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IMPACTS of NEW INFRASTRUCTURE on TOURISM in the PHILIPPINES Case Study on USAID Support for the Philippines’ Tourism Road Infrastructure Program

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IMPACTS of NEW INFRASTRUCTURE on TOURISM in the PHILIPPINES Case Study on USAID Support for the Philippines’ Tourism Road Infrastructure Program PAWEESIT | PALAWAN UNDERGROUND RIVER, PUERTO PRINCESA IMPACTS OF NEW INFRASTRUCTURE ON TOURISM IN THE PHILIPPINES Case Study on USAID Support for the Philippines’ Tourism Road Infrastructure Program This publication was produced for review by the United States Agency for International Development. It was prepared by Meliza Agabin and Robert Travers of Chemonics International under the Asia and Middle East Economic Growth Best Practice Project, Task Order AID-OAA-M- 12-00008. The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States government. CONTENTS EXECUTIVE SUMMARY 3 I. INTRODUCTION 8 II. BACKGROUND 10 III. MECHANISMS FOR SUCCESSFUL COORDINATION BETWEEN THE DEPARTMENTS OF TOURISM AND PUBLIC WORKS AND HIGHWAYS 14 IV. USAID SUPPORT FOR PHILIPPINES TRIP 17 V. MECHANISMS FOR SUCCESSFUL IDENTIFICATION AND PRIORITIZATION OF INFRASTRUCTURE INVESTMENTS 18 VI. TRIP HIGH-LEVEL RESULTS AND LESSONS LEARNED 21 VII. SPECIFIC TRIP INTERVENTIONS AND IMPACTS IN PALAWAN 27 ANNEX A: PHILIPPINE TOURISM COMPETITIVENESS RANKINGS 40 ANNEX B: ADDITIONAL INDICATORS OF GENERAL TOURISM GROWTH IN PALAWAN (2012-2016) 41 ANNEX C: INDICATORS OF NATIONAL TOURISM GROWTH (2012-2016) 42 ANNEX D. TOURISM ROAD INFRASTRUCTURE PROGRAM PRIORITIZATION CRITERIA, 2016 43 ANNEX E: FIELD TRIP ITINERARY 50 ANNEX F. PALAWAN TRIP PERCEPTION SURVEY 51 USAID.GOV IMPACTS OF NEW INFRASTRUCTURE ON TOURISM IN THE PHILIPPINES | I EXECUTIVE SUMMARY This case study aims to: 1) document the United States Agency for International Development (USAID) Advancing Philippine Competitiveness (COMPETE) Project support for the Tourism Road Infrastructure Program (TRIP) implemented by the Philippines Department of Tourism (DOT) and Department of Public Works and Highways (DPWH); and 2) estimate impacts of specific TRIP interventions on the Philippine Province of Palawan. According to a detailed annual study undertaken for the World Economic Forum, the Philippines ranks most competitively in terms of its (1) Price Competitiveness, (2) Natural Resources, and (3) Labor. The Philippines is ranked least competitive in terms of (1) Safety and Security, (2) Environmental Sustainability, and (3) Ground Infrastructure and Ports. In each of these three areas the country is in the bottom quadrant of scorings worldwide. The Philippines had one of the lowest investments in infrastructure at less than three percent of GDP in 2011. This low level of investments, along with a strict division of responsibility and budgets for national versus local roads, left a great majority of local roads that connect to important tourist destinations unpaved. TRIP was created in 2012 out of a formal Convergence Program between the Philippines’ Departments of Tourism and Public Works and Highways to increase government investments in roads to support tourism development in priority destination areas defined in the National Tourism Development Plan. Three factors facilitated the establishment of the Convergence Program: 1) The Tourism Act of 2009 provided the legal basis for the collaboration; 2) A newly crafted National Tourism Development Plan prioritized eight destinations in which to implement the Tourism Act; and 3) national roads nearing completion coupled with a robust DPWH budget enabled the agency to focus on building local roads to tourism destinations. The TRIP program aimed to “promote access to and from, airports and seaports, Tourism Enterprise Zones (TEZ) and other tourism destinations, in accordance with the priorities of the National Government.” This included increasing infrastructure investments, improving the quality of infrastructure, and enhancing monitoring and evaluation (M&E) through geographic information systems (GIS) video mapping. At the core of the TRIP system and structure are the TRIP Prioritization Criteria (TRIPPC), the Technical Working Groups (TWG) at the central (CTWG) and regional (RTWG) levels, and the Secretariat of the CTWG. TRIP TWGs are central to the selection and vetting process for road project proposals. USAID SUPPORT FOR TRIP The USAID-funded COMPETE project (2012-2017) extended technical assistance to the Department of Public Works and Highways and the Department of Tourism through the Research, Education, and Institutional Development (REID) Foundation to implement TRIP. Specifically, COMPETE helped develop systems to identify, evaluate, prioritize, and implement tourism road infrastructure across the country, in support of the goals and targets of the National Tourism Development Plan. COMPETE crafted, piloted, and refined TRIP Prioritization Criteria (TRIPPC) that standardized and facilitated the selection of projects with potential economic benefits to tourist destination sites. In addition, COMPETE provided supervision, technical guidance, capacity building, and policy inputs to the CTWG Secretariat. COMPETE supported the Secretariat to formulate a Multi-Year and Annual Tourism Road Infrastructure Program. USAID.GOV IMPACTS OF NEW INFRASTRUCTURE ON TOURISM IN THE PHILIPPINES | 3 Moreover, COMPETE provided the Secretariat with research assistance and specific policy studies supporting reforms, such as the Right of Way Law passed in 2016. MECHANISMS FOR SUCCESSFUL COORDINATION BETWEEN THE DEPARTMENTS OF TOURISM AND PUBLIC WORKS AND HIGHWAYS Formalized agreements for the TRIP Convergence set the structure, roles, and working relationship. TRIP was created as the vehicle to implement the Convergence Program between the DOT and DPWH, with the key elements of implementation clearly defined: structure, roles, and responsibilities of the parties to the agreement; and guidance on the working arrangements for identifying, evaluating, prioritizing, and vetting project proposals. Designation of middle-level champions in the planning service of the two departments. Undersecretaries and/or assistant secretaries involved in the planning, programming, and policies were delegated authority for the execution of TRIP while providing advocacy and support, internally and externally, for the convergence principles and reforms introduced. Technical Working Groups at the central and regional levels. This interagency mechanism served as the forum and venue to work closely together, discuss issues, plan, review, validate and endorse project proposals. The TWG mechanism fostered close working relationship and served to break down silos, which characterized the past. COMPETE provided capacity building training and provided technical guidance to Technical Working Groups. MECHANISMS FOR SUCCESSFUL IDENTIFICATION AND PRIORITIZATION OF INFRASTRUCTURE INVESTMENTS The shared goals of economic growth and employment generation through better roads and tourism development prompted collaboration at the highest levels of the DOT and DPWH. Strong political will enabled major reforms to decision-making and budgeting, and moved processes from politically-oriented to objective, rational, cost effective, and criteria-based systems. The set of multi-level TRIP prioritization criteria is the master key to the systemic reforms in the process from the identification to approval of road project proposals. Every project proposal must go through the process and pass the prioritization criteria and requirements with a passing rate of 60 percent. TRIPPC is an objective, standardized, and disciplined system for choosing the right project for the right place and right cost. This rationalized system also recognizes the important role of stakeholders, including the local government units (LGUs), the private sector, the Regional Development Councils (RDC) of the National Economic and Development Authority (NEDA), the congressional district representatives, and senators. For example, endorsement by the RDC of the proposed road project is required for all projects; support of one or more of the other stakeholders – with proof of consultation or letter support – increases a project’s chance for inclusion in DPWH program and budget planning. TWGs, with assistance from the COMPETE-supported Secretariat moved the planning process along to synchronize with the budget cycle. USAID.GOV IMPACTS OF NEW INFRASTRUCTURE ON TOURISM IN THE PHILIPPINES | 4 TRIP HIGH LEVEL RESULTS Quantitative results. COMPETE’s support to TRIP resulted in the successful programming of funds for paved tourism roads in 15 regions of the country. In addition to increasing public investment in road infrastructure from three percent of GDP to five percent, TRIP facilitated a 300-fold increase in road infrastructure funding from $1.5 million in 2010 to $452 million in 2016. Over the four years from 2012- 2016, TRIP programmed more than $1.659 billion of government funds, resulting in 852 road projects completed (out of 881 projects with approved funding) and adding 2,080 kilometers (km) total nationwide. Out of every 10 km constructed, seven km were local roads. Qualitative results. In qualitative terms, TRIP convergence brought about systemic reforms that have made significant improvements to road infrastructure planning and budgeting processes, such as: • TRIP Prioritization Criteria significantly “de-politicized” the planning and budgeting process and instituted objective, standardized, transparent, and disciplined systems for planning and budgeting new roads nationwide. • Programmatic budgeting for tourism road replaced piece meal and non-targeted road projects. • National budgets now include local roads, which is a significant breakthrough from
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