DAVAO CITY is in the middle of a transformational process, as more vertical constructions are literally and noticeably sprouting like mushrooms in the downtown area, as well as in its suburbs. At the pace by which investment inquiries and actual investments are coming in, the reconfiguration of the urban scenery is likely to go on for years ahead.
Just how the massive flow of investment going into the city is summed by Mayor Sara Duterte-Carpio in her State of the City Address on Monday (October 14, 2019).
“As in the past years, Davao City’s economy continues to show a steady rise as evidenced by the increased number of registered businesses and capitalization. Together with our neighbor-provinces, Davao region’s economy remained the second fastes-growing economy in the entire country when we posted an 8.6-percent growth in 2018,” she said, in a report attended by the four consul general of Indonesia, Malaysia, Japan and the People’s Republic of China.
While the growth is already splendid enough to place the Davao region as the second fastest-growing region after the Mindoro, Marinduque, Romblom and Palawan (Mimaropa) region, it was 2.1 percentage points lower than that of 2017.
Duterte said investments continued to grow the past three years with a total investment portfolio of P230 billion in 2016, P272 billion in 2017 and P279 billion in 2018.
This would position Davao City to a comfortable platform to attain the $6 billion-economy within striking distance.
On the road beyond IRA
Local economies, including Davao City, are relying on the financial subsidy, called Internal Revenue Allotment, from the national government to prop up respective budgets with cities enjoying advantageous edge over the municipalities, due to the sheer size of population, which is the main criterion in computing the amount of the IRA.
Through the years, the local tax collection has demonstrated an increasingly healthy and robust economy that Duterte-Carpio said would allow the city to wean itself away from heavy dependence on the IRA.
Last year, the city surpassed revenue collections of the previous years, when it collected P8.5 billion. It was “continuing upward trend since 2016,” she added.
In 2016, the total collection was P6.3 billion, which increased to P7.2 billion in 2017. By June this year, “we already saw an 11-percent increase with P5.5 billion compared to P4.9 billion of the same period last year.”
“In effect, more local taxes are collected, and the city is on its way to surpass the Internal Revenue Allotment as the main fund source to finance projects. The goal is to limit our dependency on the Internal Revenue Allotment, or IRA, so that we can finance more programs that are not among those restricted for IRA use,” she reported.
The Office of Councilor Danilo Dayanghirang, chairman of the council committee on finance, ways and means, provided the BusinessMirror with the IRA received by the city. In 2016, it received P3.6 billion, and this increased in 2017 at P4.167 billion, and further up last year at P4.47 billion. This year, the city IRA was at P4.9 billion.
Duterte-Carpio ascribed the increased total collection to the implementation of Ordinance 0291-17, Series of 2017, otherwise known as the 2017 Revenue Code, last year and the decrease in fines and penalties “that positively translated to the taxpayers’ compliance with their obligations to the city government.”
Debt-free regime by 2022
Private investments have been pouring as multi-storey structures multiply and grow limited only on the height set by the Civil Aeronautics Administration of the Philippines to avoid blocking the path of aircraft that land and take off at the Davao International Airport in swarms.
From a trickle of big investments coming in two decades ago, the field has widened tremendously for big players. Early this year, the Davao City Water District (DCWD) gave a glimpse of the extent of investments already here, based on the actual requests for water connection filed at its office.
Lawyer Bernardo D. Delima, DCWD spokesman, said the upcoming operation of the bulk water supply agreement with the Aboitiz-owned Apo Agua Infrastructura Inc. would be adequate enough to meet the city’s needs and the surge of demand from high-rise residential structures and new subdivisions.
He said water connection applications were filed by owners and operators of new 66 condominiums and high-rise structures, and 58 housing subdivisions.
Delima said the water connections for these new applications would entail an estimated supply of 82 million liters of water daily for the condominiums and 119 million liters daily for the 158,200 units of housing subdivisions.
Delima said the demand is expected to come in gradually, with the bulk of the demand to come by 2021 due to the length of time needed to construct these projects.
Meanwhile, Duterte-Carpio said the increasing economic activity year-on-year translates to more employment opportunities and increased purchasing power for the Dabawenyos.
“Furthermore, the healthy fiscal condition of Davao, along with the constant support of the private sector, paved the way for the funding various programs and projects,” she added.
The City Engineer’s Office completed 517 projects, such as the construction of 679 buildings, drainage systems, roads, bridges, and water systems amounting to P1.3 billion. In the next period would be the finishing touches, or construction, of new buildings for the city library, Museo Dabawenyo, City Investment Promotion Center, City Tourism and City Social Services Development Office.
The rehabilitation work at Agdao Public Market is currently being undertaken.
In the past three years, the city constructed 112 classrooms across all levels and sites, with 77 classrooms under the Special Education Fund. The 2017 constructions were 90 percent complete and last year’s projects were 78 percent completed.
“For the year 2020, we will continue to put funds for the construction of more classrooms that will help us in attaining zero backlog for our children’s classroom needs. In the coming weeks, the Local School Board is set to approve a budget of P650 million, and approximately P270 million will be used to further fund classroom construction in the different areas of Davao City,” Duterte-Carpio said.
She acknowledged the foreign assistance initiated by the consular offices here. Last year, the embassy of the People’s Republic of China in the Philippines allocated funds for the construction of 13 modern two-story, four-classroom buildings, of which, 11 were completed and are now being used by the students.
The Department of Education here also received assistance in putting up five school buildings with four classrooms each from Emcor, an electronics and appliance company, that had its beginnings in Davao City. Four of the five buildings were scheduled for turnover later this month.
Health infrastructure projects
Health was not far behind. Some P87.5 million under the Health Facility Enhancement Program 2017 was allotted for the construction of 30 new health facilities in the city. As of May this year, 14 barangay health stations and rural health units were completed under that 2017 project. Six other RHUs were renovated, while 10 were still in the construction phase. For the Health Facilities Enhancement Program of 2018, four facilities were completed, two were renovated, and 12 were still constructed.
The completion of the health centers in Buhangin, Agdao, and Panacan were currently being planned, and the Paquibato District Hospital was already at 15 percent into the construction, she added. In addition, we have also provided ambulances to 16 Barangay Health Stations and health centers around the city.
In her city address, Duterte-Carpio listed some 38 major infrastructure projects in the pipeline, many of them for social services of the city constituents, but mainly for the indigents and the need for shelter and services during disasters.
She allayed fears of rising debt to finance these projects saying that “debt servicing is nearing completion, which will basically make the city debt-free in 2022.”
This assurance came with the sterling performance of the city during difficult times.
While last year’s growth was lower by 2.1 percent from the previous year’s growth, even the National Economic and Development Authority praised the performance of the region, bannered by Davao City, for coming up with a significant growth while the whole country was struggling with one of the worst inflation period in a decade.
The big ‘advantage’
Detractors have also dismissed the spike in the growth as short and fleeting, linking the trend to please the current administration of President Duterte, who comes from this city of more than 1.6 million residents, the fourth most populous after the three big Metro Manila cities.
Investors though see a more grounded business opportunity and still untapped resources way beyond politics, local business leaders would say.
The Anvil Group of young and moneyed Filipino-Chinese businessmen and women, for example, pointed this out during their first-ever venture in July 2018 of holding their annual meeting here outside of the capital in Metro Manila.
Key leaders said they were astounded by reports of huge potential of raw materials across many provinces, and by the increasingly improved transportation infrastructure like widened roads from Davao City going to the satellite areas where the resources and production areas abound.
City officials though agreed that the ascension to Malacañang of President Duterte, a mayor for 22 years here, helped a lot to propel interest in the city. That factor, according to Arturo Milan, Davao City Chamber of Commerce and Industry president, “Is an undeniable fact, and advantage that we have to capture also.”