Philippine Boomtown Expands Into the Sea

Strangled by Success, a Philippine Boomtown Expands Into the Sea

By Karl Lester M. Yap | Bloomberg – Tue, Dec 22, 2015 7:00 AM SGT

(Bloomberg) — In the shadow of the Philippines’ highest volcano, Davao city’s reputation as one of the safest, most vibrant and best-run cities in the country is drawing migrants and business people in their thousands.

But there’s nowhere to put them.

Encompassed by hills to the north, the Celebes Sea to the southeast and the looming presence of Mt. Apo to the west, Davao has become a victim of its own success, and an archetype of modern urbanization in developing countries, where inward migration is outstripping governments’ ability to supply infrastructure and services.

The economy of Davao region, which includes the city, expanded 9.4 percent in 2014, the fastest in the country, and is expected to top 9 percent again this year. Its success has helped add nearly a million people since 2000, almost doubling the population.

Like Brazil’s favelas, a dense sprawl of illegal or unplanned housing and shantytowns has sprouted among and around the original town and harbor. Davao needs a new port, a new business district, condos and housing. But everywhere it could build, there are already people’s homes.

Evicting all the settlers who illegally occupy state land is politically and practically difficult. There are tens of thousands of them and some have been there for generations. So Davao has come up with a solution more in keeping with the advanced economies of Japan, Singapore, or the Netherlands: Make some new land in the sea.

Four Islands

The plan is to build four islands, just off the coast in the Gulf of Davao. The cost: $825 million.

“We really need to have some kind of rationalization of urban development,” said Ivan Cortez, head of the Davao City Investment Promotion Center, in an interview in the city. “The reclamation will answer that question.”

Originally designed for a 50,000 population in 1937, Davao is a microcosm of the urbanization sweeping Asia as the region speeds through the transition from agrarian society to an urbanized economy in less than half a century. By 2025, 21 out of 37 of the world’s megacities — those with 10 million or more people — will be in the Asia and Pacific region, the Asian Development Bank predicts.

Each of Davao’s new islands would be about 50 hectares (124 acres) and together they would provide land for a new port, government offices, a business district, high-end shopping malls and ritzy condos, all under the plan of Mega Harbour Development Corp.

The city would own about 20 percent of the reclaimed land, including roads and parks, Cortez said. A new port on one of the islands would have 2.5 kilometers of berthing, more than double the wharves of the city’s main port, he said. Mega Harbour, currently the sole bidder, has taken part in reclamation projects in Manila, Cortez said.

Cardboard Houses

While the city can avoid clearing most of the slums by conjuring land from the sea, it will still need to relocate about 3,000 illegal households to build access roads and other connections.

That’s bad news for Joselito Ferrarin, a resident for almost 30 years in the shantytown of Isla Verde, a labyrinth of narrow streets and passageways, between houses of brick and shacks made of wood, cardboard, plastic sheets and scraps of iron.

“This is my home, this is where my kids grew up,” said Ferrarin, while a group of boys played basketball in the narrow street near the shore. He does irregular jobs at construction sites and lives with his wife, eight children and pet cat in a one-room house with no electricity. “There’s a lot more job opportunities here.”

While the reclamation plan offers a longer-term solution for the overcrowding, the city is also trying to improve the onshore area. The national government is taking bids for a contract to upgrade the existing port to cut unloading times to three hours from three days, while the city is seeking national government approval to build its first mass transit system, a 13.6-kilometer rail line.

Fighting Crime

Among those drawn to Davao is Mykael Louie Melendrez, who came just over a year ago to look for a job after working in the tourism office in Mati, about 360 kilometers away.

“I took a chance on Davao,” said Melendrez, 31, who has also lived in Manila, Cavite and Cebu, where he provided escort services for foreigners. In Davao, he got a job within a day at a call center, helping North American clients wire money via Western Union Co. “I don’t want to leave. It’s a nice city to live in, unlike in Manila or Cebu where everybody is running against time.”

Part of the reason for Davao’s success is a relentless war against crime waged by Rodrigo Duterte, the mayor.

During the time of the late dictator Ferdinand Marcos, Davao had a reputation for crime and was known as the nation’s murder capital. Duterte built his reputation over two decades leading the city, insisting that law and order had to be achieved at all costs. He is now running for president in next year’s elections.

“I believe that my policies on peace and order and my stand on keeping the city safe from crime and criminality have played a big role in what we have achieved,” he said in a written response.

Luring Migrants

That was one of the major draws for Melendrez, a flamboyant cross-dresser, who felt more threatened in the capital. “There is no crime,” he said. “I can use my iPad, my phone in public. Every street corner has a CCTV.”

The order Duterte fostered has helped businesses flourish, said Imelda Lu, who returned to the Philippines in 2001 from Taiwan, where she worked in a computer factory. Lu started with a gas station in Davao, then an internet cafe and then opened an interior design shop.

“I’ll probably be here for good,” said Lu, 53, who comes from the landlocked province of Cotabato, the other side of Mt. Apo. “It’s very diversified. There are a lot of migrants.”

With wealth, population and investment rising, bigger companies are also moving in, including SM Prime Holdings Inc. and Ayala Land Inc., which have both opened shopping malls in the city.

“With urbanization proceeding at a break-neck pace in many developing economies, planning officials increasingly have to devise creative solutions,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “With Asian economies expanding rapidly, no doubt we will see many cities increasingly stretched to their limits.”


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