Total Philippine debt has reached P14.15 trillion in June 2023. As the government pays an average interest rate of 5 percent, the country’s outstanding debt is on track to reach an unprecedented P15.8 trillion in 2024. The administration has set aside a staggering amount for debt payments for 2024, with P1.2 trillion for the payment of principal debt and P670.5 billion for interest payments.
There’s nothing to worry about the country’s debt, according to our economic managers. Finance Secretary Benjamin Diokno said the Philippines’ debt-to-GDP ratio, at 61 percent, was still at a “manageable range.”
Assurances from our economic managers are good, but ultimately, the Filipino people will have to shoulder the debt burden.
Grossly unpopular tax hikes can help pay down debt a bit, and spending cuts could help ease the debt burden at the expense of our economic growth. Of course, the government can issue bonds to raise money, but that’s using debt to pay debt. So, what’s a sensible approach?
Albay Rep. Joey Sarte Salceda proposed a viable solution. He said the 14 approved reclamation projects off Manila Bay could generate at least P23 trillion in land sales, “enough to retire the country’s debt.” (Read the BusinessMirror report, “P23T in land sales projected from 14 reclamation projects,” October 17, 2023).
President Marcos ordered in August an indefinite suspension of 22 land reclamation projects in Manila Bay, including three that were already underway, after the US expressed concern over environmental damage from the projects and the involvement of a Chinese company that was blacklisted by Washington for its role in building Chinese military bases in the South China Sea.
Salceda said the cumulative impact of these reclamation projects has already been studied, making the suspension somewhat surprising. “A suspension is not tantamount to the abandonment of the projects and may be an opportunity for us to rethink the costs and benefits of reclamation projects,” he said.
According to Salceda, the 14 approved Manila Bay reclamation projects can also generate as much as P432 billion in national land taxes, including VAT, capital gains tax, and documentary stamp taxes in the next five years.
“Reclamation is inevitable when developing large metropolitan cities that are bound by the sea, and Metro Manila is now the world’s most densely populated megacity,” Salceda said.
He added that reclamation is a standard practice undertaken by major cities worldwide, citing the examples of Tokyo, Singapore, and Hong Kong. He said Tokyo, for instance, has reclaimed 20 percent of Tokyo Bay to meet the growing demands of the Tokyo Metropolitan Area.
Singapore has reclaimed around 22 percent of its total land area, with one-third allocated for socialized housing projects. Hong Kong has reclaimed 25 percent of its developed land, housing 27 percent of its population and serving as a hub for 70 percent of its business activities, Salceda said.
Philippine Reclamation Authority Assistant General Manager Atty. Joseph Literal said the 14 approved projects in Manila Bay cover about 5,503 hectares. “These projects bolster the gross national product and have the untapped potential to generate employment on a monumental scale,” he said, adding that reclamation projects provide the physical space for a thriving business ecosystem because the created land offers fertile ground for enterprises to set up shop, attracting local and international investors alike.
Given the country’s debt crisis and current economic challenges, it’s difficult to refute Salceda’s claim that reclamation projects are a boost to the country’s economy. What’s more, these projects are done at no financial cost to the government, and all risks are on the shoulders of the private sector. However, as in any project that has an environmental effect, it is important to approach any land reclamation project with careful assessment and consideration of any negative impacts.
