Business World, 27 November 2013


The avalanche of gifts and donations, in cash and in kind, realized and in pledges, from private citizens, firms and foreign governments, has given survivors of super typhoon Yolanda and of the killer Bohol-Cebu earthquake a glimmer of hope.

The Aquino administration should not turn hope into despair. It shouldn’t squander this opportunity to provide the survivors of the calamities a new beginning.

Government authorities should make sure that these tragic calamities, and the subsequent reconstruction activities, are not seen by the cynical public as another opportunity for stealing and wasting public funds. The vultures in Congress are now moving heaven and earth to convert the constitutionally flawed Priority Development Assistance Fund (PDAF) into new money for the President’s Calamity Fund.

First things first. The immediate goal is to relieve the victims, bury the dead, heal the wounded, support the anguished survivors, and feed the hungry, the jobless, and the homeless. I think there’s enough money and donations to address these concerns.

The second, equally critical, goal of government is to build, stronger, and safer local communities. But even before serious financing estimates can be entertained, what is needed is a well-crafted rehabilitation and reconstruction plan. Finance follows the plan.

In some places, new town centers have to be established. The series of natural calamities — the typhoons in the eastern side of Luzon, the earthquakes in Bohol and Cebu, and the massive devastation brought about by typhoon Yolanda in the Visayas — have given the government an opportunity to start afresh in many communities.

It can’t be business as usual. Rebuilding in situ, in many cases, may be the wrong thing to do. New realities suggest that typhoons have become more severe and destructive, probably travelling at a lower trajectory — more towards Visayas and Mindanao rather than Luzon.

The use of public schools as relocation centers is no longer appropriate; it never was. Schools characterized as lacking in toilet, wash room and kitchen facilities are inappropriate as relocation centers.

Moreover, the use of classrooms are relocation centers disrupts normal academic activities and negatively affects student performance.

Neighborhoods and communities in low-lying places, especially those along sea shores may no longer be viable. In many places in the Philippines, entirely new towns or cities have to be established on higher, secure grounds.

The process of rebuilding and reconstruction starts with coming up with a carefully crafted plan, to be designed by professional urban planners. The national government may provide the funds for the generation of the plan in the same manner that it provides money for the preparation of feasibility studies for the public-private partnership (PPP) projects.

The immediate concern is for the government to bid out the services of urban planners to identify new, safe sites for towns and cities and to come up with designs of the new communities.

After the new site is identified, the government should use its power of eminent domain to secure ownership of the site. The national government may then assign the new site to the local government unit (LGU). Alternatively, it may choose to extend a long-term (25-year to 20-year loan), concessional loan to the LGUs, so the latter may own the new town site.

The town plan should include provisions for a new government center including the municipal hall, public market(s), schools, church, health facilities, and a multi-purpose community center.

The community center should double as an evacuation center in the event of natural calamities. It should have adequate power, water, toilet, shower, and kitchen facilities. Its management, operations and maintenance may be bid out to a private company.

In the meantime, the government may also use its power of eminent domain to secure the areas near the seashores. This is the best time to acquire the wasted land and convert it to a park or a promenade.

It makes economic sense to acquire land now rather than later. Property values are expected to be depressed. And property owners need cash to rebuild their lives. Infusing financial liquidity into the local community may lead to faster normalization process.

Now the $6-million question: Where will the government get the money to finance the program of rebuilding and reconstruction? It can borrow money since the cost of financing is at rock bottom. The low-interest rate regime is expected to continue for many more years as the world economy edges ever so slowly into a “new normal” recovery.

Foreign borrowing or local borrowing? I prefer local borrowing since the economy is awash with cash. Foreign borrowing, which appears to be the preference of Aquino’s finance men, has the following disadvantages: first, it takes much longer to have a foreign loan approved; second, it puts pressure on the peso to appreciate, with its subsequent negative effect on Philippine exports, and on the purchasing power of the dependents of overseas Filipino workers; and third, foreign loans carry foreign exchange risks.

The recent spate of natural calamities has given Filipino leaders a rare opportunity to build better, stronger and safer local communities. The economic benefits of a carefully prepared and well executed reconstruction plan far outweigh the economic costs in terms of the loss of human lives, life-long trauma for survivors, deeper poverty, and slower economic growth.