Putting the Philippines in the Fast Lane

ADB's support for the renovation of a highway north of the Philippines' capital of Manila has transformed the area's economic landscape.

Manila, Philippines—At World Wide Auctioneers, north of Manila, business people from all over the world wander among hundreds of trucks, cranes, and other heavy equipment. They are deciding what they want to bid on at an upcoming multimillion-dollar auction.

The global business people, the heavy equipment they are buying, and the auction company have one thing in common: they are here because of the North Luzon Expressway.

"Most of our equipment comes up the North Luzon Expressway from the Manila port, and most of our customers come up the highway from the Manila airport," says Eric Montandon, chair and chief executive officer of World Wide Auctioneers, which also maintains auction sites in Lebanon, the United Arab Emirates, and the United States.

Said Montandon, "We wouldn't have been able to locate our business here without the renovation of the expressway."

A Dramatic Shift

The North Luzon Expressway Rehabilitation and Expansion Project of the Asian Development Bank (ADB) helped renovate an 83.7-kilometer section of the road and build or rehabilitate 14 interchanges, 24 bridges, and 31 overpasses from Manila to the Clark Special Economic Zone in Pampanga province.

The project, a long time in the making, resulted in a landmark financing plan that engaged the private sector in infrastructure building in a new way. In the early 1990s, the government recognized the need to upgrade and modernize the 30-year-old highway. The road had fallen into disrepair, with flooded sections, potholes, and traffic congestion.

Despite the highway's poor condition, traffic grew significantly from 1992 to 1997. Commuters had little choice but take the highway, whatever its condition. It was the only major thoroughfare going north from Manila.

The government and ADB, the lead financing agency, worked together to assemble a US$378 million loan package, provided primarily by the private sector. ADB provided a loan of US$45 million and coordinated the loan of US$25 million by a group of international commercial banks.

For users of the highway, the impact has been dramatic. The road used to be a heavily pot-holed two-lane thoroughfare where overloaded trucks, speeding buses, and private vehicles dangerously competed for space. Today, it is a safe, smooth tollway with good lighting, modern signage, and vigorous enforcement of traffic laws.

Signs of Growth

"We have seen this business thrive due to the renovation of the highway," says Adonis Baluyot, former chairman of the North Luzon Expressway Billboard Association. "The business barely existed before. People didn't want to put their company advertisements on the old road."

He notes that more than 50 billboards have been erected since the renovation, creating dozens of jobs for those who install and maintain the billboards, raising millions of pesos in revenue for advertising companies, and driving business toward the companies that use the billboards.

"There is a saying that the economic health of an area can be judged by the number and quality of billboards," says Baluyot. "If so, this area's economy is very healthy."

Travelers Welcome

The highway also opened up the picturesque areas in the north to greater tourism. The Spanish colonial city of Vigan, the historic rice terraces of Ifugao, and the beaches of La Union and Pagudpud used to be easily reached only by air. It required a much more arduous road trip to reach some of the top tourist destinations. Today, most areas can be reached in a day.

In Central Luzon, the area that benefits most from the new highway, tourism has risen steadily in the last 3 years, according to the Philippines Department of Tourism, with a 24% increase from 2007 to 2008. In 2009, the region had a total of 550,277 visitors.

Jim Sebree, a retired United States Air Force officer, operates the popular Cottage Kitchen Caf? in Angeles City, adjacent to the highway. He has seen business increase by about 15% since the upgraded highway opened. In response, Sebree has doubled his floor space and taken on new employees.

"It used to be a real challenge, getting to our place before they fixed the highway," said Sebree. "People always enjoyed our food, but the highway made our location more convenient." Now, he said, travelers heading north or returning to Manila can easily stop for a meal along the way.

An ADB review of the highway renovation project found that the average daily traffic from January to March 2009 was at 149,430 vehicle entries, the highest first-quarter traffic since commercial operations started in 2005, and 2.87% higher than the highest previously recorded - 145,258 vehicles in 2007.

Bringing Families Together

The highway's renovation has shown impressive results, but for Elmer Rotoni, it's all about his 1-year-old son, Carl. The professional driver works in the northern province of Zambales, but his wife and young son live in the capital city.

Before the upgrade of the highway, Rotoni, 41, spent weeks away from his wife. The commute was too unpredictable and arduous to complete regularly. After the highway was renovated, Rotoni could reliably time his commute to his family to about 2.5 hours from his provincial workplace to Manila.

Now, Rotoni can get home after work on Friday nights and play with his young son before he sleeps, then spend every weekend with his family, and be back to work Monday morning. He can also get home quickly for family emergencies or special occasions.

"Even though I was only about 100 kilometers from my family, I couldn't get home to see them because of the bad road. Now I see them every weekend and I'm a bigger part of their lives," says Rotoni. "For me, the highway has meant the reunion of my family."