The Pinoy Business Chronicle

Business news and analysis. Covering financial news, economic issues, stock market data, local business, business policy and more.

Philippines Economy News

Pandemic could lower use of major urban transport projects — ADB

pandemic could lower use of major urban transport projects adb - Pandemic could lower use of major urban transport projects — ADB

URBAN TRANSPORT projects in developing economies such as the Philippines are vulnerable to lower-than-planned usage rates due to the pandemic, upending their underlying financial assumptions and calling into question their viability, the Asian Development Bank (ADB) said in a report.

In its “Guidance Note on COVID-19 and Transport in Asia and the Pacific” published July 24, the bank said developing Asia and the Pacific will “continue to have a substantial need for additional transport infrastructure and services” despite the ongoing pandemic.

It noted that not all the transport projects it supports in the region are equally sensitive to the pandemic.

“National, urban, and rural road-based projects can largely proceed as planned with precautions built in for workers,” ADB said.

“Urban public transport projects are likely to be the most sensitive given uncertainty of future usage and the length and intensity of the pandemic,” it added.

The ADB said the future of the transport sector after the pandemic “will be heavily influenced by how long and deep the economic recession will be globally and in Asia.”

“Initial hopes of a quick, 2020 economic rebound are starting to fade and it is increasingly likely that full economic recovery will take longer,” it said.

The bank recommended that sustainable transport projects be promoted to counter the possibility  of a major shift to private modes of transport, which can be done by “further promoting public transit, providing quality alternatives in active transport modes such as walking and cycling, promoting e-vehicles, and developing green infrastructure delivery approaches.”

It added that the resilience of public transport systems can be improved by making better use of advanced technology and promoting digital inclusion.

The ADB also noted that transport has also played a “central role” in the spread of the virus.

But the system can “be designed to play an important role in promoting a more sustainable transport mode balance through more active promotion of clean vehicles; provision of quality travel alternatives in public transit; and encouragement of active modes of transport, such as walking and cycling, to enhance overall health and well-being,” the bank said.

In a statement Monday, the ADB said behavioral trends linked to the pandemic “may require a review of the short-term viability of passenger transport and operational performance to meet changing demand for public transit systems.”

A working paper, “Overhauling Land Transportation in the New Normal and Beyond” by Jedd Carlo F. Ugay, Monica Paula Lavares, Jerome Patrick D.R. Cruz, and Marjorie S. Muyrong of the Ateneo Center for Economic Research and Development recommended that the Philippine government minimize spending on projects that can “otherwise be undertaken as public-private partnerships (PPP), and should be put on hold, especially should there be indication that the coronavirus pandemic will persist into the longer term.”

The paper argued that if the pandemic persists, “the adoption of travel restrictions and social distancing measures could severely impair the long-term viability of particular types of Build, Build, Build projects.”

It identified several infrastructure projects with high COVID-19 and viability risks, such as Unified Grand Central Station, Light Rail Transit (LRT) Line 2 West Extension, Metro Rail Transit (MRT) Line 3 Rehabilitation, MRT-4, and LRT-2 East Extension. The paper also said some projects are “harboring white elephant risks,” such as Metro Manila Subway, Mindanao Railway Project, and Subic-Clark Railway.

These projects had gone through a “robust multi-level and multi-agency review process,” the Transportation department said in a recent statement.

It said the investment time horizon for large-scale projects, such as railways, ranges from 25 to 40 years.

“This means that the upfront economic costs of a project are measured vis-à-vis its projected benefits over a period of 25 to 40 years,” it said.

It also argued the pandemic would have been over 10 years before the government starts paying the principal for most of the current railway projects which are funded by official development assistance or ODA. — Arjay L. Balinbin

Leave a Reply

Theme by Anders Norén