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The Philippines

Country Snapshot

Population size 94 million (National Statistical Coordination Board Philippines, 2010)
Rural population 35% (CIA World Factbook, 2008)
Urban population 65% (CIA World Factbook, 2008)
Area 300,000km2 (CIA World Factbook, 2008)
GDP per capita $3,300 (CIA World Factbook, 2009)
Population below poverty line 32.9% (CIA World Factbook, 2006)
Gender Development Index:
             Country rank
             Index
  86 (Human Development Report, 2009)
0.784 (Human Development Report, 2009)
GDP composition by sector:
             Agriculture
              Industry
              Services       
  14.9% (World Bank, 2008)
31.6% (World Bank, 2008)
53.5% (World Bank, 2008)
Rural Access Index (% of people within 2kms of a motorable road) 80% (World Bank, 2006)
Road accident deaths per 100,000 people 1.11 (International Road Federation, 2009)
Government investment in transport infrastructure (% of GDP average from 1999 to 2008) 1% (AusAID, 2010)

 

Rural Transport and Development: The Country Context

Over the last four decades the Philippines has been unable to generate and sustain high enough economic growth to raise real incomes and reduce poverty. From 1961 to 2004 GDP per capita has grown on average 1.2% per year – a much lower figure than the 5.4% average for comparable East Asian economies. Actual investment in transport infrastructure has also noticeably lagged behind that of other Asian countries. This disappointing economic record has lead to high levels of public debt, weak institutions unable to deliver quality services and growing gaps in infrastructure.

Due to the geography of the Philippines rural transport involves both land and sea transport networks. Increasing rural road length and density have been identified as major factors in promoting poverty reduction and local development in several poverty reduction strategies. Those who live in rural areas of the Philippines rely heavily on the agricultural sector of the economy. However 40% of rural families in the Philippines live in poverty (International Labour Organisation, 2006) and a major cause of poverty in the country is the underperforming agricultural sector. A principle constraint that many poor farmers face in becoming more productive and profitable is the lack of adequate infrastructure, particularly rural roads and irrigation. This lack of infrastructure limits the access of people to basic agricultural inputs, transport and storage facilities and results in difficulties to access markets. An Asian Development Bank report shows that the provision of all weather rural roads could reduce the cost of marketing agricultural outputs by 20%. Inland water transport plays an important role and over the last five years a nautical highway system has been developed opening up the countries southern islands to trade and reducing travelling time and cost.

 

Overview of the Philippines Transport Sector

Transport Subsectors

Roads:             Length of roads total: 199,000 km (ILO, 2006)
                        Length of roads paved: 21,677 km (CIA World Factbook, 2008)
                        Length of roads unpaved: 180,233 km (CIA World Factbook, 2008)

The average road density is 0.67 km per km2. Gravel roads make up about 78% of the total road network and the rest are earthen roads. About half of rural villages in the country lack all weather access to the main transport system


Railways:        Length of railways total: 897 km (CIA World Factbook, 2008)
Waterways:    Length of waterways total: 3,219 km (CIA World Factbook, 2008)

 

Road Classification System

National roads: National Arterial, National Secondary
Local roads: Provincial, city, municipal, barangay

 

Institutional Framework for Transport Sector

LGU (Local Government Units): In the Philippines what used to be a top down style of planning has been decentralised with the emergence of Local Government Units. The LGU is the largest investor in local rural roads. The requisites of an LGU include having a name, inhabitants, place or territory and legislative power. Most powers were devolved to LGUs upon passing of the Decentralization Act. There are five levels of local government; the barangay, municipality, city, province and region. LGUs are dependent on their (IRA) internal revenue allotment, distributed by the national government. The performance of an LGU does not only lie on its officials, but mostly to the residents, who must follow the laws and participate in the implemented programs. A study by the Asian Development Bank suggests that LGUs spend about 4.5% of their budget on road investment and 1.9% on road maintenance. These rates, based on previous trends, are well below desired levels.

Department for Transportation and Communication (DOTC): The executive department of the Philippine government responsible for the “maintenance and expansion of viable, efficient, and dependable transportation and communications systems as effective instruments for national recovery and economic progress.” (http://www.dotc.gov.ph/) The department is responsible for the country’s land, air, sea and communications infrastructure.

Department for Public Works and Highways (DPWH): The DPWH is mandated to undertake: The planning of infrastructure such as roads, bridges (and other public works) and the design, construction and maintenance of public works. These activities are undertaken in support of the national development objectives as envisioned in the 2004-10 Medium-Term Philippine Development Plan.  Further, the DPWH has devolved part of the national road network, about 35% of the existing length of national roads, to the LGU’s.

 

Relevant Rural Transport Programs

Formulating a National Transport Plan (An Australian Government, AusAID Initiative): This report (published in 2010) focuses on developing a “unified, well integrated economy where people and goods can move and trade swiftly and efficiently, locally and internationally” through a better transport system. A medium term plan has been developed with five objectives for the national road network:

  1. Efficient for fast all weather and convenient movement of people, goods and services.
  2. Economic and affordable from the standpoints of road users and government.
  3. Safe to avoid road related accidents.
  4. Accessible to promote equity, physical and social integration, and regional development.
  5. Environmentally friendly.

The National Transport Plan also looks to improve institutional capacity of the DOTC. This capacity building is limited to two areas: Restructuring the DOTC network (needed to develop transport policies into a coherent framework) and staff capacity building in support of the institutional reforms.
The outputs of the report “Formulating a National Transport Plan” will help advance the Government’s reform agenda for the transport sector. AusAID has so far been the key driver of the reform agenda in the Philippines transport sector and will continue to be for the foreseeable future.


Infrastructure for Rural Productivity Enhancement Sector Project (infRES): The Asian Development Bank is supporting the Philippines government by co-financing this project. The project aims to remove constraints to agricultural productivity by investing in rural infrastructure. The demand for rural road construction and improvements is extensive and it is important that respond to the transport needs of rural farmers and contribute to an increased agricultural output and poverty reduction. InfRES has the duel objective of improving agricultural productivity and reducing poverty. The idea is to remove constraints to increasing agricultural productivity and profitability in areas where there is potential for substantially enhanced productivity with pro-poor distributional effects. This is based on the premise that improving rural infrastructure is a main ingredient in achieving agricultural development and poverty reduction.

Details:
Part A: Improved rural infrastructure – 1,478km of rural roads rehabilitated or constructed
Part B: Capacity building for devolved project implementation - at least 100 local government units participated in Integrated Rural Accessibility Planning.
Part C: Project Management and Coordination – staffing, operations and equipment requirements provided.


Integrated Rural Accessibility Planning (IRAP) Project: IRAP is a simple, inexpensive data gathering and analysis procedure that considers the rural households’ access to basic goods, services and facilities as a basis in determining development needs. The beneficiaries of the IRAP procedure are the rural households which should benefit from improved access to the facilities and services provided in the area. The IRAP procedure was introduced into LGUs and concluded that since people were not involved in the decision making process, their goals were not achieved. It was decided that accessibility planning should address the dynamics of local politics in order to be an effective alternative tool for the LGUs. The IRAP procedure is now recognized by central government and is included as one of the planning tools being recommended to LGUs.

 

Challenges to Rural Transport in the Philippines

The Philippines cannot afford to ignore transport needs in rural areas, especially given that almost one half of the rural population live below the poverty line.

 

Major impediments to rural transport in the Philippines:

Cost recovery in roads: Roads tax revenues are far from meeting the requirements from road maintenance expenditures.

Corruption: Has emerged as a top bottleneck to doing business in the 2004 World Bank Investment Climate Assessment. The Department Of Public Works and Highways has been targeted in particular.

Competition: The full benefits of competition have yet to be realised in most infrastructure sectors reducing the quality of road construction.

Credibility of institutions: Regulatory credibility is undermined because of lack of insulation for the regulatory authorities from short term political pressures.

 

Key Documents

International Labour Organisation – Philippines Infrastructure for Rural Productivity Enhancement
http://www.ilo.org/public/english/region/asro/bangkok/library/download/pub06-07.pdf

Asian Development Bank – Infrastructure for Rural Productivity Enhancement Sector Project
http://pid.adb.org/pid/LoanView.htm?projNo=30552&seqNo=01&typeCd=3

World Bank – Rural Infrastructure Development and Sustainability
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/08/01/ 000310607_20060801153539/Rendered/PDF/367770P09199701tructure0WP01PUBLIC1.pdf

Government of Philippines - Department of Public Works and Highways
http://www.dpwh.gov.ph/