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Manila Times Editorial: Review reclamation's impact on shipping, trade

Review reclamation's impact on shipping, trade
Editorial Board August 20, 2023

THE authorities reviewing the reclamation projects in Manila Bay should also study how they will impact the shipping industry, particularly the trade passing through Manila's ports. Thus far, environmentalists and fishing advocates have led the resistance against reclamation. The economic impact may also lead to higher operating costs for shipping lines, which will likely be borne by consumers.

Trucks, backhoes and bulldozers stand still at a halted Manila Bay reclamation project with the Manila skyline in the distance on Aug. 13, 2023. PHOTO BY J. GERARD SEGUIA
Trucks, backhoes and bulldozers stand still at a halted Manila Bay reclamation project with the Manila skyline in the distance on Aug. 13, 2023. PHOTO BY J. GERARD SEGUIA

Those added costs may be substantial, given that some 70 percent of all the country's trade passes through ports in Manila. As such, the government should not easily dismiss the potential effect on commodity prices. Remember that the Philippine economy is consumption-led, meaning rising costs of goods could slow down the gross domestic product (GDP) growth rate.

Total external trade, according to the Philippine Statistics Authority, was valued at $216 billion in 2022. And as many know, Manila's ports also serve domestic trade. Metro Manila is the heart of the Philippine economy, contributing 36 percent to GDP.

Proponents and defenders of reclamation have pointed out that Manila Bay has an area of 200,000 hectares and that only 5,000 to 6,000 hectares are to be reclaimed. In other words, only 5 percent of Manila Bay will disappear. The problem, of course, is the location of that small area.

Proximity to Manila's ports may require cargo ships to move farther out into the bay, as they wait for their turn to unload and load their vessels. In other words, reclamation around Metro Manila will diminish the space in the bay where all ships can move around. That will likely bump up fuel costs, add to turnaround times and perhaps compromise maritime safety.
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Moreover, the government should commission technical studies on how reclamation might affect shipping channels and other passageways. And if those become narrower because of reclamation, shipping lines may need a pilot to guide their vessels to and from the docks. That, too, will add to costs.

Moving more cargo business from Manila to other ports, like Batangas in the south and Subic Bay in the north, may not be a viable solution to the problems that reclamation could create. The bulk of consumption happens in Metro Manila, and wherever goods are brought to Luzon, they will have to be delivered to markets that are close to buyers. Put another way, using Batangas and Subic Bay will likely increase the transportation costs of commodities bound for Metro Manila.

Economic study

Fortunately, the Department of Environment and Natural Resources has already said it will review the ongoing and planned reclamation projects. Additionally, several lawmakers want to investigate them, including reports that the projects are linked to a Chinese construction firm that was tagged by the World Bank for fraudulent business practices.

Meanwhile, President Ferdinand Marcos Jr. announced a suspension of the reclamation projects, although some worry that he has not yet made that official. Indeed, the environmental impact and economic blow to fisherfolk deserve attention. But the authorities should also check on the welfare of consumers, who are the main drivers of GDP growth.

Reclamation is not without merit if done properly and only after an economic cost-benefit analysis. Metro Manila is relatively small in land area, and the space for new developments is either nonexistent or limited for the city governments. From that viewpoint, reclamation is a way to create wealth through land development.

On the other hand, Manila Bay's value should also be appreciated. Even though it is heavily polluted, policymakers should not give up on it. If the government wants to, the bay can be rehabilitated. That will benefit many sectors, not just the fishing community.

Even if, for argument's sake, Manila Bay is too polluted, it remains valuable for ships carrying most of the goods entering the Philippines. The economic toll, of course, is not necessarily more important than the environmental impact. The economic factor is simply another cause for concern that adds to all the other problems that may be caused by reclaiming parts of Manila Bay.

An accounting of the total economic costs is necessary, even while the DENR conducts its review.