Reclamation: Enterprise Cost
And rice and China too
You don’t have to go and look at outstanding examples of reclamation familiar to globe-trotting Filipinos --Mission Bay, San Francisco; Songdo, Incheon, South Korea; or Singapore, which expanded its territory by 22% in the first 50 years of its independence, and plans to expand its land area by 8% by 2030—but simply at what’s considered the pride of Manila, “the boulevard,” to see how successful reclamation can be. But then again you can look at the same place to see the risks involved as well.
There are a couple of interesting readings, too, related to the imposition of price controls on rice, and perspectives on great power rivalry and Asean.
This week’s The Long View:
THE LONG VIEW
Shotgun approach hurts all
By: Manuel L. Quezon III – @inquirerdotnet
Philippine Daily Inquirer / 04:25 AM September 06, 2023
In 1954, President Ramon Magsaysay reserved a vast tract, stretching from Manila to Pasay and Parañaque, to be known as the “Manila Bay Beach Resort” (modified by President Diosdado Macapagal to exclude the lot now occupied by the Philippine Navy HQ). More contemporary concerns over the environment are covered by Republic Act No. 7586, the effects of which apply to Manila Bay since the Ramos administration. Manila guaranteed the protection of the vista from the United States Embassy to the Cultural Center of the Philippines (CCP) by banning any form of reclamation along Manila Bay, but the city council later repealed its own ordinance.
It’s the US Embassy that’s been credited with having the wherewithal to get the government to slam on the brakes concerning reclamation as it found itself in danger of being engulfed by a project, and alarmed over the involvement of subsidiaries of Chinese state firms in some projects—weakening America’s ability to ostracize state firms. Result? A blanket moratorium ordered by the President, with the environment secretary pledging a holistic, Filipino-dominated, multisectoral review of projects taken as a whole and not piecemeal.
Back in 2019, a workshop was conducted on how to dispense science-based advice to government, and hopefully, the lessons are now being applied. The bay, after all, is a system that is much larger than we normally imagine: three regions, eight provinces, and 178 LGUs, with the port of Manila itself covering an aggregate area of 100 square kilometers.
It will inevitably boil down to a debate over reclamation: Should it even take place? Something to bear in mind: Much of what we consider attractive about Manila dates to earlier reclamations. A few years ago, as I worked with my team to produce a map illustrating the British invasion of Manila in 1762, I was struck by how much of what we take for granted in Manila is actually reclaimed land. The beach and shoreline, then, of Manila roughly follow today’s Bonifacio Drive along Intramuros and the vicinity of A. Mabini in Malate. Put another way, the entire Port Area, and the vicinity of the Quirino Grandstand up to the old Army and Navy Club dates to the first decade or so of the 20th century, while the US Embassy compound and what is now the service road of Roxas Boulevard in Pasay, date back prewar Commonwealth reclamation. Postwar property owners in Pasay waged an unsuccessful campaign to block the further widening of Roxas Boulevard. All these were considered symbols of modernity and, in fact, created the seaside promenade along Roxas Boulevard recalled nostalgically by the older generation.
Back in 2020, researching Imelda Marcos and the CCP, I was struck with how nimbly she took over as her own brainchild, a scheme actually begun by a disgraced American tycoon, Harry Stonehill, who first conceived, and started, going beyond Roxas Boulevard and engaging in further reclamation in Manila Bay. He ended up deported in 1962 but for our purposes, the Stonehill and Marcos eras are one, creating the vast reclamations—88 hectares in Manila, where the CCP complex is, and 100 hectares in Pasay, where the GSIS and PNB are—that were semi-abandoned until the private sector finally turned them into viable developments.
Since the 1950s, objections to reclamation have been two-pronged: from current property owners afraid their land values will go down, and heritage advocates concerned landmarks and historic sites will vanish. Add to this more recent concerns over the environment, and you have a motivated, committed constituency ready to oppose any development. Government, for its part, has a track record of corruption which makes it easy to attack any project as motivated by private greed at public expense.
But an accompanying, harsh reality is that sudden stoppages, however well-meant, wreck the reputation of the country as a whole when it comes to investments. The effects aren’t just immediate, as the economy is slowing down, but also cumulative, adding to the many opportunities that are already being lost for attracting interest from foreign investors. Even the local market has gotten spooked, news from the stock market reveals.
We’re always told that at 71,263 inhabitants per sq km, Manila is the most densely populated city in the world (Pasay City is 29,815). The NCR as a whole has a population density 60 times higher than the national level. Unless we end up under a Pol Pot who would depopulate the cities at gunpoint, the metropolis needs more land: This is something the private sector understands and can do something about more efficiently than the national government. What government is supposed to do is act consistently, predictably, (the basic requirements of a flourishing economy), and fairly (with justice for all sectors). We are still stuck in using the shotgun approach which bruises as much as it loosely targets what’s supposed to be specifically addressed. Surely we can do better.
This week’s readings:
A grim analysis
From Heneral Lunacy (retired investment banker Leo Alejandrino) a grim reading of the situation, see his September 3 entry, The Administration Needs To Be Careful, in which he suggests government is running out of resources and that rice is the thin end of the wedge when it comes to public dissatisfaction with the administration:
The Government can import rice through the NFA and subsidize prices to the public at a loss. It can also increase the Cash Transfers to indigents so they may afford the higher price. Unfortunately the Government does not have the money to do much of either what with other demands on its pocketbook.
The Government is short by over a trillion pesos on military pensions. The DoF has presented options to go around this commitment (which incidentally Sec. Diokno approved as then Budget Sec. under the previous Administration) but Defense Sec.Teodoro and his military constituents are not buying.
The Government’s 2024 Budget after inflation and service of our over P14 trillion debt; is possibly smaller than the previous year’s. Budgets for critical sectors like Health have been slashed…
Our fiscal deficits continue to rise so the Government is underspending to limit the shortfall. Government services are being curtailed to preserve our financial metrics – debt/GDP, deficits to GDP ratio – that credit agencies are monitoring. Some departments are disbursing only 30% of their allocations. Tax and customs collections are up 7-8% but most of that is from inflation and the weaker peso and not necessarily from heightened economic activity. If the economy continues to weaken as it has done in the last three quarters, our tax base will shrink exacerbating our financial condition. I would not be surprised to see a credit downgrade in the next 12 months.
In particular, he looks at the imposition of price controls as a bad idea which will have bad consequences, among which is the vow of rice traders to defy price controls. This came on the heels of government earlier urging increased imports (which would’ve ended up being sold at a loss with price controls).For its part, the Speaker, who is the heir presumptive to the President, has vowed subsidies to traders. As it is, inflation and lack of global supply are worrisome to officialdom.
One thing though, which I gleaned from talking to others who look at the business environment: there seems a wide understanding that the President’s imposition of price controls for rice will only be strictly enforced in Metro Manila and, possibly, other urban areas but not rural areas: “rice prices are primarily an urban phenomeno, as the rural areas are closer to places of production,” was how it was put to me; in which case the threat of rice traders in the provinces to defy the President is play-acting since they are expected to conduct business as normal, anyway.
For the impact (or lack of it) of price controls, background comes from this 2000 report: Asymmetric Prices: Implications on Trader's Market Power in Philippine Rice. Winnie Monsod has spoken up against price controls saying they don’t work.
ASEAN:
Through The Asean Wonk, an intriguing title: Southeast Asia’s Multipolar Future: Averting a New Cold War by Thomas Parks. Here is Asean Wonk’s summary of the book (the use of a table is a great idea):
[The book] argues that Southeast Asia is more likely to be the epicenter of an emerging multipolar order rather than a site for a bipolar Cold War or a Chinese sphere of influence. Parks sees the region approximating what ex-top Singapore diplomat Bilahari Kausikan… has termed “asymmetric, dynamic multipolarity,” with the United States and China in a league of their own and other middle and smaller powers exerting their agency in multitiered competition and collaboration. The book’s argument advances in two parts (see table below for a snapshot).
See Chapters and Select Topics in “Southeast Asia’s Multipolar Future”: this is a great idea for outlining a book!
As a specialist title, the book is very, very expensive. But here’s a discussion of the book featuring the author:
This is all well and good but in the Financial Times, US Managing Editor Peter Spiegler in a newsletter points to the US-Japan-Korea Summit that recently took place, as a “hugely important geopolitical development”:
But none of this should detract from the importance — both symbolically and substantively — of Japan’s and South Korea’s leaders agreeing to work together, alongside the US, on regional defence. It is, in many ways, the culminating act of a year-long series of pacts among American allies in Asia that is unprecedented in scope and scale, at least since the original flurry of treaties signed to secure peace after the second world war.
The American effort to knit together a collective security structure in east Asia has been a regional priority for decades. Unlike Europe, where collective security has been second nature since the signing of the North Atlantic Treaty in 1949, the US’s relationships with its Asian allies since the end of the cold war have been what American officials have derisively labelled “hub and spoke”. While Tokyo, Seoul and Canberra have happily worked directly with Washington on military and intelligence co-ordination, they’ve rarely (if ever) wanted to work with each other.
…From an American perspective, systematising military planning and intelligence sharing from Hokkaido to Tasmania would not only be more efficient, but would send a clear signal to Beijing that it faces a phalanx of like-minded allies as it contemplates its own increasingly aggressive posture in the Pacific.
Spiegler notes how past history —World War II— has been an obstacle but while historic grievances may still be festering, nations are increasingly prepared to move on:
So what has changed? North Korea’s increasing tendency to fire intermediate-range missiles over the Japanese home islands has raised the threat posed by Pyongyang in the eyes of Japan’s security establishment — more closely aligning it with Seoul, where North Korea has long been the existential threat. China’s increasing belligerence has concomitantly changed perceptions in South Korea, where previous presidential administrations saw Beijing as a needed ally to contain North Korea rather than the potential belligerent — a shift that more closely aligns threat assessments in Seoul with those in Tokyo.
But neither of these developments, I would argue, is sufficient to explain the sea change going on among American allies in Asia. The credit for that should go to Vladimir Putin. ... In Asia, it has served as a wake-up call that the international order created by the victors of the second world war (but agreed to by almost all nations for nearly a century) is no longer inviolable. The security assumptions that Japan and South Korea relied on for decades, almost by instinct, no longer hold.
He notes how there has been an increasing tempo of cooperation:
Fumio Kishida, Japan’s prime minister who came into office with a relatively dovish reputation, has defied expectations by not only achieving detente with Seoul, but also inking consequential new security co-operation agreements with Australia, Vietnam, Thailand and the Philippines.
But it is not just Japan. There have been so many regional co-operation agreements and security commitments in the past year that they are hard to keep track of. Thirty years after the US was forced to lower its flag at Clark Air Force Base and Subic Bay Naval Station, the American military has been invited back to nine separate Philippine military facilities in locations offering easy access to the waters off Taiwan and the South China Sea. … American allies, long complacent about their security status in a rules-based international order, are all rapidly rearming and dropping objections to regional co-operation in the wake of a Russian invasion that shattered their complacency.
For its part, in the Asia Sentinel, the forthcoming G20 Summit in New Delhi won’t include the leaders of Russia and China, perhaps something of a relief for all concerned. But connected to this topic, is China’s recent behavior antagonizing its neighbors:
India wants the Chinese troops to return to status quo ante; China says India must move on and now has printed its so-called 10-dash line, generating anger across Asia, officially renewing its illegal claims to most of the Sout China Sea and adding new claims along the Indian border. Modi knows a photo of him and Xi in the same frame, given the furor, that too in India, could become politically charged in the runup to what promises to be a divisive election year. After all, he has indirectly accused India’s first prime minister, Jawaharlal Nehru, of being weak and fallible when dealing with China and Pakistan. How can he now be seen to be losing to China, just like Nehru once did?
Certainly, few people understand what the Chinese are doing. On the margins of the recent BRICS meeting in South Africa, Modi and Xi agreed to tell their officials to intensify efforts to de-escalate tensions in Ladakh. Within days, China’s ministry of natural resources published its map claiming Arunachal Pradesh, an Indian province the Chinese insist on calling “South Tibet,” which it also claimed earlier. How to explain what the Chinese are doing?
The absence of the Chinese leader( see: Xi Jinping Will Be a G-20 No-Show) has gotten many tongues wagging: see Analysis: Xi reprimanded by elders at Beidaihe over direction of nation: G20 absence hints at turmoil in Chinese domestic politics.