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PPP Possibilities for the Future of Butuan City

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PPP Possibilities for the Future of Butuan City PPPPPP PPoossssiibbiilliittiieess ffoorr tthhee FFuuttuurree ooff BBuuttuuaann CCiittyy TOYO University Research Center for PPP Butuan Project Team November 14, 2011 1 PPP Possibilities for the Future of Butuan City November 2011 Research Center for PPP Toyo University ii TOYO UNIVERSITY RESEARCH CENTER FOR PPP Foreword Toyo University was established by a philosopher and educator, Dr. Enryo Inoue in 1887. The university will celebrate its 125th anniversary next year. Our university has 10 departments and 44 research center with over 30,000 student enrolment. Toyo University, under the leadership of our present Chancellor Shiokawa (former finance minister of Japan), established its PPP Graduate School in 2006 to meet the challenge of upcoming crisis of the public finance and management in Japan. With the PPP Graduate School, Toyo established its PPP Research Center in 2008. Our PPP Graduate School and its Research Center have been recognized as an outstanding educational institution and received numerous grants from the Ministry of Education and Science and other ministries of Japan up to date. Toyo PPP was also recognized by the United Nations PPP Initiative in 2011 as an outstanding PPP research institute and Toyo PPP works closely with UN PPP Initiatives to promote PPP activities around the world. With the grants we received from the government starting in 2008, Toyo PPP has started the Area Redevelopment Support Program (ARSP) with PPP consideration for the local governments in Japan. Toyo PPP has completed 16 ARSPs to evaluate and recommend various conceptual economic developments and PPP solutions for the local governments in Japan. This year, we have extended our program to an Asian nation. The first case was the City of Butuan, Mindanao, the Philippines. This is the final report for the study mission we took to the Philippines and Butuan, Mindanao September 4 – 11, 2011. iii iv TOYO UNIVERSITY RESEARCH CENTER FOR PPP Table of Contents Foreword ............................................................................................................................ iii Table of Contents .................................................................................................................v Acknowledgements ........................................................................................................... vii CHAPTER I Basic Information on the Philippines and Butuan City...........................2 Section 1 Current situation of the Philippines ...............................................................2 Section 2 Current situation of Butuan city .....................................................................4 Section 3 Butuan’s Position in the Philippines ...............................................................5 Section 4 The Philippines and Butuan City From the View Point of Japan ................6 CHAPTER II PPP Trends: World, Asia, and the Philippines ........................................8 Section 1 What is PPP? .....................................................................................................8 Section 2 PPP Market .................................................................................................... 10 CHAPTER III Butuan’s Lemon and its Prospective PPP Projects ............................. 14 Section 1 Importance of Agriculture ; Key Industrial Sector For Poverty Reduction 14 Section 2 Industry and Infrastructure: Exploration of Recycle Market and add values to old instruments .......................................................................................................... 25 Section 3 Energy: Possibility of Renewable Energy Development ............................. 29 Section 4 Commerce: Business of “City Economic Enterprises Department” - Market and Bus terminal............................................................................................................ 34 Section 5 Tourism: Advantages in Geography, Ethnicity, and Human Resources .... 42 CHAPTER IV Steps Forward........................................................................................ 57 Section 1 Project Implementing Organization in Butuan City .................................. 57 Summary ........................................................................................................................... 62 Project Team Member Profile .......................................................................................... 64 v vi TOYO UNIVERSITY RESEARCH CENTER FOR PPP Acknowledgements I would like to recognize one graduate student, one made this mission possible. Mr. Motohide Takano has joined our graduate program in the spring of 2011. Mr. Takano spent over 11 years of his young carrier to work around Butuan, Mindanao and the Philippines. After he became our graduate student this year and learned about our Area Redevelopment Support Program with PPP and one study of a local government in Japan. He learned of the value of the study and talked to Mayor Amante of the City of Butuan in Mindanao. Mayor Amante got together with the area business leaders and requested to Toyo PPP School if it is possible for the school and the graduate students to visit Butuan during the summer break to provide the program. One professor and 10 graduates and graduate students visited Butuan and the Philippines for 7 days to conduct the study. I also would like to recognize the contributions made by the participated graduates and the graduate students, who dedicated for their time and efforts for this study. This study was not possible without the great efforts made by the staff of Mayor Amante, the regional and national agencies which participated in providing the data and materials and the business groups of Butuan City. I would like to thank Governor Amante of North Agsan State in Mindanao, who opened his office and provided variable information of his great state. Sam Tabuchi, Professor PPP Graduate School Toyo University November 14, 2011 vii CHAPTER I Basic Information on the Philippines and Butuan City CHAPTER I Basic Information on the Philippines and Butuan City Section 1 Current situation of the Philippines The demand of infrastructure development in Asia from 2010 through 2020, according to the forecast by Asia Development Bank, is assumed to be as much as USD 8 trillion, based on population increase and economic growth. As they say “The 21st century belongs to Asia”, the Philippines is one of the Asian countries pursuing such an economic growth in future. The Philippines is an island country consisting of 7,107 islands. The Philippines and Japan are similar in a sense that the area is 300 thousand square meters, and its population in 2010 is around 94 million, both of which are nearly 80% of those of Japan respectively. The growth rate of real GDP, on the other hand, has been increasing stably to be 7.3% in 2010, but GNI per capita in 2009 was only USD 1,790, which obviously illustrates huge gap between the Philippines and Japan. Economic activities in the Philippines are robust, while those of other foreign-demand-dependent leading countries are slowing down. This could be attributed to the country’s dependence on the domestic demands and therefore the Philippines is considered to be a steady market for the years to come. Active foreign investments are also playing role to stimulate domestic demands. Therefore the government is taking its course toward strengthening basic infrastructure such as highway and power networks to further induce foreign investments. Number of investments-related negotiations are under way through the direct leadership of the President Aquino under the auspices of the government’s diplomatic policies. During the Presidential visit in September 2011, the government made a joint announcement with China that the two countries would increase the bilateral trades 6-fold of the 2010 figures to US$60 billion in the coming 5 years toward 2016. As one of the collaborations, it was also announced that China would benefit from Filipiono investments worth US$7 billion into building new ship and auto production facilities and developing mines. On the other hand, the Philippines urged Japan for the technical corporation in the infrastructure investments which requires sophisticated technics. This demonstrates that the Philippines’ negotiation strategy is aligned along the lines of country and business area. The Philippines has long been focusing on Japan, 2 TOYO UNIVERSITY RESEARCH CENTER FOR PPP the largest trade partner. However the territorial disputes in the South China Sea shifted its focus onto the neighbouring China, in order to maximize its domestic economy. Now for the labour policy: the Philippines labour population stands at approximately 39 million (the whole population 92 million). Out of which, 10 million works overseas, and remittances from these Filipino overseas workers amounts to US$10 billion in the first half of 2011 (source: Central Bank of the Philippines), equivalent of 10% of the GDP. Majority of these workers resides in the English speaking countries such as America, Canada, England, and Singapore. Around 70% of them are taking advantage of linguistic capabilities working for such companies as international call centers. With more diversified business gets and added value professions such as in legal and medical increase, the higher the wages of the overseas workers get. Thanks also to their quasi native English capabilities, the country is the second largest supplier of workers, following India. This however
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