Logistics cost for businessmen in Northern Luzon and other parts of the country are expected to go down if the expansion and digitalization of the Subic Port are implemented, a Filipino economist and infrastructure specialist said on Wednesday, Sept. 27.

The Philippines has one of the highest logistics costs in Southeast Asia, according to the Department of Trade and Industry (DTI) and the World Bank, and economist Ronilo M. Balbieran, of the University of Asia and the Pacific, said this must be addressed amid the efforts by the Marcos administration to further improve the country’s economy.

“The expansion and digitalization of the Subic Port is the key to help bring down logistics costs, not just for the businessmen in Northern Luzon, but also for those in the rest of the Philippines who will use such a facility to trade internationally,” said Balbieran.

Based on the data from the World Bank, logistics cost in the Philippines is more than 20 percent of sales, compared to Thailand with only 11 percent.

Balbieran traced the problem to the country’s archipelagic nature with 7,641 islands and the decades of infrastructure underspending due to budgetary constraints.

But he said these logistics challenges can now be overcome by the recent government prioritization of infrastructure development – starting from the Build Build Build program of the Dutertre administration and now being sustained by President Marcos through the Build Better More program.

Such efforts, according to Balbieran, have resulted in the good ranking of the Philippines in the World Bank’s most recent report on Logistics Performance Index, where the Philippines moved 17 notches up in rank from 60th to 43^rd.

“The national conference held last September 20 by the Supply Chain Management Association of the Philippines (SCMAP) saw the DTI finalizing the National Logistics Strategy, including public and private investments in Logistics 1 of the 6 pillars of improving the country’s logistics efficiency. The Strategy emphasizes massive investments in ports nationwide, as more than 90 percent of goods pass through the ports,” Balbieran said.

“In this regard, the significant investments in the ‘expansion and digitalization’ of the Subic port by the HCPTI (Harbour Centre Port Terminal Inc.) will be a crucial component of the national effort to build more and to build better in jumpstarting the country’s progress,” he added.

Balberian explained that the development and modernization of the port of the SBFZ (Subic Bay Freeport Zone) by the HCPTI can unlock the massive potentials and further fuel the economic growth of all the Philippine regions north of Metro Manila.

These include the Cordilleras, Ilocandia, Cagayan Valley and Central Luzon comprising the so-called “NorthPhil” or North Philippines. NorthPhil specifically pertains to the northern half of Mainland Luzon.

“Those regions account for 18 percent of the country’s total GDP (Gross Domestic Product), adding P3.9 trillion to the national economy just for 2022. And in the last two years, these (regional economies) have grown faster than Metro Manila and the entire nation,” Balbieran emphasized.

“With larger investments in expansion and digitalization, the SBFZ ports can further ignite domestic and international trade to and from Luzon, which will expand the economy of NorthPhil even faster,” he added.

Strategic location

Balbieran emphasized that the Philippine government should take advantage of the strategic location of Subic in terms of logistics operations in Southeast Asia, saying the United States’ decision to choose it as a naval base only revealed its importance.

He added that Subic is the most strategic location for port operations outside Metro Manila as it has all the requirements necessary for a deep-sea port that can accommodate and handle the largest of the world’s vessels both today and in the future.

“Subic is simply the port of choice outside the NCR (National Capital Region) to push immediate and accelerated growth. Developing its port facilities could spread to the rest of the SBFZ because of the government revenues and financial gains accruing therefrom and thus contribute to the increased attractiveness of the Philippines for FDIs (foreign direct investments),” Balbieran said.

“Modernizing the SBFZ’s ports, facilities, and services can attract cruise ships, luxury liners, and even by-land and in-land tourism operators catering to all market segments and offering various activities -- from leisure, educational and religious to M.I.C.E. (meetings, incentives, conferences, and exhibition) events that require large-scale tourism function and accommodation capacities,” he added.

Tourism potentials

Currently, the regions north of the National Capital Region, according to Balbieran, receive around 10 percent of the foreign tourist arrivals, and around 20 percent of the total domestic tourism of the Philippines.

This is the reason, according to Balibieran, why NorthPhil is being promoted by the Department of Tourism and the Tourism Promotions Board through the yearly “NorthPhil Expo” held mostly in Clark.

“Investments in the SBFZ port at this time are very timely as tourism activities around the world are starting to pick up, boosted by ecommerce that will be further supported by the upcoming law on internet transactions as approved by the Senate on second reading last September 19,” said Balibieran.

“Such investments can trigger further capital inflows into manufacturing and services specifically catering to the direct and indirect needs of foreign and domestic tourists,” he added.