Land-reclamation tack fraught with  challenges, opportunities

Second of three parts

(Published in the Business Mirror, May 18, 2016)
http://www.businessmirror.com.ph/land-reclamation-tack-fraught-with-challenges-opportunities/

FIVE of the land-reclamation projects currently in the pipeline are along Manila Bay in the National Capital Region (NCR).

One of these include a land-reclamation project first initiated as early as 1960s, but was recently revived under the Aquino administration is the Navotas Business Park, covering 650 hectares. 

Another project involves 148 hectares, fronting Manila Bay near the United States Embassy in Manila. The other three are the 360-hectare  land-reclamation project in Pasay City; the 300-hectare project in Parañaque City; and the Solar City project near the Las Piñas-Parañaque Critical Habitat and Ecotourism Area (LPPCHEA). The former two are separately being pursued by the local government units, with SM as private-sector partner. The latter is being jointly pursued by Las Piñas and Parañaque covering 635 hectares.

The PRA has already received the green light from the Office of the President to process the application for the Navotas project. 

“It remains to be seen if the PRA will approve it, depending on the evaluation by the PRA,” PRA General Manager Joselito D. Gonzales told the BusinessMirror in an interview.

Gonzales explained the law designates the president of the Republic of the Philippines as the approving authority for any project submitted by the PRA.

“But the current rule, because of the 2013 Executive Order (EO) 146, the PRA evaluates and then recommends to the Neda [National Economic Development Authority] Board for approval,” he added.

Exemptions

GONZALES explained that the situation for Navotas is unique, because EO 146 has a “transitory” provision that provides for noncoverage if there had already been prior contracts or agreements entered into between a government entity concerned and a private sector.

“It so happened that in the case of Navotas there has been a prior agreement executed between 

Navotas and a private proponent even before EO 146 came out,” Gonzales said.

Similarly, the 148-hectare Solar City-Gold Coast Project, a joint- venture project of the city of Manila and Manila Gold Coast Development Corp., is exempted under EO 146. According to Gonzales, the exemption applies because of a contract entered into by the city government of Manila with the developer in 1992.

The SM By the Bay is part of the SM Group’s Mall of Asia Complex and is possibly one of the largest single attractions in the entire metropolis. It has 100,000 daily visitors and employs 6,000 Pasay City residents. It is part of a completed reclamation project. According to the Philippine Reclamation Authority, the SM Group is the private-sector partner in the 360-hectare land-reclamation project in Pasay and the 300-hectare project in Parañaque.NONNIE REYES

“This means these [projects] will not have to reach the Neda,” he said. But [these] will have to be approved by the PRA.”

Another land-reclamation project near the LPPCHEA in Parañaque and Las Piñas is now in the hands of the Supreme Court because of a Writ of Kalikasan filed by Sen. Cynthia Villar. The project involves the reclamation of 635 hectares of coastal area near LPPCHEA, an important migratory bird site and one of six Ramsar sites in the Philippines.

A Writ of Kalikasan is a legal remedy recognizing the Constitutional right to a healthy environment, as outlined in Section 16, Article II of the Philippine Constitution. Ramsar sites are wetlands of international importance designated under an international convention approved in the Iranian town of Ramsar, according to the United Kingdom Joint Nature Conservation Committee (JNCC). The JNCC is the public body that advises the UK government and devolved administrations on UK-wide and international nature conservation.

Projects

APPROVED during the time of former President Gloria Macapagal-Arroyo is the Mactan North Reclamation Development Project in Cebu. Basically, being pursued under the public-private partnership structure, this land-reclamation project by the municipality of Mactan, Cebu, covers 400 hectares. It is in the process of finding a private-sector partner through a Swiss challenge.

In the town of Cordova, also in Cebu, another land-reclamation project was initiated by its local government unit (LGU). However, LGU officials were advised to tie up with the province of Cebu, because a municipality is not allowed under the Local Government Code to enter into a transaction of such type. The land-reclamation project will cover 1,500 hectares for mixed-use development.

Meanwhile, the PRA is still waiting for the formal letter of intent for a land-reclamation project in Davao from the proponent, the LGU of the city where the incoming President would come from. The project covers 200 hectares of land reclamation for the development of a harbor facility in the area.

“Mostly it [the project] is for port expansion,” Gonzales said.

Of these projects, Gonzales added that he sees the reclamation projects for Navotas, Manila, and the 60 hectares of the 360 hectares in Pasay—a portion not covered by EO 146—to be happening within the next 10 years.

Costs

ACCORDING to Gonzales, the huge capital needed for reclamation alone will be a big boost to the local and national economy.

He said reclamation projects are capital-intensive undertakings that normally involve funding from foreign investors. The funding requirement, he said, depends on the attributes of the proposed site.

The cost of reclamation projects, in Manila Bay for example, “by rule of thumb,” the average cost is 

P15,000 per square meter [sq m], “depending on the depth of the water,” Gonzales explained.

“In that alone, the proponents will have to spend [a] huge amount of money,” he said. “In the provinces, the cost of reclamation range from as low as P6,000 per sq m to as high as P12,000 per sq m if the project is in Metro Cebu.”

This means the cost of the Navotas project would hit nearly P97.5 billion, while the Pasay and Las Piñas reclamation project with SM, P99 billion.

Using Gonzales’s  rule of thumb, the Solar City land-reclamation project would cost around P22.2 billion; the Cordova project in Cebu, at P180 billion; and the Mactan, Cebu, project at P48 billion. 

The Davao City project could cost around P24 billion.

NTP

GONZALES said, since reclamation projects are funded by the private sector, the government gains and accumulates real-estate properties at nearly no cost to the state. These real-estate properties, he said, are wealth created and contributed to the state, resulting from land shares imposed to proponents of the projects.

“Normally, the sharing is 50-50: the national government share is 50 percent of the gross area of land reclaimed.”

According to Gonzales, once the PRA issues a notice to proceed, or NTP, with today’s technology and assuming there will be no problem finding filling materials, a 500-hectare to 600-hectare land-reclamation project can be completed within six years.

“But with the heavy equipment, the big dredgers and all, it will be faster.”

He added the land filling alone will generate jobs for the people in the area where the project will take place.

“There will be job generation because these are labor-intensive projects,” Gonzales told
the BusinessMirror.

According to him, initially, it would be the big ships that will dump sand. “But once it comes to building containment wall and compacting, labor-intensive na ’yan all the way to master planning and development to commercial or industrial.”

Gonzales explained that, once the reclamation activities produce a raw land and become a street,
“at may abang ng utilities, [utilities] will follow.”

Benefits

RECLAMATION projects, according to Gonzales, boost government revenues by way of increase in real-property-tax base; increase in construction permit fees, business- permit fees and income-tax base.

The PRA alone, he said, has chipped in P1 billion to the national coffers last year out of sale of reclaimed lands. It has continuously been in the top 10 government-owned and -controlled corporations that contribute to the national coffers, Gonzales claims.

Local governments, he added, would also benefit from these land- reclamation projects, as the private-sector partners of the LGUs start massive construction activities.

More than the tangible benefits of land reclamation, Gonzales said there are other benefits of land-reclamation, as it offers an opportunity for expansion of old cities. A well-planned and modern urban area with balanced provision for wide roads, green areas, open spaces and recreational areas will be much easier compared to developing finding areas to develop, especially in a highly congested area like Metro Manila.

Moreover, Gonzales said, through enhancement of coastal environment, there is an opportunity in creating new well-planned and properly regulated seafronts that presents unregulated settlement in the foreshore areas.

“It is very difficult to find a wide open space in the city. It will take time to accumulate an area big enough for big development projects,” he added.  He said, with a reclaimed land, it is much easier to come up with a new design and start working building roads, canals and structures that fits and serve the purpose of development projects. To be continued