.8 million, or .less than 1 percent of total revenues and only about 4 percent of the owners' equity. Operators estimate that they realized a return of 4.4 percent on their investments in 1972. For comparison, the prevailing minimun interest rate on savings deposits is 6 percent, and in the money market the prevailing rate is around 20 percent. Prospects for the Future The precarious financial position of the bus companies will be intensified with the recent sharp increases in the prices of gasoline, oil, and even spare parts, brought about by the energy crisis. It appears that the PUB must be given some fiscal incentives to improve their financial position and return on investment. The continued unsatisfactory financial picture will only result in a further deterioration of services, safety and operating standards. - 32 - V. Proposals for Reform Public Ownership of Buses and Jeepneys The government has under consideration a proposal for a bus- jeepney system in Metropolitan Manila that will be publicly-owned and privately-operated under contract. The specifics of this proposal had not been released when the mission was in the field. Therefore, a detailed evaluation cannot be made. Nevertheless, since it is an import- ant issue, the proposal deserves preliminary discussion. - 33 - The present system which relies on buses and jeepneys that are owned and operated by a multiplicity of competing private entrepreneurs, has many shortcomings. Among them are uncoordinated management and operation, which make efficient scheduling and vehicle flows on various lines, as well as effective location control, impossible. Another factor is the strong profit motivation, which tends to faster neglect of provision of needed services during off-peak hours and on less profitable routes, at the same time that it maximizies competition and over-saturation of certain routes during peak hours. These disadvantages notwithstanding, jeepneys and buses in Metro- politan Manila provide a variety and frequency of services seldom found in other cities and do so at no capital or recurrent cost to government. The major objective of the current proposal for public ownership is to improve efficiency by rectifying defects fovnd in the present system of private operation. In deciding whether it is desirable to shift from private to public ownership, there should be explicit recognition of the total public costs involved, in terms both of direct payments, such as capital costs and administrative expenses,and of.less easily identified fac- tors such as employment effects, welfare costs, and administrative complications during the transitional period.. These costs should be weighed against the specific imporvements expected to result from public ownership; and compared to the anticipated costs and benefits of alternative measures of achieving similar results without shifting the enormous costs of operating the transport system into the public sector. Financial Regulatory Improvements. Regulatory policy and associated adinistrative changes have typically had as their goal to ensure adequate maintenance and public safety, maintain - 34 - "well-regulated" competition and improve the reliablity of service. At the same time, in order to encourage the expansion and adequate maintenanee of existing stocks of motor vehicles, consideration might be given to rev- ising certain financial policies, since only a financially sound transpor- tation industry can be expected to provide improved services: (i) Differential rates may be prescribed for buses and jeepneys, whereby the latter would be required to charge more than buses in view of the higher quality of services rendered. As part of a broad sch- eme to separate bus and jeepney traffic in all but a few locations, the financial operating situation for buses may be sufficiently improved to encourage increased.service. (ii) Franchised public utility carriers might be exempted from restric- tive import and exchange regulations which make it difficult for them to maintain and replace units. In addition, consideration might be given to reducing public carriers'income taxes. (iii) The possibility of obtaining easier crelt terms should also be explored, particularly for those willing to operate on new routes. Formation of a Bus Cooperative One way of achieving economies of scale and centralized management would be through establishment of a bus cooperative. Management, accounting and operational practices could be standardized and certain overhead expenses could be shared to -reduce costs. Standardization of equipment would facil- itate collective purchases and common inventories of spares, and it might also be possible to obtain volume discounts on purchases of fuel and lubr- icants. In short, a bus cooperative may be able to achieve economies of scale - 35 - in: (i) fuel and lubricants, .(ii) spare parts, (iii) tires and tubes and (iv) personnel. Cooperative operations could be implemented through 1/ the already existing BOAP, thereby avoiding large public costs for the time being while at the same time achieving the objective of providing im- proved transport services. It appears that the feasibility of this cooper- ative scheme should be examined as one possible alternative under the current government proposal to assess the possibility of obtaining desired improvements without incurring large public expenditures. VI. Me'tropolitan Manila Transport Plan 'he first major transport study in Metropolitan Manila was init- inted in,1971 and comploted in 1973 by a team. of Japanese experts working 2/ ,wXth the Department of Public Works, Transportation & Communications (DPWTC)- as counterpart agency. The objectives of the study were: (i) to identify ways to relieve existing congestion through the provision of greater transport ,capacity; (ii) to determine optimal future development patterns necessary to assess transport needs, and (iii) to recommend an inter-modal transport plan and investment program to meet future transport needs in accordance with projected'land uses and employment and residential densities. The study area was defined by a radius of 20 lo-from the center of Manila, and the tar- get year of the plan was set at 1987. The study atteihpted to integrate all modes of transport, giving due recognition to the relationships between land use and the transport sys- tem. To generate future land use patterns, it was assumed that industrial employment densities would vary from 250 workers per hectare in the CBD to 1/, Bus Operators Association of the Philipines. 2/ Government of Japan, Overseas TechnicaT Cooperation Agency, Urban Transport Study in Manila Metropolitan Area, 1973. - 36 - 100 in the suburbs, whereas commercial densities would range from 1,500 workers per hectare in the CBD to 300 in the outlying areas. The total number of industrial and commercial workers by 1987 were predicted to be 47,000 and 2,036,000 respectively, whilst the corresponding land requirements for%industry and commerce would be 4,900 and 3,400 hectares, respectively. In order to arrive at"the most efficient development pattern", which would promote "orderly Rrowth", the mPtronolitan area was divided into inner and outer areas (C-h was the boundary), and alternative development hypotheses were examined. For the area inside,C-4: two patterns were considered: 1. Continuing the present trend of concentrated development in the center; 2. Restricted central develbpment and establishment of new centers along C-h. For the area outside C-h: three,patterns were considered: 3. Continued present sprawl; 4. Restricted sprawl, with the creation of satellite cities; 5. Radial mass transit extensions to the surrounding areas, thereby encouraging corridor development. The study concluded that the combination of (2) and (5) was the most suitable development pattern as it would generate the lowest volume of travel in the center and decentralize urban activities. It was thus recommen- ded that the capacity of the existing circmferential road No. 4 (Highway C) be increased to induce industrial location along this axis and that a, rail transit system be developed to permit a radial build up. The study refers to this growth form as a "rail-dependent", "dispersal" development pattern. Te study arguea against a "vehicle-dependent pattern", as this would generate ten times the. numiber of vehicle trips estimated for the rail- - 37 - dependent pattern and,"even trebling the present road network capacity would be inadequate to accommodate the trip demands generated by the vehicle- dependent pattern. The study further contended that the difficulties associated with acquisition of rights-of-way in the city and the higher cost of providing transport facilities for the vehicle-dependent pattern forbade serious consideration of the latter form of development. The future traffic demand for each transport mode was estimated by a series of analyses of trip production, trip generation and attraction, trip distribution, modal split, external traffic analysis and traffic 1/ assignment using data obtained by the 0-D surveY. According to these analyses, the traffic generation in the urban center (CBD) was estimated at 9.0 million person-trips; that in the surrounding area at 16.6 million person trips. The volume of person trips to be carried by mass transit was estimated at 9.4 million. The resulting inter-pdal transport plan (or "integrated transport plan") has the following major recommended components: six circumferential roads, ten radial roads, six elevated expressways, north- 2/ south commuter rail lines, and five subway lines. From this schematic system plan have evolved transport investment proposals estimated to cost upwards of P7.9 billion (US$1.2 billion). To implement the complete system proposed by the study would cost at least P17.3 billion (US$2.6 billion) (Table Vi.6), an amount tar beyond that assessed as necessary.for any sector in the M4A. Since the transport study was presented as the main support for these proposals, some observations about its.short-comings are in order. Amhitious Coverage The study., within the space of just over a year, attempted to in- clude everything from basic origin-destination surveys and their analyses 1/ The 0-D survey used was one of extremely limited usefulness. It was not related to a systamatic body of information on land uses; and it provided information onIly as to daily flows past cordon points -- with neither the direction nor. the time of flow being recorded 2/ See Map 11 (IBRD 10927), pg. VI.3) - 38 - Table VI.6: URBRAN TRANSPORT STUDY IN MANILA METROPOLITAN AREA, 1973: RECOMMENDED INVESTMENT PLAN 1/ Iumedlate 1Progrnm (1973-19771 Long Term Program (1978-1981L Project 1., R-10 and completion of C-4 1. Elevated expressways 2. Circumferential and Radial Roads: Route No. 1 25.0 km Route No. 2 5.8 km C-1 Route No. 3 3.6 km C-2 Routi.No. 4 3.8 km C-3 Route No. 5 9.9 km C-4 Route No. 6 6.4 km R-8 Total length 54.5 km. 3. Interchanges along C-4 2. Rail Rapid Transit 4. Parts of C-5 andC-6 Line 3. Along E. Delos Santos Avenue 5. Traffic Engineering (24.3 kms) (C-4) 6. Restoration of PNR Commuter System Line 4. From Marikina to Zapote via (30.1 kms) Cubao, downtown-Manila and 7. Mass Transit System: the Manila Bay Area Line 1. From Consfitution Hill to Line 5. From Meycauayan to aowntown (22 kms) Tatalonvia Central (17.6 k s) Manila running between Quezon City. downtown Route No. 2 and PNR. Manila and the Interna- tionalAirport. Line 2. From Novaliches to Cainta (36 kms) via downtown Manila and Pasig. 8. East-West Road 1/ R stands for Radial roads and C.stands for circumferential roads. - 39 - to the evaluation of alternative development patterns for the MMA and Manila Region and prelininary engineering plans for the proposed rail transit and road improvements. Consequently, only cursory attention was paid to detail or to establishing economic feasibilities for the road and rail systems. Many conolusions thus emerge solely as qualitative statements which are supported neither by careful analyses nor even by convincing argumentation. Thus, whilst the study may constitute a useful background document, it does not provide sufficient basis for approval of the proposed major investments. - 40 - Neglect of Resource Constraints Furthermore, the study imposes no limits on resource availability. The emphasis on capital investments involving substantial financial costs ignores the existence of the competing demands for other urban services. It also fails to take into account the severe burden that the proposed cap- ital expenditures, eren if justifieds would place on the metropolitan reg- ion's fisc. Difficulties of Forecasting Residential and Enployment Densities The study recognized the interdependent relationships between land uses and transport demand. However, %ne uraffic forecasts which provide the foundation for economic justification of a high-cost, high-capacity metro are based on crude estimates of activity distributions derived from physical planning exercises. The land use inputs which establish the initial values of zonal growth factors are of the most general nature. The study does not detail the land uses projected for each pair of zones for which the total trip productions and attractions were estimated, nor does it specify the kinds of industries or comnercial establishments to be induced or how such desired activity patterns should be achieved. In view of the lack of small area census data available in the metropolitan area, only gross figures in terms of a few generic land uses were used, but the impression is given thit the results are precise. The danger is that even small inaccuracies in the initial step of analysis can produce enormous errors when cross-multiplied in the subsequent stages of analysis. For these reasons, the estimated 14 million person trips per day may or may not materialize in 1987. Furthermore, even if they do, it is very doubtful that the modal split which actually occurs will closely approximate that "predicted" by the study. - 11 - Procedural Weaknesses for Traffic Assignments The study assumed that, in future under the "mass transit depen- dent pattern" , 70 percent of total person triDs would be madp by mass transit Alid 30 percent by automobile (including taxis). No data were presented to support this assumption, although it is very likely that the majority of trips would continue to depend on public transit, as automobile ownership would continue to be out of zne reach of the majority of persons for many years to come. However, in further subdividing the estimated number of public transit trips according to projecte4 shares for jeepneys and buses on one hand and rail transit on the other, the study adopted a methodology which was subject to a number of procedural weaknesses: (i) The split of transit passengers between rail and road was based on a "tinimum time path" traffic assignment technique. Travel tiM68 bteen all zones were compared via the shortest (t Aa) thil routes and bus or jeepney routes, and an "all-or-nothing" assign- ment was made. If the estimated travel time was shorter by rail than by bus or jeepney, all trips were assigned to the rail transit system and none to the bus or jeepney system, even if the time differences happened to be only one minute. In reality a signi- ficant portion of trips may be still made by the more time-consuming mode even in the absence of cost and convenience factors in its favor. Although this procedure is entirely arbitary and completely ignores possible variations in trip pricing, the resulting volumes were interpreted as the justification for the proposed rail and road systems. (ii) In undertaking "all or nothingn traffic assignments, it was assumed that buses and jeepneys would operate as hitherto in mixed traffic - 42 - at average speeds of 5 kph in the center and 10 kph in the perip- hery, whereas new transit facilities were assumed to have operating speeds , including waiting times, of 30-40 kph. Thus the comparison was between a system incorporating mass transport facilities on its own right-of-way with one based on automobiles and mass transport on shared rights-of-way. This techniau is bound to fAvor rnil development. (iii) In determining operating speeds, the study assumed the same running speeds for jeepneys and buses; in fact, jeepneys achieve higher average speeds. In determining modal split, vehicle capacity con- straints were applied which assigned all the traffic to buses where traffic was estimated to be heavy, thus confining the role of jeep- neys to serving areas not covered by rail or bus routes. (iv) The study technique assumes completion of all the rail and road networks included in the analysis; elimination of any part would invalidate the assignment results. Yet, on financial grounds alone, there is no possibility of constructing the entire network by 1987. (v) The traffic assignments were based on estimates of total daily passenger movements. The conversion of these daily figures into directional movements during peak hours would have been a more valid procedure for determining the capacity constraints of the road or rail system. Weak Economic Analysis The most fundamental error in the economic analysis undertaken to justify the need for expressways and rail transit was the complete disregard of the time inension in quantifying benefits and costs. All expenditures incurred and benefit.s obtained were assumed to occur simultaneously; no attempt - 143 - was made to determine the present values of future costs and benefits. The "net" benefit figure of P62.3 billion (US$9.3 billion), derived from simply subtracting the estimated total costs from the assumed total benefits, cannot be considered As R basis for establishing their economic feasibility. The crucial analysis of determining the investment timing of various project components was left untreated, therefore accounting for many of the inaccuracies and contradictions found in the methodology. Neglect of Near Term Transport Improvements The major highway and rail transit proposals are forward-looking in the extreme. Many years are likely to elapse before actual construction or major improve- ments can even begin. In the meantime, the growing numbers of passengers would have to be carried by existing systems in the already developed areas. Even the inadequate attention given these matters appears seriously misguided. The focus is on the provision of highways to accommodate growing automobile travel and on high-cost rail transit services; whereas improving bus and jeepney services is neglected. Quite to the contrary, the report diagnoses these two latter modes to be the major causes of present congestion, despite the fact that the two combined were found to comprise only 30 percent nf total vehicular traffic. The study denies the capabilities of these two modes to serve the travelling public in 'future, without having ex- plored the possibilities of expanding and renovating their operations. No Focus on Specific Land Use Policy It would have been useful if the report had focused on recommending specific land use policies aimed at locating employment centers in proximity to residences, with a view to lessening trip distances. Instead, the emphasis was on providing mobility to peripheral areas so that people could move out to the suburbs only to commute back to the center. For example, the study expounds on the need for and the justification of rail transit to serve the commuting public over increasingly long distances brought about by separation of the business district in the center from residential districts in the suburbs. For this purpose, station spacings of about 3 km are proposed. 1/ This relatively long distance between stations/ would tend to minimize the role of :the rail metro as a downtown distributor, and to encourage the outward move- ment of residents by providing low-cost accessibility. This concept appears to be completely inconsistent with the present needs of Manila, as analyzed in Chapters Three and Four, as well as with any notion of an optimum development pattern requirin6 minimum transport needs. Unconvincing Rationale for Rail Transit The rationale for the provision of a rail metro as a vehicle for dispersed development seems to contradict the conventional concept of the metro's role as a density-inducing tool. It is not at all clear how the seemingly inconsistent policies of restricting central development and providing the density-dependent metro system can be reconciled. The transport system recommendations that emerged from this study were a mixture of long-standing proposals and new elements. The basic pattern of radial and circumferential surface roads remained essentially the same as had been first proposed in the mid-1950s. The study apparently treated these as given elements and did not attempt to analyze their justifications or to determine whether some other pattern might be preferable. The new elements, principally the proposed subway system and the elevated expressways, were superimposed on the "given" system to provide the additional capacity purported to be needed by the favored land development pattern. From the above discus- sion, it is clear that the study does not provide an adequate basis for asses- sing either the social and economic benefits and costs of these proposals or 1/ The New York, Montreal and Tokyo systems have an average spacing of 1 km in the center. This spacing is considered as the limit of practical walking distance. - 45~ - their physical and financial feasibilities. By ignoring the constraints on available resources for transport purposes, the study fails to establish even the scale of a feasible investment program, much less the priorities of its Various elements. VII. Recommendations Transpory is clearly a mater of great importance, in terms boh of the present functioning of Metropolitan Manila and of effects on future growth patterns. Any solution to existing problems will require a twofold approach. On one hand, planning should be set in motion which will prov±de the required base for sound investment decisions and programs that conform to overall metropolitan growth plans. On the other, a concerted effort should be made to increase the capacity of the existing system, through more effec- tive management-and regulation procedures. The following courses of action are recommended: ;Improved Traffic Management and Control Measures The metropolitan area has recently initiated a limited program of traffic engineering measures such as parking and turning bans in the central area and one-way and reversible flows. Much more could be accomplished along these lines. The Bureau of Public Highways is also undertaking a short-term study of traffic management; however, due to budgetary limitations, the analyses are confined to a small area in the core. This study should be expanded to cover the wider metropolitan area to investigate measures for easing congestion and facilitating vehicular movement on major arteries and intersections. The deficient areas and types of necessary traffic control equipment should be outlined in detail, together with proposals for clear markings, striping, and traffic signs. Better regulation of pedestrian crossings should also be - 46 - investigated, with a view to confining crossings to specified intersec- t.jon..; tindor approprinte_ly ; Ignalled conditions. The need ['or pede,strian ovrjAsns could also be identified. ftp roved Bus and Jeepney Services Although basic statistics on growth, detailed load factors and capacity utilization still need to be collected to determine service levels required, the improvement of bus and jeepney services merits the highest priority. The present policy of restricted entries for buses anjeepneys appears inconsistent with the objective of providing expanded passenger-carrying capacities. In recent years, the number of registered buses has been declining and the nunber in actual service may be even smaller than formal registration figures indicate. It would not be surprising if this were shown to be due to narrowing profit margins stemming from rising operating CdMi While fares remain the same. Consideration should be givft to fare increases, as well as to lifting foreign exchange restrictions on imported spare parts and relaxing the bans on entry. Buses and jeepneys should be given priority in the use of street space, including exclusive use of separate traffic lanes or entire streets, and loading zones should be established and their use enforced. Studies should be undertaken to analyze the growing demand for bus and jeepney services and to find means of increasing their capabilities, beginning with a detailed inventory of available vehicles and a survey of bus and jeepney passenger novements. Restraint of Private Automobile Use Attention should also be given to the formulation of a program of workable measures to discourage the use of automobiles, particularly for the journey to work. An examination of the full range of available tools should include special licensing, increased parking fees, control of on-street - 47 - parking, and traffic control systems which give priority to public transport. Better driver education and improved traffic code enforcement also should Tiot. b4 ovrlooked. WItppraisal of the Proposed First-phase Program Given the difficulty, if not impossibility, of obtaining sufficient funds to finance in the intermediate teryI all projecto proposed under the metropolitan transportation plan, a reexam4nation of these proposals and assignments of a priority ranking seems essential. Candidates for such an investment program include the widening of major arterial roads and bridges, and capital subsidies to increase bus rolling stock. CHAPTER SEVEN 'THE METROPOLITAN FISCAL AND GOVERNMENTAL STRJCTURE The system of local government in the Philippines consists of provinces, cities, municipalities, and barrios. Provinces are partitioned into municipalities, which in turn are subdivided into barrios. Cities do not form part of a province, but, like the provinces, they are directly linked, administratively, to the central government. Cities are further subdivided into districts or barrios (cf. Chart 1); neither barrios nor districts have significant revenue authority or expenditure responsibility. Local government structure in the Metropolitan Manila Area generally does not differ from that in other areas of the country. The MMA presently has a fragmented local government system which includes, in addition to five cities, 23 municipalities which constitute parts of four different provinces. These cities and municipalities are in turn subdivided into districts and barrios. I. Local Government Structure: Layers of Local Government The national government exercises a large measure of control over all local political and administrative units in the Philippines. Local governments are creations of the national government; and any restructur- ing must be undertaken by the national government. Enactment of such meas- ures as the new local government code and any central governance or financing authority that might be created for Metropolitan Manila must be direct ac- tions of the central government. -2- Chart VT.: THE STRUCTURE OF LOCAL GOVERNMENT IN TIE PITLLTPINl Nation Province (68) Municipalitr (1,429) Chartered City (61) 1/ 1/ 2/ Darrio Barrio District 1/ There are 33,832 barrios in all. 2/ Manila City is comprised of districts rather than barrios. Unlike the barrio, the district is purely an administrative unit with no government or budget. -3- A full study of the public finances and governance of Metropolitan Manila is beyond the scope of this chapter. Its more limited intention is to describe the institutional structure and its fiscal consequences, 1/ to discuss the normative implications of these consequences, and to describe and evaluate proposed measures for local government reform which are presently under consideration. 2/ At present, cities are governed by their charters, whereas prov- inces and municipalities are governed by the Provincial Code and the Munici- pal Code, as amended by several acts and decrees. While these acts have tended to increase the functions and taxing authority of the local govern- ment units, the central government continues to exercise considerable control over local affairs. The declaration of martial law in September 1972 has of course increased the influence of the President in all political spheres, including local government affairs. 3/ The chartered city is administratively independent from the prov- ince in which it is located. The range of services provided by these char- tered cities depends on their income. Manila City and Quezon City are more autonomous than many because of their relatively high incomes. They can per- form, and even expand, their services frequently without depending on na- 1/ For more detail on this area, the joint efforts of the Manila Bay Metropolitan Region Strategic Plan (MBMRSP) National/Regional Planning and Development Group and the National Tax Research Center have re- sulted in the following mdnographs on the public finances of Metro- politan Manila; Metro Finance Studies Working Paper No. 1, Revenue- Raising Powers of Local Governments; No. 2, Existing Financial Administrative Machinery of Local Governments; ,No. 3, Description and Classification of Local Revenues; No. 4, Intergovernmental Fiscal Relations; No. 5, Emergence of Metropolitan Manila and thephilippine Local Government Structure; No. 6, Rate of Schedule of Taxes, Fees and Charges and Inter-local Variation. 2/ For a more detailed study of Metropolitan Manila finances, see Pamela Brigg, Manila Local Government Structure and Finance, August 31, 1973, (Mimeo). 3/ President Marcos has issued well over 300 decrees since September 1972, several of which affect local government structure. The most important of these are discussed in Section III below. tional aid. In the recent past, cities, municipalities and municipal dis- telcts could be created only by Congress. Cities have usually been created from municipalities which were relatively heavily populated and had rela- tively high incomes, although there are no fixed standards for the granting of city charters. Makati. for instance, recently requested independence of Rizal Frovince and city status, but was denied. The new Constitution (January 1973) states that only "highly urbanized" cities will be allowed to become independent of their provinces. The new local government code establishes detailed criteria for defining highly urbanized cities and for creating, abolishing, merging, or altering boundaries. II. Budget Structure and Responsibility Budget Preparation The lbedi treasurer prepares the estimates of revenues fbt the budget and is responsible for the collection of local taxes, license charges and fees. He submits his revenue estimates to the chief executive (Governor or Mayor) who prepares the estimates of expenditures after receiving the budget proposals of the different department heads. When the estimates of revenue and expenditures have been prepared, the local chief executive sub- mits the budget to the local legislative body for enactment. The mayor or governor has the power to veto the budget twice, and the city council or provincial board, in turn, can override the veto. If the differences can- not be resolved, the budget dispute is sent to the President for resolu- tion. This rarely happens. The Department of Finance reviews the city and provincial budgets within one hundred days after their approval, to verify their legality with respect to the following: (a) Budget appropriations must not exceed estimated tax receipts and/or income (estimated income includes intergovernmental assistance but does not include borrowing); -5- (b) Statutory and/or current contractual obligations must be met; and (c) No individual salary can exceed the maximum salary provided for by the salary laws and executive orders. Changes in the budget within a fiscal year can be made only through the adoption of supplemental budgets, even if such changes are meant only to rearrange the budget allocation. There is no limit to the number of supplemental budgets that can be adopted during a fiscal year. Budget Format City, provincial and municipal budgets consist of three funds: General Fund, Special Education Fund, and Road and Bridge Fund. 1/ As may be seen from the general budget format presented in Chart VII.2, the local government budgets do not distinguish between capital and current expenditures and their classification of expenditures is quasi-functional. The absence of a budget breakdown by capital and current account prevents investment planning, whilst lack of a meaningful and detailed classification of expendi- tures by function hinders planning for improvement of specific service levels. Moreover, the frequent preparation of supplemental budgets encourages piecemeal planning. The format of the present budget document is thus not amenable to effective fiscal planning. III. Revenue Structure and Growth General Considerations National tax laws grant cities, municipalities and barrios the authority to impose certain taxes, fees, license charges and user charges. Cities are granted additional taxing powers through their charters. Prov- inces have not enjoyed taxing powers in the past, only the right to share 1/ The new local government code will.abolish the Road and Bridge Fund and create an Infrastructure Fund in its place. -6- certain local and national taxes. 1/ Various national laws also authorize local governments to borrow from the national government and the private sector. The Local Autonomy Act (R.A. 2264) places restrictions on local taxing power by excluding from local authority the right to levy income taxes; estate, inheritance and gift taxes; a residence tax; the documentary stamp tax; taxes on persons operating water-works, irrigation and other public utilities except electric light, heat and power; taxes on the busi- ness of certain newspaper, magazine, review or bulletin printing and publi- cation; customs duties; certain export taxes; motor vehicle registration fees; drivers' licenses; and taxes on banks, insurance companies and persons paying the franchise tax. Some of these restrictions are to be lifted when the new local Tax Code is issued. For example, the residence tax and the franchise tax will be transferred to the provinces and cities. The Secretary of Finance has the power to review local tax ordi- nances; Presidential Decree No. 145 broadened this power. The Secretary may suspend an ordinance within 120 days after receipt of a copy of it if he deems the tax or fee excessive, oppressive, confiscatory or contrary to national economic policy. Revenue Sources The most important local tax is the real property tax, which is authorized by the national government but is in effect almost totally local in nature. The real property tax is a flat rate levy on the assessed value of land and improvements, which values are substantially lower than market value. Following PD 76, assessment ratios differ formally for different types of property. In addition, local governments are authorized to collect a special assessment from property owners who benefit (presumably in terms of land value increments) from local government investments. However, be- 1/ The new local government tax code (PD 231) will give provinces specific taxing powers for the first time. - 7 - Chart VII.2: BUDGET OUTLINE OF PROVINCE/CITY Gornal Fund FY I. TOTAL ESTIMATED INCO1E ............ II. TOTAL EXPENDITURES........,,...... A. TOTAL NATIONAL ALLOTMENTS........ A. GENERAL ADMINISTRATION ......... 1. Reg.Int.Rev.Allotment.......... 1. Office of the Governor/Mayor.. 2. Special Allotments............. a. Office of the Attorney..... 3. Excess Income Tx ............. 2. Office of the Board .......... 3. Office of the Auditor ........ B. REAL PROPERTY TAX ............... 1. Current Year................... B. GOVERMENT FINANCE 2. Preceding Year ........ 1. Office of the Treasurer ...... 3. Previous Years ......... 2. Office of the Assessor ....... 4. Penalties ............ . . . C. ADJUDICATION ................... C. MUNICIPAL LICENSE ........ . 1. Office of the Fiscal ..... 1. Current ............... 2. Office of the Clerk of Court.. 2. Penalties ..................... 3. Office of the ....... D. PUBLIC UTILITIES D. PROTECTIVE SERVICE ............ 1. Receipts ...................... 1. Office of the Chief of Police. 2. Expenses ....................... 2. Office of the Fire Dept ...... 3. Net Gain (Loss) ............... 3. Office of the Health Offcr.... E. NATIONAL AIDS ................... E. SOCIAL IMPROVEMENT ............. 1. Maint. of Schools ......... F. ALL OTHERS .... . . 2. Maint. of Prisoners ........ 3. Maint. of Parks & Monmnts .... h. Library ..................... F. ECONOMIC DEVELOPMENT .......... 1. Office of Agric. ........ 2. Office of Livestock Inspctr 3. Office of Engnr ........ .. . Cper. of Teleph., Waterworks, & Other Publ.Util. .... 5. Oper. of Mkts & Slghtrhse G. OPER. OF ECONOMIC ENTERPRISES H. INTERGOVERNMENTAL AIDS ........ I. LOANS, ADVANCES & TRANSFERS 1/ Fiscal year begins July 1. J. REAL PROPERTY ................ K. EQUIPMEN1T ........ .. ........... L. OTHERS ........................ - 8 - cause of restrictions on its use and unclear implementation procedures ke.g., the measuring of betterment), the special assessment has rarely been used. Licenses are the second largest source of locally raised revenue in Metropolitan Manila. In addition, cities and municipalities may levy certain other minor taxes, including a sales tax on gasoline distributed within their boundaries, sales taxes on a range of other'items and a frontage tax on commercial properties; collect fees on a range of items; impose charges for services rendered by them and operate public utilities (i.e. telephone systems) or services (i.e. slaughterhouses) as commercial entrepreneurs; and collect rents and certain fines. These additional items do not, however, contribute substantially to total revenue. Revenue Performance In 1970 about 70 percent of total revenues in the MMA were derived from own sources (See Table VII.1). Of total own-source revenues, half were derived from the real property tax and about one-quarter from municipal and city licenses. The other fourth consisted primarily of user charges, fees, the gasoline tax, fines, rent, and borrowing. Revenue from the real property tax increased rapidly from 1960 to 1970, i.e., at an average annual rate of 15.8 percent, compared to 6.4 percent for license revenues and 10.6 percent for total revenues from own sources (see Table VII.2). Much of the increase in real property tax collections resulted from an increase in rates between 1965 and 1970 following the introduction of the 1 percent additional charge for the Special Education Fund. However, even between 1960 and 1965, when there was no rate increase, revenue from the real property tax grew at an average annual rate of 12.5 percent. This would suggest a high degree of elasticity of the property tax relative to all other locally raised revenues. - 9 - Table VII.1: REVENUE OF MANILA METROPOLITAN AREA (P 000's) 1960 1965 1970 % of % of % of Total Total Total Total Total Total Current Revenue, Own Sources 70,375 83 109,537 65 183,197 65 Local Taxes 51,874 62 83,224 49 154,990 55 Real Property Tax 21,961 26 39,645 23.5 95,933 34 /3 Municipal Licenses /1 26,784 32 39,788 23.5 49,698 18 Gasoline Tax 1,600 1.5 1,800 1 3,400 1 Other Taxes /2 1,529 1.5 1,991 1 5,959 2 Fees 3,929 5 6,147 4 7,695 3 User Charges 13,525 16 18,584 11 17,996 6 Fines 651 0.5 1,113 1 2,022 1 Rental Income 396 0.5 469 -- 494 - Capital Revenue, Own Sources 1,755 2 2,460 1 14,952 5 Borrowing 439 0.5 1,201 0.5 58 -- Inventory, & Other Adjustments /4 1,316 1.5 1,259 0.5 14,894 5 Total Revenue, Own Sources 72,130 85 111,997 66 198,149 70 Inter-Governmental Assistance 12,276 15 57,027 34 84,715 30 Internal Revenue Allotment 9,778 12 52,394 31 79,398 28 Grants-in-Aid 2,497 3 4,633 3 5,318 2 Total Revenue 84,406 100 169,023 100 282,864 100 /1 Municipal licenses are referred to in the.Philippines as taxes. As a category it includes both taxes (e.g., annual and quarterly taxes on certain business receipts) and licenses (e.g., fixed annual charges on certain business). 12 This is a calculated residual. /3 Includes proceeds from the 1% additional charge for the Special Education Fund. /4 Includes increases in the book value of property and refunds of disburse- ments illegally or erroneously made during preceding years. - 10 - Table VII.2: REVENUE OF MMA: PERCENT AVERAGE ANNUAL RATE OF CHANGE 1960-65 1965-70 1960-70 0.11en t Revenue, On Sources 9.2 10.8 10.0 Local Taxes 9.9 13.2 11.6 Real Property Tax 12.5 19.3 /3 15.8 1 Municipal Licenses 45.2 . 6.4 Gasoline Tax 2.2 13.5 7.8 Other Taxes /2 5.4 25.0 14.6 Fees 9.4 4.6 7.0 User Charges 6.6 - 0.7 2.9 Fines 11.3 12.6 12.0 Rental Income 3.4 1.0 2.2 Capital Revenue, Own Sources 7.0 44.0 24.0 Borrowing 4/ 22.0 -- - 12.3 Thventory & Other Adjustments - 0.9 64.0 27.5 Total Revenue, Own.Sources 9.2 12.1 10.6 Inter-Governmental Assistance 36.0 6.2 21.3 Internal Revenue Allotment h0.0 8.7 23.3 Grants-in-Aid 13.2 2.8 7.9 Total Revenue 14.9 10.9 12.9 1/ Minicipal licenses are referred to in the Philippines as taxes. As a category it includes both taxes (e.g., annual and quarterly taxes on certain business receipts) and licenses (e.g., fixed annual charges on certain businesses). 2/ This is a calculated residual. 3/ Includes proceeds from the 1% additional charge for the Special Education Fund. V/ Includes increases in the book value of property and refunds of disburse- ments illegally or erroneously made during preceding years. - 11 - Problems and Issues Like most big city governments in LDC's, local governments in Metropolitan Manila are faced with a mismatch between the expenditure requirements implied by the services which they must provide, and the size of the bases from which they may raise revenues. In Manila, this imbalance is compounded by governmental fragmentation (i.e., the revenue-expenditure mismatch is generally less severe for wealthier governments) and public service level disparities, or tax burden disparities, result. Hence, Manila's urban fiscal problems may be viewed as having two components. The first is an inadequate level of local government resources (and would exist even under a metropolitan government) and the second is an uneven distribution of those resources that are available. Tax Effort. The growing dependence of MMA local governments on Intergovernmental Assistance (see Table VII.2) is some indication of the overall inadequacy of local revenue sources. However, it is also due to the failure of local governments to fully (adequately) use the taxation powers granted to them in the various acts and charters. These failures include not using available tax bases (e.g, special assessments), underassessment in the case of tax bases presently being used (most notably the property tax) and inefficient collection procedures. Tax effort is not easily measured for a metropolitan area, but even a rough estimate might provide some useful information. If, for example, Metropolitan Manila governments were, in total, making an adequate effort, then the problem might be judged to be essentially due to an inadequate legal taxable base for local governments. As may be seen from the data in Table VII.3, estimated expenditures in the MMA area by all levels of govern- ment (as a percent of personal income) is low when compared to other cities for which data are readily available. Similarly, revenues raised from local sources by MMA local governments, are relatively low as a percent of personal incomes. Finally it should also be noted that the level of tax effort exerted by the Central government has been estimated as being well below the Table .3: COPATIVE FISCAL EFFORTS OF S=LETED XETROPOLITAN AMA COVEM-,NTS (All in US$) Manila Seoul Ahmedabad 3o ta Cartagena Bombgg Jakarta Kingstor angkok 1970 1971 1971 l969 1970 1971 1971/2 1971/72 1970 Population 4,403 5,851 1,588 2,339 324 5,971 4,576 566 2,268 (in thousands) 2/ 3/ h Per Capita Income 193 3754 76- (1970)501 256 (1970)283 135 774 - 311 ($US) Per Capita Expenditure in Metropolitan Area 1/ 25 81 48 71 42 63 18 138 14 (a+b+c) a. City 10 29 20 56 14 26 7 16 10 b. State 15 - 13 24 - - - c. Federal 15 52 13 15 15 13 11 128 4 Total per Capita 13.0 21.6 63.2 14.2 16.4 22.3 13.3 17.8 4.- 5 > Expenditure (a+b+c) as a Percent of per, Capita Income Per Capita Local Goermnnt 6.4 28 17' 52 16 14.5 7.2 15.26 12.3 Revenue As a Percent of Total 3.3 7.5 22.4 10.3 6.3 5.1 5.3 2.0 4.0% Income Per Capita local Government 3.0 24 16 51 15 14.0 4.o 4.9 12.1 Revenue from Cwn Sources As a Percent of per Capita 1.6 6.4 21.0 10.2. 5.9 4.9 3.0 0.6 3.9 Income 1/ The figure generated for 7ederal government expenditure is the per Capita figure of 7ederal Go7erment spending. -""at is, we assume the government spends the per capita amount for each citizen regardless of location. To the extent the federal government spends more or less than the national average amount in the metropolitan area, the figure for federal government spending in the metropolitan area will understate or overstate respectively the true level of federal per capita expenditures in the metropolitan area. A similar argument applies to the estimate of state government spending in the metropolitan area. 2/ Estimated value: See Seoul Report, Urban Public Finance Project, Appendix I. J7 Estimate for Gujarat State, 1968-69. 1/ Department of Statistics Estimate, 1971. - 13 - developing country average.1/ These results, though clearly rough estimates, might be given the following interpretation: On a per capita basis and as a percentage of income, the central government in the Philippines is a relatively low spender, and local governments in the MMA add to this expendi- ture at a lower rate than do urban local governments in some other counpries, even after adjustments for income differentials are made. In sum, this evidence would seem to suggest that the fiscal problem in Metropolitan Manila is at least partially due to an inadequate revenue effort. Fiscal Disparities. Quite apart from the possibility that taxable capacity is not used intensively in the metropolitan area, is the possibility that taxable capacity is being used at differential intensities within the MMA, I.e., that there is a tax effort disparity among jurisdictions. A simple measure of tax effort, for the purposes of interjurisdictional comparisons, is the ratio of revenues raised from own sources to income. Unfortunately, income estimates for the localities within the Manila Metropolitan Area are not available. Similarly, estimated property values are not available by jurisdiction. 2/ It is possible, however, to point to the substantial differences in revenue raised per capita among cities and municipalities as a rough indication of at least disparities in public service levels provided, if not in tax effort. The range of variation in per capita revenues raised from own sources is wide indeed. In 1970, the average for the five chartered cities was P38.70, but the range was from 14 pesos per person in Cavite City to 74 pesos per person in Manila City 3/. Among the 23 municipalities, the range was from 3.00 pesos per capita in Taguig to 40,.60 pesos per capita in Makati. The standard deviation among municipalities in per capita revenues from own sources is 70 percent of the mean. Without some indication of the fiscal capacities of these jurisdictions, it is not possible to infer whether these results imply tax effort disparities. 1/ Roy Bahl: "A Regression Approach to Tax Efforts and Tax Ratio Analysis", p. 570 IMF Staff Papers, Vol. XVIII No. 3, Nov.' 1971. Roy Bahl: "A Representative Tax System Approach to Measuring Tax Effort in Developing Countries" p. 87, IMF Staff Papers, Vol. XIX No. 1, March 1972. 2/ Though the Office of Local Government presently has such a compilation underway. 3/ See Chapter III, Table 111.14. 14- 1/ Property Taxation- . The property tax, because of its importance as a government resource in Metropolitan Manila, presents what may be the most serious set of local finance problems. Both the elasticity and the equity of the tax suffer from existing assessment practices, there are substant*al interjurisdictional disparities in amounts raised, and the administration of the tax is poor; only about half the levy is actually collected. In almost all jurisdictions in the MMA, the most important source of locally raised revenue is the property tax; 2/ however, the per capita level of property tax revenues varies widely. It ranged from P 53.37 for Manila City to P 2.04 for Pateros and P2.75 for Noveleta in 1970. From these data it would appear that the difference among jurisdictions in total property tax revenue raised is an indication of differences in both taxable capacity (real property value) and property tax effort. For example, Makati, thought to be the wealthiest jurisdiction in the metropolitan area (i.e., with the highest taxable capacity), raised the highest level of property tax per capita. 1/ A more detailed description of the property tax in Manila may be found in Pamela Brigg. Op. Cit. 2/ The exceptions are: Cavity City, Binan, Cainta, Taytay and San Mateo (the last of which falls outside our chosen definition of the MMA), which all raised more from user charges than from property taxes in 1970. However, in 1965, of these local governments, only San Mateo earned more from user charges than property taxes. - 15 - With respect to property tax effort, the effective tax rate, i.e. the ratio of tax collected to the market value of the property, would seem to be a reasonable indicator of overall tax effort 1/. The estimates pre- sented in Table VII.4 suggest that, among the chartered cities, Manila and Pasay have been making a better effort than Caloocan and Quezon. This is what one would expect, since the assessment level (estimated market value as a percent of true market value) and basic tax rate are higher in Manila and Pasay than in Caloocan and Quezon. However, these tax rate variations also are a result of the failure to implement the property tax fully; that is, there are three factors at work: under-assessment, inefficient collec- tion and enforcement, and in some cases a failure to utilize the maximum allowable rate. 2/ 1/ Unfortunately a breakdown of the property tax base into residential and non-residential is not available. Nor is it possible to obtain an estimate of the value of exempt properties. These data would be useful in estimating the factors underlying a higher or lower tax effort, and in relating this to tax burden differences. 2/ For example, Manila and Pasay cities both tax at the maximum basic rate of 2 percent. However, Quezon and Caloocan tax only at 1.5 percent. 己戶一不二 戶／& - 16 - Table VII.4: EFFECTIVE REAL PROPERTY TAX RATE IN METROPOLITAN MANILAO 1972 Taxes Collected Market Value Effective Tax Rate /a 1972 -Dec. 1971 - 1972 (Z) Manila F 58gl479355 P 5921008229280 1.1 Caloocan 6,494,565 941,485,320 0.7 Pasay 5,339,347 535,025,770 1.0 Quezon 31,931,673 6,021,277,100 0.5 La Ratio of taxes collected to market value. Property tax collections for 1972 were estimated by: (1) deducting property tax collections for the Special Education Fund in 1970 from total property tax collections by assuming that the additional tax for the Special Education Fund as a percent of total property tax collections (61.4 percent) for the nation in 1971 held for the above four cities in 1970; (2) by using these figures to compute the compound annual average growth rate for real property taxes from 1960 to 1970; (3) by using these rates to calculate 1972 taxes collected; and (4) by assuming the same relationship cited in (1) to calculate total real property taxes in 1972, including the additional tax for the Special Education Fund. Similar rates were calculated for selected municipalities in Rizal, but they made no sense. It seems as though the estimates we used for market value from the 14th Annual Report of the National Tax Research Center may have been misquoted, as they appeared to be extremely undervalued. Sources: Taxes collected: MBMRSP and National Tax Research Center, "Revenue Structure of Metro Manila", Working Paper No. 7. Market value,,Dec. 1971: National Tax Research Center, 14th Annual Report, 1972. - 17 - in most local governments in the Philippines, only two revisions in assessments of the market value of property vere made during the period 1945-1967. 1, The Department of Finance has estimated the assessment level (estimated market value as a pewent of true market value : various cities and municipalities In Metropolitan M'anila during December 1971 as follOws: 2/ Percent Manila 50 Caloocan 35 P asay 44 Quezon 24 Makati. 37 Malabon 18 Mandaluyong 26 Navotas 13 Paranaque 19 San Juan 20 The uneveness in the degree of underassessment in different juriuaictions within the IMA, as shown in the preceding set of figures, may create a substantial inequity in tax burdens, since nominal rates are tied to a legal ceiling. A more specific example of assessment inequity is a com- parison of the assessed value of property in Forbes Park, the wealthiest residential area in Makati, with that in two government low-income housing projects. 3/ Land in all three places is assessed at P 150 per square meter. This suggests that assessment biases within jurisdictions may accentuate the Tegressivity of the property tax, 1 / Joint Legislative-Executive Tax Comission, Second Survey on Local Finance, 1972. 2/ National Tax Research Center, 14th Annual Report, 1972. 3/ Projects No. 6 and No. 8. - 18 - Whatever the situation regarding assessment, collection of the property tax is poor. Local governments collected only 55 percent of billings on the basic real property tax and 41 percent on the 1 percent additional tax for the Special Education Fund in 1971 (see Table VII.5), Table VII.5: EFFECTIVENESS OF PROPERTY TAX COLLECTIONS Property Tax Property Tax Percentage Collected Demanded Collection (000) (000) Rate Basic Real Property Tax P 132,802 P 241,231 55 1% Additional Tax 83,569 203,802 41 Source: National Tax Research Center, 14th Annual Report. There are a number of reasons for this poor administrative per- formance. According to a national survey of local finance conducted in 1967 by the National Tax Research Center, the offices of both the local treasurer and the local assessor tend to be inadequately staffed, and officials are generally lax in enforcing the law. Furthermore, local assessors' offices have few trained valuers and, more often than not, they have no tax map and at least half of the land has not been cadastrally surveyed. Other Local Taxation. The evidence available implies that local governments in the MMA could make more intensive use of certain taxes which are legally available to them. One such possibility is to levy a special assessment on property as a charge for betterment. Such a tax not only has substantial revenue potential, but it may be equitable in so far as it may be treated as a charge for benefits received. Surely the use of such levies has been effective, for example, in the cities of Korea, Colombia, and Taiwan. 1/ Whereas the special assessment could be a lucrative source 1/ For a more complete discussion, see Orville Grimes, "Urban Land and Public Policy: Social Appropriation of Betterment", IBRD Working Paper No. 179, May 1974. - 19 - of revenue in the MMA, in fact it was used by only three local governments beften 1960 and 1970, and only insignificant income was realized as a result. 1/ An additional levy may be imposed by cities and municipalities on gasoline of various types, with a maximum rate of 25 percent of the national levy. This tax is being imposed by all five chartered cities, but by only iJbout 40 percent of the municipalities in Metropolitan Manila. Moreover, few jurisdictions have chosen to levy the maximum rate. The tax in Manila, Quezon, Caloocan and Pasay tax is 12.5 percent of the national levy, while only Cavite City levies the full 25 percent rate. The rates levied by the municipalities vary from 7 percent to 25 percent of the national levy. It is not clear that any particular jurisdiction would be "better off" raising the rate since a further distortion in relative prices in different areas of the MMA, would occur. A more proper policy would be to levy the tax at a uniform rate throughout the metropolitan area and to distribute the proceeds among jurisdiction on some rational basis. Finally, the per capita level of license revenues and user charges also varied widely within the MMA (see Table VII.6). Again, the disparities are due in part to differences in population characteristics and economic activities amongst the jurisdictions but also in part to different rate and charge structures. With respect to the latter, the efficiency losses which result from the distortion in relative prices might be viewed as another "cost" of local government fragmentation. 1/ Quezon City (1960) P 198; Taytay (1965) P 13; and Santa Rosa (1970) P 8,638. - 20 - Table VII.6: PER CAPITA LICENSE AND USER CHARGE REVENUES: 1970 Per Capita Per Capita Locality License Revenue User Charges Manila P 24.80 P 5.01 Makati 8.52 2.29 Las Pinas 7.92 1.69 Mandaluyong 7.10 2.02 Quezon 6.68 2.61 Pasay 6.89 6.34 Cavite 2.51 5.34 Cainta 5.19 46.35 Rosario 0.21 15.33 Pasig 5.73 9.48 San Mateo 0.65 6.86 San Juan 3.52 5.65 Navotas 0.23 0.38 Noveleta 0.45 0.42 Paranaque 4.63 1.32 Taguig 0.68 0.23 IV. Expenditure Structure and Growth The distribution of expenditure responsibility, i.e., final budget allocation responsibility for various functions, for the metropolitan area is summarized in Table VII.7. In many cases, several levels of government are responsible for a specific function, e.g. the construction and maintenance of roads (five levels), high schools (five levels), health facilities (four levels), and planning (five levels). At present, the national government has the major responsibility for flood control and drainage, road construction and maintenance, the port, air and rail transportation, housing, health, edu- cation, welfare, pollution control and planning. City or municipal govern- ments have the predominant responsibility for refuse collection, traffic control, street lighting, fire protection, police, markets and cemeteries. Government corporations have major responsibility for water and sewerage (MWSS) and shared responsibility, with regulated private companies, for electricity (NPC) and telecommunications (GTS). The major regulated private companies sharing responsibility are MERALCO (electricity) and PLDT, Republic TaЫe VII .7 : Р[Угlгклс rrsPФislstLlп vlпгм гк[ lалwа4?и им11л вsи 1[ог лгlат 1вп1в в[ вОьпп�ег ао1 вwв[пsлг вд tepИtN <ювргвt 1ет 1 гв:0lсt- Соигвеьс �eprlвtN ►.иctlow бвг__!е вС 11гг С1гт lговlа• Lt _lов Со[s�+[в[1ов /ьlввг[let b� _ erttl•1!f G+ггвllеп УРС � 1�АlСС у tгв.ивlв+lоn � 1�1� дlагг(М.гlоп 1iЧLCC Ь .[Ьв[в -.с.. :•�ne1r икs у г г.аг.глс wsf dlвlrlDotcoo MaSS __,�,_ггllг•г4ап к 15/ к у /YS1 tтtvв[e сафаа[Ов во! ш ггг•гмnс к 15 l,�/ MtS� Рг[мп вйдlвгвlои 1о.г•гlвсlоо к к 1Y3i . , и_�., ,_,д вРн в/ Flaod Contral в я Ьtд �/ [в[егvв 6РУ _ аг С.�11есв1ап i Р t hlлb ееllвс[о[в вв0 Рг[ег. ..ы[пиоо. � .м.п��е /гоада . сопвсгиссlоо !б/ в к к !Р8 J ы!о[<ып_[ 1n/ 1 д ■ i 6Р9 ' �-t -- nct4on Ь wlпсеммв ЕР1Г 5/ орг[allOO RP J ,гlдг.>• к а в вР9 �/ -глг[tс Con[rnl (1lаЬtв) Р Р (PC-TtAP ) (Р[С Са 7/) __Ос Ilкh lпх к п Тг•^ап^тгвгtоп ) jrepney ► I+nd .hamp[Чс[ео Се�Lвв[огr р„а ML (lonj д[в- t ll<выев. ГиЫlе 5ег+[р Глв!- N Свг�е.) J в100 •�[в[Nв rooC[ej J г.[( Рпд J 1 а4г у...1в1 3 кlпа сlевгвпсв х� к L ��' РЬ� , РЮС сОо\[г-ncClOO Р1111Св DРУ,Агву СО[Р•►гfL IСБ � ]j/ fввс•Вов.t>,врг i г 1 гС и.твгП lC.l [ 10п1 --c.1evl.one CI'Ь ь2/ Р[DT J7S ГвWЫ[е с.:lс.ггауh �Р jC/ РТ7 j6/6 оtАггв ..lr. - �га; ,са1в +с 1!! к к ..-- :..1га ' ллi::г се��г_гв к к к . � ..сг..г hes:гtr n.::rca: cduc�.cton Р bгЬsведlиl 6 nигвlо; веЬооlв lггипt:.ггiоп а к к г'г:.ги 1 1 оп еlс.каеагу j1-6 ог 7) f ortmcy (l-4) к ?�/ lncermcllace (5-6 or 7) 1:ir:: всiюоl [ к к а сас lunal а Р 1Ьвсi7-и[[оыl гпl:сgе Ь unlvralcy [ ^пгtсг д к ;в1lо, ргlвоnк д в а Р4гв к ❑м Gr к к а к МлЛега в1rv�Ь[в[ кеоесвl в Р ► аг<гелг(Оп. овttв к х к t : Ргв.lmlal Гвтtв па р[trrtt�:pvввdв вгеад �евt. etfteв Чдр. Ь tлг вроги атсnо i•:.ппl�гс к ■ в г._ 1Ys(1в Свв tввl.�овв[овеас t_:п•гггlвв �.1гг гУ У 2 1 в 1 i�.+1l�.�гon ront[ol F -- r-imzr-y re6pn-nsibility." x = s' c=darry responsibility. .i *;P icnal Power Cor;-)oration. Marila Electric r'ompany. A/ Herropulitan Waterworks and Sewerage System. Bureau of Piblic Highways. E Area-,; of -2ublic '.:ork:;. of ca'_- Tr aff! c Control . P -.ilippine 'Nztionai Railways. Bureau of Posts. Nat:ional Nousing Corporation. Government TelephTne Syrccm. ar-i Tele-.raph. Mal,a- i has built ics own sew(.-,aFe system and treatment plant as has the Quezon City hospital. 16/ Barrios do minor repairs and construction of neighborhood streets; municipalities and charter cities do internal roads and screets; Provinces do inter-province hig,,ways; National government responsible for major arterial national highways. .It The City aod Municipal Governments play a minor role in slum clearance. They are involved in the financing only if the slum clearance. They are involved in the financing only if the slum clearance project relates to City or Municipal land. ln.tihe case of Sapang Palay ai,.d Carm.ona, the infrastructure was constructed by the Army Corps of Engineers and the Department of Pub!-'c !-Iorks,. under the supervision of t1he People's Homesite and Housing Corporation. The Presidential Assistant for Housing and Resettlement Agency provided tran port itiorffor squatters to these areas. The Department of Social Welfare helped the squatters to adjust to their resettlement areas. in the future construction of dwelling units for government housing projects - resettlement and otherwise - will. be by the National HousingCorporation. 19/ Municipal hospitals are rare. Generally, the municipality contributes to and makes use of the Provincial hospital. TO-/ Makati was granted permisiion.to take over the financing and hiring for teachers in prImary pchools. - 22 - and PTT (telecommunications). Other regular private companies have major rbSponsibility for certain functions, e.g. bus and jeepney transportation and gas (Manila Gas). Attempts at metropolitan area coordination in the delivery of these services are already being made. A metropolitan police force, iETROCOM, has been created to cover 17 local governments in the area. It is presently financed from national government funds. Coordinating agencies have also been established for fire control. A Metropolitan Mayor's Coordinating Council has been set up to coordinate the activities of 14 local governments. So far, the MMCC has made an agreement to coor- dinate on flood control, drainage and garbage control; however, its powers are merely coordinating ones, as the MMCC has no budget. The population of Metropolitan Manila grew by 62 percent from 1960 to 1970, while total per capita expenditures from the general funds of the cities and municipalities in the MA increased by 82 percent during this period, from P 24.4 to P 44.4 per capita. Since the consumer price index during this period increased from 79.4 to 133.4, or by 68 percent, there was little or no real increase in per capita general fund expenditures. 1/ As indicated in Table VII.8 the bulk of expenditures are for economic development (public works, etc) and protective and social services (police, fire, garbage collection, health and education). The charter cities spend considerably more per capita than municipalities; however, during the period in question, both the population and spending of municipalities increased much more rapidly. Total general fund expenditures of municipalities increased faster (21 percent per annum) than those of cities (9.6 percent per annum) and the disparity was particularly pronounced for economic development expenditures 1/ If the CPI (base 1965=100) is used to convert 1960 and 1970 general fund expenditures per capita to constant figures, the rate of increase in real terms from 1960 to 1970 is only 8 percent, or less than three- quarters of one percent per annum. - 23 - (0.4 percent and 26.8 percent per annum). Part of the reason for the more ra;pid growth of these expenditures in municipalities than in cities during 1960-1970 was the more rapid population increases. Total city population in the MMA increased at an annual rate of 3.5 percent over this period, as compared to 7.0 percent for total municipal population. Per capita local government expenditures increased at an average annual rate of 13 percent for municipalities during this period, as compared to 6 percent for cities. Even at the end of the period, however, average annual city expenditures per capita (P 61.8) were more than two-and-a-half times those for municipa- lities (P 23.1). Table VII.8: GENERAL FUND EXPENDITURES OF METROPOLITAN MANILA BY FUNCTION 1970 Total % 1960-1970 % -a Function (P 000,000's) Distribution change p.a. General Administration 27.2 13 12.5 Government finance 16.4 8 6.6 Protective & social improvement 82.5 39 12.3 Economic development 86.5 40 11.4 Total 212.7 100 11.4 /a These annual growth rates, as well as all annual growth rates in this Annex, are compound average annual growth rates. V. Intergovernmental Fiscal Relations Shared Taxes The internal revenue allotment from the central government was the second largest item after the real property tax in the total revenues of Metropolitan Manila's local governments. At P 79 million, it accounted for - 24- 28 percent of the total revenues of MMA governments in 1970 as compared to 12 percent in 1960 (See Table VII.I.). Over this ten year period, shared tax revenues grew at an average annual rate of 23 percent. In the case of the municipalities within the MMA, total allotments (P 23 million) repre- sented 36 percent of total revenues and exceeded revenues from the real property tax (P 17 million) in 1970. National taxes that are shared with local governments until recently were divided into two groups: those subject to regular allotment, and those subject to special allotment. 1/ The distribution of the total internal revenue allotment in 1970 was as follows: Amount (P 000,000) Percent of Total Total 79.4 100 Regular allotment 9.5 12 Income and transfer taxes 64.7 82 Residence tax 0.6 1 Franchise tax 4.4 5 This represented a radical change from the distribution in 1960 which was as follows: Amount (P 000,000) Percent of Total Total 9.8 100 Regular allotment 5.6 57 Income and transfer taxes 0.7 13 Residence tax 0.5' 5 Franchise tax 2.3 23 Beginning with FY 1974, P.D. No. 144 issued in March 1973 is to be implemented. Under this decree, all taxes previously shared under regular and special allotments are to be consolidated into one fund. 2/. Of the amounts accumulated in this fund, 20 percent are to be distributed to local 1/ For details, see Pamela Brigg, ap. cit.; and ongoing work under IBRD Research Project, RPO 270. 2/ Excluded are national internal revenue taxes accruing to special funds and special accounts in the general fund. - 25 - governments distributed as follows, 30 percent to provinces, 45 percent to municipalities and 25 percent to cities. P.D. No. 144 is intended to simplify the internal revenue allotment procedure, thereby increasing the chances for administrative efficiency. In addition, it makes the national allotment more equitable by abolishing the excess income tax special allot- ment which had been distributed so as to accentuate rather than reduce fiscal capacity variations. The new national allotment scheme introduced under P.D. No. 144 will work substantially to Metropolitan Manila's disadvantage. According to preliminary projections of the National Tax Research Center, several local governments in the MMA will undergo the maximum decrease of 50 percent in national allotment allowable under the decree. Of all MMA local governments, only Malabon and Taguig will receive more under the new allocation scheme than they would have under the old scheme. Manila City will suffer the greatest loss in absolute terms, P 26 million. The MMA as a whole will lose P 63 million, or 42 percent of what it would have received under the old alloca- tion system. One provision in P.D. No. 144 which appears very questionable calls for the new allotment to be based on the national internal revenue taxes collected during the third fiscal year preceding the year of the allotment release. This will be a very long lag, and in effect will not allow local governments to benefit immediately from the growth in national taxes. It would also appear to be another contributing factor to the reduction in national allotment to MMA government in FY 1974 and beyond, as well as a substantial (and unexplained) steps backward from those taken. Recently to avoid the crippling effects of delayed allotment release on local govern- ment operations. The Decentralization Act of 1967 (R. A. 5185) introduced the automatic retention scheme which authorized local governments to retain every month their predetermined shares of regular allotment (which were based on collections during the preceding fiscal year) from the national internal revenue taxes paid within their jurisdiction. R. A. 6258 extended appli- cation of the automatic retention scheme to the special internal revenue allotments, including income tax collections. - 26 - In sum, the national allotment system has, in the past, made the dittribution of revenues among all local governments in the Philippines less equal and it tended to equalize available revenues as among local government units within the MMA. 1/ P.D. No. 144 will reduce national inequities bup will not further apparently improve distribution within the MMA nor will it alter the fact that the national allotment system has so far failed to provide any incentive to local governments to improve their own tax efforts. Grants-in-Aid Grants-in-aid are made by the national government to local govern- ments for specific purposes. They are not nearly so important for local governments as is the internal revenue allotment. For the MMA, grants-in-aid consisted of only 2 percent of total revenues, compared to 28 percent for the internal revenue allotment in 1970. During the 1960-1970 period, grants-in-aid to MMA governments grew at an average annual rate of 9.3 percent. In 1970, the five cities in the MMA received P3.6 million in grants-in-aid; the munic- ipalities received P 1.3 million. Grants-in-aid comprise grants from special funds and special accounts in the general fund of the national government. In some cases, counterpart funds are a prerequisite for acquiring grants. One way of improving the tax effort of local governments would be to require more local counterpart funds for release of grant money, i.e., to install a system of matching grants. So far this has not been done. Loans Borrowing from the national government and other financial institu- tions accounts for a very small part of total revenues in the MMA. In 1970, total borrowing of the MMA was only P1.2 million, which was 0.7 percent of total revenue. Total loans outstanding as of June 30, 1970, in the five cities of the MMA, amounted to about P 29 million; Manila City accounted for over 70 percent of this. The new local government code will authorize local governments to borrow from foreign sources for the first time. 1/ See Chapter Three, Section IV, pp. 16* - 27 - VI. K.cent and [impending Reforms in Local Government Finance Local government structure and finance are currently undergoing change throughout the Philippines. Two recent Presidential decrees, No, 76 on the real property tax, and No. 144 on the system of national internal revenue allotments to local governments, will substantially affect the revenues of local governments in Metropolitan Manila in the immediate future. The new national internal revenue allotment scheme went into effect on July 1, 1973, and the changes in the property tax base and the distribu- tion of property tax revenues was scheduled to go into effect on January 1, 1974. Two other Presidential decrees, a new local tax code and a new local government code, will also alter the present structure. In addition, the creation of some new central authority is anticipated for the Manila Metropolitan Area, though it is not yet clear how powerful this new authority will be. The goal in this discussion is straightforward: to describe these proposed changes and to assess their likely impacts on both the local resource constraint and the level of fiscal disparities. Local Tax Code The Local Tax Code enacted under P.D. 231 (June 28, 1973) puts into a single repository the provisions relating to the taxing and revenue raising powers of local governments. The code transfers some national taxes to prov- inces and cities, and specifies the extent of taxing power of each level of government as well as limitations on that power. It also empowers the Secretary of Finance to review tax revenue ordinances and to alter existing rates every two years. The new local tax code 1/ will extend taxing powers in the provinces for the first time. Most of these powers will involve transfers of taxing power from the national to the provincial level, e.g.: 1/ As amended by P.D. 426 and P.D. 436. - 28 - (a) residence tax; (b) occupation tax; (c) amusement tax on admissions; and (d) fees for sealing, licensing of weights and measures, peddlers' tax, and rental fee for use of municipal waters, rivers, etc. Other taxes authorized for provincial governments include: tax on transfer of real property, tax on printing and publishing business, franchise tax, and sand and gravel fee. Provincial revenue sources will further increase because of the provision which grants all levels of local government the authority to collect market and slaughterhouse fees, tuition fees, permit fees, tolls, and public utility and service charges. The cities' taxing powers will also be increased, as they will have the authority to levy the same taxes and fees as the provinces (but usually at rates which may be higher) in addition to those taxes, licenses, fees, and user charges that they already levy. In fact, imposition of the transferred taxes by the city and the province will be made mandatory by the code. The barrios will lose their power to levy an additional property tax; this will not have much effect, since very few barrios have util- ized this power. The code will set fixed rates for the taxes transferred from the national government. For other taxes, maximum rates will be speci- fied. In some cases the maximum rate for cities will exceed that for muni- cipalities and provinces by 50 percent. At least once every two years the Secretary of Finance will consider whether it is necessary to change the levels of the maximum rates. At first glance, it would seem that the local tax code will have two effects. First, it will probably strengthen the overall fiscal powers of the local governments in the MMA, and may therefore lead to an increase in revenues raised. Whether such an increase actually comes about will depend - 29 - on the extent to which the local governments use their increased taxing powers --something they have not chosen to do intensively in the past. Given a low level of public spending by local governments in the MMA, such a revenue effect would have favorable implipationq, The second result of the local tax code would seem less favorable. By strengthening the taxing powers and fiscal independence of local gover- nment units (particularly provinces) within the MMA, the local tax code will strengthen the results of fragmentation of local government, i.e., uncoordina- ted fiscal and physical planning decisions, service level and tax burden disparities, etc. Local Government Code A new local government code, for which drafts are being prepared and discussed, is under active consideration. The major policy objective of the code appears to be to encourage decentralization of national government by promoting the autonomy of local governments throueh increased powers and resources. The code will cover legal and administrative details related to each level of local government, namely; province, municipality, city and barrio. It would also contain a section on inter-governmental relations. Since it is bound to affect considerably the powers of the constituent local governments of the proposed Metropolitan Manila Authority, the proposal for the formation of a Metro Authority should be considered in conjunction with the new local government code. Ideally, all interrelated reforms having to do with forms and powers of local governments, such as, the local tax code, local government code and metropolitan government proposals should be viewed together and not in isolation. The local tax code has already transferred certain tax and revenue raising powers to provinces and cities. If a centralized form of government for the MMA is.considered desirable for raising service levels in general and removing interjurisdictional variations in amenity levels in particular, it might be appropriate to make the decision on the form and powers of the metropolitan government before its constituent local governments are granted more autonomous positions within the overall governmental frame work. - 30 - VII. Metropolitan Fiscal Problems: The Proposed Metropolitan Government Solution The foregoing discussion of local government structure and finance in the Philippines and their effect on the MMA elucidate a number of prob}ens. Two major causes of these problems are inadequate amounts of pub- lic sector resources available to local governments, and the fragmentation of local government within the metropolitan area. The resource bottleneck is a problem common to all governments in their efforts to provide an adequate level of services. One element of the resource constraint is simply that the level of total personal income in Manila, and in the Philippines, is not adequate to support a high level of public sector resource mobilization. Another is that government may not mobilize a high enough proportion of personal income for the public sector. The second problem, the fragmented structure of local government in Metropolitan Manila, has resulted in substantial intra-metropolitan - even intra-neighborhood -- income and public service level disparities. This disparate pattern of development is reinforced by an almost complete dis- regard for long term physical or fiscal planning. A long term capital budget exists for no local government within the MMA and there exists no statement of the consolidated fiscal position of the local government sector in the MMA. This combination of government fragmentation and resource con- straint has contributed to a number of specific problems facing Metropolitan Manila and the Bay Region. 1/ These include haphazard patterns of sub- division and urban development; serious traffic and transport bottlenecks and congestion; inadequate and uncoordinated transport services; co-existence of very high densities in the core areas with low density sprawl in the suburbs; deficient water supply, sewerage and drainage systems; extensive annual damage from floods; housing and land shortages reflected by the presence of 1/ See Manila Bay Metropolitan Region Strategic Plan; Department of Public Works and Telecommunications Commission, April 1973, pp. 2-3. - 31 - formidable slums and squatter areas inhabited by more than one-quarter of the metropolitan population; lack of community facilities, open spaces and re- creational areas; environmental pollution; high land values and inordinate land speculation. Because of the severe repercussions of these problems, a Prpsiden- tial decree creating a new central authority for Metropolitan Manila as well as a new planning commission for a larger metropolitan region are anticipated soon. A number of alternatives have been proposed for the Metropolitan Manila Authority (Metro Authority). There is general agreement that more centralization of the administration of functions within Metropolitan Manila is needed, that some version of a two-tier form of government is desirable, and that the central agency should have some financial resources. Agreement has not been reached, however, on the degree of direct expenditure responsibility and the extent of taxing powers that this central agency will have. Proposed Reforms A number of proposals have been offered. They run the gamut from proposals for strong local autonomy and a coordinating function for the central agency to one for a financially strong central agency with major expenditure responsibilities. Proposals have been offered by: (a) An inter- agency committee headed by Dean Carlos Ramos of the Philippine Executive Academy, University of the Philippines (The Ramos Proposal), (b) the Metro- politan Mayor's Coordinating Council (MMCC), (c) NEDA, and (d) the College of Public Administration, University of the Philippines. These proposals are reviewed briefly below, with special attention given to the following features: jurisdictional boundaries; division of tax and expenditure responsibility as between the central Metro Authority and the remaining local units; form of government; and lines of inter-governmental administrative responsibility. As will be seen, the proposals are quite similar in their recommendations as to the expenditure categories with which the Metro Authority should be concerned, but do not agree about whether such concern should take the form of advice/coordination or direct delivery - 32 - responsibility4 1/ These proposals also differ considerably as to jurisdic- tional boundaries, form of government, lines of intergovernmental admin- istrative responsibility and, most important, direct revenue raising powers to be assigned to the Authority. In short, they differ in terms of the "seriousness" with which the major issues -- the reduction of service level and tax burden disparities and the improvement of service level efficiency -- is addressed. The Ramos Proposal. The Ramos proposal defined a Metro Authority area composed of Manila City, Quezon City, Caloocan City, Pasay City, and 14 municipalities. 2/ Under this proposal the metropolitan government would be primarily a coordinating council, though it would have some direct expendi- ture responsibility. The following services would be delivered directly through the central authority: protective services including police and fire, transport and traffic management, flood control and drainage, water supply and sewerage, solid waste management, and health and hospital services. The rationale is that all of these carry areawide benefits and therefore areawide financing would seem most appropriate. The taxing powers of the new central agency were not spelled out in great detail; however, it was suggested that these might include (a) annual national government subsidies for operating and capital expenses, up to one fifth of the total incomes from the general funds of all local governments operating within the metropolitan authority jurisdiction, and (b) proceeds from the franchise tax which are presently accruing to local governments. The general policy, then, would be to vest little direct revenue raising authority at metropolitan government level. 1/ Essentially all or most of the following services have been mentioned: police; fire; flood control and drainage; garbage collection; water supply and sewerage; land management and zoning; transportation, including traffic regulations and control, road and bridge construction and maintenance for all but national highways and bridges; some health clinics and hospitals;. park and recreational development (shared responsibility); and intermediate level educaiton (grades 5-7). 2/ Reference to Chapter Two, Table II.1. - 33 - Under the Ramos proposal, the Metro Authority would be a national g0ilrnment creation, directly responsible to the President. Although it is proposed that it be supervised by the national government, local governments would also play a role as an advisory council to the Metro Authority on policy issues, .and on nominations for the major metropolitan administrative posts. The authority for planning is not dealt with in detail. The Metro Authority would have a planning function, but apparently would not have strong imple- mentation powers, except for those functions which it would be delivering directly. The MMCC Proposal. Under the MMCC proposal, the metropolitan government would be primarily a coordinating unit with little expenditure or revenue decision-making power. The basic differences between the Ramos and the MMCC proposals are that, under the latter, the metropolitan govern- ment would haveless direct expenditure responsibility and would be directly responsible to the Mayor's Council, rather than to the Office of the President. Under both proposals, however, major fiscal power would still lie with the existing units of local government. According to the MMCC proposal, the Metro Authority should have direct responsibility for traffic and transport, police and fire, garbage disposal, flood control, pollution control, planning and housing. The jurisdictional definition of the MMA proposed by the MMCC is smaller than that in the Ramos proposal including, in addition to the four chartered cities, only the ten adjacent municipalities. 1/ Another basic difference between the MMCC and all other proposals concerns the plan- ning function. The MMCC would have planning performed by task advisory groups whose membership would come from component local government bureaus or services. 2, The NEDk- Proposal. The NEDA proposal would create a National Capital District (NCD), including all jurisdictions presently within the boundaries of the Bureau of Census and Statistics' definition of Metropolitan Manila. 3/ The NCD would be created through Presidential Decree, and a Metro- politan Manager would be appointed directly by the President. The national 1/ Reference to Chapter Two, Table II.1. 2/ National and Economic Development Authority. 3/ Reference to Chapter II, Table II.1. -34 - goV0rnmejrnt would Hupervise and administer the National Capital District Liltough the Metropolitan Manager. Local governments would be phased out as political subdivisions and give way to the smaller baranguay, wh*ch would act in an advisory and guidance capacity to the NCD. A counci+ pf local government officials would act in this role until 1975 when they would be replaced with a council of one hundred baranguay heads. The specific taxing powers intended for the NCD are not spelled out in the NEDA proposal; however, it is noted that the District will have the power to tax and to borrow, and would receive a specific central govern- ment subsidy. On the expenditure side, it is suggested that the NCD should assume responsibility for all urban services, including police and fire, garbage collection and disposal, transport and traffic, public works and flood control, water and sewerage and planning. The NCD would have plan preparation and implementation responsibilities and powers, and would coordinate its planning efforts with the larger, nine-province, National Capital Region.1/ In sum, the NEDA proposal would create a strong metropolitan govern- ment unit with areawide financing powers, under which all local government expenditure responsibilities and revenue powers would rest. In this respect it is considerably different from the other proposals. The University of the Philippines Proposal. The most recent proposal to create a Metro Authority was offered, in draft form, by the College of Public Administration of the University of the Philippines to the Development Academy of the Philippines. This report proposed the creation of a Metropolitan Manila Authority by Presidential Decree, and proposed that the Bureau of Census' definition of Metropolitan Manila be adopted in defining the jurisidictional boundary. Moreover, it was recommended that, for planning purposes, the territorial jurisdiction of the authority encompass an area of 75 kilometers radius from the center of the city. 1/ Reference to the MBMRSP Region. - 35 - The Metro Authority would be headed by n manager appointed by the President for a three year term, and the manager would be responsible directly to the central government. The Authority would be assisted in policy making by a Metropolitan Manila Consultative Council which would act in an advisory capacity. This Council would be composed of the Secretary of the Department of Local Government and Community Development (DLGCD) the Director General of the NEDA, the Secretary of the DPWTC, a representative of the President and four local officials to be appointed by the President upon the nomination of the Provincial Governors and Metropolitan Mayor's Coordinating Council. Under this proposal, the Metro Authority would (a) act as a central organization to provide services, (b) formulate development plans and moni- tor and execute these plans, (c) supervise the execution of priority proj- ects which would be funded by the Authority, (d) provide resources for or finance directly projects which are within the scope of .the metropolitan development plan and (e) exercise development planning power over the metropolitan region, including the implementation of land resource management. The exact expenditure responsibilities of the Metro Authority are not spelled out in the proposal, nor is the division of fiscal responsibilities and control between the central agency and the various local governments. The exact mechanism for delivering services has not yet been determined; however, one option being considered would involve administering areawide services through a system of special authorities. With respect to financing, it is noted that provision would have to be made to ensure a fiscal base for the Metro Authority and that resources would come primarily from national appropriations and counterpart funds of local governments. It is proposed that a total budget of 19.5 million pesos annually would be necessary to cover both operating and capital expenditures of the Metro Authority. This amount is.equivalent to about 9 percent of the total revenues of all local governments in Metropolitan Manila in 1971; there- fore, it would appear that, contrary to what is implied on the expenditure side, not a very large role is envisioned for the Metro Authority. - 36 - Evaluation There are many advantages to a metropolitan form government. The most important are usually thought to be gains in technical efficiency (economies of scale) and in interjurisdictional equity in the delivery of local public services, and in the areawide provision of services which are characterized by "spillovers" or external effects. The technical efficiency argument -- that, for example, better coordination and the avoidance of duplication would lower public costs - is particularly difficult to docu- ment, since quantification depends on finding some suitable measure of public sector output. Intuitively, it seems reasonable that, e.g., one well-staffed police training academy can perform its function more efficient- ly than can four smaller academies, or that one fire department can provide a better level of service than can 28 fire departments. Similarly, land use and facilities planning and management can hardly be efficient unless the basis is the entire urban area, i.e., certainly there are cost savings implied by planning and implementing public sector activities on an areavide basis. Moreover, where some public sector activities result in spillouts of costs/benefits to other jurisdictions, areawide provision can increase total comnunity welfare. However, it should be underscored that these positive effects need not mean reduced government costs. On the contrary, it is argued below that the cost of providing the same package of services as are now provided would rise, but that the quality of services increase more than commensurately. The second major potential benefit from the formation of metropolitan government is its equity effect. Presently, local governments within Metropolitan Manila may offer different levels of public services because of their different levels of wealth and differential ability to tax. These disparities among local governments in the MMA, data problems per- mitting, have been documented above. 1/ Under a truly metropolitan govern- ment, the power to tax would be removed from these local units. Hence, there would be no automatic disparity due to interjurisdictional differences in 1/ See Chapters Three and Seven. - 37 - the level of fiscal capacity, and it would be possible to move directly toward equalizing the level of services provided throughout the metropolitan area. Whether or not such equalization would in fact come about would then be a decision of the MMA Management. The major drawback of metropolitan government is the loss of local autonomy implied. If residents of different local governments have different preferences for local services, and if a single decision making unit does not (or cannot) recognize these demand differences, then an inefficient allocation of public services may result. The bundle of public services offered by the metro government is better for some people than for others. This problem with metropolitan government may be combatted by dividing services according to whether or not they might be "neighborhood" oriented, e.g., local "small" parks and refuse collection, or whether they are goods for which the demand is relatively homogeneous across neighborhoods, e.g., water supply. Responsibility for the former might be assigned to local units of government, the latter to the metropolitan government. Given these basic considerations, it would seem useful to evaluate the four proposals described above in terms of their effects on equity, ef- ficiency, and allowance for appropriate variations in public service pack- ages between local jurisdictions. First, it should be noted that none of the four proposals described above offers specific details about either the division of functional respon- sibilities between the Metro Authority and the remaining local government units or the methods of financing. Accordingly, little by way of a projected size of operations, or of equity implications, are presented. In sum, then, all of these proposals are preliminary and sketchy, and our evaluation is at least partly based on our best guess about the policy intentions of these reform suggestions. The Ramos and the Metropolitan Mayors' proposals are similar in that both propose that the structure of local government as it now exists - 38 - remain the basic vehicle for delivering local public services. In the Mayors' proposal, the Metro Authority would be primarily an advisory/coor- dinating unit. Even the planning function would be heavily controlled by local government. Under the Ramos proposal, the Metro Authority would have direct responsibility for planning and, in addition, some direct service delivery responsibility. Still, in neither case would the Metro Authority become the most important local government unit in terms of the delivery of public expenditures, i.e., in terms of budget size. The major strength of the Ramos and the Mayors' proposals is that both would preserve a large degree of local autonomy; that is, they would allow local constituencies more freedom in choosing their own bundles of public services and tax prices. With respect to technical efficiency, the internalizing of externalities, and equity, however, both are weak. To the extent there are important economies of scale in the delivery of public services achievable within the MMA, these proposals which allow local governments to retain major service delivery responsibility, would not capture such economies. Moreover, to the extent there are technical efficiencies and social benefits associated with better coordination in public service delivery, it is not clear that the Metro Authority planning function proposed would be effective because of its weak implementation powers. The basic issue is that these proposals would give the Metro Authority little control over local budget operations and/or expenditure decision making; therefore, it is not clear how adherence to a plan could be enforced. With respect to the important question of equity, the Ramos and the Metropolitan Mayors' proposals fail badly. By keeping major expenditure responsibility at the local level, the possibility that service levels and tax rates may vary among jurisdictions is preserved. The UP proposal for a Metro Authority shares a basic objective with the MMCC and Ramos proposals, in that it also intends to preserve the existing structure of local government as the major vehicle for deliver- ing public services in Metropolitan Manila. It is different only in that it may centralize more direct service delivery responsibility and that it - 39 - covers a wider jurisdiction. But, because of the limited expenditure re- slonsIbility and because this proposal would give the Metro Authority little by way of autonomous revenue-raising authority, it is doubtful that it could play a major role in coordinating local government efforts with respect to development planning, upgrading and equalizing the overall level of public services, or achieving measurable efficiencies either in terms of reduced costs or increased service levels. The NEDA proposal is qualitatively and quantitatively different from the other three in that it proposes the creation of a full-fledged metropolitan government. As such, it would provide a framework within which efficiencies associated with government size could be captured, external effects could be taken account of, and service level and tax burden disparities could be reduced or eliminated. There is some attempt to preserve local autonomy in the NEDA plan by establishing 100 baranguays which would transmit local preferences to the capital district decision-makers. Still, complete evaluation of the NEDA proposal is difficult at this stage, since so little is known about the proposed financing arrangements, planning implementation powers, and the division of expenditure responsibility with the central and local governments. Revenue Implications of Metropolitan Government Considering the revenue implications (expenditure requirements) of introducing a full-fledged metropolitan government, it is interesting to note that, if service level equalization were a goal of metropolitan govern- ment, it is almost certain that the level of total public service expenditrues within the metropolitan area would rise above the present costs to all local governments of providing the same set of services. This is because perfor- mance levels and labor costs would tend to be equalized toward the higher prevailing levels, e.g., it is likely that wage rates of public employees in low paying communities would rise toward the levels which exist in the higher paying communities such as Makati. Moreover, in addition to this consolidation of what are now local government services, the metropolitan government could be expected to assume some additional functions which had been provided - 40 - previously by national government - water supply, sewerage, drainage and flood control and perhaps some levels of education. The transfer of these functions to a Metro Authority need not be accompanied by cost increases, except possibly for education, where intra-metropolitan service level disparities do arise because of local government taxation for school purposes (i.e., the receipts to the special education fund). In any case, the budget of a Metro Authority would be substantial - clearly higher than the sum of all local government budgets at the present levels. So also, therefore, must be its resources. Though exact expenditure projections are not available, it is possible to speculate on the general magnitude of metropolitan government financing requirements, particularly with respect to that portion which would have to be borne from the general revenues of the city. Of the functions suggested to be designated for Metro Authority financing, those susceptible to user charge financing are water supply, sewerage, and refuse collection. In practice, the cost of none of these functions is now fully covered by charges; therefore, rates would have to be raised or a general fund subsidy would have to be created. For certain functions there are earmarked taxes; a P 0.25 tax on movie admissions - rather oddly designated for flood control purposes - and property tax surcharges for flood control and education. Even if these earmarked taxes were to be transferred to the Metro Authority, substantial amounts of general revenues would be necessary to cover the full costs of education and flood control. The other functions which would be transferred to the metropolitan government are essentially those which must be financed entirely from general account revenues. These include health and hospitals, road and bridge con- struction and maintenance, and police and fire protection. The principal sources of general revenues available to cover these costs are local prop- erty taxes and local shared tax from the central government. The local property tax in Manila is a capital value levy similar to that used by local governments in the United States. It is argued that receipts from this tax will now increase dramatically because of a new -41 - decree which: (a) requires self-assessment of the market value of land, Mid (b) fixes this self-assessed value as the price at which government may expropriate the land. Presumably such a program results in reduction if not elimination of underassessment and therefore markedly raises the level of the property tax Jase. It has beep repofted that in some cities in Metro- politan Manila, a doubling of receipts is expected. However, the property tax assessment ratio has also been fixed by decree at 30 percent of market value for residential land and 50 percent for industrial and comercial land 1/. Varying estimates of inderassessment under the existinf systezq place the assessment ratio as low as 15 to 20 percent and as high as 50 percent. This suggests that the self-assessment scheme - at least for residential property - may not result in a doubling of the property tax base or of property tax revenues. If, for example, a piece of residential land is presently assessed at 20 percent of its true market value of P 10,000 the new decree will raise assessed value by P 1,000 and property tax revenues by P 20 or by about 50 percent. If the existing average assessment ratio were higher than 20 percent, the tax increase would be less than 50 percent. If the existing assessment ratio in the metropolitan area is as low as the 15 percent reported for Manila City, a doubling of revenues is a reasonable expectation. In any case, it would appear that the magnitude of the increase in property tax revenues will not nearly match the increase in general revenue requirements of the proposed Metro Authority. 1/ The rate for improvements varies with the value of the improvement. For residential houses, the assessment rate varies from 15 percent for houses valued at P 30,000 and under, to 80 percent for houses valued at P 500,000. For commercial and industrial improvements, the assessment rate if to remain at its current level unless it is under 50 percent, in which case it may be raised to between 50 and 80 percent. - 42 - The second major general resource available to the Metro Authority trduld be the local share allotment from the central government. By a recent Presidential Decree, 1/ the distribution formula has been changed with the result that Metropolitan Manila will now receive a smaller share of the total allocation. 2/ Since the projected increase in the total allocation is not enough to offset this reduced share, the effect on Metropolitan Manila govern- ments as a group, and on most of them individually, will be an actual reduc- tion in the total amount received. Hence, the increased property tax revenue performance will be offset to some extent by the decline in revenues from this allocation. It seems clear that if, as is desirable, metropolitan government is established, additional sources of income for the Metro Authority will have to be found to accommodate the fiscal needs of effective metropolitan govern- ment. There are a number of alternative means of filling this financing gap. First, the Metro Authority might resort to increased borrowing for capital projects, but ultimately the added debt must be serviced either through increased general taxes or increased user charges. Second, the central government might (and, probably, would) raise the number and amount of categorical grants to support certain activities. Third, the Metro Authority could engage more heavily in "self-financing" projects, e.g., the tapping of land value increments to at least cover the cost-related development aspects. Fourth, user charges might be given more consideration as a revenue source. Fifth, there might be room to increase the level of real property taxation.. A rate between 1.5 and 2.0 percent of full market value 1/ P.D. No. 144; see pp. VII-28. 2/ At the same time, this readjustment will alter the shares of the various cities and municipalities within the MMA; though not apparently in a way that will improve equity. There is no clear relationship between the projected decline in the local share allotment and the wealth or poverty of municipalities; however, it does appear that such relation- ship as does exist is.perverse; for example, Makati (which is certainly the wealthiest municipality in the MHA) is projected to have one of the lowest percentage decreases; that of Quezon City is even lower. On the other hand, Manila City, which has some of the greatest needs, is projected to have largest decrease. (See Pamela Brigg, aR. cit., Table 8). - 43- might be considered; with the current assessment rates for residential pkbperty this would require a nominal rate of 4.5-6.0 percent. A differential rate on idle land might also be considered. Sixth, some national taxes might be transferred, e.g. the contractor's tax. Although these impresatons of meqropolitan reform and itq 4mpli- cations are general and not empirically supported, they reflect the opinion that the particulars of financing metropolitan government in Manila remain to be worked out and thpt, ip doing so, it will be necessary to define sources of revenue in addition to those existing under the present "truc- ture of local government finance. This is not to say that the metropolitan government form is not desirable. On the contrary, it would seem the only clear approach to raising service levels in general, and to removing the interjurisdictional variations in amenity levels which presently exist within Metropolitan Manila. CHAPTER EIGHT PLANNING IN METROPOLITAN MANILA I. Introduction There are considerable gaps in the planning process in Metropolitan Manila, as in most of the World's great cities. Several planning functions either are not performed or are very incompletely performed, and there are substantial overlaps among responsible agencies dealing with certain planning functions. For example, more than ten different-agencies have same responsibility for planning within the housing sector and,depending on how one definesthe relevant transport sector,a minimum of five agencies are involved. Further, land use and general fiscal planning do not exist for the metropolitan area as a whole, and barely exist for its constituent units. The intent in this chapter is only to highlight briefly these planning inadequacies, gaps,fragmentation and duplication, against the background of a general understanding of the institutional structure in which urban planning must take place in Manila. Accordingly, after a brief itemization of the agencies involved with national and regional developnent policies and plans, attention is turned to those agencies directly responsible for cmprehensive, physical and sectoral planning in Metropolitan Manila. Although the emphasis in this description - is very much on land use planning, attention is also given to facilities and fiscal planning wherever possible. The term "spatial development planning" is used throughout this chapter to refer to the planning of where economic activity, population -2- growth, etc. will take place within the country, metropolitan area, etc. By contrast, development planning would normally focus only on how much and what kind of activity would take place. II. National and Regional Development Planning Until very recently, national development planning in the Philippines has not been concerned specifically with the spatial distribution of development; that is, no policies or plans as yet exist which describe a target national settlement pattern in terms of demographic and economic characteristics. The major planning document, the Four Year Development Plan, has not in the past made mention of any planned distribution of activities within the Philippines. As a consequence, it has not so far been possible to coordinate development planning for various regions, and specifically for the Manila Metropolitan Area, with an agreed set of national spatial development planning objectives. The Planning Framework It was with these shortcomings in mind that the central povernment has in recent years established two agencies and charged each with the coordination of some aspects of the spatial development planning effort. These agencies are the National Physical Planning Strategy Project (NPPSP) within the Planning and Project Development Office (PPDO) of the Department of Public Works Transportation and Communications (DPWTC);and the Task Force on Human Settlements (TFHS), which is responsible to the President's Office. The NPPSP was created in 1971, with the assistance of the UNDP and the Institute of Planning of the University of the Philippines, to develop strategies and priorities for the DPWTC's national infrastructure programs, with special reference to the national transport network. However, in order to undertake this work, the NPPSP found it necessary to become involved in issues concerning spatial distribution and spatial development policies. Eventually, the DPWTC (through the NPPSP) began to assume the role of government advisor on spatial development policies, However, the NPFSP has not yet prepared an overall framework pl,ap for national spatial development, though it has prepared a number of reports dealing with a wide range of topics which will need to be considered in the formulation of such a framework. It was largely as a result of the failure of the NPPSP to proceed more rapidly towards formulation of a general framework for spatial development planning that the TFHS was established by decree in September 1973, with terms of reference which include the preparation of a plan setting out the objectives of and policies for national spatial development. In addition to preparing this "national human settlement program" and studying the policy issues and strategies related to such a comprehensive program, the TFHS is responsible for formulating a national housing program and for guiding the preparation and implementation of "clusters" of urban development projects within the MMA. The TFHS includes the President of the Development Academy of the Philippines (DAP) as its Chairman and relies heavily on DAP staff. It consists of 17 additional members, belonging to various government departments and agencies. The National Economic and Development Authority (NEDA) is represented, presumably to ensure coordination between the development of a national apatial (demographic and economic distribution) plan and the national development plan. Surprisingly, however, the PAHRA, which is entrusted with responsibility for the relocation and resettlement of squatters, is not represented on the task force. The broader long-range objectives of the task force as stated in its guidelines include: (i) "analysis of growth, direction and ordering of human settlements and urban development in the Philippines"; (ii) "assessment of governmental capacities for overall policy determination, strategy formulation and program implementation;" and (iii)"recommendation of an operational program considering the social, physical and economic aspects of human settlements and urban development". A long-range program undertaken by the task force aims at formulation of three models of human settlement - an urban model, a rural model and a transitional model. I/ It was evident from the outset that there would be a high degree of (potential) overlap in functional responsibility between the NPPSP and the TFHS. It was thus a pleasant surprise to find that, by April 1974, not only the NPPSP but the entire PPDO 2/ had been combined with the TFHS into a Human Settlements Project Group (HSPG). Furthermore, a decree 1/ As the result of a very brief review of the task force's mandate and activities during its one month of existence, the members of the October/November mission concluded that, considering the very short period (six months) within which the task force was to perform admittedly urgent but very complex tasks, the group was substantially "overcamitted". The total operating staff of the task force at that time consisted already of about 50 people. Within the short period of about 5-6 weeks, they had already prepared ambitious plans and work programs. However, although the professional staff appeared competent, they were certainly not sufficient in number, and appeared to be attempting too much. Moreover, the first two aspects of the task force's imuediate objectives appeared to overlap with similar activities for which other government agencies and departments were responsible. As for the third objective, the task force was still in the process of collecting information about details of projects and their status from other agencies. 2/ With the exception of the well advanced Metro-Ring Projects (see footnotes 1 and 2, pg. VIII.16). had been issued establishing a Human Settlements Commission with the HSPG performing the role of its secretariat. However, the assigned areas of responsib I I I ty of the coiwission were so far-ranging and the amount of responsibility conferred so substantial that, as of April, the decree was being reconsidered and modified. 1/ Thus, one critical area of uncertainty as to the division of responsibility for spatial development planning has apparently been eliminated, and attention thus shifts from the PPDO and the TFHS 2/ to the interface between the HSPG and the NEDA. 3/ For the moment,interest focuses on the decree creating the Human Settlements Commission; on how it may be revised; and on how the Commission and NEDA will work out a division of responsibilities in practice. For the moment, also, it remains unclear which agency will have primary impact on the formulation of national spatial development plans. and policies in future. Moreover, it is not even clear that the spatial dimension will be an important consideration in future national development plans. There is, however, some 1/ This is indicative of a rather general problem in the Philippines at present. It has been noted (page VII.h, footnote 3) that President Marcos has issued well over 300 decrees since martial law was declared in September 1972. Many of these decrees have dealt with matters of great complexity, and there is simply no way that adequate attention can have been paid to detail nor full coordination with existing laws or procedures achieved. As a result--at least within the.fields of municipal public finance and spatial development planning, which are important concerns of this investigation -- the,analyst is confronted with a sittation that is continually changing and at all times unclear. 2/ The staff members involved in the HSPG are still assigned to this task from their formal positions within the DPWTC and the rFHS, so the "integration" achieved to date is not irreversible. 3/ It should be noted that the Department of Local Government and Community Development (DLGCD),with some potential for further complicating the issue, aspires to establish a "Bureau of Physical Environmental Planningn under its tutelage. It has prepared a draft decree to this effect; however, this has not yet been enacted. - 6 - basis for conjecturing both that the "spatial dimension" will in fact assume greater importance in future and that the approach to be taken will be determined more by the NEDA than by the Human Settlements Comission, whatever its ultimate form. Support for both of these predictions can be found, for example, in the recent submission by the government to the UNDP of a request for a minimum of four years' support of a project (to be managed by the NEDA "in conjunction with" the DPWTC)l "Recent events in the Philippines have created a propitious, climate for broadening and strengthening the entire approach to regional development planning, by fully integrating it into the central machinery for national socio-economic planning. The important new conditions are: (i) the vigorous program of New Society reforms which has been initiated by the Government and is now being rapidly carried out; (ii) the creation of the new National Economic and Development Authority (NEDA) under the personal chairmanship of the President, and with a reinforced planning and coordinating mandate; (iii) the promulgation of the Four-Year Development Plan for fiscal years 1974-1977, with special emphasis on comprehensive, integrated regional planning and development; (iv) the overriding priority placed by the Government on social development in the sense of combining greater equity with rapid growth and ensuring that the Plan results in early and tangible improvements in living conditions for the low-income majority of the population; and (v) the urgent importance which the Government attaches to the speedy, effective and coordinated implementation of all planned development programs and projects. "The project will therefore take the form of assistance to the NEDA, at both national and regional levels, in strengthening the machinery for comprehensive regional planning and development and in formulating and implementing integrated socio-economic plans and programs for the eleven development regions into which the country has been divided." 1/ "In keeping with the recommendations .of the Integrated Government Reorganization Plan, which was completed in February 1972 and which is being implemented under Presidential Decree No. 1 of September 1972, the Philippines has been divided into eleven regions for purposes of regional planning, and provision has been made for the establishment of eleven corresponding Regional Development Councils (RDCs), The Councils, several of which are already in the process of organization, will be extensions / Regional Development Strategy for the Philippines, pp. 1-2. -7- of the NEDA- and their development activities will be guided by the Four-Year Development Plan. Their principal functions will be (i) to prepare long-range and annual socio-economic plans for their respective rlgions; (Ji) to conduct surveys, studies and researches required for planning purposes; (iii) to provide technical assistance in planning and relevant matters to local governments, private entities and regional offices of national sectoral agencies; and (iv) to coordinate all planning activities of national and local governmen bo4ieq functioning within the regions in question. "The Government also intends to accelerate equitable and efficient regional development through the establishment of Regional Development Agencies which will be charged with the implementation and coordination of such parts of regional plans and such projects as may be directed by the NEDA. It is expected that these agencies, of which there will pormal}y be one for each region, will assume responsibility where the tasks are beyond the capacities of line agencies or local governments or where large-scale integration and coordination is necessary. "Regional planning and development have thus clearly emerged as the major conceptual and organizational elements in the Government's overall plan for the rapid acceleration of national development and as the principal vehicle both for economic growth and the conversion of that growth into tangible and early improvements in the living conditions of the people at large. In general terms this means that the extensive preparatory work already done in the field of integrated regional planning at the level of infrastructure and other programs of physical development must now be greatly reinforced in the socio-economic dimension, most particularly in all aspects that relate to the changing size, distribution, occupational characteristics and quality of the national population and to related social needs, potentials, problems and dynamics. In future regional development and planning activities, substantially increased attention will therefore have to be given to a wide range of population questions in addition to and in conjunction with the study of problems of an economic, physical or administrative nature. This will fulfill the previously-mentioned need to complement macro-planning with an effective micro-planning approach and, without loss of time or momentum in economis and physical growth, to effectively account for the critical social and human requirements of the planned development process.".! These passages and others in the proposal indicate that to establish the organizational framework and develop the resources necessary to begin real regional planning as desired will be a formidable task. Almost certainly it will require, in addition to firm commitment, a good deal more than four years to achieve. Indeed, on the basis of what is known 1/ According to Director General Sicat, eaOh RDO is the NEDA of the region. / Regional Development Stratekv for the Philippines, pp. 7-8. - 8 - about efforts to date to introduce the spatial dimension into national planning in the Philippines and other countries (developed and developing), it wouild live to be regarded aits i substaiitial nblievement II--at the end or this period--an effective start has been made. Although there are many reasons for the absence of coordinated national- regional-local planning in the Philippines, an important one. not yet mentioned here is the absence of statutory and regulatory instruments requiring the formulation of such coordinated plans and setting out the principles for their preparation. Though there are indications that the government may take steps to correct this inadequacy by introducing legislation regularizing the preparation and specifying the contents of national and regional physical development plans, there are (as will be seen in the following section of this chapter) real grounds for concern as to implementation. In particular, it will be far from easy to create the conditions whereby competent staff (planners, economists, etc.) will be trained and recruited at the RDC and, especially, the local government levels. Planning the Location of Economic Activity Though spatial development planning is recognized to be of considerable importance in the Philippines, it does not yet exist. The concern with such matters is most evident in the Four-Year Development Plan for FY74-77, but the document does not, in fact, introduce such planning. It does not go beyond presenting figures on the disparities in economic and population growth rates and income,levels between and within regions; commenting at some length on the need for a comprehensive (or integrated) approach to planning with a "greater infusion of the - y - spatial dimension"; and talking of general objectives. It does not even really begin the arduous task of performing analyses to transform general objectives into specific, feasible goals. Thus, with the exception of the vngoLng Manila Bay Metropolitan Region Strategic Plan (MPMRSP) and the Mindanao Regional Development Studies,which cover regions of substantial size and importance, the plan consists only of small-area development plans (which are frequently limited to single sectors? Ind spec4l.c projects. -This is not to a4 that a serious start has not been made. It has. Much remains to be done, however, and it is likely that the Bank -- if it so desires -- may be of assistance in advising on the most essentia. early steps to be taken. 1/ See Regional Development Projects: Supplement to the Four-Year Development Plan FY1974-77, Republic of the Philippines, NEDA, Manila, 1973. 2/ See: Mrinal Datta-Chaudhuri, "Review of Regional Development in the Philippines," IBRD DRAFT. - 10 - III. Metropolitan Planning As has been pointed out above, there do not now exist any statutory or regulatory instruments requiring the formulation and implementation of long term development plans, whether comprehensive, physical, or fiscal, for,Metropolitan Manila as a whole or any of its constituent parts. However, as will be noted below, there exist a plethora of public agencies responsible for a variety of planning and management functions in different jurisdictions within the metropolitan area. In addition to these public agencies, private organizations sometimes assume important development planning and control functions. The Autonomy Act of 1959 confers to local authorities in the PhiLlippines (including those in Metropolitan Manila) virtually complete control over physical development within their jurisdictions. 1/ 1/ Follo-ing the US model with a vengeance, however, what this amounts to in practice is virtually no control by anyone over such matters. In brief, the local governments are on their own and very, very.weak. Furthermore, as will be seen further on in this section, they are tending to grow even weaker in relation to the forces they are presumed to control. - 11 - As has been seen in the preceding chapter, it also vests in the local authorities important powers over the management of urban activities witHiLI the!ir Jurlsdictions. I/ Note slould alo be made of the role of private developers. "Private sub-divisions", which in essence are private townships, are often planned,established, maintained and managed by private development groups with the consent of thelocal governments concerned. In some cases, local public services (e.g. refuse collection, police protection, street maintenance, etc.) are supplemented or wholly provided through a system:of voluntary user charges. Though in theory such "townships" are subject to the overall control of the local authorities, in practice their actions may be relatively autonomous. The planning function in Metropolitan Manila might be viewed as , ideally, having/tour inter-related components. The first is comprehensive development planning, i.di d tong term design for structuring the growth of t11 98O9Its of the metropolitan economy,including demographic and geographic aspects. 2/ There are no hard and fast rules as to the appropriate time span for such a plan, but it ought to cover a period at least as long as that embodied in any capital facilities planning. The second type of planning function is physical planning, which is usually best reflected in the patterns of desired or allowable land use by area. The third type of planning is more 1/ See, especially, Table VII-7, P9. VII.21. 2/ The term "comprehensive development planning" generally refers to planning which also incorporates socio-economic, management and organizational, as well as physical considerations. Comprehensive development planning requires the establishment of a framework for coordinated levelopment decisions and actions. As such, development planning is a continuous process whereby .the various elements of the plan framework are constantly .reviewed, revised and refined. Indeed, it is the "process" rather than the "plan" that is of special importance in development planning. - 12 - sector .pL:cific, and is, in effect, a plan (or a set of sectoral plans) for financing capital facilities. Such plans usually have a three to six yonr hortzon and are annually revLsed depending on changes in either comprehensive development or land use plans, in available financing, etc. A fourth kind of planning, which relates to both comprehensive and sectoral (facilities) plans, is an overall fiscal plan. This, however, is no,t discussed here, as it was found in the previous chapter that ppcb plannn does not currently take place in Metropolitan Manila. Te information in the tables in this chapter is designed to provide an overview of the first three types of planning in Metropolitan Manila. In the descriptive summary below, emphasis will be placed on agency responsibility for preparation and review of plans, on the existence of plans, and on their coverage. Comprehensive Development Planning Three different groups have responsibility for what hal been called comprehensive development planning: the Manila Bay Metropolitan Region Strategic Plan (MBMRSP) Project, the Task Force on Human Settlements (which has been discussed above and will not be treated further here), and the Housing and Urban Development (HUD) Team. All are central government activities and very little coordination with local governments in Metro- politan Manila is in evidence or apparently intended. In addition, many other agencies are responsible for preparing "plan" documents which are in some peripheral sense comprehensive plan documents. These are not discussed at this juncture in the text; however, the most important of them are enumerated in Table VIII.1, and will be discussed as sectoral plans at the end of this chapter. Table VIII.1: COMPREIENSIVE PLA.NIn ESPONSIBILITY IN METROPOLITAN MANILA Types of Plans Prepared - if any -- Period or Plan Covera2e) Public Agencies Responsible for Invst.nent/ -nd Use/ Fiscal Jurisdictional Coverage of Plan-2 Plan I-olerentatic./ Plan Preparation and Reviev Developrent Spatial Financial Dept. of Public urlks, Dept. of Public Works, Transportation & Com.unt- Annurl Framework Annual MBR: MA Definitlons Ncs. 8 & 9 Tra-sportation an'! cations (Planning & Project Development Office) PudCe' Plan Budget Cor-urications and Task Force on Human Settlements (Yr.2000) National Economic & Development Authority Four-Tear None Annual Nationwide: No Metropolitan Plan Bud6et Board of Investments Investment None None Nationide and !CI. DefLnition Incentives No. 6 .:etropolitan Waterworks Metropolitan Waterworks and Sewerage System Project None Capital MMA Definition No. 5 and Sewerage System Developrent Projects (Yr.2010) 1/ .and Annual Budget Dept. of Public Works, Dept. of Public Works, Transportation & P1o0ect Yone- " MA Definition No. It Transportation and Communications Developnent Couniunications (Tr.1987)h/ Local Governments Local Governments Annual ZoiLngs Annual Local Jurisdictions Budget and and Sub- Budgets Ordinances division .Regu2a-1 tions Local Governments National Tax Research Center None None Metro- PMA Definition No. 7 politan Finance Study 1/ Practically all line agencies of the central government are involved to some extent in plan implementation. 2/ References to Definitions of the MMA are, in all cases, to Table 11.1, pg. 11.3. 3/ The following two studies are, in effect, first attempts at plannin: Report to the National Waterworks and Sewerane Authority on Second Stage Improvement Program for the Manila and Suburbs Watervorks System, Metelf Pnd Eddy, 1068 (Period 1970 - 2CCC); and Master Plan for a Sewerape System for the Manila Metropolitan Area, Black and 'Teatch Tnternational, 1969 (Period 1970 - 2000) l±/ The following study is, in effect. A first attempt at plannina: Republic of the Philippines, Urban Transport Study in Manila Metropolitan Area, prepared by Overseas Technical Cooperation Service, Government of JEpan, February 1973. - 14 - The Manila Bay Metropolitan Region Strategic Plan Project. This is the only comprehenHive development planning undertaking which includes Metropolitan Nantlh. It L being conducted by the Planning and Project Development Dffice (PPDO) of the Department of Public Works,Transportation and Communications (DPWTC) with UNDP assistance, and is an attempt to establish a comprehensive, long-term development plan fqr Metropolitan Manila and its adjoining areas of influence. 1/ In essence, the Project is assessing resource availability, development constraints and opportunities in the plan'area; as a result, it will be proposing spatial patterns for economic development, settlements, and attendant facilities. It will also include consideration of implementation measures.; Described in its own documents, the objectives of the project are to "provide advice and assistance to the Department of Public Works, Transportation and Communications And related agencies in: "(i) The preparation of a comprehensive strategic plan for the Bay Region defining an optimum pattern of social and economic geography and physical development to serve as a basis for decisions on infrastructural projects, settlement patterns, land uses, industrial locations, housing and environmental conservation; to provide guidelines for subregional, local and action plans and development projects; and to initiate new planning and development studies; "(ii) The initiation, conduct, coordination of applied research and studies and the expansion of the information systems to support the strategic plan project, its detailed component and project studies, and the metro-region planning and development process in general; "(iii) The identification.of priorities for action planning, infrastructural and integrated development projects and the initiation and conduct of prefeasibility, capital budgeting, revenue, and other studies required to ensure the implementation of viable and necessary investment projects; 1/ Geographically, this region comprises Metropolitan Manila and its immediate hinterland, as defined by natural features. It covers an area of just over 18,000 square kilometers within which there are 188 municipal and city governments, with their independent areas of jurisdiction. Metropolitan Manila, as defined by this project, covers 2330 sq.kilometers, has a population of 4.75 million (2,056 persons per sq.kilometer) and contains five chartered cities and 35 municipalities. These are definitions 9 and 8 of the MMA (See Table 1.1). "(iv) The establishment of practical and effective organizational, administrative, legal and financial machinery to ensure continuity of the planning, plan implementation and project development processes; "(v) The establishment of suitable integrative and coordinating arrangements with related projects of the goverment; and "(vi) The training of the national personnel pngaged,in the project and in related activities. The Project, which was initiated more than two years ago, is organized under nine study areas, each of which is directed by local staff under the guidance of a UNDP Project Manager, permanent staff and/or short-term experts. The nine areas are: (1) land use (analysis of existing patterns and calculation of future patterns); (2) population projection and analysis; (3) economic base analysis; (4) transportation (In the past this area also included tourism, which has now been shifted to the National Physical Planning Strategy Project); (5) housing and.canmunity facilities; (6) health and educational facilities; (7) metropolitan organization; (8)metropolitan finance; and (9) project identification and project development. A number of reports and papers have been prepared under the Project. Others are in the course of preparation. All are to be refined, updated and used to adjust imetropolitan plan - 16 - proposals. 1/ In April 1973 the Project staff produced the "first approximation" of a regional plan. This report, Integrated Development of the Manila Bay Region: Overall Framework Plan (Interim Report No.5),and its accompanying maps and documents represent the first comprehensive physical plan foT the region. The plan document is a refinement of an earlier "Preliminary Regional Plan".,developed from population and land use trends, land characteristics, assessments and major infrastructure requirements. Essentially, the Overall Framework Plan was prepared to indicate likely future development trends and to assist in the identification of major development projects which could then be elaborated to test their feasibility and eventually initiate their implementation. 2/ The Overall Framework Plan and its supporting technical components also provided necessary data (e.g.,on land use and land use projections)for inputs to more detailed studies carried out independently or parallel 1/ Illustrative of the technical reports produced to date are "Preliminary Report on Hospitals in Manila Bay Region" (Interim Report No.3,April 1973); "Metro Manila Ring Development:15 Projects" (November 1972); Population Analysis and Projections for Manila Metropolitan Region" (Interim Report No.6); "Metropolitan Manila Transport Plan" (Interim Report No.2); "Emergence of Metropolitan Manila and the Philippine Local Government Structure" (Metro Fiscal Studies Working Paper No.5). 2/ Area development and infrastructure projects already"identified" include: (1) Mariveles Export Processing Zone and Bataan East Shore Area; (2) Pampanga Delta Area; (3) Laguna de Bay Area; (4) Candaba Swamp; (5) Sierra Madre Foothills; (6) Cavite-Batangas Shore; and (7) Taal Basin *Area. Work on the first four of these projects has already started, with the UNDP contributing to the development of the Pampanga Delta and Candaba Swamp projects. In addition, as part of an associated but separate exercise, 15 integrated area and infrastructure projects in the urban-rural fringe of Wbtropolitan Manila have been identified. These include urban.land development, industrial estate, transport, and flood control projects. - 17 1/ to the Project, e.g. the recent urban transport study for the MMA7, which utilized population and land use projection data developed in the Over,il Frnmework Plan. There are at least three areas where this "comprehensive development plan" is still considerably short of being comprehensive. These are reflected in the absence of (1) detailed projections aind planning concerning the financing of the proposed projects; (2) presentation of a method which would enable a ranking of the investment projects according to their desirability and therefore their priority;and (3) detailed coordination of this long-term development plan with already existing sectoral plans for the provision of certain basic services. Unfortunately, in addition, the Ptoject has suffered some serious staffing problems which may have reduced the technical quality of the plans and other work produced this far. Since its inception, it has operated more or less without a project manager. After the original project manager assumed other duties nearly one year ago, the Project has functioned under a caretaker arrangement. The UNDP apparently has been unable to recruit and provide suitable professional staff to train and assist loeal counterparts. Housing and Urban Development (HUD) Team Projects. In order to coordinate urban.development activities, HUD was established within the Office of the Executive Secretary. According to its establishment guide- lines, HUD is entrusted with examining major issues and problems affecting urban development in Metropolitan Manila. Operating with a number of 1/ See Republic of the Philippines, Urban Transport Study in Manila Metropolitan Area, prepared by Overseas Technical Cooperation Service, Government of Japan (February 1973). - 18 - Task Forces, HUD has considered issues related to transportation, land use, housing, utilities and squatter resettlement. 1/ Despite its guidelines, it has not been concerned with the preparation of a comprehensive development plan for the area. But, even if it had, its contribution would have been limited since HUD is essentially an advisory agency. HUD is expected to-focus nn research and policy (mplications of specific isquei of urban development in Metropolitan Manila and on the promotion of urban development projects. Indeed, it has already become active in the latter role in its promotion pf the Ton4o Foresliorp Urban fienewal froject. Physical(Land Use)Planning As noted above, local governments are vested with powers to control physical development within their areas of jurisdiction. However, there also exist avariety of public agencies--most of which are donibed by the fedetal gvernment--which have been vested with specialized Aybital planning functions within the MMA. All of these are sunnarized in Table VIII.2. Local Governments. There are no provisions requiring local governments to exercise their physical and various other regulatory instruments, e.g., zoning. Nevertheless, local governments in Metropolitan Manila do to some extent use land use plans supported by subdivision regulations, zoning, and building by-laws. This use, however, is limited and varies greatly among local governments. 1/ See, for example, the work of the Committee on Lands, Office of the President, as described in Chapter Fours pp. IVh7. Table VIII.2: LAND USE PLANNING RESPONSIBILITY Public Agencies Responsible for Types of Plans Prepared Coordination Juri q- Function and Plan Plan Preparation -- if any -- Within With dictioral Sub-Function Implementation - and Review (Period of Plan Coverage) Sector Other Coverage Investment/ Land Use/ Fiscal/ Sectors of DeveloaEnt Spatial Financial Plan a) Area Master Planning 1) Zoning -Local Government DLGCD & Local ( Land Uses :( ( BPH City and Units (Province, GoverTment'Units ( Zoning (BPW Mnicipal City Municipa- ( aps (Long ( (Level lity ( Range) (( ( (( 2) Sub- Local Government Plans prepared ( Annual Individual ( Annual ( BPH City and division Units (Province, by private pro- ( Gen.Fund Subdivi- ( Gen. (Inter- BPW Municipal \o City, Munici- fessionals; ( Budget sions in ( Fund (Local MWSS Level I pality) Review by DLGD ( accord. ( Budget ( LWUA & Local Govern- ( with master ( ( ment Units ( plan ( ( 3) Building Local Government DLGCD & Local ( ( ( City and Codes & Units (Province, Government Units ( ( ( BPW Municipal Regula- City, Munici- ( ( ( Levels tions pality) National Water & b) Ebvironment Air Pollution. NWAPCC, DPWTC Annual Comprehen- Annual /Local BPW National Control Comis- Budget sive Budget GDovt . sion (NWAPCC) Zoning Units General Land c) Land DPWIC, PHHC, NHC, DPWTC, PHHC,NHC, Anal. Use, Housing W-/Loc al BPW City and Development Financial Insti- Financial Insti- Budget Projects, IGo-vis & BPH 11nicipa[ tutions (GSIS, tutions (GSIS, Subdivision frdvate MWSS Levelts SSS, etc.) SSS, etc.) Flais 1sector LWUA General d) Land Re- Bureau of Forest BFD Annual Land Annual BPWaBPH National clamation Development (BFD) Budget Use Classi- Budget Bureau fication of lande 1/ Practically all line agencies of the central government are-involved to: uome extent in plan implementation. - 19 b - Key to Abbreviations DLGCD - Dept. of Local Government and Community Development DPWTC - Dept. of Public Works Transportation and Communications PHHC - Peoples Homesite and Housing Corporation NHC - National Housing Corporation GSIS - Government Service Insurance System SSS - Social Security System BPH - Bureau of Public Highways (WC) BPW - Bureau of Public Works (DPWrC) MWSS - Metropolitan Waterworks and Sewerage System - 20 - In tiie past it was the practice of the central government to ci:eate ad hoc agencies or commissions to undertake land use planning activtties on behalf of local governments. For example, the now defunct National Planning Commission was established by the Office of the President to provide technical assistance to local authorities by preparing their physical plans (or master plans). preparing stan4ard subdivision ano zoning reguiations ana suggestine builaing Dy-laws. bv and large, such ad hoc agencies acted in an advisory capacity and had no implementation powers. The implementation pf development policies and plans in urban areas was (and so far remains) generally a local authority function. I/ Most, if not all, local governments delegate their technical planning functions to their respective City Engineers' Departments,which are in turn accountable to their local representative bodies (Councils or Boards), eitht directly or through intermediate and usually rPpnEd bodies. Ekainples of the latter are Zoning Committees, Zoning Administrators, or local Planning Boards. None of the City Engineers' Departments visited 2/ had professional planners on their staff. Most admitted to serious financial constraints which have prevented them from improving their technical capability by hiring planners,and it is not clear that this situation will 1/ Under the present governmental arrangements a variety of new laws and measures are under consideration, and their adoption may alter the role(s) and function(s) of local governments. Some such proposed measures include elements of greater control by the central government. 2/ Mission members held discussions with the City Engineers, and departmental staff, of Manila, Caloocan, Pasay and Quezon Cities. Él 2 - soon change. For exmp1e, even.in the,moät recently approved reorganizatiori propoals for the City Egineer'a Departmnt, of the Cityf Manl, no provieiona are made for a 9sotiòn to dål ith omprehenåive urban þ1anning. To the contrary, it appears that uiban p.LanninR 2, peen as a number of ou1, fmnctions to be dqalt with separately by- varioús div!sione et the City Mngineer' s Department. In general, most local governmentå look to agenciea of the central government to gprnaré gtiphysical pln (masterplanes and in many instances avan their detaile0.layout plan. Plans. As no leal requireht exi.>ts for either the prepara- tion or the implementatl,c df physieal development. plans (master plana), the preparation of euh plass.was, by Prsidertil, Order go. 31 of 1963, left to the appoIlted loal Planning Board (established by thO .I.N PesidMiM oM~) Ln coopOration with the National Pilanning Cdft" Pev Boardå ever functioned efeotivsly. Most are at present not: oprationail and, av proViously roted' théNational:Planning Cdmmiasion hasbeen dissolved. Therefors, there :no longer e1t O sven the organisational Indeed, if arth±nR the relativ asituation' ehow siagn of deterioratins and staff.,of ethe Institte, of FRnidna IP). thEdveii of the~ Phminines are auite ooeerfid babou% Dresent trMnda. The -nfttutä fäfla that öMIo 6f Line nremprrwor±i,ea n. tne In.S of urban maneueent~ is to build ui teohnical co~meence ang capaany wanne.:LooaJ govermntmnvei, ana bel±evea itae derveloped A program ztnatwilli hèLp; aeiwvs tn±e goaL. Óúort äle3 howeve- thbäh the' IPJ*ägte gräduated 79 aptQM e in 1973mmo-opposed to t 1in,9 29, in 1969) e ha,f otheise ve eonn persons vithetheirriowr f;inanciaáleppot and:.thúse édjoy±thfl. flldb2hiri in *elrin±ril amonnest imuoèment onorLuities aftor Rraduat±ori. fDWa1iy all ofr the ramainder vera fram (aelé eantal r,verritent n amendies. very rew nave come: rran Local:goemrmengnor havO :the "uneenmitted" idaates tended t/o chooae iol ROò en serice . This has 1é&t o the somewhát anoalous situationin wh±ch Ah& P im takino' vdünmi aneM frin: sooial soiene as well as. aron±tectuzrar and engineerin,t baokaronaes nd - oamletely against the Institute's and.moWnvof the. students' desires trnuing them as t~hnio±ahé 'förzivateaaVx Wfrdov149ëe at thö' sams tii0 that looáI ÉövermebtO W* 1OOZeOIdl etehgth Mi ains ft å for7 löf level. - 22 - 1/ capability for preparing physical development plans for urban governments. 2/ Though some local governments actually had land use plans- (prepared for them by the National Planning Commission when this system was thnctioning), there is no evidence to indicate that any of these plans were ever formally adopted and made legally binding. Moreover, most are by now severely dated and none are being systematically review and/or revised by the local governments concerned. Controls. Zoning is a tool available to most local governments within the MMK; but, with few exceptions, such zoning as has been performed has occurred as an ad hoc exercise, not related to overall development strategies. Presidential Order 31 did in fact require local Planning Boards to prepare subdivision, zoning and building regulations for apprd 46 Oart of local governMent development plans. By implication, these would reflect the general objectives of the development plans, but this objective has rarely been effectively pursued. For example, the zcning code of Pasay City (ordinance No. 710) states one of its purposes to be: "To guide, control and regulate future growth and development in accordance with the Development Plan of Pasay City." The original and only physical develop- ment plan of Pasay City is an outdated plan which has never been reviewed, has no imp3ementation powers and has, as a result, had little if any influence in guiding the development of Pasay City. 1/ The Manila City Engineer and his staff stated that they feel they do need a plan and that they would like to prepare it themselves. Though they felt they also possessed the capability to prepare.a plan, they certainly do not have the capacity. This last fact is underlined by the inability to utilize or attempt to follow the existing plan at any time during its ten years of existence, to conduct any.land use survey during this period, or even to maintain up-to-date land use records. In Caloocan City, the situation is even less advanced. No thought has been given to preparing a land use plan. 2/ For an example of such a plan, see "Manila City General Plan", prepared by the National Planning Commission in 1964. - 23 - By and large, overall zoning plans and regulations, wherever they exist, Are compilations of piecemeal and spot zoning efforts of the past. Even in cases, such as that of Manila City, where zoning was designed to reflect master plan proposals prepared by the National Planning Commission, spot zoning and piecemeal variances have -- as is frequently the case 1/ elsewhere -- been more the rule than the exception.- Subdivision regulations prescribe the manner in which land may be subdivided, the process of approving the subdivisions and the prescribed fees. Approval of land sub-divisions at the local authority level is a function of the elected body <(City Council or Municipal Board) on recom- mendation of the City Engineer. Though in principle it could have been otherwise, in Manila land subdivision control, like planning, had beh #ibentially an ad hoc practice, exercised independently of overall physical development strategies. This has held true even though subdivision regulations generally require adherence to general master plans or other overall physical development plans whenever these exist and have been Oadopted". In general, their technical specifications have not been systematically reviewed, and in scme cases they may be considered outdated.- Building codes or by-laws are established by local governments primarily for the control of the construction of buildings and structures. Although such regulations can in theory be used, in conjunction with sub-division controls, to .control building densities; in practice, within the cities and muni- cipalities of the MMA, they have se[dom been employed with the aim of achieving such "planning" goals. Instead, their use has been limited to enforcing structural 1/ The Manila City Engineer acknowledged that spot zoning has been permitted up to now and that, while this meant that the present zoning maps reflected the actual situation, no element of control has in fact existed. The Caloocan City officials have made no attempt to even record the actual situation in the densely settled inner portion of the city; they have attempted to prepare such a map for the sparsely settled outer portion. 2/ See, for example, the Subdivision Regulations of Caloocan and Pasay Cities. - 24 safety conditions -- e.g. safe bearing weights. Even so, the city engineers referred to instances of the issuance of building permits in violation of these codes. Building regulations of some of the local authorities (e.g., Caloocan City) also include provisions for the control of display signs and billboards, the estaplishment of building lines and, the control of building height and bulk. All building control is exercised by the City or Municipal Engineer. Evaluation. The general absence of trained planners and the tack of an organizational framework or statement of objectives of physical planning within the technical agencies responsible (i.e., the City and Municipal Engineers' Departments) has resulted in a generally inadequate capability for guiding urban development. Because of this, local govern- ments have yet to develop the required technical framework to guidd physical development in their areas of jurisdiction. The above noted instruments for planning are in almost all instances static artifacts. They are badly out of date and no provision has apparently been made to permit their review and adjustment. Most are replete with detailed provisions (concerning, e.g., registration fees, remuneration of staff, etc.) which require regular reviews and which are not ordinarily contained in such instruments. However, perhaps the most serious deficiency is the complete ineffectiveness, if not the total absence, of regulatory develop- ment plans. This has.inhibited the establishment of physical planning 1/ Parenthetically, it should be mentioned that efforts have recently been made to adopt a uniform building code for all local authorities in the nation. This building code is a national law (Republic Act No. 6541) whose provisions are to be implemented by local authorities. - 25 systems by the local authorities, as well as the development of resources, capabilities and technical tools necessary to the physical planning process. Thus, for example, no systematic records exist of changing patterns of land use, floor area utilization, etc., which are essential for determining what development has taken place, establishing development control standards and reviewing development plans and their subordinate instruments such as zoning regulations. The various city and mnicipal departments operate independently of each other (the only coordination at staff level being provided by the City or Municipal Engineer's Department). It also appears that the technical resources available to local governments for undertaking substantial urban planning efforts -- plan preparation, implementation and revision -- simply do not exist. Nor is there evidence (except in some isolated reorganization proposals) that positive steps are being taken to improve this situation -- for example, by structural reform of city governments, in-service training for planning, retaining permanent planning advisors, etc. It is difficult at this point to predict the future of urban development control and guidance within the various local government units of the MMA. Certainly the need for improving the existing system is recognized by both the central government and a number of local authorities. Indications from current discussions on local government reform and the possible establishment of a statutory framework for urban (physical) develop- ment planning suggest that planning functions may be regularized and coordinated at the metropolitan level. For example, the one point of agreement in the four existing proposals for a metropolitan government is that the planning function should be a responsibility of - 26 - 1/ this Metropolitan Manila Authority.- However, there is much lose agreement about the desirsble scope of implementation powers of such a Metro Authority. Other Land Use Planning. At least three other forms of land use planning are potentially relevant for the spatial development of Metropolitan Manila. These include environmental planning, land development planning, and land reclamation planping. The primary responsjb4lity for the .preparation of environmental plans lies with the National Water and Air Pollution Control Commission (NWAPCC), and secondary responsibility rests with the DPWTC. However, there is no comprehensive environmental plan for the MMA. Rather, the plan is a general document which is not coordinated with local government planning at any level, but is presented on a national basis. In theory the opening of new land for non-agricultural use should be subject to land development planning. In a sense, same planning for land developftet 6IA be carried out in Metropolitan Manila through " 6t work of the MWSS, the DPWTC, the PHHC, the PAHRA and the NHC; and through the financial transactions of the OSIS, the SSS, the HFC and the DBP. In fact, these institutions are not guided by, nor do they independently practice, land development planning -- except at the level of the individual project. As has been seen, there is no long-term plan for land development within the MMA to guide them; nor have any of them developed their own conceptions of such a plan, on the basis of which their several efforts might be coordinated. 1/ See Chapter Seven, Section VII, especially page VII.31. 2/ See, for example, the discussion.of the lack of planning and coordination within the housing sector in Appendix X. - 27 - Finally, since there is a considerable amount of reclamation activity taking place in Manila Bay, there is the issue of planning land reclamation. Reclamation work is presently being coordinated through the Bureau of Forest Development and the Bureau of Public Highways, and has so far made intensive use of the private sector through a turnkey a?proach. Apart from a set of project statements about current reclamation under- takings, e.g., the Coastal Road Project, there is no long term plan for reclamation. Sectoral Planning Quite apart from questions of comprehensive development planning and land use planning is the issue of whether or not there are long term plans for the delivery of services provided through the public sector. The answer, in bhort, is again that there are not. Such sectoral piahihg would normally have two basic camponents. The first would be a facilities plan which would identify, for a period of years into the future, the physical projects which will be undertaken, their location, and their priorities in the investment program. The second would be a detailed fiscal plan or capital budget. The capital budget would identify the total amount of capital resources required over a period of approximately five years, and would identify the sources of finance for this investment program. Just as the physical components of the sectoral plans should be keyed into the land use plan, the individual sectoral capital budgets or fiscal plans should be keyed into an overall fiscal plan for the metropolitan area. All in turn should be elements of the comprehensive development plan. - 28 - Few of these links have been forged as yet and it is fair to say that, by and large, sectoral planning does not today exist in Metropolitan Manila. Technical capacity is limited and neither the organizational framework nor the necessary background of technical information are yet in place -- at either the natioral on the etropolitan level. There are either too few or, more frequently, too many agencies; coordination does not exist between or even within sectors; the spatial links and interrelatio shipsare only beginning to be understood to be important; and, since the demand for them has not yet been articulated, hard planning data are in short supply. Thus, in the absence of metro- politan government in the MMA at present, most public functions are provided independently either by local government units, or by a branch of agency of the central government. 1/ In either case, the annual budget estifates are in almost all cases the closest approximation to a plan which exists, and almost always these estimates are only for a period of one year. Despite this quite negative conclusion, information on the responsibility for plan preparation and implementation is summarized for major public sector functions in Table VIII.3 2/. The Table also indicates whether planning has ever been attempted and what, if any, has been the concept of a metropolitan area to which planning should apply. The public sector functions may be conveniently divided into five categories: First are those sectors -- housing, transport, water, sewerage, drainage and flood control -- which are most important for spatial/land use 1/ Or some combination of these. 2/ Further information on functional expenditure responsibilities for each public sector activity listed may be found in Table VII.7, pg. VII.21. - 29 - planning. 1/ Housing and transport have been treated separately in preceding chapters 2/ and planning in these sectors is discussed, respectively, in appendices I and XI. However, apart from specific features noted in those places, e.g. confusion as to planning responsibility in both instances and the lack of any plan in the case of housing, tb essential features in these areas are the following: (a) with the exception of marginal involvement of local governments in the case of roads and drainage, these have so far been national government (or agency) functions; (b) with the exception of housing, long-range comprehensive plans of a sort have been attempted for all these functions; and (c) these plans have had a metropolitan area focus, though the "metropolitan area" chosen has varied according to the specific concerns, at the time of plan preparatioh, of the agency involved. 3/ Clearly the need in the 699b bf these functions is for coordination of effort through a form of metropolitan planning strong enough to make and implement important land use decisions or decisions which will have important effects upon land uses within the metropolitan area. All the other categories of functions, or sectors, are deemed less important from the point of view of metropolitan planning; however, they will be discussed briefly. A second category comprises power and telecomunications. These functions are presently planned and exercised at the national level and it is likely that this will continue to be the case. In any case, it does not seem unwise or unrealistic to treat these as lenabling" rather than 1/ Of course there are no services (or functions) the presence or absence of which does not in any way affect location decisions; however, these are viewed as fundamental; electricity and telecommunications are treated somewhat separately; and other services are considered as, by and large, being "distributed" after the location decision has been taken. 2/ Housing in Chapter Five; Transport in Chapter Six. J/ See, e.g., Table II.1, pg. 11.3. - 30 - Table VIII.3: SECTORAL PLANNING RESPONSIBILITY/ACTIVITY IN METROPOLITAN MANILA Planning Responsibility Central Local Plan Jurisdictional Definition Government Government Attemp- Scope of of MMA 1/ ted Responsibility Used Multi Single Agency Agency Housing X No Uncertain None Transport X X 2/ Yes National 8 & 9 Regional MMA Water X Yes MMA 5 Sewerage X Yes MMA 5 Drainage X X Yes MnMA ? Flood Control X Yes MMA ? Electricity X X No National/ ? MMA Telecoms X No National None Health X X Yes National None Education X X Yes National None Social Welfare X X No National/ None Local Libraries X X No National/ None Local Parks & X X No Local N/A JRecreation Markets etc. X X No National/ None Local Courts X x No National/ ? .Pensions X X No National/ None Local Police X X No National/ ? Local Fire X No Local N/A Refuse X No Local N/A Collection Street X No Local N/A Lighting Cemeteries X No Local N/A 1/ Refer to Table II.1 / Local Governments have responsibility for local roads. - 31 - leading sectors in managing spatial development within an urban area such as the MMA. A third category of services -- health, education and social welfare are bimilar to the last in some ways, different in others. In the Philippines these services are planned and provided principally by central government departments; however, local governments private a also play important roles. Planning, however, has so far been strictly national. As local needs may be expected to vary substantially in these fields, the attempt should be made to integrate some planning functions at the MMA level as soo,as possible? Fourth is a group of services -- libraries, parks and recreation, markets, courts, prisons and police -- provided partly nationally and partly locally; and finally a group -- fire protection, refuse collection, street lighting and cemeteries -- provided strictly locally. Plans have not been attempted in these fields, nor has a metropolitan concept been invoked. As a practical matterthis probably should not be expected for some time to come. For an interim period of some length, scarce planning resources should be brought to bear in the really crucial areas. For these functions what should be sought are relatively simple decision rules for equitable distribution,given assessment of relative needs and relative costs of providing services. Eventually these would seem best coordinated at the metropolitan level. CHAPTER NINE A SUGGESTED PROGRAM FOR BANK INVOLVEMENT IN METDPOLITAN MANILA I. Introduction The preceding chapters of this report have identified Metropolitan Manila as a primate city which dominates virtually every aspect of life in the Philippines. They have described the rapid and haphazard growth of the metropolitan area, as well as the unbalanced pattern of development and the disparities which have resulted. There are imperfections in the housing market similar to those in other large cities of the developing world, and a large and growing shortage as a result. The transport network is inadequate and inappropriate to meet today's demands; in addition,it is inefficiently utilized. What is more,present government programs in the fields of land use (e.g.,resettlement and reclamation), housing and transport do not appear to be leading to early solutions to urban problems in Manila. This appears to be principally because these programs have not been coordinated, are not well designed, have been formulated in the absence of explicit spatial objectives and do not appear to deal adequately with the particular problems of the urban poor. These features have resulted in turn from fragmentation and lack of planning. Responsibility for government and administration within the MMA is fragmented geographically, sectorally and even sub-sectorally. No planning framework as yet exists for the formulation of a consistent set of policies to guide the development of the MMA, or any other urban area in - 2 - the Philippines. Planning has been national and macro-economic. Spatial and distributional issues have become matters of concern only very recently. So rar, this c-nern has progressed no further than an attempt to define the major problems and to state (very broad) general goals, and this only at the national level. It appears, therefore, that location decisions -- both as between urban areas and within the MMA -- will continue to be made primarily by private sector interests effectively unguided by public policy. There is thus no observed tendency for government policies or market forces to substantially alter either the rate or the pattern of growth which have,characterized Metropolitan Manila in the recent past. Hence, the sprawling and largely unplanned extensions of the urbanized area and the inexorable increases in the densities of the poorest areas of the urban core seem likely to continue:Bank involvement in Metropolitan Manila, therefore, should be based on clear recognition that there is not only a planning problem, but also a fundamental underlying social problem involved. It should thus focus generally on assisting local authorities to develop a more co-ordinated and rational metropolitan development planning process, and particularly on assisting in the formulation and execution of policies and programs designed to alleviate the problems of the urban poor. Neither of these things can be achieved without confront- ing issues of inter-jurisdictional allocation of functions and resources. Thus, 1/ There are a number-of reasons for this, the most important of which are the following: (a) nothing has.happened as yet to.reduce the relative "attractiveness" of Manila vis a vis the rest of the Philippines or to significantly increase that of any other area; (b) at the same .time, some effective measures are being taken to reduce immigration into Mindanao, the other major recipient of mi rants from the Visayas and other lagging regions in recent decades; (c) the national population growth rate has not diminished; and (d) whatever programs and projects are developed to stimulate growth elsewhere will be quite limited in the beginning and their benefits will accrue only with a substantial time lag. - 3 - a third key problem area is introduced, that of public finance and administrat ion. In dealing with these problems at all levels, attention must be given to means as well as objectives, implementation as well as plans and programs as well as policies. To this end, it is recommended that the Bank adopt the following position: A long term commitment should be made to assisting the development of the MMA. The precise strategies to be followed will be expected to change with the analyses of problems over time. But, during the years immediately ahead, the most efficient approach would appear to be one of accommodating the poor within the presently urbanized area; that is, "filling in the holes", as opposed to the implicit present strategy of extending the growth of the urban area far beyond the presently urbanized fringe. II. The Policy Framework It is not at present possible to outline in any detail a full set of government policies which would lead to an efficient filling in of those portions of the generally urbanized area (i.e. the core city and inner ring) that have not yet been built upon. The formulation of such a policy frame- work will require serious study and analysis, and a considerable amount of experimentation, by Philippine officials. The Bank Group can assist in this process by: (1) providing technical assistance for appropriate purposes; (2) augmenting local resources with loans for appropriate projects; and (3) eventually supporting selected elements of an integrated approach to the urban development of Metropolitan Manila. The following section contains a discussion of how current government policies are, or are not consistent with the recamended approach, and general suggestions as to how conformity might be attained. 111. Pnlicy Issues and Options Wployment Location There is not yet any policy or consistent set of policies governing employment [ocation within the metropolitan area. In fact, data limitations are so severe that government officials have little idea of the amount of emp.loyment. in various portions of the MMA. It is incontestable, however, that the location of economic activities and therefore jobs must be at the heart of any serious spatial planning effort for the MMA. It is recammended that the formulation of an employment location policy, involving appropriate objectives and means for improving the balance of employment opportunities within the metropolitan area, be developed as soon as possible. To this end, a crucial first step will be to measure, according to an appropriate sub- division of the area, the present location of jobs within the MMA by major economic sector and occupational category. A wcrkable employment decentralization program should also be developed for the Manila Bay Region and for the nation as a whole. That such a policy is needed in the Philippines is now recognized and efforts have been made to define at least some aspects of such a policy. In general, these efforts have not so far been successful, in part because of lack of clear definition of the tasks to be performed. 1/ See Chapter Three, pp.11; and, in particular, Appendix III for a detailed discussion. - 6 - Tiere is no easy wny to build up the kind of planning and policy fLrmlation base that is required. The gaps are substantial at every level of the process: data and information, analysis, planning and policy formulation; and progress must thus bp.m4d oj number of fronts over a long period of time. However, there is a 'rlority need to define the major policy and problem areas; that is, national spatial planning, plapnnig'for the Manila Bay Region and planning for the 4MA, Resettlement Policy Present resettlement policies have shortcomings which are so grave as to suggest that, unless the approach can be very substantialy altered, consideration should be given to discontinuing the prdg.aM6 Perhaps more fundamentally, the whole idea of "resettlement"--that particular people, families, or groups of people should be picked up in one place and set dowi in another, however delightful and accessible the new milieu--is antithetical to concepts of urban planning and management. What the planning effort should attempt to do instead is guide the direction of urbanization either by developing land directly or by creating the opportunities and incentives for private sector development. ..In either case, the individual 1, See Chapters Four and Five, especially pp. IV.2h and V.25. -7 - (family) decision to move should not be part of the planning decision; it shou,d be made voluntarily, in response to a pattern of physical development (transport, utilities, housing, etc.) and a system of incentives governing their use. The guiding principle of such a policy reform should be that housing location choices should be based on existing and intended job location patterns and the existing and intended public transportation network. To implement this policy would require two changes of great importance in present resettlement policies. First, the choice of re- settlement sites should no longer be constrained by the availability of government-owned land. Rather, the policy should-be to promote the development of lands in appropriate locations, regardless of present ownership. This implies, of course, a higher land development cost. Second, such resettlement as takes place should be a voluntary response to redirected efforts of the agencies involved to plan comprehensive land development schemes, including, in addition to housing, appropriate opportu- 2/ nities for industrial and commercial development. 1, In fact, it may only do .so in monetary terms. The planning rule should be simply that, for all alternative development sites and plans, the land component should be valued at its opportunity value, regardless of present ownership. 2/ One partial exception to this within the MMA might be the cluster of municipalities about Cavite City. This urban cluster, as has been spelled out in Chapter Four, is somewhat independent and not yet fully integrated into the metropolitan area. With its independent existence, it has an independent set of enterprises and sources of jobs. Therefore, resettlement to this complex might be encourged to take place more rapidly than to deserted areas such as Carmona and Sapang Palay. This point, of course, holds true for whatever decentralization policies are adopted with respect to separate urban areas outside the MMA, such as Batangas and Mariveles. -8- Roclamation Policy Whether or not land reclnmation should be taking place at present Ls an issue which merits serious study by government planners. Two questions would seem especially relevant. The first has to do with whether the govern- ment should be involved in the very expensive business of reclaiming lanq in Manila Ba-; when the urbanized area still contains a considerable amount of land which could be "improved" at substantially lower real resource cost. The second is why more extensive reclamation of paddy and fishpond areas within the metropolitan area has not taken place. It would seem that governmental policy consistent with the kind of filling in strategy suggested would emphasize reclamation of the paddy and fishpond areas, rather than the Bay. The case might be made for some reclamation in the Bay on the grounds that the sale of reclaimed land or rights to it to the private sector might well generate funds in government hands for further development of the urban area. It does not appear, however, that in past and current efforts to reclaim land from Manila Bay the government has taken all the advantage it might of this opportunity. Certainly, in the most recent instance, the way in which the turnkey approach has been used appears to have involved substantial resource loss to government. Transport Policy At present, a number of proposals for additions to the transport network are being considered. These include proposals for a subway and major highways, which were made in the absence of reliable 1/ See Chapter Three, especially pp. III.43. 9- infornattion concerning thl curront or likely future pattern of employmont 1/ and lc.11dowi Th%nI:n: Th!:;e investment:; won0il hv th U f of substantially expanding the present network. Quite counter to this, the general urban development strategy suggested above would suggest improvements to the existing network "d in the efficiency of its use. What would be implied in terms of actual investments cannot be determined without substantial study; however, an effective program would appear to have to include the widening of certain streets and roads ithir the core city and inner ring.; perhaps the addition of some new links (e.g., bridges over the Pasig River); improvement of traffic control devices (lane separation, signs, signals etc.); improved traffic management; rationalization of the regulations and pricing rules governing use of the road network by the various kinds of vehicles; and an expansion of the carrying capacity of the jeepney/bus system. Beyond this, it is clear that some extension of the road network will be desirable, especially to open land within the inner ring for comprehensive development; however, little can be said about details without further study. i7fIt has been shown in Chapter Three and Appendix III that it is impossible on the basis of existing data to describe the pattern of j,ast or present employment location. Nor is there a consistent set of policics regarding the spatial organization of activities within the MMA. It is therefore, impossible to construct possible configurations for the future on the basis either of actual trends or normative criteria. - 10 - 1tusing Policy Present government policies are 3uch that the private sector does not generate enough housing, particularly for low-income residents, ad that the public sector has done very little to supplement the 1/ inadequate housing supply. What is being designed and produced is not within the reach of the poorest half of the population, and the institutional processes by which this housing is distributed make it inaccessible to the poor in any case. The result is that the housing, and the subsidies involved, fall to middle income groups. It would be desirable to attempt explicitly to expand the supply of housing with a substantial portion designed for the poor. To be responsive to the needs of the poor, this housing must be relatively centrally located or at least enjoy reasonable transport access to a substantial range of employment 1/ See Chapter Five, especially pp.Y.11 - V.13. opportunities For it to be priced at a level that can be afforded by the lower incme groups, this housing will at least initially have to be of a very low standard (in terms of space and finish, if not quality of construction). Even so, a significant proportion of the poor may still be unable !,o afford such housing without subsidy. The response to this situation should not be to ignorp 1he ousing nee4s of those so unfortunate as to fall below this "threshold"; at the same time,the total amount of subsidy must not be excessive. Finally, it would appear best to attach the subsidy not to the housing itself or to housing finance, but rather to the allocation of land to this use. Planning an,l Government Structure Comprehensive planning for the metropolitan area is required if the above policy objectives are to be met. And, although the previous chapter has shown that such planning does not in fact exist in Metropolitan Manila, thore is a substantial awareness that it is required. What is apparently not recognized is the inevitable interrelationships between the effectiveness of planning for a metropolitan area and the structure of metropolitan eovernment. 2/ 1/ Practically speaking, given present conditions and the present (inadequate) state of information concerning the location of employment opportunities, this means that there must be access to the core city and at least portions of the inner ring, for these are the only areas known to contain substantial employment opportunities. Certain portions of this area would be ruled out, e.g. the CBD and certain other strongly favored locations because of the extremely high price of land; and peripheral locations,because of the present lack of transport access. In effect, this points to the kinds of areas that the poor have sought to occupy by squatting. 2/ Three of the four current proposals for government reorganization within the MMA call for very limited powers of metropolitan government and for most powers to be retained at either the local government or the central government level. The fourth proposal, 'while samewhat better, is ambiguous and indecisive on this point. Moreover, certain actions with respect to local government procedures and taxation which have taken place in recent months have tended to work in favor of more rather than less autonomy at the level of the individual local government unit. See Chapter Seven, especi-lly pp. VIT.32 and VII.35. - 12 - in :011n1, whmi. i requi r-d is joint Iand uo, tran.povt and capitk)i budg.rt. 1 - nin r th' I I:tnil.roo- 1 itan area, am(bn ri st,!r!I and ji).mI nt by m m-tro- politan government with some real powers. The planning should be based on a notion of how economic activities (and jobs) should be distributed within the urban area and analysis of the requirements in housing and transport to make this pattern viable. The metropolitan government transport and housing institutions should have implementation powers and financial resources necessary to ensure that the development plan can be carried out. A major adjustment in government policies is thus called for. The long term objective should be a metropolitan government with strong financial and planning implementation powers, and a restructured system of local finances to reduce both fiscal and service level disparities. IV. Elements of an Initial Program In moving toward these longer term objectives, it is reconended that the Bank support a project for the upgrading and redevelopment of a large squatter settlement in the foreshore area of Manila City"s Tondo Dis- tric t,cne of the poorest residential areas within the MMA. In addition, it is sug- gostedi that the Bank should finance and contribute to the management of studies in the fields of transport engineering and management, metropolitan organization and finance, and land use planning. These combined steps would constitute the beginning of a long-term commitment by the Bank to assist in the development of the MM!A. - 13 - These recommendations are made in the full knowledge that the basis -- in the form of reliable information on the existing situation, tlear and consistent objectives for the development of the MMA, and analyses of the interrelationships between variables -- does not at present exist for rational projec selection accorqing to avaaq optimizing techniques. It is acknowledged as well that an upgrading of relative living standards, even within a limited area such as Tondo, will not be accomplished ,y a single project involving a particular capital investment, out insteaa requires a more generai improvement or tne levels of public services provided and the method of their delivery. Nevertheless, it does appear to offer a suitable "starting place". Given the paucity of basic information available on place of residence, use of transport and place of work b$ income category, it is possible to be more confidel* boft having a direct effect upon the environment of the poor by treating conditions in situ, rather than attempting to introduce more general re- distributional effects, as for example by widening or adding to transport arteries in the hope that incremental use and benefits will accrue mainly to the poor, or by attempting to design an addition to the urbanized area with similar ends in mind. And it has been demonstrated- that the Tondo is a poor area. The government had a project proposal for redevelopment of the foreshore area. The initial project concept was -deficient in a number of respects. Some of its internal features were questionable. More important, its predictable external repercussions were not being assessed in terms of either normative or non-normative projections concerning development of the MMA as a whole. Nevertheless, something was going to be done in the area. The issue of tenure had been simmering for a number of years, and both the residents and government were anxious to put it to rest. Furthermore, the 1/ Seo Chapter Three, esp.pp. III.2. government officials responsible indicated a willingness to reevaluate the project concept in light of major unresolved issues which they acknowledged existed, and to undertake a lengthy reformulation as a result. The task then is one of attempting to formulate a project which not onlv is internally cansistent, but also has been assessed in terms of its lkely consequences for the rest of the metropolitan area. The associated studies should be designed to provide analyses and advice in fields in which the Bank is developing expertise and which are of importance for the project area and its residents after physical 'implementa- tion, as well as for development of the metropolitan area as a whole. V. Proposed Tondo Foreshore Urban Renewal Project 1/ Background to thp Proposed Project/ The project area is located just north of the Pasig River, abutting the customs reservation of the North Harbor on the west and the private lands of Tondo Municipal District on the east.- It is an elongated, irregular rectrtngle -- approximately three kilometers long -- comprising 137 hectares 3/ of reclaimed, predominantly flat, low bearing landfill,- created initially in response to government plans to expand and improve the port facilities of Manila. Its occupation by squatters started some twenty years ago. The geographical location of the Tondo Foreshore is highly attractive for the poor and landless urban newcomers, as the site is close to employment centers requiring substantial quantities of low-skilled labor, 1/ For additional information, see Chapter Three, Section V,pp. III.hO 2 See Map II (IBRD - 11100), pg.III.3. 3/ See Map IV (IBRD - 10868), pg.III.h7 - 15 - as well as the Tondo Municipal District with its large variety of social 1/ infrastructure facilities.- Squatting in the area has occurred for over twenty years, with successive waves following additions to available land bbrough reclunation. In recent times, however, the area has become congested and completion of the reclamation works has forced new waves of newcomers to seek alternative sites in the vicipity. Government policy connPcOq -fle the Tondo Foreshore Lands has .in the past vacillated between proposals for the removal of all residents and its redevelopment for port and other urban functions, to its redevelopment as a low-income housing area; and in same respects it is vacillating still. Meanwhile, persistent demands by the squatters eventually led to the declaration of the area as one within which bona fide residents would be issued land titles and permitted to remain. The government has in fact subdivided some portions of the area and issued a number of land titles. However, the bulk of the area remains in de jure government ownership, even though it is occupied by squatters. 2/ 3/ The general conditions of overcrowding- , low service levels- and urban decay accentuated by the apparently low quality of most structures in the area, have prompted the government to propose measures for its renewal. The objectives of the Tondo Foreshore Urban Renewal Project as elaborated by 1/ For a more detailed discussion.on the suitability of the Tondo Foreshore for squatting see Mary Hollensteiner "Metaorphosis: From Tondo Squatter to Tondo Settlerf", Institute of Philippine Culture, Manila, June 1973 (mimeo). 2/ Approximately 1,200 persons per hectare, or 1,750.persons per hectare of residential land. 3/ For details see Appendix XII 4/ More accurately, development has never taken-place. - 16 - the responsible government authorities and first presented for Bank consLdoraftion were: "... . improvo the Ii vi ng conii t on of people in the reclaimed area by thinning out its population, taking into consideration the land rights already acquired by them, and by using alternative areas as a resettlement site for the population overspill." The specific objectives of the project were: 1. "to improve the level of services, i.e. water, electricity, roads, sewerage, in the Tondo Foreshore area; 2. "to make available to residents of Tondo a mixture of dwelling units from which they may choose based on their preferences and financial capabilities; 3. "to create and maintain a renewed community in the Tondo area with not only improved levels of services, but also camnunity facilities such as schools, playgrounds and community centers; and 4. "to establish a relocation site for the population overspill."1/ As far as may be ascertained, the attainment of these objectives was to be pursued with the greatest urgency and on the implicit understanding that the renewal of the area would require the demolition of all structures (other than authorized structures recently constructed, such as government multi-storey apartment buildings); the re-parcellation of land into individual serviced housing lots and sites to support community facilities 1/ These objectives are stated in the Tondo Task Force Paper "A Tondo Foreshore Renewal Project" 1973. (Draft, for discussion purposes only.) - 17 - and commercial outlets; and the provision of roads and physical infrastructure (utilities). On this basis, a physical master plan was 2 prepared envisaging 5,794 residential lots (100 m each) for detached houses and 1,660 dwelling units in three multi-storey housing developmen sites, one of which was already under construction. Thus conceived, the renewed area would have accommodated approxiately 7,500 families, or 1/ 2/ 44,700 persons, at a gross density of 670 persons per hectare-* Dwellings to be built on the residential lots under a site-and-services concept would consist of publicly constructed core houses including a floor slab, toilet and bath and party walls where required; the remainder of house construction was to be provided through aided self-help. Preliminary evaluation of the project proposal in October/November,1973 was difficult without detailed knowledge of existing physical and socio- economic conditions in the area concerned, as well as in its immediate surroundings. Examination of plans and cost estimates, field inspections by mission members in the Tondo Foreshore area and discussions with officials responsible for the proposed project confirmed that, in the absenco of surveys specifically designed for the purpose, insufficient information and data on existing conditions were available to guide the establishment of a redevelopment concept for the area. Moreover, four fundamental difficulties.with the project concept were immediately revealed and quickly confirmed to exist: First, the plan for massive clearance of the entire area ignored the existence of substantial numbers of buildings which were obviously in very good condition, as well as even larger numbers whose actual condition could only be established.by systematic investigation, 1/ Less than 30 percent of the present population of 160,000 persons. See pg. III.4. C-ns'3erably below that in several other low-income residential areas within Manila City. See Table III1., pg. 111,6. - 18 - but which might well be classified as "acceptable" according to criteria appropriate for the area and the income levels of its res-idetiLs. Second, the proposed design called for unrealistically low densities and therefore cost levels well beyond the means of the present residents. A third, corollary optcome ould have been that some 11(-1?2,UUU persons, or roughly 75 percent of the present population would have had to leave the foreshore area. And fourth, whatever the number of families eventually displaced, the proposed resettlement area -- a 450 hectare township to be developed on land reclaimed from Manila Bay at Navotas, some eight kilometers north of the foreshore area -- appeared to be an unsuitable choice from most pointsof view. In addition,it was clear that the directives for the renewal of the Tondo Foreshore were too confining to permit an examination of its role and influence in its surrounding areas. Nor would it be possible to assess the potential contribution of the project to urban development concepts in the MMA generally. Clearly, fundamental reformulation, based upon primary collection of information on physical and socio- economic characteristics of the area and its residents, was necessary before the project could be evaluated by the Bank. Further Steps in Project Preparation Preliminary probes, including the surveys referred to in Chapter Three, consultations of reports, air photo interpretation, and discussions with knowledgeable persons, did permit the construction of a preliminary profile of existing conditions. This profile, which is included as Appendix XIII indicates some of the major issues which are being examined in the 1/ See Chapter Three, pp. III.45. - 19 - reconsideration of the project concept. It must be emphasized, however, that this profile was all that could be achieved in the field at the time and is oniy tentative. Comprehensive surveys of existing physical and socio-economic conditions needed to be conducted before the project's redevelopment concepts were established. Therefore, to assist the Philippine authorities to this end, a Technical Brief was prepared by the mission members to guide the formulation of the project proposal which will, eventually be submitted to the Bank for its consideration for support. The Brief, which appears as Appendix XIII, identifies the data and information needs for project preparation and discusses the tasks to be undertaken and analytical approaches that could be used. In accordance with the Technical Brief,a Project Team was formed and an Advisory Panel constituted. The Project Team carried out the physical (examination of aerial photo mosaics and field checks) and socio- economic (ten percent sample of households) surveys and prepared a preliminary 1/ report in April, 1974. The report, which was based on work undertaken to date, including preliminary findings from the physical survey, was able to provide some information on physical features, economic activities and other institutions extant in the areas, factors influencing project costs and community relations. It also contained information on background, objectives, survey design, the work program (completed and to be carried out), initial findings and major policy issues. 1/ "Preliminary Report, Tondo Foreshore Urban Renewal Project", Manila, April, 1974. The surveys were evaluated in early May, 1974 to have been competently designed and executed. The 'printouts for the socio- economic survey were just beginning to become available at the time, and some of these results are presented in Chapter Three, Section V.pp.III.45. -20 - M: jor to IYer tqi A I*I'octing Project Fnr.i n roet Rct preparation is proceeding as a separate exercise. It remains to summarize here the required degree of correspondence between project features and the policy issues and options discussed in Section III of t4is chappe:r Information on location of residence is of course available; information on employment location for Tondo Foreshore residents has been made available by the socio-economic survey. Project decisions as to the number of families to be absorbed within the Foreshore area or relocated elsewhere should be responsive to this information. To the extent relocation is called for, specific relocation decisions should be "justifiable" in terms of longer-run resettlement policy ond reclamation policy. Categorical resettlement to specified areas is to be avoided if possible. One way of avoiding this would be to couple with the renewal of the Foreshore area a sub-project to provide new low-income housing or serviced sites. To provide appropriate flexibility, new housing opportunities provided should be substantially in excess of the number of households displaced from Tondo. Another way of obtaining a desirable degree of flexibility would be through granting compensation and rental supplements to displaced families. Specific justification should be required for any reclamation component in the project, and the institutional and financial arrangements for its implementation should be subjected to careful scrutiny. The transport implications of all proposals for development at all sites should be carefully traced and evaluated. In the field of housing policy, it has been noted in Chapter Five- that subsidized lons through housing finance institutions presently go entirely, or almost entirely, to middle and upper income groups. Project leverage 1/ See especially pp.V.14. - 21 - should be used to reduce and eventually eliminate the subsidy inherent at this general policy leveli at the same time, care should be taken in internal project design to ensure that subsidies, if any, will reach the intended tatrget group(s). Project leverage should again be used to encourage institu- tional consolidation within the housing field. Appropriate housing institutions should be used for project implementation; and, to the extent that they ret4in housing management functions thereafter, specific technical assistance should be provided in the project. Once service levels are improved, the question of 1/ maintenance and operation becomes one of local public finance and administration, And the project must be feasible in terms of (1) the level of contributions expected from direct beneficiaries; (2) the level of transfers expected within Tondo District and from other districts of Manila City; and (3) the level of transfers expected from other jurisdictions or from higher levels of government. Within bounds established by such general policy considerations, the major questions to be answered in project design are: (i) How many of the structures (or other existing land uses) within what proportion of the total area are to be retained? (ii) According to what combination of land uses and at what residential densities should the remainder of the Foreshore area be developed? (iii) How, where and at what residential densities should any families displaced from the Foreshore area be resettled? (iv) What services should be provided in,each of the three areas and at what levels of standards?-!' 1/ The one approach to the question of administering agency that should clearly be avoided would be to establish a development agency -- whether its sphere of responsibility were to cover only the Tondo Foreshore or a larger area -- that would retain general administrative responsibilities after the construction phase has been completed. - he range of feasible choices will of course differ between these areas, parti- cularly as between the area of retention on one hand and areas of internal and external resettlement on the other. - 22 - The major factors influencing the answers to the above questions are: (i) The nature and quality of the land and physical facilities presently existing within the foreshore area. (This informatiop has been provided by the physical suryey,of the area,) (ii) The costs of developing each of the three areas according to different layouts, service levels etc. (This information will be assembled in engineering feasibility studies.) (iii) The socio-economic characteristics, including income levels and preferences, as revealed through the household budget behavior, of residents. (This information has been assembled under the socio-economic survey conducted in the area and is presently being analyzed.) 1/ These factors may be linked through a simple simulation model, which permits the interrelationships between areas and alternative 2/ pattorns of development to be traced and the trade-of2between costs and other considerations to be revealed. It turns out that the major decision variables are the number of families displaced and the gap between the cost of development per capita and the ability to pay of the average resident 3/ family -- which is the level of subsidy required. This is not surprising, as these are the two dimensions along which the proPect area is most clearly involved (linked) with the city as a whole. The families displaced 1/ One is suggested in Appendix XIV. 7/ For example, higher service levels in the area of existing settlement may cause more buildings to be demolished and many families requiring settlement elsewhere; if the number of displaced families is to be held fixed, the density in the renewal portion of the foreshore area will go ui -- and conversely. I These are set up in the model as dependent variables whose values will -ary wi11 variations in the independent policy variables. - 23 - constitute the planning link, which requires land (use) to be allocated; the level of subsidy constitutes the public finance link, which requires tlesourceS to be transferred. VI. Associated Studies Technical assistance has already been extended and more will be provided in the course of further work on project preparation and implementation. It is recommended in addition that, because of their importance for the development of Metropolitan Manila generally and for the success of this project in particular, the following studies be financed as part of the project package: 1. Tranportation Engineering and Management Transport studies should focus initially on two objectives: providing guidance for policies and actions which will result in better utilization of existing facilities, and establishing basic data about travel characteristics needed for longer-range investment and policy planning. In the first category, studies should be concerned with: (i) measures to give priority to public transport.in the central business district and on major radial and circumferential roads; (ii) signals and other regulatory devices and measures to improve traffic capacity and safety; (iii) the effects of various regulatory options, comprising policies, etc., on the use of public and private transport modes, especially jeepneys and buses; (iv) the identification of missing links and other road system bottlenecks that can be corrected at low investment cost; and - 24 - (v) institutional arrangements and operational measures such as revised schedules and routings which wi 11 increase the efficiency of bus services. Fli Llse stui.es should come a coordinated and c(on.;i sitent prograr1 of invesLments and io.l.icies that can be implemented quickly and at minimal cost to improve the quality of transport services. L ng-range transport planning must be carried out in conjunctiop with and in the context of overall land use and development planning. As a preparatory step, studies should be undertaken which will provide factual information about personal travel patterns, factors affecting choice of transport mode and characteristics of trip generation and attraction. Only when there is a basic understanding of these factors, as well as a metro- politan development planning framework and an explicit estimate of resource constraints will it be possible to analyze the technological and locational policy alternatives for long-tem transport development. 2. Metropolitan Organization and Finance Some reorganization of the structure and financing of local governments in the MMA is essential if fiscal and service level disparities are to be reduced and scale economies to be captured, and if the provision of public infrastructure and services is to be coordinated with some general plan for urban development. TAe present system of 28 local governments, 4 provinces, several autonomous agencies and numerous central government departments making independent budgetary decisions is untenable. - 25 - If the Bank is to be involved in this reform, it should move quikly. Ali-udy )I propoaa,l9 (covAr1ng a range of special interests) haIve h1i of*oruel-' , aw th N'li h:ta niow been camisoioned to carry out a major study of metropolitan government on behalf of all agencies involved. The Bank, providing echnica asq4stance anq objective guidance, could ensure that the proper set of issues is examined. It is important to note that the NTRC was about to begin work in early autumn 1974, and it is the opinion of the mission members that they would welcome technical assistance. The study should have as its primary objective the det iiled evaluation of alternative government structure reforms against normative criteria, the working out of a financing plan, and the development of a detailed management plan. In general, the study would provide the evidence necessary for government decision makers to choose between the alternatives available-- only sane of which have already been proposed. The study would be in seven parts. First, it would pull togebher all recent work which has been performed on the financing and administration of local governments in Metropolitan Manila and on proposals for government structure reformpin order to provide a comprehensive description of the workingsof the present system and to provide an inventory of what is knownindirectly about its financing. This analysis, primarily a summary of existing work and a compilation of existing data, could be accaplished in a relatively short period of time. 1/* See Chapter Seven, -pp. V'I.32-35. - 26 - Second, there should be an overview paper enumerating in considerable detail all reforms in government structure and local COvernment finance which have been recently implemented or proposed. One very inportant goal of the overall study of metropolitan government. is to provide gcvernment decision makers with a rationale for chopsipg among, or packaging, these reforms. The third analysis would deal with the question of disparities in the MMA, by inventoryipg service level disparities, tax burden disparities, and expenditure disparities. The research would deal with both fiscal and physical service level disparities. add disparities in input levels (e.g. employees). It would describe the service boundaries within which various activities are performed. It would be necessary.in this study to attempt to identify the causes of such disparities, in particular whether they are due to inefficiencies related to the size of governents or to different capacities to finance services. After this detailed description of the disparities problem, alternative programs to eliminate or reduce disparities would be evaluated and the cost implications estimated. The fourth phase of the study would deal with technical efficiency, and with the extent to-which various kinds of government structure could result in overall cost savings through some form of -scale economy. Particularly important here will be an evaluation of the technical savings associated with alternative structural reforms. - 27 - The fifth analysis will focus on economic efficiencies, or on the loss in welfare vhich might occur if budget and service level decisions are centralized, i.e., the welfare cost of losses of local autonomy. Sixth, a great number of managepnent .pd 44mipistration questions will. have to be dealt with in some detail,including the budgetary decision making process if the government is of a two-tier formyfthe mechanisms for planning, overall purchasing and auditing questions, budget preparation, etc. This section may also involve consideration of a number of political issues, such as the composition of the governing body, etc. .40404fijthe research should contain a proposal for a d6tKil@d financing plan. This analysis necessarily would be based on alternative divisions of central authority/ local tier expenditure responsibility for various functions. After estimation of the cost increases associated with reducing disparities, and of any cost reductions associated with technical efficiency, alternative means of financing the metropolitan authority should be evaluated in terms of elasticity, equity, efficiency, and feasibility considerations. It should be.possible to draw on the e.xp-riences in other large.cities in the developing world to suggest how the system of local financing in the MMA might be streamlined to produce more effective results. - 28 - 3. land Use fqlunning and Policies The oIj,tIvn of I,hi s study or techni cn1 assistanco effort will be to generaite the following information (and help to generate through training the local cnpacity for keeping it up to date) which is absolutely essential for long-run analyses of the development requirements of the metropolitan area in. order to guide its more "rational" evolution. Time series, going as far into the past as possible, but in any case being established from this time forward, should be developed on the following parameters: transportation (network) changes (that is, extensions to, widening of and improvements to the nietwork); changes in trans- port flows (vehicle composition and numbers of people); land use changes (including changes in the "intensity" of development, i.e. number of storeys, improved value, number of workers or residents, etc.); land values at all locations; residential location over time (This is currently derived from the population census; however,a needed improvement is that income statistics should be gathered at the same time.); and employment location over time. (This is in prinriple collectable under the economic census,but is not at present collected; when this error is corrected, information on earnings should at the same time be collected.) Although establishment of this long-run capability is the major objective of the proposed study, it should also attempt to identitr areas for more immediate development and suggest the nature of development which should take place. By and large, the focus should be on presently vacant or under-utilized land within the presently urbanized area,and on - 29 - the establishment of complementary land uses. This would suggest giving attention to areas where low-income housing may be introduced near areas of expanding employment; introducing areas of employment and amenity (e.g. open spaces) near crowded residential areas; and general development -in the larger vacant tracts.
Группа Всемирного банка · Pre-2003 Economic or Sector Report
Philippines - Urban Sector Survey : Manila (Vol. 2 of 3) : The Main Report (Part B)
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