People look out over Manila Bay, one of the capital’s attractions. Photographer: Sanjit Das for Bloomberg

People look out over Manila Bay, one of the capital’s attractions. Photographer: Sanjit Das/Bloomberg

Manila Has a Fix for World’s Worst Traffic: Build Artificial Islands

By Andreo Calonzo, Siegfrid Alegado, Hannah Dormido and Adrian Leung

July 18, 2019, 5:00 PM EDT

Manila, one of the largest and most congested urban areas in the world, has a solution to its problems: build artificial islands in the sea.

The plan is to create islands covering a total of 90 square kilometers—more than half the size of Washington, D.C.—to house a new airport, condos, casinos, theme parks and commercial zones. It would be 15 times the size of Dubai’s Palm Jumeirah island.

Property developers are queuing up to get a slice of the action. SM Prime Holdings Inc., the country’s largest builder, and a venture of businessman Dennis Uy’s Udenna Development Corp. and China Harbour Engineering Co. are among groups that submitted 22 proposals, worth $34 billion, to the Philippine Reclamation Authority.

But environmentalists and the communities that have made a living for generations by fishing in the bay are worried that the giant project could have major consequences, not just for them, but for the whole city.

Local fishermen turn in their catch for the day in San Roque, Novotas. Photographer: Veejay Villafranca/Bloomberg

“The government says Manila Bay reclamation is progress, but for whom? It’s progress for them and not for us,” said Samuel Miller, 55, who has paddled before dawn each day from the age of nine for a day’s catch in the city’s famous bay. “How can we be part of development if we will lose our homes and livelihood?”

Manila’s dilemma is one shared by many fast-growing cities in developing nations. Rapid growth in population⁠—boosted by migration from rural areas⁠—is overwhelming services, roads, transportation, power and drainage. Manila had the worst traffic out of 186 cities ranked by traffic app developer Waze Mobile in a 2016 driver satisfaction survey.

In Manila’s case, the problem is exacerbated by geography. The capital is made up of 16 cities and a municipality sandwiched between Laguna Lake and the Rizal mountains to the east, and Manila Bay to the west. Together, they have a population of 25 million, smaller only than Tokyo, Jakarta and New Delhi, according to Illinois-based Demographia.

As the city grew, farmland was turned into industrial zones and tech parks, and surrounding hills were bulldozed to make more space. Like other cities restrained by geography, including Hong Kong, Singapore and Tokyo, it soon looked to the sea to expand.

Manila’s freight port and palm-fringed Roxas Boulevard, known for its spectacular sunsets, sit on land reclaimed by the American colonial government almost a century ago. Smaller projects kept adding land from the bay until 1977, when dictator Ferdinand Marcos proposed a 3,000 hectare enlargement to the southern coastline—a project that would take decades to realize and which is sill being built on today.

But as fast as land was reclaimed, it couldn’t keep up with the population.

“There’s no more room where we can build new businesses,” said Tobias Tiangco, the mayor of Navotas City, a fishing hub where one of the artificial islands would be built. He says the reclamation can be good for the city, like similar projects in Singapore and Hong Kong, as long as it includes public spaces and affordable housing and doesn’t displace residents.

The ambitious plan was boosted by President Rodrigo Duterte’s infrastructure push, encouraging private companies to propose reclamation projects to help ease congestion.

Joselito Gonzales, assistant general manager at the reclamation agency, said the plan could generate “billions of dollars in terms of commercial transactions.”

In the early 2000s, builders aggressively bought land in Manila as demand for offices soared from overseas investors such as outsourcing companies and Chinese gaming operators. Bidding wars pushed land prices to a record 900,000 pesos ($17,600) per square meter.

That’s about three times the price of building an artificial island, said Fredrick Rara, research manager at property services company KMC Savills Inc. in Manila. “Given the trend now on land prices, if there’s an opportunity to reclaim, it’ll be better.”

People hang out at the SM by the Bay amusement park on reclaimed land in Manila Bay. Photographer: Hannah Reyes Morales/Bloomberg

Nowhere is the boom more obvious than the previous big reclamation project in the capital’s south, now known as the Bay City Area. Home to malls⁠ as well as casinos such as Tiger Resort Asia Ltd’s Okada Manila, the area saw the fastest price growth for high-rise homes and offices in Manila for six straight quarters up to March, Rara said.

But reclaiming such a large amount of land in Manila’s shallow and largely enclosed bay could have major consequences for the local environment.

Manila is built on a low-lying river delta in a latitude that is prone to typhoons, earthquakes and storm surges. A study at the University of Hong Kong suggests that building artificial islands can reduce a bay’s aquatic life by a fifth within five years as water temperatures, levels and currents change.

Sources: Philippine Reclamation Authority, Sentinel

“It really is going to be a loss for society,” said Agustin Arcenas, professor of environmental and natural resource economics at University of the Philippines. “Yes, there’ll be profit and employment. The trade off is the loss of a big natural resource and environmental damage.”

The government says it will closely review the reclamation proposals. “We will not sacrifice the biodiversity of this area just for a few people to make money,” said Environment Department Undersecretary Benny Antiporda.

Over the decades of expansion, successive governments have made efforts to divert growth away from the capital to other regions, including a recent proposal to build a new green city the size of Manhattan at New Clark, about 100 kilometers north of the capital.

Commuters in Manila spend hours stuck in traffic. Photographer: Noel Celis/AFP/Getty Images

But people and money continue to pour into Manila.

“It’s just the momentum is here,” said KMC’s Rara.

The capital region accounts for nearly half of the Philippine economy. It holds the seat of government, the central bank and financial center. It’s the seat of the nation’s best-known universities and draws thousands of migrants every year, providing a vast pool of skilled and unskilled workers.

Still, reclamation projects take decades, meaning big risks for private investors, including fluctuations on the property market, shifts in government policy and changes in environment laws.

Forest City, a $100 billion Chinese-funded development off the coast of Malaysia that was initially marketed largely to Chinese investors, suffered from a glut of unsold homes after China’s government curbed the transfer of money abroad.

“If you’re patient long enough, you should be able to recover your investment,” said Delfin Wenceslao, chairman of D.M. Wenceslao and Associates Inc., which spent two decades reclaiming 200 hectares of land on Manila Bay that now houses a casino and leisure center.

The fishing community of San Roque. Photographer: Veejay Villafranca/Bloomberg

Miller, the fisherman, has a different long-term perspective. He’s seen his hometown of Navotas City grow from a quiet coastal village to become the Philippines’ largest commercial fishing hub. As he takes a break from repairing his boat on the beach, near the single-story dwelling of concrete blocks and scrap wood he built for his family of six, he expresses frustration at the prospect of having to move.

“If they take away the holes that we live in, we will bite back,” he said.

Manila Has a Fix for World’s Worst Traffic: Build Artificial Islands

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