000016.pdf

Study on Economic Partnership Projects in Developing Countries in FY2016

Study on Mindanao Container Terminal Expansion Project in the Republic of the Philippines

Final Report

February 2017

Prepared for: Ministry of Economy, Trade and Industry Prepared by: Oriental Consultants Global Co., Ltd. The Overseas Coastal Area Development Institute of Japan

Preface

This report shows the results of the “Study on Economic Partnership Projects in Developing Countries in FY2016” prepared by Oriental Consultants Global Co., Ltd.and The Overseas Coastal Area Development Institute of Japan under the contract awarded by the Ministry of Economy, Trade and Industry. This study, the “Study on Mindanao Container Terminal Expansion Project in the Republic of the Philippines”, deals with the pre-feasibility of a project for expansion of the Mindanao Container Terminal (MCT), located at Cagayan de Oro City, Misamis Oriental, on Mindanao Island, to cope with the shortage of terminal handling capacity. The Phase II total project cost is estimated in Phase II-1: Japanese Yen 5.53 billion (equivalent to Pesos 2.30 billion), Phase II-2: 3.20 billion (equivalent to Pesos 1.33 billion), and Phase II-3: 4.02 billion (equivalent to Pesos 1.68 billion) including VAT. We, all members of the Study Team, hope this study will contribute to putting the proposed project into practice, and will be gratified if the results help the relevant government officials understand and drive the project forward.

February 2017 Oriental Consultants Global Co., Ltd. The Overseas Coastal Area Development Institute of Japan

Project Site Map (1)

(Source: 2015 Philippine Statistical Yearbook ､ marked by Study Team)

Project Site Map (2)

(Source: NEDA, processed by Study Team)

(Source: Google Earth, processed by Study Team)

List of Abbreviations Abbreviation

Official Name

AGM

Assistant General Manager

AIIB

Asian Infrastructure Investment Bank

APL

American President Lines

ARMM

Autonomous Region in Muslim Mindanao

ASEAN

Association of South-East Asian Nations

B/C

Benefit Cost

BCDA

Philippines Bases Conversion and Development Authority

BOC

Bureau of Customs

BOR

Berth Occupancy Ratio

BOT

Build Operate Transfer

BTMU

Bank of Tokyo-Mitsubishi UFJ, Ltd

CAGR

Compound Average Growth Rate

CDL

Chart Datum Level

CDO

Cagayan De Oro

CFS

Container Freight Station

CGY

Cagayan De Oro

CHE

Cargo Handling Equipment

CPA

Cebu Port Authority

CY

Container Yard

D/D, DD

Detailed Design

DENR

Department of Environment and Natural Resources

DFA

Department of Foreign Affairs

DICT

Davao International Container Terminal Department of Information and CommunicationsTechnology

DL

Datum Level

DND

Department of National Defense

DOF

Department of Finance

DOTC

Department of Transportation and Communications

DOTr

Department of Transportation

DPWH

Department of Public Works and Highways

DTI

Department of Trade and Industry

DWT

Dead Weight Tonnage

ECC

Environmental Compliance Certificate

EIA

Environmental Impact Assessment

EIRR

Economic Internal Rate of Return

EMB

Environmental Management Bureau

EMD

Estate Management Department

EOJ

Embassy of Japan

EZ

Economic Zone

Abbreviation

Official Name

F/S, FS

Feasibility Study

FIRR

Financial Internal Rate of Return

GDP

Gross Domestic Product

GM

General Manager

GNI

Gross National Income

GOJ

Government of Japan

GOP

Government of the Philippines

GRDP

Gross Regional Domestic Product

ICC

Investment Coordination Committee

ICTSI

International Container Terminal Services, Inc.

IMF

International Monetary Fund

INFRACOM

Committee on Infrastructure

IP

Implementation Program

JBIC

Japan Bank for International Cooperation

JETRO

Japan External Trade Organization

JICA

Japan International Cooperation Agency

JPY

Japanese Yen

LED

Light Emitting Diode

LGU

Local Government Units

LNG

Liquefied Natural Gas

LOA

Length Overall

LRT

Light Rail Transit

LSC

Lorenzo Shipping Corporation

MARINA

Maritime Industry Authority

MC

Memorandum Circular

MCC-S/M

MCC Singapore/Maersk Line

MCC-TP

MCC Transport Philippines

MCT

Mindanao Container Terminal

MCTEP

Mindanao Container Terminal Expansion Plan/Project

METI

Ministry of Economy, Trade and Industry

MICTSI

Mindanao International Container Terminal Services, Inc.

MLIT

Ministry of Land, Infrastracture and Transport

MLLW

Mean Lower Low Water Level

MO

Misamis Oriental

MPN

Most Probable Number

MT

Metric Ton

MTL

Magsaysay Transport and Logistics Group

NEDA

National Economic Development Authority

NMC

NMC Container Line Inc.

NOL

Neptune Orient Lines Ltd.

NPV

Net Present Value

Abbreviation

Official Name

OCDI

The Overseas Coastal Development Institute in Japan

OCG

Oriental Consultants Global Co., Ltd.

OD

Origin-Destination

ODA

Official Development Assistance

OECD

Organization for Economic Co-operation and Development

OM

Operation Management

PCG

Philippine Coast Guard

PD

Presidential Decree

PDO

Port Development Office

PEZA

Philippine Economic Zone Authority

PHIVIDEC

Philippine Veterans Investment Development Corporation

PHP

Philippine Peso

PIA

PHIVIDEC Industrial Authority

PIE

PHIVIDEC Industrial Estate

PIE-MO

PHIVIDEC Industrial Estate in Misamis Oriental

PMD

Port Management Department

PMO

Port Management Office/Project Management Office

PPA

Philippine Port Authority

PPOSS

Philippine Port System Strategy

PPP

Public Private Partnership

PQ

Pre-qualification

PRA

Philippine Reclamation Authority

PSA

Philippine Statistics Authority

PSC

Philippine Sinter Corporation

QGC

Quay Gantry Crane

RA

Republic Act

RORO

Roll-On/Roll-Off

RRTS

Roll-On/Roll-Off Terminal System

RTG

Rubber Tired Gantry Crane

SBMA

Subic Bay Metropolitan Authority

SCMB

Subic‐Clark‐Manila‐Batangas

SER

Shadow Exchange Rate

SITC-P

SITC Container Lines Philippines

SO

Supply and Operation

SPC

Special Purpose Company

STEP

Special Terms for Economic Partnership

TEU

Twenty-foot Equivalent Unit

TMO

Terminal Management Office

TTS

Telegraphic Transfer Selling

UN

United Nations

UNCTAD

United Nations Conference on Trade and Development

Abbreviation

Official Name

UNDP

United Nations Development Program

UNICEF

United Nations Children's Fund

USD

United States Dollar

VAT

Value Added Tax

Table of Contents Preface Project Site Map List of Abbreviations Page Executive Summary Chapter 1

Overview of the Host Country and Sector

(1) Economic and Financial Conditions of the Country .............................................................. 1-1 1) Population Trend ................................................................................................................ 1-1 2) Gross Domestic Product and Regional Gross Domestic Product .............................................. 1-2 a)

GDP ........................................................................................................................... 1-2

b)

Gross Regional Domestic Product (GRDP) per Capita .................................................... 1-4

3) Income Level ..................................................................................................................... 1-5 (2) Overview of the Port Sector ................................................................................................ 1-6 1) Port System of the Philippines ............................................................................................. 1-6 a)

Public Ports and Private Ports ...................................................................................... 1-6

b)

Development and Management of Ports ........................................................................ 1-6

c)

Department of Transport .............................................................................................. 1-6

2) PPA Port System ................................................................................................................. 1-7 a)

PPA Ports ................................................................................................................... 1-7

b)

Outline of PPA Port Performance .................................................................................. 1-7

c)

Organization Structure of PPA ...................................................................................... 1-7

d)

Cagayan De Oro Port .................................................................................................. 1-11

3) PHIVIDEC Industrial Authority (PIA) Port System.............................................................. 1-15 a)

Establishment of PHIVIDEC Industrial Authority (PIA) and Mission ............................ 1-15

b)

PHIVIDEC Industrial Estate (PIE) .............................................................................. 1-15

c)

Ports in PIE .............................................................................................................. 1-17

d)

Mindanao Container Terminal (MCT) ......................................................................... 1-17

(3) Present Situation of the Objective Area.............................................................................. 1-23 1) Population and Economic Zone .......................................................................................... 1-23 a)

Population Trends..................................................................................................... 1-23

b)

Economic Zones ...................................................................................................... 1-23

2) Status of Hinterland Industries ........................................................................................... 1-24 a)

Industries in Hinterland Economic Zone ................................................................... 1-24

b)

Major Consignors and Commodities ........................................................................... 1-25

3) National Development Plan, Relevant Development Plans and Other Related Projects ............ 1-26 a)

Philippine Development Plan ..................................................................................... 1-26

b)

Philippine Port System Strategy (PPOSS) .................................................................... 1-27

c)

Mindanao Strategic Development Framework 2010-2020 ............................................. 1-29

d)

Development Plan for PPA Cagayan de Oro Port .......................................................... 1-29

e)

PHIVIDEC Industrial Authority Development Plan ...................................................... 1-31

f)

Road Development Plans for DPWH ........................................................................... 1-34

Chapter 2

Study Methodology

(1) Contents of the Study .......................................................................................................... 2-1 1) Review of the Existing Data/Information ........................................................................... 2-1 2) Current Situation of the Existing Ports ............................................................................... 2-1 3) Study on Industries in Hinterland Economic Zone .............................................................. 2-1 4) Cargo Demand Forecast ..................................................................................................... 2-1 5) Study on Relevant Plans and Projects ................................................................................. 2-2 6) Port Planning, Design, Construction Plan and Cost Estimate .............................................. 2-2 7) Study on Project Financing ................................................................................................ 2-2 8) Economic and Financial Analysis ....................................................................................... 2-2 9) Environmental and Social Considerations .......................................................................... 2-2 10) Study on Port Operation and Organization ...................................................................... 2-2 11) Project Feasibility and Recommendations ....................................................................... 2-2 (2) Study Method and Organization ........................................................................................... 2-3 1) Study Method ..................................................................................................................... 2-3 2) Study Organization ............................................................................................................. 2-3 (3) Study Schedule .................................................................................................................... 2-5 1) Study Schedule ................................................................................................................... 2-5 2) Work Record in Philippines ................................................................................................. 2-5 Chapter 3

Justification, Objectives and Technical Feasibility of the Project

(1) Background and Necessity of the Project ............................................................................. 3-1 1) Scope of the Project ........................................................................................................... 3-1 2) Current Situation Analyses and Future Prospects ................................................................. 3-2 a)

Container Cargo handling Volumes ............................................................................... 3-2

b)

Current Situation of Calling Vessels ......................................................................... 3-35

c)

Current Terminal Operation of MCT ......................................................................... 3-40

3) Effects of Project Implementation .................................................................................... 3-41 4) Alternative Study with Other Options .............................................................................. 3-42 a)

Hard Components ..................................................................................................... 3-42

b)

Soft Components ....................................................................................................... 3-42

(2) Basic Approach/Determination of the Project Contents ...................................................... 3-43 1) Basic Approach for Determination of Project Contents ..................................................... 3-43 a)

Linkage with National Plan and Relevant Development Plan ......................................... 3-43

b)

Contribution to Advantageous Competitiveness for MCT .............................................. 3-43

c)

Environmental and Social Considerations .................................................................... 3-43

d)

Consistency with Capacity of Implementation Agency.................................................. 3-43

2) Determination of Project Contents ................................................................................... 3-44 a)

MCT Expansion Scenario .......................................................................................... 3-44

(3) Outline of the Project .......................................................................................................... 3-48 1) Concept Design and Required Facilities .............................................................................. 3-48 a)

Port Planning ............................................................................................................ 3-48

b)

Port Facility Planning and Construction Program ........................................................ 3-57

2) Description of the Proposed Project ................................................................................. 3-62 3) Issues and Countermeasures upon Application of Proposed Technologies ............................. 3-63 (4) Required Studies for Project Implementation ..................................................................... 3-64 1) Future Demand in Anticipation ........................................................................................ 3-64 a)

Preparation of statistics ............................................................................................ 3-64

b)

Continuous activities for strengthening ties with cargo owners (companies) and understanding needs and seeds ................................................................................. 3-64

c)

High-level method of demand forecast ..................................................................... 3-65

2) Issues for Determination of the Project Contents .............................................................. 3-66 a)

Prompt Authorization of Basic Policy and Project Scheme of MCT Expansion .......... 3-66

b)

Improvement of Port Administration by PIA ............................................................. 3-66

c)

Comprehensive Port Development Management by the Government of the Philippines ............................................................................................................... 3-66

3) Advantages of the Proposed Technologies ........................................................................ 3-67 (5) Effects of Implementation of the Project ............................................................................ 3-68 Chapter 4

Evaluation of Environmental and Social Impacts

(1) Current Situation of Environmental and Social Aspects ........................................................ 4-1 1) Existing Environmental Impact Assessment (EIA) and Environmental Compliance Certificate (ECC)............................................................................................................. 4-1 2) Existing Natural Environment ............................................................................................ 4-1 a)

Land Environment ....................................................................................................... 4-2

b)

Water Environment...................................................................................................... 4-3

c)

Air Environment and Noise Conditions ......................................................................... 4-5

d)

Marine and Coastal Ecology ......................................................................................... 4-5

3) Existing Social Environment .............................................................................................. 4-7 a)

Present Social Conditions ............................................................................................ 4-7

b)

Present Economic Conditions ....................................................................................... 4-8

(2) Environmental Improvement Effects with Implementation of the Project ............................ 4-12 1) Improvement Effects on Natural Environment .................................................................. 4-12 a)

Positive Effects on Natural Environment .................................................................... 4-12

b)

Negative Impacts on Natural Environment .................................................................. 4-12

2) Improvement Effects on Social Environment .................................................................... 4-13 a)

Positive Effects on Social Environment ....................................................................... 4-13

b)

Negative Impacts on Social Environment .................................................................... 4-13

(3) Environmental and Social Impacts with Implementation of the Project ............................... 4-14 1) Environmental and Social Consideration Items................................................................. 4-14 a)

Potential Impacts on Natural Environment ................................................................... 4-14

b)

Potential Impacts on Social Environment .................................................................... 4-17

2) Alternative Study with Other Options .............................................................................. 4-17 3) Expected Stakeholders ..................................................................................................... 4-18 (4) Laws/Regulations of the Country for Environmental/Social Consideration and Required Measures for Clearance ..................................................................................................... 4-19

1) Outline of the Laws/Regulations for Environmental/Social Consideration ........................ 4-19 2) Required EIA Description in the Host Country ................................................................. 4-22 (5) Necessary Actions by the Host Country for Implementation of the Project ......................... 4-23 1) Necessary Actions by PIA ................................................................................................ 4-23 2) Recommendations............................................................................................................ 4-24 Chapter 5

Financial and Economic Evaluation

(1) Project Implementation Scheme ............................................................................................. 5-1 (2) Project Cost Estimate .......................................................................................................... 5-4 1) General .............................................................................................................................. 5-4 2) Assumptions for Cost Estimate ............................................................................................ 5-4 a)

Applied Unit Rates ...................................................................................................... 5-4

b)

Applied Currencies and Exchange Rates ....................................................................... 5-4

c)

Land Acquisition and Compensation ............................................................................. 5-4

d)

Other Ratios ............................................................................................................... 5-5

e)

Value Added Tax (VAT) ............................................................................................... 5-5

3) Cost Estimate .................................................................................................................... 5-5 (3) Outline of Preliminary Economic/Financial Analysis ........................................................... 5-8 1) Financial Analysis .............................................................................................................. 5-8 a)

Prerequisites for the Financial Analysis ...................................................................... 5-8

b)

Calculation of the FIRR ............................................................................................... 5-9

c)

Sensitivity Analysis ..................................................................................................... 5-9

d)

Net Present Value (NPV) ........................................................................................... 5-10

e)

Financial Analysis on MCT Expansion Project ............................................................. 5-10

2) Economic Analysis ........................................................................................................... 5-13 a)

Prerequisites for Economic Analysis ........................................................................ 5-13

b)

Calculation of the EIRR ............................................................................................. 5-14

c)

Sensitivity Analysis ................................................................................................... 5-14

d)

Net Present Value (NPV) ........................................................................................... 5-14

Chapter 6

Planned Project Schedule

(1) Assumptions ....................................................................................................................... 6-1 (2) Implementation Schedule .................................................................................................... 6-2 Chapter 7

Implementing Organization

(1) Organization of Implementing Agencies .............................................................................. 7-1 1) Establishment and Inauguration of PHIVIDEC Industrial Authority (PIA) ............................... 7-1 2) PIA’s Purpose and Specific Powers ....................................................................................... 7-1 3) PIA’s Organization .............................................................................................................. 7-3 4) Jurisdiction ........................................................................................................................ 7-3 5) Financial Situation .............................................................................................................. 7-4 a)

Income ....................................................................................................................... 7-4

b)

Expenses .................................................................................................................... 7-4

6) Skill Level ......................................................................................................................... 7-5 (2) Organization of the Host Country for Implementation of the Project .................................... 7-6

Chapter 8

Technical Advantages of Japanese Companies

(1) International Competitiveness and Involvement of Japanese Companies in the Project ......... 8-1 1) International Competitiveness of Japanese Companies ........................................................... 8-1 2) Possibility for Project Involvement of Japanese Companies .................................................... 8-1 (2) Possible Materials to be Procured from Japan and Relevant Cost ......................................... 8-2 1) Major Materials/Equipment to be Possibly Procured from Japan ............................................. 8-2 2) Rough Amount of Major Materials/Equipment to be Possibly Procured from Japan .................. 8-2 (3) Necessary Actions in Enhancing the Involvement of Japanese Companies ............................ 8-3 1) Financing ........................................................................................................................... 8-3 2) Assistance for Undertaking of Feasibility Study .................................................................... 8-3 3) Assistance for Dispatching Technical Advisor(s) and Undertaking of Technical Cooperation Project ......................................................................................................... 8-3

Executive Summary

1.

Background and Necessity of the Project

1-1

Background

The city of Cagayan de Oro, located in northern Mindanao, is the capital of Misamis Oriental. Being a port city, it has been the center of agro-industrial business in northern Mindanao. Cagayan de Oro Port (Base Port) under the Philippine Ports Authority (PPA) has been developed and taking important roles over decades as a logistic base for sea transportation and as a gateway to Manila, Cebu and other regions and also to the neighboring countries in Southeast Asia. PPA’s port facilities have been utilized for both passengers and cargoes that reached nearly 100% of its capacity, which soon caused remarkable congestion in the port areas. The mixture of passengers and cargoes created inefficient port activities, offshore vessels waiting, decrease of productivity and truck transportation delays, which consequently caused serious problems for cargo transportation. In order to improve these situations, the Philippine Government, in 2000, requested financial assistance from the Japanese Government to build a new container terminal at Tagoloan, located at the opposite side of the PPA base port across Macajalar Bay. The request was granted with a Special Yen Loan program (STEP), a so-called Obuchi Fund, by which the Project for Mindanao Container Terminal (MCT) - Phase I, with a total project cost of 8.3 billion JPY, was completed in 2004. MCT is located inside the PHIVIDE Industrial Estate (PIE), 10 km away from the PPA base port, which is capable of handling annual container volume of 250,000 TEU, berth length of 300 m, depth of -13 m, and has a terminal yard area of 9 ha. The Implementation Agency for construction of MCT Phase I is PHIVIDEC Industrial Authority (PIA) which was created by Presidential Decree PD538 in 1974. PIA is responsible for acquiring and managing the 3,000 ha land properties defined as PHIVIDEC Industrial Estate (PIE), and also managing MCT. Revenue-wise, PIE-related business : Port related business = 35% : 65%, thus the port related business shares high contribution to PIA’s benefits. The recent port statistics for MCT show steady increase of container-handling volume since its opening in 26. The volume recorded was 230,000 TEU in 2013, nearly hitting 90% of its capacity, while Cagayan de Oro (PPA Base) Port recorded 183,000 TEU, 188,000 TEU and 206,000 TEU in 2012, 2013 and 2014, respectively. Along with their terminal expansion program the volume shows steady increase. Based on these port statistics, it is evident that the container volume is definitely increasing in the Northern Mindanao areas. PHIVIDEC Industrial Authority (PIA), responsible for administration of PHIVIDEC Industrial Estate (PIE) and MCT, recently observed the occurrence of vessels waiting offshore, despite their efforts to improve storage capacity and handling productivity. This will create a shortage of terminal capacity very soon. Considering the above background, this study aims to conduct a pre-feasibility study on the proposed Mindanao Container Terminal Expansion Project.

1

1-2 a)

Current Situation and Future Issues Hinterland Industries

PIE, with land area of 3,000 ha, spreads out in the hinterland of Tagoloan. Acquisition of PIE properties, defined by PD538, has completed at 93% of substantially acquirable land area of 2,472 ha. Currently, the number of locators is 64 firms occupying 774 ha. There are also a number of major firms operating outside the PIE which actually are the main consignors contributing to the container cargoes MTC, while the volume generated from PIE is limited to 5% per year. There are numerous major foreign firms operating inside and outside the PIE such as Del Monte, Dole, Nestle, Philippine Kao, etc., and major domestic firms such as Miguel, Gama Food, Coca Cola, Holcim, etc. whose business is to function as supply bases for the export and domestic supply of fruit and food in the agro-industrial areas. There are also Philippine Sinter (steel), Misamis Power, STEAG State Power (power plant), etc., supplying enough electricity in PIE. According to the interviews with shipping companies, the major consignors for MCT are as follows: Foreign Trade - Import ●

Nestle (Coffee, Sugar, Powdered Cream), ・Del Monte (Fruit, Vegetable, Juice)

●

Gama Foods (Feed and Other Additives), ・Other Miscellaneous Goods, Construction Material

Foreign Trade - Export ●

Del Monte (Pineapple, Canned Products, Juice, Banana), ・Nestle (Dry Milk)

●

Jacobi Carbon (Coal Processing Product), ・Phil-KAO (Coconut Fat Acid, etc.)

●

Lumber Processing Companies（Cabinet-Wood, Falcata）

Domestic Trade - Inbound ●

Miscellaneous Goods, ・Construction Materials

Domestic Trade - Outbound ●

Del Monte (Pineapple, Canned Products, Juice, Banana), ・Nestle (Powdery Milk, NESCAFE)

●

GAMA Foods (Meats), ・Drinks

Keeping up sustainable development of the hinterland industries will lead to an increase of container cargoes for MTC and the number of locators, hence PIA will be required to formulate a future master plan covering PIE, and to closely coordinate with Local Government Units (LGUs) and the Philippine Economic Zone Authority (PEZA). b)

National Plans and Relevant Projects

Development Plans of the Philippines, as directed by the new president Rodrigo Duterte, who was inaugurated in June 2016, are currently being prepared by NEDA in collaboration with relevant departments and agencies. Draft version of the Plans are published in NEDA website from which the port sector and other sectors related to MCT project put up the policy “Any port expansion projects including new berth shall be 2

executed based on the international standards.”, thus the Philippines aim to enhance international competitiveness and efficient logistics. It is considered to be certain that the new plans would prioritize and concentrate more investment and development in the Mindanao areas than before when priority used to be placed in Luzon areas. Port Management Office of Cagayan de Oro (PMO-CGY) has formulated a masterplan and development plans, the major projects from which are; expansion of the existing CGY Port, and expansion of Opol and Laguindingan Ports located at west of CGY Port. The expansion of the CGY Port in particular is to expand the existing wharf toward south-eastward by constructing berths and yards. The plans aim to develop wharf length of 260m as Phase II and additional 450m as Phase III by the year 2026 and 2030 respectively, that are to strengthen foreign container handling functions. PIA, in keeping with the “Philippine Development Plan 2011-2016” and the “Mindanao Strategic Development Framework 2010-2020”, formulated the “Ten Year Development Plan 2011-2020 (2011 PIA)” and the “Strategic Development Plan 2013-2024 (2013 PIA)” to address PIA’s challenges and concerns. PIA also refers to “JICA Preparatory Study for the Mindanao Logistics Infrastructure Improvement Project (2009 JICA)”, in which a container cargo growth and MCT expansion program were presented, and which set up phased development of MCT. PIA thus established its own development plans as a guide for short-term and medium-term improvement, however, tactical measures and the degree of actual attainment do not seem to be well self-evaluated, which requires continuous and intensive follow-up. c)

Cagayan de Oro Port

Cagayan de Oro Port (CGY, PPA Base port) mainly handles general cargoes, bulk, RoRo and passengers and has been contributing to the development of the region. This port also handles container cargoes amounting approx. 200,000 TEU/year mainly for domestic inbound/outbound. The statistics show that CGY Port does not handle foreign containers since 2011; this is due to the fact that American President Lines (APL) moved from Cagayan de Oro to Tagoloan because of limited hinterland area and congested access to the national highway. According to the PPA/CGY development plans, strengthening of foreign container functions by extending the existing wharves and yards are being expected on a phased basis; Phase II (target year 2026) and Phase III (target year 2030). PPA mentions however the expansion plans are still conceptual at this stage, which will be later supported by justification with demand forecast and budgetary measures. PPA/CGY will then determine whether or not to push thorough this expansion ascertaining a market trend The Department of Public Works (DPWH) is currently pursuing various road development projects such as the CDO Coastal Road (to be opened in 201) intended to decongest the traffic in the city, which will consequently bring better access to CGY Port and be advantageous to PPA.

3

Recognizing the facts that PPA/CGY statistics show increasing container volume and expansion projects at hand, PIA is required to execute prompt strategic improvement to MCT in terms of cargo collection within the North Mindanao region. d)

Cargo Handed at MCT

MCT was completed/opened in January 2004 and was directly operated by PIA until 2008. In June 2008, a private operator, Mindanao International Container Terminal Services, Inc. (MICTSI), through an international bid, was awarded a concession contract for a period of 25 years. Thereafter, MICTSI started the terminal operation. The container volume trend since its opening to date is shown in the figure below. The recent foreign and domestic volume shares are 60%~70% and 30%~40%, respectively, the majority of which is foreign containers. MCT does not handle cargoes other than container. As shown in the figure below, the container handling volume at MCT started its records since 2006. The volume slowed down in 2008 due to the Bankruptcy of Lehman Brothers, however it steadily increased and recorded 230,000 TEU in 2013, nearly hitting the terminal capacity designed at 250,000 TEU. It dropped then in 2014 by 10% and in 2015 by 20% of the peak volume. According to the latest data, the volume recovered 213,000 TEU in 2016. The factor analysis of such increase/decrease may be described as follows. Container Volume Trend at MCT Lumber decreased APL moved in, Lumber Processing

Lorenzo, NMC moved in

N O T E

(Source: Study Team from PIA, MICTSI Data) «Factor of Increase (2006 – 2013) » The shipping companies Lorenzo Shipping and NMC Container Lines, who used to be located near PPA port areas, moved to Tagoloan in 2006. This is due to limited hinterland areas for future expansion and congested access to the national highway in CGY, while they are attracted by the MCT equipped with modernized cargo handling facilities that accommodate Pamanax type container vessels. 4

Likewise, American President Line (APL) did the same in 2010 due to the same reasons as well as cargo recovery from the Lehman has been ascertained. As the result of their moves to Tagoloan where MCT is also located, the foreign cargoes drastically increased. Moreover the increase of lumber processing business toward China and other export/import and outbound/inbound cargoes by Del Monte/Nestle, etc., pushed up the volume to 230,000 TEU. «Factor of Decrease (2014 –) » Since 2014, economic growth rates slowed down in Europe, USA and Japan, while the same for China. The economic growth rate of the Philippines increased until 2013 despite the Lehman crisis, however it declined from 2014 corresponding to China’s economy decline. Focusing on the Philippine Peso rate against US Dollar, it dropped at 41 Pesos/ $ in 2013, but it turned to gradual increase of Peso since 2014. It is therefore evident that during the period of 2013 and 2015, slow down of the Philippine economy and decrease of exports due to the high Peso rate were observed. «Future Demand» In order to handle more container cargoes in MCT, MICTSI the MCT operator expects that PIA takes initiatives to invite new companies in PHIVIDEC Industrial Estate (PIE) who will generate more cargoes. At the same time MICTSI intends to take efforts in collecting more domestic cargoes. Cagayan de Oro Port handles domestic container cargoes, foreign/domestic bulk, RORO and passengers, while MCT handles foreign container cargoes. Such facts are thought to have been created by the market mechanism which resultantly segregated CGY and MCT in terms of foreign container market. Keeping in mind the aforementioned observations, the future demand of MCT cargoes may be predicted as below: Nestle will expand their business in their CGY factories and be the core of MCT cargo generation Del Monte is expanding their plantation for more production of pineapple, cans and juice Davao based Dole will advance their plantation, for more production of value-added banana and pineapple by highlands cultivation Del Monte expands plantation for banana not only for pineapple Chinese market is demanding for more lumbers that expects to recover export cargoes as the exchange rate becomes more competitive PIE only generates container cargoes only 5% of MCT total volume, however San Miguel Corp. commenced soya beans products in PIE that will be an increase effect. In addition to the above listed, PIA is required to take strong initiatives to invite major companies to PIE who will generate more container cargoes as part of the authority’s mission. This should be done in collaboration with PEZA.

5

e)

Cargo Demand Forecast «Economic Frame» The economic growth rate in the Philippines from 2009 to 2014 was 6.3%. IMF also predicted the same until 2021 at 6.2%, as high as the figure at present. These figures are applied in the forecast. GDP per capita in the Philippines was $1,665 in 2014 (actual) and is expected to increase up to $2,294 in 2021. The annual increase rate from 2009 to 2014 was 4.6% (actual), and 2014 to 2021 is predicted at 4.7%. Due to the observations that the population of the Philippines is steadily increasing, and GDP per capita is below $3,000 and has room for growth, the IMF prediction of 4.7% from 2014 to 2021 is applied. Future population is based on the United Nations’ population prediction with various cases, among which the middle case has been applied. «Container Demand Forecast» Since cargo statistics by commodity are not available for MCT containers, a detailed forecast for each commodity, considering the social-economic conditions (micro forecast), cannot be conducted. Therefore, a macro forecast, by applying GRDP increase in Region X (North Mindanao where MCT locates), has been applied to foresee the increase of container cargoes (GRDP elasticity). Further, future development plans of the Cagayan de Oro PPA base port are also taken into account for MCT’s future demand. Flowchart of Demand Forecast Philippine Real GDP Population (actual, projection) [ UN, IMF ]

By Region Share, Growth Rate of Real GRDP, Population (actual) [ PSA ]

Region X Real GRDP (actual) [ PSA ], (projection) [ MST ]

CDO Container Growth Elasticity To GRDP (actual)

Container Growth Elasticity To GRDP (projection) [ MST ] Low, Baseline, High Case

MCT+CDO

MCT+CDO GRDP per Capita, Population (actual) [ PSA ], (projection) [ MST ]

Container TEU (actual) [ PIA, PPA ]

(projection) [ MST ] Low, Baseline, High Case

MCT

Future Container TEU

Future Container TEU

(projection) [ MST ] Low, Baseline, High Case

(projection) [ MST ] Low, Baseline, High Case

Note: UN: United Nations, IMF: International Monetary Fund, PSA: Philippine Statistics AUthority, PIA: Phividec Industrial Authority, PPA: Philippine Ports Authority, MST: METI Survey Team

(Source: Study Team)

6

Future Container TEU

Results of the Estimated Container Volume (MCT)

Baseline

Low

actual

projection

2015

2016

2020

2025

2030

Total

177,217

213,000

280,815

433,046

613,436

Foreign

110,172

132,417

197,370

321,370

466,044

Domestic

67,046

80,583

83,445

111,676

147,392

Total

177,217

213,000

270,045

396,623

528,802

Foreign

110,172

132,417

189,888

294,605

400,756

Domestic

67,046

80,583

80,157

102,018

128,046

Total

177,217

213,000

259,587

362,950

454,289

Foreign

110,172

132,417

182,620

269,841

343,208

Domestic

67,046

80,583

76,967

93,109

111,081

Magnification

Annual Growth Rate

Cas e

Type Total

3.5

2.9

8.6%

7.8%

High

Foreign

4.2

3.5

10.1%

9.4%

Domestic

2.2

1.8

5.4%

4.4%

Baseline

Low

2030/2015 2030/2016 2015-2030 2016-2030

Total

3.0

2.5

7.6%

6.7%

Foreign

3.6

3.0

9.0%

8.2%

Domestic

1.9

1.6

4.4%

3.4%

Total

2.6

2.1

6.5%

5.6%

Foreign

3.1

2.6

7.9%

7.0%

Domestic

1.7

1.4

3.4%

2.3%

700,000 613,436 600,000 528,802 500,000

400,000

454,289

300,000 224,539 200,000

213,000 177,217

100,000

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

High

Type

Carg o Volu m e (TEUs)

Case

Actual

Low

Baseline

Hig h

METI Survey Team

(Source: Study Team) MCT’s future demand as base case in 2030 is 530,000 TEU (foreign 400,000 TEU and domestic 130,000 TEU) which is 2.5 times (annual growth rate 6.7%) of the 2016 volume. In high case 620,000 TEU and low case 450,000 TEU which are 2.9 time and 2.1 times of 2016 volume, respectively. PIA’s strategic development plan refers to the past forecast conducted in the report “Preparatory Study on Mindanao Logistic Infrastructure Improvement Project (2009 JICA)” wherein the future demand in 2030 is 1.2 million TEU, however this study forecasted about half of that amount. Viewing over the container volume in the whole Philippines, MCT share approx. 3% of the country in 2015, and 6% in 2030 (Overall volume of the Philippines is 9,000,000 TEU while MCT is 530,000 TEU). Due to the observations that dispute between CGY Port and MCT, lack of berth window that is creating offshore waiting, lack of cargo handling equipment creating inefficiency, etc., it is thought that MCT is not rendering enough port services to the needs of the consignors, hence the demand forecast appears slightly slower than the initial plans. As it is apparent that the President Duterte will enhance more development in Mindanao areas, his born island, MCT share of 3% to be 6% against the whole country is deemed to be reasonable. f)

Calling Vessels

Current operating container vessels calling to existing MCT are of three (3) foreign shipping companies, namely MCC SINGAPORE/MAERSK LINE (MCC-S/M), SITC

CONTAINER LINES PHILIPPINES

(SITC-P) and AMERICAN PRESIDENT (APL), and of three (3) domestic shipping companies, namely 7

MCC TRANSPORT PHILIPPINES (MCC-TP), LORENZO SHIPPING CO. (LSC) and NMC CONTAINER LINES, INC. (NMC).

In terms of current foreign shipping routes operating from/to MCT,

the direct routes are between MCT and three (3) countries, namely China, Hong Kong/Taiwan and Singapore, and the indirect routes are between MCT and eleven (11) countries, namely Japan, USA, Thailand, Vietnam & Hong Kong, German & Portugal, Spain, Lebanon & Algeria, and Korea. Based on the past five (5) years’ records, foreign vessels are getting larger, from Feedermax to Panamax size (LOA: Av. 180 m/Max. 231 m, Width: Av. 27 m/Max. 31 m, Draft: Av. 10 m/Max. 12 m, and Dead Weight Tonnage: Av. 23,000 DWT/Max. 43,000 DWT) in the past five (5) years. According to a foreign shipping company, they are now under examination for introducing wider Panamax sized vessels to maximize container cargo capacity per vessel without deepening its draft to feeder services from the regional hub ports within the Asian region. It also seems that the domestic vessels are staying the same as the feeder size (LOA: Av. 110 m/Max. 150 m, Width: Av. 18 m/Max. 24 m, Draft: Av. 7 m/Max. 9 m, and Dead Weight Tonnage: Av. 6,500 DWT/Max. 14,000 DWT) in the past five (5) years. According to MCT shipping companies, they are complaining about increase of offshore waiting time and frequent repetition of such events due to congestion of the existing quay at MCT. On the other hand, MICTSI believes that the quay is not congested based on the actual record taken by MICTSI. To further examine the gap that has arisen between the shipping companies and MICTSI, the Study Team obtained the detailed calling vessel records from PIA and estimated the Berth Occupancy Ratio (BOR) of foreign, domestic and whole vessels. The average number of berths was calculated using the existing berth length divided by the average LOA for each foreign and domestic vessel, and the total and actual occupied times were sourced from the records. Based on the examination, all BORs of foreign vessels (average berth length is 206-226 m) exceed sixty percent (60%) for allowable BOR of forty-five percent (45%) when one (1) berth is available. If the foreign vessels connectively call at the existing berth, it is clear that offshore waiting already occurs. In case of domestic vessels (average berth length is 149-151 m), all BORs are forty to forty-two percent (40-42%) less than the allowable BORs of both berth cases. In case of whole vessels (average berth length is 172-182 m), all the BORs are forty-five to fifty-two (45-52%) more than the allowable BORs of one (1) berth case, which means that offshore waiting already happens. The reason of the said gap is that MICTSI applied a fixed number at ” 2 berths” in any cases as a denominator. g)

Terminal Operation of MCT

Based on the Concession Agreement concluded between PIA and MICTSI, the existing MCT operation has been conducted by MICTSI since 2008. The current berth-window provided by MICTSI is given only to three (3) companies - MCC-S/M, SITC-P, APL for foreign vessels, and MCC-T/P, LSC, NMC for domestic vessels. According to MICTSI, the current berth window is almost fully occupied by the three (3) foreign and MMCC-TP domestic, therefore the rest two (2) domestic companies are forced to find vacancy in-between the allocated berth window. In order to overcome this situation, and to accommodate more container cargoes for efficient cargo transportation services, enough berth window should be created in MCT.

8

QGC productivity as actual is recorded at 25 moves/hour which is quite comparable with the standard level by the world container terminal operators. Four (4) RTGs were provided by the Phase I project among which one is substantially malfunctioning due to breakdowns that often occurs inefficient yard operation. According to an interview, moving out one vacant container from MCT took 24 hours to complete. It is therefore required to consider to maintain the workshop functions, and to seek for a right timing to invest for additional equipment, so that low efficiency at yard will be prevented. Regarding the above stated situations, the operator is responsible for improving the berth window situation, while PIA/ the operator are responsible for provision of cargo handling equipment. Non responsive to the complaints by the shipping companies may make them decide to move back to CGY; as a matter of fact PPA is whispering to some of the companies to do so. Countermeasures to overcome these situations should be discussed, examined and executed by the respective body such as PIA as a port administrator and MICTSI as a terminal operator

9

2.

Basic Approach for Determination of Project Contents

This study will be conducted based on the following approach in order to formulate the project. a)

Linkage with National Plan and Relevant Development Plan

Project contents shall have a clear linkage with the Development Plan of the Philippines, Strategic Port System, Mindanao Strategic Development Framework and be in line with the concept of the PIA Development Plan and relevant projects. More specifically; i) Serve as an international gate way port, ii) Enhancing efficient logistic system and port infrastructure with international standard, iii) Contribution to the economic development for north Mindanao, and iv) Linkage with the relevant road projects for connectivity. b)

Contribution to Advantageous Competitiveness for MCT

MCT nd shall be attractive to the port users (shipping) and consignors (locators) in both hard and soft facilities. For this to materialize, current situations, and any complaints and/or demands shall be adequately accommodated to seek better improvement, including dissolving offshore waiting of vessels, improving container handling productivities, and increasing berth windows, among others. More specifically; i) Eliminating offshore waiting by the calling vessels, ii) Efficient container handling at terminal, iii) Phased development plans that tally with the increase of cargo demand, iv) Clear demarcation of roles for MCT and CGY, v) Improvement of terminal services. c)

Environmental and Social Considerations

The proposed project shall be well considered with environmental and social aspects, with design and construction methods planned accordingly. (Environmental conservation and enhancing employment shall contribute to the region.) d)

Consistency with Capacity of Implementation Agency The contents and implementation scheme of the proposed project shall be physically and financially

acceptable to PIA, the government implementation agency. For this, provision of a soft loan with a low interest rate, minimizing initial investment and maintenance costs, and provision of high-quality facilities with sophisticated Japanese technologies, among others, shall be ensured.

10

3.

Outline of Project

3-1

MCT Expansion Plan

The MCT Expansion Plan shall be formulated as a phased development as shown in the figure and tables below. Phase II-1 is a short-term plan aiming to solve the current situations. Phase II-2 and Phase II-3 are a medium-term plan to enable accommodation of increasing cargo volume. Further, Phase III and Phase IV are a long-term plan to be a future masterplan. MCT Phased Expansion Concept Plan

100m

200m

500m

300m

30m

300m

100m

Phase II-1

Phase I

Phase II-3

150m

150m

200m

Phase IV Phase II-2

Phase III

100m

LEGEND Phase II-1 Phase II-2 Phase II-3

400 m

Phase III Phase IV

200 m Long Quay (W=30m, Depth=-13m), 2 ha Apron/Container Yard (L200m x W100m), 2 nrs Over Panamax-size QGCs 4 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, 4 nrs RTG Cranes etc. 100 m Long Quay (W=30m, Depth=-13m), 5 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc. 300 m Long Quay, 5 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc. 500 m Long Quay, 11 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc.

(Source: Study Team) Major components of the project for Phase II-1 (short-term plan) and Phase II-2/Phase II-3 (medium-term plan), and Phase III and Phase IV (long-term plan) are listed in the table below. Phase III and IV will be regarded as a future masterplan.

11

Major Project Components for Short/Medium-Term Plans CONTAINER TERMINAL CAPACITY STAGE

TARGET PHASE YEAR

Quay EXISTING

Container Yard

EXPANSION

ACCUMLATED

EXISTING

(1,000 TEU)

Short Term

EXPANSION

CONPONENT

ACCUMLATED

REMARK

(1,000 TEU)

I’

2019

250

50

300

250

50

300

Enhamcement of Operating Efficiency etc.

II-1

2022

-

(200)

(200)

-

60

60

200 m long quay, 2ha container yard and 2-Oover- Quay & QGCs to be provided as prior investment Panamax QGCs etc. for urgent mitigation of Phase I quay congestion

II-2

2024

200

-

200

60

140

200

4ha Container Yard, Buildings, Utilities Mecanical/E;ectrical, 4-RTGs etc.

II-3

2028

200

100

300

200

100

300

100 m long quay, 3ha Container Yard, Buildings, Utilities Mechanical/Electrical, Entrance Gate etc.

Middle Term

By Operator

(Source: Study Team) Major Project Components for Long-Term Plan CONTAINER TERMINAL CAPACITY STAGE

PHASE

TARGET YEAR

Quay EXISTING

EXPANSION

Container Yard ACCUMLATED

EXISTING

(1,000 TEU)

EXPANSION

CONPONENT

ACCUMLATED

REMARK

(1,000 TEU)

III

2037

-

300

300

-

300

300

300 m long quay, 9ha Container Yard, Buildings, Utilities Mechanical/Electrical, Entrance Gate, 2QGCs, 4-RTGs etc.

IV

2046

-

500

500

-

500

500

500 m long quay, 11ha Container Yard, Buildings, Utilities Mechanical/Electrical, Entrance Gate, 4QGCs, 8-RTGs etc.

Long Term

(Source: Study Team) After implementation of all phases of Phase II, including Phase II-1 (short-term plan) and Phase II-2/Phase II-3 (medium-term plan), the expanded terminal will be equipped with a 300 m berth, 30 m apron and 13.5 ha (300 m x 450 m) container yard including reserve area which will be as large as the existing Phase I terminal, consequently one independent container terminal will be in place. The planned terminal size for phase II-1, II-2 and II-3 are summarized below. Size of Container Terminal for Expansion for Short/Medium-Term Plan Quay DEVELOPMENT PHASE Short Term Middle Term

Target Year

Container Yard Marshalling Yard

Other Area

Quay

Apron

Back Yard

Access Road etc.

Length

Width

Area

Dimensions

Area

Dimensions

Area

Dimensions

(m)

(m)

(ha)

(m)

(ha)

(m)

(ha)

(m)

II-1

2022

200

60

2

200 x 100

-

-

-

-

II-2

2024

-

-

4

200 x 200

-

-

-

-

II-3

2028

100

60

3

100 x 300

4.5

300 x 150

1.5

100 x 150

(Source: Study Team)

12

3-2

Project Implementation Scheme

MCT is currently being done by Mindanao International Container Terminal Service, Inc. (MICTSI) under the Concession Contract. According to the terms and conditions of the Concession Contract, the concession period is twenty five (25) years extendable for 10 years. MICTSI has a right to implement a terminal expansion work subject to examination and approval of PIA. This means MICTSI is not fully responsible for expansion of the terminal. Considerable options for expansion would be: -

PIA to implement by its own funding

-

PPP scheme with PIA and private firm

-

PIA to implement with an ODA financial assistance

The results of comparison on each option are summarized as follows: 

In case of implementation by Private independently: This entails no cost to PIA. Ownership of the expanded facilities (berth, container yard, cranes, etc.) goes to MICTSI. Therefore, there would exist two ownerships, namely the existing Phase I facilities by PIA, and the expanded Phase II-1 facilities by MICTSI. Such a mixture would create confusion and inefficiency of operation and maintenance procedures. The expanded facilities will not yield revenue to PIA, which consequently shows less benefit to PIA.



In case of PIA’s implementation by the Philippine budget (Non ODA): Ownership of the expanded facilities goes to PIA. Therefore, PIA will be able take initiative in any negotiations with the operator. However, loan interest is higher than the ODA scheme, which is disadvantageous to PIA from a financial point of view.



In case of PIA’s implementation by Japanese ODA loan: Ownership stays with PIA, as mentioned above. The lowest interest will be available for PIA’s loan. This scheme requires JICA’s feasibility study as a preparatory study. In addition, PIA will be able to receive not only financial assistance but also technical assistance during the course of the JICA study that will contribute to capacity building.



Implementation by both Public and Private under the PPP scheme: A Special Purpose Company (SPC) shall be established. Both public and private would share the required financing, hence PIA would lessen the construction cost. As per BOT Law, PIA would hold the ownership of the expanded facilities after expiration of the contract period. However, due to the small project scale, the profitability is low, therefore, private applicants would not show interest in this project (SPC cannot be established). Consequently, this scheme yields less benefit to PIA.

As the result of the above comparison study, it is clear that the scheme to implement the project by use of a Japanese ODA loan will be the most beneficial to PIA. Therefore, cost estimation and financial/economic analysis herein shall be made on the assumption that a Japanese ODA will be applied. PIA as an implementing agency wishes to apply a Japanese ODA (STEP Loan) for implementation of the MCT Expansion Project just the same as the Phase I scheme. In order to put it into practice, PIA is required to promptly make a decision-making process for ODA application as soon as the new board members have been appointed by President Duterte. 13

3-3

Project Cost Estimate

The project cost for the Phase II project is estimated by use of existing Phase I data multiplied by: i) Price escalation of local currency (PHP) based on price indicators established in the national statistics, and ii) Foreign currency (JPY) deflators referred to the deflators for construction works issued by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). As the result, the Phase II project cost has been estimated as Phase II-1: 5.53 billion Japanese Yen (equivalent to 2.30 billion Pepos), Phase II-2: 3.20 billion Japanese Yen (equivalent to 1.33 billion Pepos), and Phase II-3: 4.02 billion Japanese Yen (equivalent to 1.68 billion Pepos), including VAT. The exchange rate is referred to the data established by the Bank of Tokyo-Mitsubishi UFJ (BTMU) in November 2016, namely: PHP/JPY=2.50, USD/JPY=113.42. 3-4

Outline of Preliminary Economic/Financial Analysis

Financial analysis is to calculate the Financial Internal Rate of Return (FIRR) for the Phase II project, including Net Present Value (NPV) and Benefit-Cost Ratio (BCR). Several assumptions are set forth, such as: i) the base year is 2016, ii) the project life is 40 years (2019-2056), iii) the exchange rates are the same as in the cost estimate, iv) the financing source is an ODA STEP loan (interest rate is 0.10%, repayment period is 40 years, grace period is 10 years), v) the revenues are the MCT’s port charges and concession fees collected from MICTSI, vi) expenses are the operation/management costs and maintenance/renewal costs of civil facilities. The table below shows the result of the financial analysis FIRR, including sensitivity analysis for several cases (revenue and expenses vary: 0%, 10%, 20%). FIRR for MCT Phase II Project Base Case

Expenses Increase

Expenses Increase

by 10%

by 20%

Base Case

11.0%

8.4%

5.9%

Revenue Decreases by 10%

8.1%

5.4%

－

Revenue Decreases by 20%

4.7%

－

-1.4%

(Source: Study Team) Expenses and revenues that will be generated each year during the Project life are converted to the present value by applying the loan interest rate as a social discount rate of 4%. The resulting NPV is PhP 48,000 million, while the BCR is 1.57. The FIRR for the Phase II base case is 11.0%, which is higher than the interest rate of investment (JICA STEP at 0.1%). Sensitivity analysis in the case of +10% expense and -10% revenue shows still higher than the threshold. The economic analysis is to calculate the Economic Internal Rate of Return (EIRR) for the Phase II project, including Net Present Value (NPV) and Benefit-Cost Ratio (BCR). Assumptions are: i) the base year is 2016, ii) the project life is 40 years (2019-2056), iii) the benefits are the value added by export container cargoes, iv) the expenses are Phase II project, operation/management costs and maintenance/renewal costs of civil

14

facilities. The table below shows the result of the economic analysis EIRR, including sensitivity analysis for several cases (revenue and expenses vary: 0%, 10%, 20%). EIRR for MCT Phase II Project Base Case

Cost Increase

Cost Increase

by 10%

by 20%

Base Case

39.3

37.1

35.2

Benefit Decrease by 10%

36.9

34.8

－

Benefit Decrease by 20%

34.3

－

30.6

(Source: Study Team) Assuming a social discount rate of 4%, the BCR is calculated at 10.69 for the base case, and the NPV of the Project is estimated at PhP 689,529 million. The leading view on economic evaluation is that a project is feasible if the EIRR exceeds the opportunity cost of capital. The MCT Expansion Project has an EIRR of more than 40% (base case), which is much higher than the opportunity cost of capital in the Philippines. Even after the sensitivity analysis, the EIRRs of many cases are higher than the target. This means that the planned projects are economically feasible. 3-5

Evaluation of Environmental and Social Impacts

For MCP expansion, fortunately the original EIA undertaken by PIA in 1999 covered all the projected three phases of the MCP project (Phase II medium-term and Phase III long-term). Thus, it covered the total berth length of 800 meters. For this effort, the ECC issued by EMB actually encompasses all phases and works/features of the entire MCP project. The most likely procedure in terms of environmental permitting and clearance will be for PIA to obtain reconfirmation by EMB of the ECC issued in 1999. Such can be done during the feasibility. The necessary action plans for implementation of the MCT Expansion Project, vis-à-vis the Philippine laws and regulations, will undergo several steps. Necessary actions related to environmental and social considerations must be undertaken by PIA as follows: 

Confirmation of validity of Environmental Impact Assessment (EIA) and Environmental Compliance Certificate (ECC) prepared and issued in 1999. This would require formal consultation between PIA and EMB Central Office (issuer of ECC). The objective of this consultation is to present the approved scope of the MCTEP project and confirm if the original 1999 ECC is valid and sufficient to satisfy the environmental regulatory permitting requirements for MCTEP implementation. This action must be carried out preferably prior to or during the full feasibility study of MCTEP.



In the event that the EMB confirms the validity of the original EIA/ECC, then only the conditions and requirements enumerated in the ECC will be complied with and no new EIA will be necessary. In such case, implementation can proceed using the original ECC; otherwise, amendments and/or modifications of the EIA and ECC will have to be carried out during the FS period. 15



With MCTEP financed via ODA, the funding agency will most likely require specific performance by PIA of more detailed environmental and social consideration study to be carried out in compliance with the regulatory requirements under its own guidelines for ESC considerations. For this, PIA must undertake such requirements prior to or during the feasibility study period.



For more efficient and effective implementation of the Environmental Management Plan and Environmental Monitoring Plan during construction, PIA must operationalize its Environmental Management Unit (EMU). Likewise, the Multi-partite Monitoring Team (MMT) should be reconstituted and provided operating funds to carry out its periodic monitoring activities during the construction phase. During the operation phase, regular and complete quarterly compliance monitoring reports should be prepared by MCT/PIA and submitted to EMB-DENR Region 10.

The following actions/activities need to be undertaken by PIA to pursue implementation of MCTEP: a)

Conduct MCTEP technical, economic and financial feasibility studies. Under prevailing government guidelines, NEDA will be directly involved in this process in accordance with its mandate to undertake all feasibility studies of major infrastructure projects. Under special financing agreement, however, the FS may be performed by PIA with assistance from the financing entity, in which case NEDA may not directly involve itself in the conducting of the study.

b)

Upon feasibility study completion, PIA must formulate an implementation program (IP) and endorse this to the Investment Coordinating Committee- Cabinet Committee (ICC-CC) for project evaluation leading to ICC approval. Under the Joint Memorandum of February 18, 2013, of the Department of Finance and NEDA on behalf of ICC, project appraisal will focus on the technical and economic feasibility and financial viability of the proposed. A favorable appraisal must be obtained before the project will see further implementation progress

c)

After a favorable appraisal by ICC, the project shall be referred to the Department of Finance (DOF) for determination of appropriate funding source, ie., ODA, PPP, GOP financing or other means.

d)

If ODA is the preferred project financing source, the succeeding activities to procure contracts for engineering design services, supply of equipment/goods, and construction services must be carried out by PIA. Open international competitive bidding may be the mode of procurement unless the financing source and GOP agrees on special procurement for EPC from suppliers identified by the ODA source and acceptable to the Government.

e)

The detailed engineering design must be undertaken subsequently, the cost of which will be sourced from the funding source. PIA can implement this activity with technical assistance from experts as may be necessary.

f)

Unless otherwise specified in the terms of the ODA financing, PIA shall launch the prequalification and bidding process for procurement of equipment/materials/machinery (goods) and construction services.

g)

After completion of the bidding and award process, PIA must set up a Project Management Office (PMO) that will directly manage and supervise the procurement and construction activities of the Project.

16

4.

Technical Advantages of Japanese ODA

Certain Japanese construction, manufacturing and specialist cargo handling equipment companies were involved all in past similarly scaled container terminal development projects in the Philippines, such as Subic Bay Port, Batangas Port and MCT Phase I. In the case of MCT Phase II Expansion, which would be considered to apply an international bidding same as the said previous projects, such Japanese companies could perform their services in reliable quality based on sufficient experiences in the Philippines, accumulated knowledge of local practices, and many connections with local construction and material supply companies. Moreover, they are internationally advantageous, shortening the construction period through application of advanced materials and/or efficient methods that are well-researched, developed and technically verified in the governmental institutes or well recognized industrial associations. Currently, some Japanese companies have some alternative ways against price competitiveness; i.e. laying in large volume of raw materials, establishing overseas factories by Japanese capital etc. As aforementioned, it is therefore emphasized that Japanese companies are evidently competitive especially for port sector in the Philippines, because they becomes better providers of sustainable services and products based on certain experiences, reliable quality, specialized technologies and fair reasonable price these days. Even though Japanese companies are competitive, there are still many competitors who can win in price completion. It is common state of mind that most beneficiaries would get services and/or products in cheaper price. Some people say that “Japanese service and/or products are better quality but expensive”. It is not true but true. The better service and products are generally more expensive than ordinal or less ordinal services and products. Likewise the better service and products are better quality and durability.

The Philippine

National Development Plan 2017-2022 (draft version) currently stipulates securing “international standard” for new port expansion, which would supports enhancement of fair project involvement of the quality companies. To meet “international standard”, it is required to justify the necessity to apply proposed services and products. The justification is the most important process. In other word, the justification required to meet “international standard” is to specify particular specifications of the services and/or products in the process of procurement. Consequently, the specified particular specifications could be “spec-in” to relevant bidding documents for procurement. This opportunity is to prevent value cracking by unfair price competition and could reasonably induce the possibility of project involvement of Japanese companies in due course. The main proposed technologies are steel pipe pile for quay wall (strut beam method and high tension steel pipe pile with anti-corrosion), marine fender system, crane rail, cargo handling equipment (QGC and RTG) and navigation aids (navigational buoy and beacon light). Among the above listed, the marine fender system,, crane rail and navigational aids procured from Japan are known to be reliable with many historical supply records to a number of ports around the world. Oh the other hand however, steel pipe pile for quay wall and cargo handling equipment are currently available from the countries other than Japan; such technologies are prone to tough and excessive price competition due to the fact that many competitors in developing countries recently involved in the international competitive tenders. Currently the manufacturers having such technologies move on making their best efforts to make manufacturing and transportation costs lowered by mass supply of raw materials and establishment of overseas factories invested by Japanese capital. 17

Considering the abovementioned, the superiority and adequacy of the major Japanese manufacturers to produce such proposed products in comparison with possible competitors of neighboring countries are shown in the below table. Superiority and Adequacy of Japanese Manufacturers and Proposed Japanese Technologies Proposed Japanese Technologies

Major Japanese Companies

Other Companies in Neighboring Countries

Marine Fandering System

Bridgestone Co. Sumitomo Rubber Industry Ltd. Shibata Industrial Co., Ltd.

IRM (India) Yantai Taihong Rubber (China)

Crane Rail

Nippon Steel & Sumitomo Steel Metal Co. JFE Steel Co.

Steel Pipe Pile／Strut Beam Method

Quality/Record * High quality rubber composition and durability as world wide tire manufacturer * High market share internationally

Technologies/Services

Cost

* Possible technical services after supply upon request * Disclosure of technical information and design guideline

* Possible cost down by mass procurement of row materials * Possible manufacture ring and transportation cost savings by manufacture ring in foreign factories injected by Japanese capital

He Steel Co.／Bao Steel Co. (China) * High quality Posco ／Hundai Steel Co.（Korea ）etc. * High accuracy * High durability = long life (10% longer proven) * Many overseas supply records

* Less installation period due to product accuracy * Long period quality assurance for heavy QGC travelling

* Higher cost competitiveness in view of life-cycle cost * Possible manufacture ring/transportation cost savings by manufacture ring in Vietnam factory injected by Japanese capital

Nippon Steel & Sumitomo Steel Metal Co. JFE Steel Co. Ltd. Kubota Co.

He Steel Co.／Bao Steel Co. (China) * High quality Posco ／Hundai Steel Co.（Korea ）etc. * High reliability * Many overseas supply records

* Less total steel weight by combination of strut beam method * Less number of steel piles without soil improvement * Minimized for seabed disturbance * Possible shortening of total construction period

* Possible manufacture ring/transportation cost savings by manufacture ring in Vietnam factory injected by Japanese capital * Cost down by optimal design & time saving by simple work sequence

QGC

Mitsui Engineering & Shipping Co. IHI Co.

ZPMC (China) Hundai San Ko Heavy Industry Co. (Korea)

* High quality * High reliability * Many overseas supply records

・Possible custom made products ・Strict technology control in design, material procurement, assembling and delivery ・Utilization of Japanese products in assembled members and parts

* Possible cost down by mass procurement of row materials * Time and cost savings by increase of production line

RTG

Mitsui Engineering & Shipping Co. Sumitomo Heavy Industry Ltd.

ZPMC (China) Hundai San Ko Heavy Industry Co. (Korea)

Ditto

Ditto

Ditto

Navigational Aids

Zeni Lite Buoy Co., Ltd. Ryokuseishya Co.

Daekee (Korea) Wei Zhou Chongqing Hi-Sea Marine Equipment (China)

* High quality and reliability * Long business achievement more than 50 years * Many overseas supply records

* Specialization for navigational aids * Accumulation of know-how and other technoligies

* Sufficient after care in package * Possible manufacture ring and transportation cost savings by manufacture ring in foreign factories injected by Japanese capital

(Source: Study Team)

18

5.

Expected Schedule of Implementation

This expansion project is divided into three phases that are assumed to be implemented individually but seamlessly. The tentative implementation schedule is shown in the chart below. Aside from the schedule, PIA is required to coordinate with INFRASCOM and ICC in NEDA for their approval in respect of the project components and financing scheme. Such procedures are preferably implemented during the feasibility study stage. Implementation Schedule for MCT Expansion Project (Tentative) Description

Year & Quarter

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

F/S, D/D & Bid Preparation Stage 1

METI-PreF/S

2

JICA Feasibility Study/FS Review

3

EIA Report, ECC Approcation & Approval

4

Disclosure of Approved EIA & ECC in Japan

5

JICA Appraisal

6

Exchange of Notes (E/N)

7

Loan Agreement (L/A)

8

Selection of Consultant

9

Detailed Design and Bid Documents

11

Bidding for Construction Works Port Construction Stage

A

Mobilization/Demobilization

B

Preparatory Works

C

Marine Works

Phase II-1

C1 Dredging qand Reclamation C2 Quay D

Civil Works

C1 Pavements C2 Drainage System C3 Other Associated Civil Works E

Utility Works

E1 Mechanical Works E2 Electrical Works F

Building Works

G

Equipment

2029

2030

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Defects Notification Period (DNP) Commencement of Port Operation

(Source: Study Team)

*****

19

Phase II-2

Phase II-3

Chapter 1

Overview of the Host Country and Sector

(1) Economic and Financial Conditions of the Country 1)

Population Trend

The population of the Philippines is steadily increasing and eventually exceeded 100 million in 2015. It will be approximately 120 million in 2030, after which it will keep increasing until 2095. The peak is expected to reach 170 million, as per the UN World Population Prospects (see Figure 1-1). Figure 1-1

Population Trend of the Philippines

180,000

(1,000 people)

160,000 140,000 120,000 100,000 80,000 60,000 2100

2090

2080

2070

2060

2050

2040

2030

2020

2010

2000

1990

1980

40,000

(Source: UN World Population Prospects 2015, graphed by Study Team) As seen in Figure 1-2, regional population shares in Luzon, Visayas and Mindanao areas are 80%, 18% and 2~3%, respectively, which have all been constant since 1980. Six (6) regions in the Mindanao area (Region IX～XIII and ARMM) have also stayed at a constant level. Figure 1-2 Regional Population Trend of the Philippines Philippines Philippine

Philippines Philippine 100.0%

80,000

80.0% share (%)

(1,000 pop)

60,000 40,000 20,000

2.8%

2.7%

2.6%

2.5%

2.4%

2.5%

18.0%

18.7%

19.3%

18.4%

18.4%

18.0%

79.2%

78.6%

78.1%

79.1%

79.2%

79.5%

2000

2007

2010

60.0% 40.0% 20.0% 0.0%

0 1980

1990 Luzon

1995 Visayas

2000

2007

1980

2010

Mindanao

1990 Luzon

1995 Visayas

Mindanao

(Source: 2015 Philippine Statistical Yearbook, graphed by Study Team) As shown in Table 1-3 and Figure 1-3, Region X, where the Mindanao Container Terminal is located, has approx. 20% of the population of the Mindanao region.

1-1

Table 1-1 Population Trend of the Philippines population (1,000 pop) Region

1990

1995

2000

2007

2010

1980

1990

1995

2000

2007

2010

t ot al

48, 143

60, 752

68, 614

76, 473

88, 564

92, 335

100%

100%

100%

100%

100%

100%

s ubt ot al

P hilippines Luz on

share (%)

1980 26, 081

33, 358

38, 250

42, 811

49, 818

52, 363

54. 2%

54. 9%

55. 7%

56. 0%

56. 3%

56. 7%

NCR

National Capital Region

5,926

7,948

9,454

9,933

11,566

11,856

12.3%

13.1%

13.8%

13.0%

13.1%

12.8%

CAR

Cordillera Administrative

914

1,146

1,255

1,365

1,521

1,617

1.9%

1.9%

1.8%

1.8%

1.7%

1.8%

I

Ilocos

2,923

3,551

3,804

4,200

4,547

4,748

6.1%

5.8%

5.5%

5.5%

5.1%

5.1%

II

Cagayan Valley

1,919

2,341

2,536

2,813

3,051

3,229

4.0%

3.9%

3.7%

3.7%

3.4%

3.5%

III

Central Luzon

4,910

6,339

7,092

8,205

9,709

10,138

10.2%

10.4%

10.3%

10.7%

11.0%

11.0%

IV-A

CALABARZON

4,603

6,349

7,750

9,321

11,758

12,610

9.6%

10.5%

11.3%

12.2%

13.3%

13.7%

IV-B

MIMAROPA

1,408

1,774

2,033

2,299

2,560

2,745

2.9%

2.9%

3.0%

3.0%

2.9%

3.0%

V

Bicol

3,477

3,910

4,325

4,675

5,106

5,420

7.2%

6.4%

6.3%

6.1%

5.8%

5.9%

11, 211

13, 188

14, 158

15, 528

17, 159

18, 004

23. 3%

21. 7%

20. 6%

20. 3%

19. 4%

19. 5%

VI

Western Visayas

4,526

5,393

5,777

6,211

6,844

7,102

9.4%

8.9%

8.4%

8.1%

7.7%

7.7%

VII

Central Visayas

3,886

4,740

5,015

5,707

6,401

6,800

8.1%

7.8%

7.3%

7.5%

7.2%

7.4%

VIII

Eastern Visayas

V is ay as

s ubt ot al

Mindanao

s ubt ot al

2,800

3,054

3,367

3,610

3,915

4,101

5.8%

5.0%

4.9%

4.7%

4.4%

4.4%

10, 851

14, 206

16, 205

18, 134

21, 587

21, 968

22. 5%

23. 4%

23. 6%

23. 7%

24. 4%

23. 8%

IX

Zamboanga Peninsula

1,772

2,221

2,568

2,831

3,230

3,407

3.7%

3.7%

3.7%

3.7%

3.6%

3.7%

X

Northern Mindanao

2,226

2,812

3,197

3,506

3,952

4,297

4.6%

4.6%

4.7%

4.6%

4.5%

4.7%

XI

Davao Region

2,199

2,934

3,289

3,676

4,159

4,469

4.6%

4.8%

4.8%

4.8%

4.7%

4.8%

XII

SOCCSKSARGEN

1,723

2,400

2,847

3,222

3,831

4,110

3.6%

4.0%

4.1%

4.2%

4.3%

4.5%

XIII

Caraga

1,372

1,764

1,943

2,095

2,293

2,429

2.8%

2.9%

2.8%

2.7%

2.6%

2.6%

ARMM

Autonomous Region in Muslim Mindanao

1,560

2,075

2,362

2,803

4,121

3,256

3.2%

3.4%

3.4%

3.7%

4.7%

3.5%

(Source: 2015 Philippine Statistical Yearbook, tabulated by Study Team) Figure 1-3 Population Trend of Mindanao Mindanao

Mindanao 100%

25,000 20,000

90%

14.4%

14.6%

14.6%

15.5%

80%

12.6%

12.4%

12.0%

11.6%

15.9%

16.9%

17.6%

17.8%

20.3%

20.7%

20.3%

20.3%

19.3%

20.3%

20.5%

19.8%

19.7%

19.3%

18.3%

19.6%

16.3%

15.6%

15.8%

15.6%

15.0%

15.5%

1980

1990

1995

2000

15,000

Share (%)

(1,000 pop)

70%

10,000

60% 50% 40% 30%

5,000

20% 10%

0 1980 Region IX

Region X

1990

1995

Region XI

2000

Region XII

2007 Region XIII

19.1% 10.6% 17.7%

14.8% 11.1% 18.7%

0%

2010 ARMM

Region IX

Region X

Region XI

Region XII

2007 Region XIII

2010 ARMM

(Source: 2015 Philippine Statistical Yearbook, graphed by Study Team) 2)

Gross Domestic Product and Regional Gross Domestic Product

a)

GDP

As presented in Figures 1-4 and 1-5, the real GDP of the whole Philippines in 2014 recorded at PHP 7.2 trillion (value in 2015) and is still on the rise.

1-2

Figure 1-4 GDP Trend of the Philippines

GDP (billion USD)

200

150

100

50

2015

2010

2005

2000

1995

1990

1985

1980

0

(Source: 2015 Philippine Statistical Yearbook, graphed by Study Team) Figure 1-5 GDP Trend of the Philippines Philippine Philippines

Philippines Philippine 100%

8,000

6,000

GRDO Share %)

GRDP (billion PHP)

7,000

5,000 4,000 3,000 2,000 1,000

80%

14.5%

14.2%

14.3%

14.4%

14.3%

14.4%

12.6%

12.6%

12.8%

12.7%

12.5%

12.4%

72.9%

73.2%

72.9%

72.9%

73.2%

73.1%

2012

2013

2014

60% 40% 20% 0%

0 2009

2010

2011

Luzon

Visayas

2012

2013

2009

2014

2010

2011

Luzon

Mindanao

Visayas

Mindanao

(Source: 2015 Philippine Statistical Yearbook, graphed by Study Team) The growth rate between 2009 and 2015 was 6.2%. The same in Mindanao was 6.1%, while Region X where MCT is located is a bit higher at 6.3% (refer to Table 1-2 and Figure 1-6). Table 1-2 GRDP Trend of the Philippines GROSS REGIONAL DOMES TIC PRODUCT (GRDP) : at c ons t ant 2000 pric es GRDP (billion PHP)

Region

Growth Rate

2010

2011

2012

2013

2014

2009

2010

2011

2012

2013

2014

2009-2014

t ot al

5, 297

5, 702

5, 910

6, 305

6, 750

7, 164

100%

100%

100%

100%

100%

100%

6. 2%

s ubt ot al

3, 861

4, 174

4, 308

4, 599

4, 942

5, 238

72. 9%

73. 2%

72. 9%

72. 9%

73. 2%

73. 1%

6. 3% 6.5%

Philippines

Luz on

Share (%)

2009

NCR

National Capital Region

1,899

2,038

2,103

2,250

2,456

2,600

35.8%

35.7%

35.6%

35.7%

36.4%

36.3%

CAR

Cordillera Administrative

113

120

122

118

125

129

2.1%

2.1%

2.1%

1.9%

1.8%

1.8%

2.7%

I

Ilocos

168

180

184

198

211

223

3.2%

3.2%

3.1%

3.1%

3.1%

3.1%

5.8%

II

Cagayan Valley

101

100

105

113

120

128

1.9%

1.8%

1.8%

1.8%

1.8%

1.8%

4.9%

III

Central Luzon

464

511

547

586

612

667

8.8%

9.0%

9.3%

9.3%

9.1%

9.3%

7.5%

IV-A

CALABARZON

904

1,009

1,026

1,098

1,171

1,231

17.1%

17.7%

17.4%

17.4%

17.3%

17.2%

6.4%

IV-B

MIMAROPA

102

102

105

109

111

118

1.9%

1.8%

1.8%

1.7%

1.6%

1.6%

2.9%

V

Bicol

Vis ay as

s ubt ot al

110

114

116

126

137

143

2.1%

2.0%

2.0%

2.0%

2.0%

2.0%

5.3%

666

719

759

800

844

891

12. 6%

12. 6%

12. 8%

12. 7%

12. 5%

12. 4%

6. 0%

VI

Western Visayas

217

227

241

258

267

280

4.1%

4.0%

4.1%

4.1%

4.0%

3.9%

5.2%

VII

Central Visayas

302

341

364

398

427

465

5.7%

6.0%

6.2%

6.3%

6.3%

6.5%

9.0%

VIII

Eastern Visayas

Mindanao

s ubt ot al

146

151

154

143

150

146

2.8%

2.6%

2.6%

2.3%

2.2%

2.0%

0.0%

770

809

843

907

964

1, 035

14. 5%

14. 2%

14. 3%

14. 4%

14. 3%

14. 4%

6. 1%

IX

Zamboanga Peninsula

115

117

117

132

137

146

2.2%

2.1%

2.0%

2.1%

2.0%

2.0%

4.8%

X

Northern Mindanao

198

211

223

238

250

268

3.7%

3.7%

3.8%

3.8%

3.7%

3.7%

6.3%

XI

Davao Region

206

217

225

241

257

282

3.9%

3.8%

3.8%

3.8%

3.8%

3.9%

6.5%

XII

SOCCSKSARGEN

148

151

159

171

185

197

2.8%

2.7%

2.7%

2.7%

2.7%

2.8%

5.9%

XIII

Caraga

58

65

70

78

84

91

1.1%

1.1%

1.2%

1.2%

1.3%

1.3%

9.3%

ARMM

Autonomous Region in Muslim Mindanao

45

48

47

47

49

51

0.8%

0.8%

0.8%

0.8%

0.7%

0.7%

2.6%

(Source: 2015 Philippine Statistical Yearbook, tabulated by Study Team) 1-3

Figure 1-6 GRDP Trend of Mindanao Mindanao

Mindanao

1,200

100% 90% 80%

GRDO Share %)

GRDP (billion PHP)

1,000 800 600 400

5.9% 8.0%

5.6% 8.3%

5.2% 8.6%

5.1% 8.8%

4.9% 8.8%

19.2%

18.7%

18.9%

18.8%

19.2%

19.1%

26.7%

26.9%

26.8%

26.6%

26.7%

27.2%

25.7%

26.1%

26.5%

26.2%

26.0%

25.9%

15.0%

14.5%

13.9%

14.5%

14.2%

14.1%

2009

2010

2011

2012

2013

2014

70% 60% 50% 40% 30% 20%

200

10% 0%

0 2009 Region IX

5.8% 7.6%

2010 Region X

2011 Region XI

2012 Region XII

2013 Region XIII

2014 ARMM

Region IX

Region X

Region XI

Region XII

Region XIII

ARMM

(Source: 2015 Philippine Statistical Yearbook, graphed by Study Team) b)

Gross Regional Domestic Product (GRDP) per Capita

As shown in Figure 7-1, GRDP per capita is increasing as well. The annual average growth rate for the whole Philippines is recorded at 4.3% while Mindanao is 4.1%; both show quite similar. Figure 1-7 GDP Trend of Mindanao Philippine

100

1.30

80

1.25

ratio (from 2009)

GRDP per Capita (1,000 PHP/people)

Philippine

60 40 20

1.20 1.15 1.10 1.05 1.00

0 2009

2010 Luzon

2011 Visayas

2012

2013

2014

2009 2010 2011 2012 2013 2014 Luzon

Mindanao

Visayas

Mindanao

(Source: 2015 Philippine Statistical Yearbook, graphed by Study Team) As shown in Table 1-3 and Figure 1-8, Region X where MCT is located is 4.2% and is slightly higher than the Mindanao average rate.

1-4

Table 1-3 GRDP Trend of the Philippines P ER CA PITA GROS S REGIONAL DOMES TIC P RODUCT : at c ons t ant 2000 pric es Per capita GRDP (PHP/people)

Region P hilippines

tot al

Luz on

Rank

Growth Rate

2009

2010

2011

2012

2013

2014

2009

2010

2011

2012

2013

2014

2009-2014

58, 199

61, 570

62, 328

65, 332

68, 741

71,726

　

　

　

　

　

　

4. 3%

74, 872

79, 470

80, 000

83, 805

88, 412

92,014

　

　

　

　

　

　

4. 2% 4.6%

NCR

National Capital Region

162,321

171,442

173,057

181,748

195,070

203,132

1

1

1

1

1

1

CAR

Cordillera Administrative

70,672

74,107

73,490

70,156

72,759

73,908

3

3

3

3

3

3

0.9%

I

Ilocos

35,813

37,819

38,087

40,325

42,588

44,530

11

8

8

8

8

8

4.5%

II

Cagayan Valley

31,519

30,851

32,017

33,816

35,462

37,267

13

14

14

14

13

12

3.4%

III

Central Luzon

46,546

50,207

52,372

55,163

56,528

60,513

6

4

4

5

5

5

5.4%

IV-A

CALABARZON

73,271

79,699

78,231

81,562

84,687

86,683

2

2

2

2

2

2

3.4%

IV-B

MIMAROPA

37,724

37,002

37,283

38,239

38,138

40,016

8

9

10

10

10

10

1.2%

V

Bicol

V is ay as

20,580

21,004

20,979

22,502

24,005

24,688

16

16

16

16

16

16

3.7%

37, 406

39, 829

41, 246

42, 796

44, 556

46,394

　

　

　

　

　

　

4. 4%

VI

Western Visayas

30,943

31,927

33,296

35,139

35,874

37,162

14

13

13

12

12

13

3.7%

VII

Central Visayas

44,993

49,966

52,192

56,061

59,211

63,351

7

5

5

4

4

4

7.1%

VIII

Eastern Visayas

Mindanao

36,058

36,694

36,784

33,850

34,952

33,743

10

10

11

13

14

15

-1.3%

35, 575

36, 707

37, 346

39, 514

41, 274

43,579

　

　

　

　

　

　

4. 1% 3.0%

IX

Zamboanga Peninsula

34,353

34,245

33,489

37,077

37,991

39,826

12

12

12

11

11

11

X

Northern Mindanao

46,818

48,940

50,506

52,842

54,678

57,590

4

6

6

6

6

7

4.2%

XI

Davao Region

46,721

48,487

49,112

51,657

54,188

58,291

5

7

7

7

7

6

4.5%

XII

SOCCSKSARGEN

36,688

36,688

37,533

39,417

41,814

43,578

9

11

9

9

9

9

3.5%

XIII

Caraga

24,264

26,504

28,203

30,985

33,037

35,142

15

15

15

15

15

14

7.7%

ARMM

Autonomous Region in Muslim Mi

13,867

14,588

14,271

14,052

14,380

14,607

17

17

17

17

17

17

1.0%

(Source: 2015 Philippine Statistical Yearbook, tabulated by Study Team) Figure 1-8 GRDP Trend of Mindanao Mindanao

70

1.50

60

1.40

ratio (from 2009)

GRDP per Capita (1,000 PHP/people)

Mindanao

50 40 30 20 10

1.30 1.20 1.10 1.00 2009 2010 2011 2012 2013 2014

0 2009

2010

Region IX

Region X

2011

2012

Region XI

Region XII

2013 Region XIII

2014 ARMM

Region IX

Region X

Region XI

Region XII

Region XIII

ARMM

(Source: 2015 Philippine Statistical Yearbook, graphed by Study Team) 3)

Income Level

As shown in Table 1-4, the average household income levels of the Philippines and Region X are as below. The average household income levels of the Philippines in 2012 were 1.6 times that in 2003. The average household income level of Region X, which includes MCT, is similar to that of the entire Philippines Table 1-4 Change of Average Household Income Level (in Pesos)

2003 2006 2009 2012

Philippines Average Annual Index Income 148,000 100 172,730 117 206,000 139 235,000 159

Region X Average Annual Income 121,000 144,288 165,000 190,000

Index 100 119 136 157

(Source: 2015 Philippine Statistical Yearbook, tabulated by Study Team) 1-5

(2) Overview of the Port Sector Overview of the port sector is as below. 1)

Port System of the Philippines

a)

Public Ports and Private Ports

The Philippines consists of more than 7,100 islands and marine transportation plays an important role in freight traffic inside and outside the country. There are about 2,000 ports, which are composed of about 1,600 public ports developed and managed by the public sector and about 400 ports developed and managed by the private sector (according to a JICA study in 2004). Public ports are classified in terms of central government management and local government units management. Private ports are also classified into those used exclusively by private firms and those used publicly as commercial ports. b)

Development and Management of Ports

Prior to the creation of the Philippine Port Authority (PPA), port administration in the Philippines was merged with the traditional function of revenue collection of the Bureau of Customs (BOC). Port maintenance was the responsibility of the Bureau of Public Works (BPW). Realizing that two government agencies should be separated to integrate the functions of port operations, cargo handling and port development and to concentrate on tax and customs duties, PPA was created by Presidential Decree No. 505 in 1974 and it has played a fundamental role in development, operation, management, etc., of ports for the entire country. Since the 1990s the Cebu Port Authority (CPA), the Subic Bay Metropolitan Authority (SBMA), the Base Conversion and Development Authority (BCDA), the PHIVIDEC Industrial Authority (PIA) and the Autonomous Region in Muslim Mindanao (ARMM), etc., have been taking charge of port development and management in their own regions. PIA

August 1974

Established under Presidential Decree No. 505

ARMM

November 1990

Established under Republic Act No. 6734

CPA

February 1992

Established under Republic Act No. 7621

SBMA

March 1992

Established under Republic Act No. 7227

BCDA

March 1992

Established under Republic Act No. 7227

PPA and CPA are also responsible for supervising private ports in their own regions as port authorities, excluding other governmental port organizations. c)

Department of Transport

The Department of Transport (DOTr) is in charge of road, railway, air and marine transportation.

1-6

In the marine sector, the Philippine Coast Guard (PCG) and Maritime Industry Authority are external agencies under DOTr as well as PPA and CPA. Almost all local ports managed and operated by LGUs are of a small scale. In general, these local ports are developed by DOTr and are turned over to LGUs to operate and manage after completion. Until May 2016, DOTr was named Department of Transportation and Communication (DOTC). After the foundation of Department of Information and Communications Technology (DICT), the Information and Communications Technology offices of DOTC have been moved to DICT. 2)

PPA Port System

a)

PPA Ports

As shown in Figure 1-9, PPA currently administrates 108 ports throughout the country, which include two types of ports. Twenty-six (26) ports are hub ports for domestic and foreign trade, named as base ports, and 82 ports are relatively small-scale ports that serve as terminal ports. Each port has a Port Management Office (PMO) or Terminal Management Office (TMO). b)

Outline of PPA Port Performance

Cargo and passenger throughput at PPA ports in 2015 is outlined in the table below (see Table 1-5). i)

Ship calls: 395,095 calls (Foreign 10,200 calls, Domestic 384,895 calls) Up by 8.84% from 2014

ii)

Cargo: 223.671 mil. M.T. (Foreign 134.620 mil., Domestic 89.051 mil.) Up by 4.12% from 2014

iii) Container : 5.862 mil. TEU (Foreign 3.482 mil. TEU, Domestic 2.380 mil. TEU) Up by 6.09% from 2014 iv) Passenger: 62.763 mil. people (Embarked 30.568 mil. People, Disembarked 32.195 mil. people) Up 12.10% from 2014 c)

Organization Structure of PPA

PPA has integrated responsibility of planning, development, maintenance and operation, etc., for public ports in the Philippines. There are three main departments under the General Manager of PPA (Operation, Engineering and Finance, and Legal & Administration). PMOs are located in each base port (refer to Figure 1-10). Important basic policies are decided by the board of directors, which is composed of the following officials at the ministerial level. ●

The Secretary of the Department of Transport (DOTr) < Chairman>

●

The PPA General Manager < Vice Chairman>

●

The Director General of the National Economic and Development Authority (NEDA) 1-7

●

The Secretary of the Department of Public Works and Highways (DPWH)

●

The Secretary of the Department of Finance (DOF)

●

The Secretary of the Department of Environment and Natural Resources (DENR)

●

The Secretary of the Department of Trade and Industry (DTI)

●

The Administrator of the Maritime Industry Authority (MARINA)

●

One Representative of the Private Sector

1-8

Figure 1-9 PPA Ports (Base Ports / Terminal Ports) Locations

(Source: PPA) 1-9

Table 1-5 Summary of PPA Port Performance (January – December 2015)

(Source: PPA) Figure 1-10 Organization and Management of PPA

(Source: PPA) 1-10

d) i)

Cagayan De Oro Port Outline of Cagayan de Oro Port

The Port of Cagayan de Oro is one of the PPA base ports under the jurisdiction of the Philippine Ports Authority (PPA) that is located in the city of Cagayan de Oro, Macajalar Bay, North Mindanao. Across the bay in Tagoloan is where MCT is situated. Cagayan de Oro port is administrated by PPA, while cargo handling services are being done by Oroport Cargo Handling Services Inc. The port, as the gateway of North Mindanao, has been serving and contributing to the development of the regional economy. The general layout of Cagayan de Oro Port is shown in Figure 1-11. Figure 1-11 General Layout of PPA Cagayan de Oro Port

(Source: PPA) ii)

Passengers and Cargoes

According to PPA port statistics in 2015, Cagayan De Oro Port attained 1.2 million passengers, 1.56 million MT breakbulk cargoes, 0.42 million MT bulk cargoes and 236,713 TEU container cargoes. Table 1-6 shows the container handling volumes in comparison to those of Davao Port. As seen in the table, the cargo handling volume at Cagayan De Oro Port has been currently almost same volume of MCT. The volumes are to be same order of those of Davao Port if the growth rate can maintain in the future. It is noted that the volumes at Davao Port after 2014 decreased because of commencement of terminal operation of the Davao International Container Terminal (DICT) that is mainly handling fresh bananas and pineapples for export.

1-11

Table 1-6 Container Handling Volume at Cagayan de Oro Port Unit: TEUs 2000 ： 2005 ： 2010 2011 2012 2013 2014 2015

Cagayan de Oro Dome Forgn Total 140,016 8,466 148,482

Dome 87,735

Davao Forgn 57,637

Total 145,372

185,246

16,940

202,186

129,405

96,316

225,721

146,735 162,332 182,881 187,844 206,328 236,713

17,096 72 0 0 0 0

163,831 162,404 182,881 187,844 206,328 236,713

167,519 157,687 158,475 149,657 150,399 179,422

356,979 414,630 341,813 257,246 122,000 116,832

524,498 572,317 500,288 406,903 272,399 296,254

(Source: PPA, tabulated by Study Team) The reason why the foreign container cargoes have not been handled after 2011 in Cagayan De Oro Port is that a foreign shipping company, American President Lines (APL) moved to MCT from the same year with some reasons such as less expandability ofCagayan De Oro Port and poor accessibility always having traffic congestion between the main national highway and the port. iii)

Port Operations

The port cargo handling services at Cagayan De Oro Port has been operated by Oroport Cargo Handling Service Inc. Other operations such as RORO terminal and CFS are outsourced by some private companies. iv)

Major Port Facilities

Inventory of major facilities in the port is as follows: Berth Facilities

Berth Length

1,119m

RORO Ramp

10.5m x 12.5m, -10m

Berth Depth Yard Facilities

-8.0m – -11.9m

Stocking Yard

21,561m 2

CFS

5,506 m 2

Container Yard

14,636m 2

Quay Gantry Crane

Passenger Facilities

No.1-13 岸壁

2基

Marshaling Yard

25,647m 2

Transit Wharehouse

14,900m 2

Passenger Terminal

15,400m2

Some site photographs including a satellite photograph are shown as bellow. It is remarked that the photographs were taken during our field visit or obtained from Google Earth.

1-12

The hinterland of Cagayan De Oro Port is very limited

Two (2) QGC were installed at the berth

Ship gear operation for Domestic Containers

RTG Operation

Container Yard

1-13

Cargo Handling Operation (breakbulk)

Pallet Cargoes placed on Stacking Yard

RORO Vessel Calling

Cargo Handing of RORO vessel

Passenger Boat Calling

Cargo Handling Yard with CFS

1-14

3)

PHIVIDEC Industrial Authority (PIA) Port System

a)

Establishment of PHIVIDEC Industrial Authority (PIA) and Mission

PIA was created in 1974 through Presidential Decree No. 538, as amended, and has been in the business as an industrial estate developer for over 40 years. PHIVIDEC stands for Philippine Veterans Investment Development Corporation, wherein PIA is a sub-organization of PHIVIDEC. PHIVIDEC is under the jurisdiction of the Department of National Defense. PHIVIDEC owns PHIVIDEC Industrial Estate (PIE) with an area of 3,000 ha that is located in Misamis Oriental (PIE-MO), covering 13 barangays in the municipalities of Tagoloan and Villanueva. PIE is the first Industrial Area that is earmarked for PIA, however 70% of the area is agricultural use according to the EIA Report. b)

PHIVIDEC Industrial Estate (PIE)

PIA is mandated to acquire the 3,000 ha PIE areas, as defined by PD538, to manage/operate and to form industrial bases for economic promotion of the region. The current status of the land acquisition is as follows: Land defined by PD538

:

3,000ha

Roads, rivers/creeks, green areas

:

528ha

Potential areas for development

:

2,472ha

(100%)

Acquired areas

:

2,307ha

(93%)

Occupied by tenants

:

774ha

(31%)

The General Layout of the PIE is shown in Figure 1-12. The number of firms currently operating in PIE is sixty four (64) that occupy the areas (in yellow) as shown in Figure 1-13. Philippine Sinter Corp.

(A subsidiary company of JFE Steel Corp., production of sinter)

STEAG State Power Inc.

(Coal power plant)

FDC Misamis Power Corp.

(Coal power plant)

MINERGY

(Coal power plant)

Jacobi Carbon Philippines Inc.

(Coal products)

San Miguel Corp.

(Soybean products)

Taiyo Nippon Sanso Phil. Corp.

(Production of Gases)

Timber Wood Development Corp.

(Timbers)

Some major consignors, such as Del Monte, Dole, Nestle, Pilipinas Kao, etc., who export numerous container cargoes through MCT, are located near PIE but outside of PIE.

1-15

Figure 1-12 Outline of PHIVIDEC Industrial Estate

Park 1 - Mixed Industries Parks 2&3 - Light and Medium Park 4 - Solar Power Plants Park 5 - Medium Heavy Industries (Source: PIA) Figure 1-13 Utilization of PHIVIDEC Industrial Estate

(Source: PIA)

1-16

c)

Ports in PIE

The number of the firms/locators currently operating in PIE is sixty-four (64). The major firms are Philippine Sinter Corporation, STEAG State Power Inc., FDC Misamis Power Corporation and MINERG. PIE has a shoreline with a length of 9 km inside Macajalar Bay, along which private port facilities were constructed and are being operated by eleven (11) locators. There private ports mainly handle bulk materials both for import and export. Mindanao Container Terminal (MCT) handles container cargoes generated from those locators. Refer to Figure 1-13. Figure 1-14 Ports in PHIVIDEC Industrial Estate 1

PORTS INSIDE PIE-MO Phoenix / LimKetKai Port PSC Cargo Berth

4

2

5

1

2

PSC Main Berth

3

STEAG Plant

4

FDC Power Plant

5

KITROL Jetty

6

(Ferrochrome) Port 7 Gracia Port

8

JETTI Depot

9

6 7

8

9 10

Mindanao Container Terminal 10 Petron Depot

3

11

11

(Source: PIA) d) i)

Mindanao Container Terminal (MCT) Outline of MCT

The Mindanao Container Terminal (MCT) is located in Tagoloan, Macajalar Bay, North Mindanao. Across the bay in Cagayan de Oro is where the PPA Base port is situated. The Philippine Government requested a technical and financial assistance from Japan in 2000 for the construction of a new container terminal under PIA. A Japanese STEP Loan called an Obuchi Fund was pledged at the amount of US$85.32 million. The MCT Phase I project was completed in 2004. The general layout of MCT is presented in the Figure 1-15. ii)

Passengers and Cargoes

Mindanao Container Terminal (MCT) is exclusively of a container cargo handling terminal unlike Cagayan De Oro Port. According to PIA port statistics in 2015, the container handling volumes became 230 thousand TEU in 2013 but 180 thousand TEU in 2015. Recently, the volumes has revived about 210 thousand TEU in 2016 based on the latest information given by PIA. The containers handled are mostly composed of 60-70% foreign cargoes and 30-40 % domestic cargoes

1-17

Figure 1-15 General Layout of Mindanao Container Terminal (MCT)

(Source: PIA) iii)

Terminal Operations

After the completion of MCT in 2004, the terminal operation was put on hold for two years until the di spute with Oroport Cargo Handing Service Inc. was settled in 2006. Thereafter, PIA directly operated it until 2008. In June 2008, MTC’s operation and management were turned over to International Container Terminal Services, Inc. (ICTSI), the winning bidder under a concession contract. Operation works have been transferred to Mindanao International Container Terminal Service Inc. (MICTSI), a 100% subsidiary of ICTSI, then full operation was started by MICTSI. According to the terms and conditions of the Concession Contract, the concession period is twenty five (25) years extendable for 10 years. Concession fees are defined as both fixed fee and variable fee. MICTSI has a right to implement a terminal expansion work, subject to examination and approval of PIA. This means MICTSI is not fully responsible for expansion of the terminal. Considerable options for expansion would be -

PIA to implement with its own funding

-

PPP scheme with PIA and private firm

-

PIA to implement with an ODA financial assistance

1-18

iv)

Major Port Facilities

Inventory of major port facilities of MCT is as follows: Planned Cargo Handling Capacity Berth Facilities

250 Thousand TEU

Berth Length

300m

Berth Depth

－13.0m

Target Vessel

30,000DWT

Quay Gantry Crane Yard Facilities

Container Yard

2基 9.5ha

RTG

4基

Refer Power Outlets Buildings

Panamax

262 口

Administration Bldg.

1

Control Tower

1

Maintenance Shope

1

Some site photographs including a satellite photograph are shown as bellow. It is remarked that the photographs were taken during our field visit or obtained from Google Earth.

MCT is a container terminal with the dimensions of 300 wide and 480 m deep (container terminal area only) with certain expansion area at the north-west side.

1-19

300 m quay wall, apron and berthing fittings are good. Container handling by 2 cranes seems normal.

Quay gantry crane (2 units) and RTG (4 units) are well maintained, however, 1 RTG often malfunctions.

Container yard with container stacks, yard pavement, reefer sockets are good.

1-20

Administration building and container gate with weigh bridge, all in normal condition. v)

Proposed Expansion Area at Present

The proposed expansion site is located on the southern side of the existing Phase I Terminal (on the left, facing the sea). There exists stock-piled sand (3 m high) as reserve made during the Phase I dredging. The site is PIA’s own surrounded by perimeter fence. No settlers, no land use is observed.

Overall view of the MCT expansion area.

1-21

Shoreline of the expansion site, dredged sand during Phase I was stock-piled as reserve.

Current land conditions of the expansion site, no settlers, no land use are observed.

1-22

(3) Present Situation of the Objective Area The situation of Northern Mindanao is as follows: 1)

Population and Economic Zone

a)

Population Trends

Northern Mindanao, which consists of seven provinces, had a population of 4.3 million in 2010, and accounts for 4.7% of the total Philippine population. The annual average population growth rate from 2000 to 2010 was 2.06%, slightly lower than in the previous 10-year period but exceeding that of the Philippines as a whole (1.90%), as shown in Tables 1-7 and 1-8. Table 1-7 Change of Population of Northern Mindanao

(Source: 2015 Philippine Statistical Yearbook) Table 1-8 Change of Annual Average Growth Rate of Northern Mindanao

(Source: 2015 Philippine Statistical Yearbook) b)

Economic Zones

According to the Philippine Economic Zone Authority (PEZA) website, there are 10 economic zones currently operating in Northern Mindanao as of October 2016 (this represents 2.8% of all economic zones in the Philippines), while 6 economic zones have been authorized to commence operations in the near future and 7 more are in the planning stage (see Table 1-9).

1-23

Table 1-9 Economic Zones in Northern Mindanao in Region X (as of October 31, 2016) Type

Under Oeration

Approved

Developing

Manufacturing EZ

4

-

4

IT Park/Center

2

5

1

Tourism EZ

1

-

-

Agro-industrial EZ

3

1

2

(Source: PEZA, tabulated by Study Team) PHIVIDEC Industrial Estate Economic Zone is the Largest Economic Zone in Northern Mindanao. There are four Manufacturing Economic Zones in Northern Mindanao (refer to Table 1-10). Table 1-10 Manufacturing Economic Zones in Northern Mindanao (as of October 31, 2016) NAME OF ECOZONE 1 CIIF Agro-Industrial Park 2 Jasaan Misamis Oriental Ecozone OPERATING

3 Manticao Ecozone Corporation SEZ 4 Phividec Industrial EstateEconomic Zone 5 First Cagayan De Oro Business Park 6 Global Ispat Industrial Park DEVELOPMENT 7 JPLTI Special Export Processing IN PROGRESS Zone 8 Misamis Occidental-Oroquieta City Economic Zone

DEVELOPER/OPERATOR CIIF Agro-Industrial Park, Inc. Misamis Oriental Land Development Corp. Manticao Ecozone Corporation

TOTAL AREA CITY/PROVINCE (In Hectares) 15.36 Lanao del Norte 25.25 Misamis Oriental

Phividec Industrial Authority First Cagayan de Oro Business Park Co., Inc. Global Ispat Holdings, Inc. JP Latex Technology, Inc. Provincial Government of Misamis Occidental

28.89

Misamis Oriental

3,000.00

Misamis Oriental

79.90

Misamis Oriental

187.00 5.20

Iligan City Bukidnon

32.00

Misamis Occidental

(Source: PEZA, made by Study Team) 2)

Status of Hinterland Industries

a)

Industries in Hinterland Economic Zone

The acquisition of the 3,000 ha of land in PIE, defined by PD538, has completed at 93% of the substantially acquirable land area of 2,472 ha. Currently the number of locators is 64 firms occupying 774 ha. The reasons that there are numerous manufacturing and supply firms in PIE are: geopolitically high advantages with calm sea, and land, power, water, wages, etc., are available at low cost. Moreover, the Surigao area in northeast Mindanao is known as a mining industrial district producing high quality copper and nickel. PIE faced a slight economic decline in the last couple of years, however, it is expected that more domestic/foreign firms will be interested in locating there considering the availability of enough power due to the opening of FDC Misamis Power Corporation (400 MW power plant). Water supply is available from deep wells. There are numerous major foreign firms operating inside and outside the PIE, such as Del Monte, Dole, Nestle, Philippine Kao, Philippine Sinter, etc., and domestic firms, such as Miguel, Gama Food, Coca Cola, Holcim, etc. There are many manufacturing facilities and supply bases for export and domestic supply of fruit and food as the areas are being developed as agro-industrial areas. These firms are classified as: locators of PIE operating under lease contracts, those that have individually acquired the land and are operating therein, or tenants in the Economic Zone under lease contracts. 1-24

b)

Major Consignors and Commodities

According to the interviews with shipping companies, the major consignors for MCT are as follows: «Foreign Trade - Import» ●

Nestle (Coffee, Sugar, Powdered Cream)

●

Del Monte (Fruit, Vegetable, Juice)

●

Gama Foods (Feed and other additives)

●

Other Miscellaneous Goods, Construction Material

«Foreign Trade - Export» ●

Del Monte (Pineapple, Canned Products, Juice, Banana)

●

Nestle (Dry Milk)

●

Jacobi Carbon (Coal Processing Product)

●

Phil-KAO (Coconut Fat Acid, etc.)

●

Lumber Processing Companies（Cabinet Wood, Falcata）

«Domestic Trade - Inbound» ●

Miscellaneous Goods

●

Construction Materials

«Domestic Trade - Outbound ●

Del Monte (Pineapple, Canned Products, Juice, Banana)

●

Nestle (Powdered Milk, NESCAFE)

●

GAMA Foods (Meats)

●

Drinks

In the near future, the major consignors are planning to strengthen their business, which may bring a certain increase of MCT container cargoes. ●

Nestle will continuously serve as the major consignor and will expand production.

●

Del Monte plans to expand the existing plantation for more production of cans and juice.

●

Dole, which is stationed mainly in Davao, recently advanced their plantation in Bukidnon trying to cut into Del Monte’s field. Del Monte will then expand plantation areas not only for pineapple but also banana.

●

Lumber export volume may recover with Chinese buyers’ demand.

●

San Miguel will open and start production of soya bean products that will be exported via MCT.

1-25

3)

National Development Plan, Relevant Development Plans and Other Related Projects

a)

Philippine Development Plan

a-1)

Philippine Development Plan 2011-2016

Benigno S. Aquino III, the former President of the Republic of the Philippines, directed the National Economic and Development Authority (NEDA) to coordinate the formulation of the Philippine Development Plan for 2011-2016 (2011 NEDA). This plan was later updated in 2014 and the same has been validated until now. This plan was formulated and it adopts a framework of inclusive growth, which is high growth that is sustained, generates mass employment, and reduces poverty. With good governance and anticorruption as the overarching theme of each and every intervention, the plan translates into specific goals, objectives, strategies and programs, and projects all the things that we want to accomplish in the medium term. In this plan, the infrastructure development program is described as follows: “The Plan’s infrastructure development program aims to contribute to inclusive growth and poverty reduction. It will support the performance of the country’s economic sectors and ensure equitable access to infrastructure services, especially as these affect the people’s health, education, and housing. Toward these ends, the government will accelerate the provision of safe, efficient, reliable, cost-effective, and sustainable infrastructure.” The objectives and strategies that shall be pursued across all infrastructure subsectors are to optimize resources and investments, to attract investments in infrastructure, to foster transparency and accountability in infrastructure development, to adapt to climate change and mitigate the impacts of natural disasters, and to provide productive employment opportunities. In these, encouraging Public-Private Partnerships (PPP) and tapping the private sector for the financing, construction, operation, maintenance and rehabilitation of major infrastructure in high-priority areas, such as transportation, power and water, is stated as a policy for attracting investments in infrastructure. Six strategic plans are set to realize “a safe, secure, efficient, viable, competitive, dependable, integrated, environmentally sustainable, and people-oriented Philippine transportation system” for the transport sector, and the strategic plans relevant to this Project are as follows: «Develop an integrated multimodal logistics and transport system» a.

Identify and develop strategic logistics corridors based on a National Logistics Master Plan: The SCMB Corridor and other strategic logistics corridors must be developed to become seamless intermodal logistics corridors. In support of this, a Logistics Master Plan shall be completed to guide overall development.

b.

Improve the RRTS: Interisland logistics shall be enhanced by further developing the RRTS. Studies on the domestic shipping industry shall also be undertaken to identify concrete measures to lower interisland shipping costs. Efforts to improve performance and efficiency in port operations shall likewise be pursued. 1-26

c.

Explore ASEAN connectivity through sea linkages: The government shall study the development of existing RORO ports to accommodate international RORO ships as well as the necessary regulatory framework to promote such service. The development of port facilities through PPP to cater to cruise tourism, both servicing interisland and international cruise vessels, may also be explored.

«Separate the regulatory and operational functions of transport and other concerned agencies» a.

In line with the goal of separating the operation and regulation functions of transport agencies, the port, rail and air transport organizations shall be restructured.

Such existing development plans in the Philippines may be directed by the new President Rodrigo Duterte, who was inaugurated in June 2016, for updates and renewal. According to various media sources, it is considered to be certain that the new plan would prioritize the investment and development in the Mindanao areas where he was born. a-2)

Philippine Development Plan 2017-2022 (Draft)

Under Rodorigo Roa Duterute inaugurated at the end of June 2016 as the new President of the Republic of the Philippines, NEDA is making the draft of the Philippine Development Plan 2017-2022 in well coordination with the relevant Departments of the Government. Some parts of the draft of the Development Plan (10th January 2017 version) are already disclosed on the website of NEDA. In particular, it is stated for the port sector that “International Standard” should apply to any new port expansions, which means that the Government urges to enhance international competitiveness and logistics efficiency. b)

Philippine Port System Strategy (PPOSS)

“The Study on the Master Plan for the Strategic Development of The National Port System in the Republic of the Philippines” was conducted by JICA in January 2004. The Philippine Port System Strategy (PPOSS) drawn up in the study is extracted in Table 1-11. In the strategy, Cebu Port is selected as one of the international gateway ports as a major "window" to the world that will be developed until 2024.

1-27

Table 1-11 Philippine Port System Strategy Mission

1. Establishment of a fast, economical, reliable and safe maritime transport network accelerating the development of national economy 2. Formation of maritime transport bases to support regional society Establishment of a nationwide port development plan coordinated with the plans of various port management public corporations Port classification

International gateway port (Gateway port), Principal international trade port (Principal port), Major port (including RORO port for major corridors), Regional port LEGEND : International Gateway Port : Principal International Trade Port : 2 Lane Nat’l Roads : 4 Lane Nat’l Roads

Subic

Manila

Batangas

Iloilo Strategies for Planning

Cebu

CDO/MCT Santos Zamboanga General Santos

Davao

Principles for planning 1) Establishment of nationwide maritime transport

1) Concentrated Development of Specific International Container Gateway Bases 2) Improvement of Domestic Container Transport Efficiency 3) Development of Facilities for Break Bulk and Bulk Cargo 4) Port Planning at the Greater Capital Region 5) Formation of Major Corridors

2) Formation of 1) Enhancing the Mobility of People and Goods in the Region maritime 2) Securing Transportation Bases to Support Daily Life in Remote transport bases Islands to support 3) Supporting Social Reforms regional society Investment in long term development plan (2004-2024); about 150 Strategic development billion pesos port Investment in short term development plan (2004-2009); about 41 billion pesos Management and Operation

Modification of port administration as well as improvement of port management/operation - Establishment of National Plan for Port Development (NPPD) Council - Increasing cargo handling efficiency - Appropriate port tariff setting

Investment and Financing

Investment scheme and proper financial resource allocation for feasible port development - Proposed financial policies for public port development - Acceleration of private sector participation to port projects

(Source: The Study on the Master Plan for the Strategic Development of The National Port System in the Republic of the Philippines) 1-28

c)

Mindanao Strategic Development Framework 2010-2020

The aforementioned Medium Term Plan also focused, as its important policy, on enhancing the development of the Mindanao areas. Accordingly, NEDA formulated and established the Mindanao Strategic Development Framework 2010-2020 (2010 NEDA). This framework pursues Mindanao’s development by 2020 with the vision of “a peaceful and socially-inclusive Mindanao with a strong, sustainable, competitive, ICT-driven, agri-industrial, and resource-based economy that is responsive to local and global opportunities”. The development themes are given as follows: a.

Sustainable Resource-based Industrialization

b.

Growth with Social Equity

c.

Efficient Logistic Support

d.

Peace Building

e.

Good Governance and Strong Partnerships

Among which, particularly with regard to the logistics, the following programs are defined; c-1. Improving the Network of the Intermodal Transport System (Internal Connectivity and External Connectivity) c-2. Strengthening Linkages through ICT (Information and Communication Technology) It is obvious therefore that the Philippines will pour more investment into the development of Mindanao, which means that resources will shift from Luzon to Mindanao. d)

Development Plan for PPA Cagayan de Oro Port

Project Management Office - Cagayan de Oro (PMO-CGY), under the administration of PPA, has formulated its own masterplan and infrastructure development plans for the development of Cagayan de Oro base port. An outline of the major projects is as follows: expansion of the existing base port, and expansion of Opol port and Laguindingan port, among others. Expansion of Cagayan de Oro base port is to extend the existing berth and yard southeastward, which schedule is to be implemented as Phase II 260 m by 2025 and Phase III 450 m by 2030, aiming to strengthen foreign container functions. (Refer to Figure 1-16)

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Figure 1-16

Masterplan and Future Development Plan for Cagayan de Oro Port

(Source: PPA) Other improvement projects to construct/procure additional facilities are: construction of a modern passenger terminal, introduction of an IT system at the entrance gate, construction of a bulk terminal, etc. (see Figure 1-17) Figure 1-17

Ongoing Development Plan at Cagayan de Oro Port

BASEPORT DEVELOPMENT PROJECTS: • Construction and Operation of Modern PTB • Construction of 6-Lane Electronic Gate Complex • Provision of Efficient and Cost Effective Lighting System using Solar Powered LED Lights • Construction of Breakbulk Receiving Facility at Area “A” • Improvement of Back-Up Area at Portion of Area “Q”

(Source: PPA)

1-30

Further, PMO-CGY plans to develop the existing two ports, Opol and Laguindingan located at the west of the base port, to strengthen their domestic functions by expansion with reclamation. Opol Port aims to handle more domestic general cargoes, while Laquindingan Port aims for more passenger functions since it is located near the Laguindingan Airport. (see Figure 1-18) Figure 1-18

Development Plan for Laguindingan Port (Left) and Opol Port (Right)

(Source: PPA) According to the aforementioned development plans by PPA-CGY, Cagayan de Oro base port will be developed to strengthen conventional facilities such as domestic cargoes, RoRo and passengers. In parallel, foreign container functions will also be developed on a phased basis, namely Phase II by 2025 and Phase III by 2030. It is evident that PPA-CGY is focusing on foreign containerization, which will apparently compete with MCT operations. PMO-CGY mentions that these plans are assumed based on the market mechanism and that no coordination/adjustment will be required with PIA prior to implementation. e)

PHIVIDEC Industrial Authority Development Plan

The PHIVIDEC Industrial Authority (PIA) was created in 1974 through Presidential Decree No. 538, as amended, and has been in the business as an industrial estate developer for over 40 years. PIA, in keeping with the Philippine Medium Term Development Plan 2011-2016 and the Mindanao Strategic Development Framework 2010-2020, formulated the following plans to address PIA’s challenges and concerns: -

Ten Year Development Plan 2011-2020 (2011 PIA)

-

Strategic Development Plan 2013-2024 (2013 PIA) ---- an updated version of above

1-31

These plans give PIA’s vision and mission as follows: Vision:

A progressive industrial community that is socially, economically and environmentally sound, contributing to the growth and development of the country.

Mission: a. To create and promote an attractive business location efficiently managed by competent and dedicated professionals in close collaboration with the local government and the community. b. To uphold the interests of its stakeholders and provide benefits to veterans. c. To develop a workforce dedicated to harnessing new technology for a better service to the organization. To achieve the mission, PIA will focus on 4 “Ps” as shown below: 1.

People: Efficient and effective PIA Operations and delivery of Services

2.

Port: Full development of the Mindanao Container Terminal

3.

Power: Reliable, low price and continuous supply of power

4.

Policies & Procedures: Investor friendly, simplified and efficient procedures

This development plan also refers to the “JICA Preparatory Study for the Mindanao Logistics Infrastructure Improvement Project, 2009 JICA” in which container cargo growth and the MCT expansion program were presented. Referring to the result of the study, PIA set up phased development of MCT as follows: (Refer to Figure 1-19) CY 2012

Phase-II Stage-1 ---- with 200 m Expansion

CY 2018

Phase-II Stage-2 ---- with 400 m Expansion

CY 2026

Phase-III Stage-1 ---- with 300 m Expansion

CY 2030

Phase-III Stage-2 ---- with 300 m Expansion

PIA reiterates in the development plan the necessity of a new masterplan inclusive of MCT, PIE and SEZ, and promotion/marketing to invite locators in the industrial estate. It also pursues improvement of road accessibility to MCT in collaboration with DPWH. Thus, PIA emphasizes and focuses on the development of Mindanao Container Terminal as a first priority.

1-32

Figure 1-19 PIA’s MCT Expansion Conceptual Plan

(Source: PIA)

1-33

f)

Road Development Plans for DPWH

DPWH is currently pursuing various road network plans and projects based on the Road Masterplan formulated by JICA (Refer to Figure 1-20). Major road projects are shown below: (i)

Coastal Road: BCIR National Highway that passes along the shoreline of Macajalar Bay from Guza, behind the PPA base port and to Puntod-Kauswagan Bridge. Ongoing construction will complete by 2019. Two (2) lanes will open but right of way avails for 4 lanes, depending on the traffic volume. This road aims to decongest current traffic in the city, which is advantageous for PPA ensuring better access to the base port.

(ii) BCIR National Highway: Widening of the National Highway connecting Butuan-CDO-Iligan. Widening completed to the extent of CDO-Tagoloan with 4 lanes. (iii) Eastern Interior Road: This road aims to decongest the BCIR National Highway that connects Guza-Puerto. Right of way acquisition is ongoing. (iv) Alae-PHIVIDEC Road: This is a new bypass road connecting Balubal at Sayre Highway (CDO-Davao) via Bukidnon-Puerto-BCIR where Del Monte plantation is spread, then directly to the PHIVIDEC entrance. It is intended to lessen traffic accidents along the existing Sayre Highway due to steep slopes. The road sections are 90% complete with concrete pavement; the remaining works are to construct a bridge at Bugo and will be completed in 2019 or, at latest, 2020. Three (3) lanes in total (2 lanes uphill and 1 lane downhill). The final end at the MCT gate will be connected with an intersection. One of the biggest consignors, Del Monte, has long been looking forward to having this bypass opened. This is advantageous to MCT cargo generation. (v) ReXPRIP 1-Road 7 (Puerto–Claveria Alternate Road), ReXPRIP 2-Road 4 (Puerto–Claveria Alternate Road) and Balubal–Claveria Road: A planned road for CDO and Tagoloan for the sake of agricultural business for better logistics and transport. DPWH is also pursuing a flood control project funded by JICA. Both the Tagoloan River and the Cagayan de Oro River will have flood control infrastructure. The current status is at the detailed design stage.

1-34

Figure 1-20

Development Plans for Road Network in Cagayan de Oro

Cagayan de Oro River Flood Control Project (JICA), Just commenced

2 lanes to be Opened by 2019, 80% Complete/ 20% Remains due to RoW, Expandable to 4 lanes (partially 4 lanes paved) Butuan-CDO-Iligan 250 km Under Widening to 4 lanes, To be Completed by 2022, Currently 15% done

2 lanes Target by 2019, Ongoing RoW Process, 15% accomplished

2 lanes New Road, Target yr 2025, 5% accomplished

3 lanes Bypass directly into MCT, Target yr 2018, 3km left (2 Bridges 2020)

2 lanes New Road, Target yr 2025, 5% accomplished 2 lanes New Road, Target yr 2025, 5% accomplished

(Source: DPWH)

1-35

Chapter 2

Study Methodology

(1) Contents of the Study This Study aims to formulate the proposed project to be implemented under the Japanese ODA scheme. In order to materialize the project, the following investigations and analysis will be conducted, namely: review of the existing data/information, current situation of the existing ports, study on industries in hinterland economic zone, cargo demand forecast, study on relevant plans and projects, port planning, design, construction plan and cost estimate, study on project financing, economic and financial analysis, environmental and social considerations, study on port operation and organization, and project feasibility and recommendations. Then the pre-feasibility of the proposed Mindanao Container Terminal Expansion Project is examined. The methodologies for each study item are enumerated hereunder. 1)

Review of the Existing Data/Information

Existing data/information such as national development plans, statistics, PIA development plan, ongoing projects, etc., shall be collected and reviewed. Port cargo data, various engineering data, financial data, environmental/social data shall also be collected for further analysis. These data may be collected from NEDA, PPA, PIA, DENR, DPWH and others. 2)

Current Situation of the Existing Ports

The current situation of the Mindanao Container Terminal (MCT), Cagayan de Oro Port (PPA Base port) and others, if any, shall be investigated. Cargo handling volume of commodities, vessels, equipment, import/export, etc., shall also be collected for further analysis and forecast. Interviews with the shipping companies and consignors will be conducted to find out the current issues regarding the port facilities and services. 3)

Study on Industries in Hinterland Economic Zone

Industrial activities and cargo generation in the hinterland economic zone, including PHIVIDEC Industrial Estate (PIE) in Cagayan de Oro City covering North Mindanao, shall be surveyed for future forecast. Interviews with the existing locators shall also be conducted to know the current issues and future prospect. 4)

Cargo Demand Forecast

Future container cargo volume shall be forecasted for MCT and PPA base port based on the cargo statistics data. The result of the container forecast for MCT will be the criteria for project formulation in this study. The result may be examined by comparison of other forecast data in past studies.

2-1

5)

Study on Relevant Plans and Projects

Plans established in the Philippines that are relevant to the logistic infrastructure, such as national development plan, regional plan, transport projects, PPP projects and others, shall be collected to know the current status and future prospect, by which the proposed project will be justified. 6)

Port Planning, Design, Construction Plan and Cost Estimate

Basic policy for MCT development shall be determined. Required port facilities for expansion, with scale and dimensions, shall be specified based on the result of cargo volume forecast, then the layout will be proposed. Conceptual design will be conducted for berth structure, construction planning and rough cost estimates. 7)

Study on Project Financing

Project financing would supposedly be made by the Japanese ODA loan (STEP). Terms of the existing concession shall be carefully examined so that the best financing option for the benefit of PIA would be selected. PPP scheme will also be subjected to comparison as one of the alternatives. 8)

Economic and Financial Analysis

Economic analysis shall be made by calculation of EIRR for WITH/WITHOUT cases. Financial analysis shall also be done to evaluate the financial capability of PIA and to ensure that the loan would be repaid properly under the ODA scheme. 9)

Environmental and Social Considerations

An Environmental Compliance Certificate (ECC) issued by DENR/EMB is one critical requirement for an ODA loan project. The existing ECC issued at the time of the Phase I detailed design in 2001 may still be effective, however, such effectiveness shall carefully be examined considering whether the project site is covered in the ECC. Update of monitoring items, if any, shall also be studied by reviewing the existing EIA report, then necessary actions will be recommended. 10) Study on Port Operation and Organization Current MCT operations, including organization, shall be inspected. Solutions and recommendations for operation and management of the expansion area shall be studied. 11) Project Feasibility and Recommendations Feasibility of the proposed MCT expansion project shall be analyzed. Possible actions to be taken by PIA will be recommended for the way forward.

2-2

(2) Study Method and Organization 1)

Study Method

Methodology for the Study is shown in the form of the Flow Chart below. Figure 2-1 Study Flow

(Source: Study Team) 2)

Study Organization

This study was conducted jointly by Oriental Consultants Global (OCG) and The Overseas Coastal Area Development Institute of Japan (OCDI). In addition, JFE Steel Corporation was involved as the supporting firm for the study. An organization chart is presented below. The counterpart agency of the host country is PHIVIDEC Industrial Authority (PIA).

2-3

Figure 2-2 Study Team Organization Oriental Consultants Global Port & Harbor Dpt.

Project Manager Oriental Consultants Global Port & Harbor Dpt. Sr. Project Manager: Mr. Masato Suzuki [Local Support] Oriental Consultants Global Manila Office General Manager: Mr. Yuji Asano

General Planning / Team Leader Oriental Consultants Global, Port & Harbor Department Sr. Project Manager: Mr. Masato Suzuki Co-Team Leader / Port Planning / Port Operation & Management/ Financing The Overseas Coastal Area Development Institute of Japan (OCDI) Chief Researcher: Mr. Ryuichi Kuwajima Hinterland Industries / Demand Forecast Pacific Consultants Co., Ltd. Professional Engineer: Mr. Hitoshi Onodera

[Local Support] JFE Steel Corporation Manila Office General Manager: Mr. Kazuya [Supporting Firm] JFE Steel Corporation Civil Engineering Sec., Construction Material & Business Solution Dpt. Manager: Mr. Kaoru Uehara

Construction Plan / Cost Estimate Oriental Consultants Global, Port & Harbor Department Port Engineer/Project Manager: Mr. Toshitsugu Shimodaira Economic / Financial Analysis The Overseas Coastal Area Development Institute of Japan (OCDI) Senior Researcher: Mr. Akira Yamaguchi Social & Environmental Consideration Global Environmental Concepts Corporation (GECC) Senior Environmental Specialist: Mr. Catalino T. Taclibon, Jr.

(Source: Study Team)

2-4

(3) Study Schedule 1)

Study Schedule

The study period is set forth from August 30, 2016, until February 28, 2017, as per the consultancy contract, during which time the 1st site visit and 2nd site visit were programmed. The actual study schedule is shown in the bar chart below. Figure 2-3 Study Schedule ID

Work Items

Jul

I Works in Japan (1) Preparation, Inception Report

2016 Sep Oct

Aug

Nov

Dec

2017 Feb

Jan

Mar

(2) Analysis Works (3) Reporting Works II Works in Philippines (1) Colleciton of Existing Information/Data and Analysis W ork Schedule

(2) Formulation of Project Plan (3) Industrial Analysis, Demand Forecast, Vessels Forecast (4) Current Status of PPA Base Port, Port Planning (5)

Conceptual Design, Construction Plan and Cost Estimates

(6) Economical and Financial Analysis (7) Port Operation and Management, Financing (8) Social and Environmental Considerations III Reports (1) Inception Report

▲

(2) Draft Report

▲

(3) Final Report

▲

(Source: Study Team) 2)

Work Record in Philippines

Work record including itineraries and visits during the period of the first site visit and second site visit are listed in the following table.

2-5

Table 2-1 Work Record in Philippines Date

Activities

2016

Remarks

First Site Visit Sep 5 Mo Sep 6 Tu

Study Team travel to Manila Courtesy call to JFE Steel and Phil Sinter

Confirmation of various supports

Courtesy call to PPA Headquarters

Assistant General Manager Miole

Courtesy call to Japanese Embassy Courtesy call to JICA Phillippine Office Courtesy call to JETRO Manila Sep 7 We

Travel to Cagayan de Oro

Sep 8 Th

Visit to Phil. Sinter

Presentation of PSC business, Site visit to factory and berth

Courtesy Sep 13 Tu

call

to

PHIVIDEC Industrial

Presentation of Inception Report, Request

Authority, Kickoff meeting

for data/information

Visit to Cagayan de Oro Port (PPA Base port)

Port

Manager,

Presentation

of

PPA

Development, Port site visit Interview with PhilExport

Exec. Dir. Ignacio, Hearing on Export cargoes and Relevant business

Sep 14 We

Collection of relevant information

Collection of Charts/Maps at NAMRIA

Sep 16 Fri

Interview with Pilipinas Kao

Hearing on their business and cargoes

Interview

with

Chamber

of

Commerce

Hearing on recent port development

Manila Interview with NYK Manila

Hearing on cargoes and shipping trend

Sep 19 Mo

Inspection of ongoing Bypass Road

Sep 22 Th

Meeting with PIA Administrator Magno

Sep 23 Fr

Meeting with counterpart at PIA

Sep 28 We

Meeting with Japanese Embassy

Collection of required data/information

Meeting with JFE Steel Sep 29 Th

Study team returned to Japan

Sep 30 Fr

Team internal meeting in Tokyo

Confirmation of the 1st site visit, the way forward

Oct 3 Mo

Team travel to Manila Coordination meeting with JFE Steel

Oct 4 Tu

Travel to Cagayan de Oro Collection of data/information, Interviews and hearing

Oct 20 Th

Returned to Japan

2-6

Date

Activities

2016

Remarks

Second Site Visit Nov 24 Th

2 Team members travel to Cagayan de Oro

Nov 25 Fr

Courtesy call to PIA

Explanation of the itineraries

Nov 28 Mo

Interview with the Operator MICTSI

Hearing on cargoes, etc.

Dec 1 Th

Visit to DPWH, Site visit

Hearing on road development plans, Visit to ongoing Coastal Road

Dec 2 Fr

Interview with shipping company APL

Dec 7 We

3 team members travel to Cagayan de Oro

Dec 11 Su

JFE Steel travel to Cagayan de Oro

Dec 12 Mo

Progress presentation to PIA

Request for vessel data

Discussion

with

Dpt.

Managers

counterparts Dec 13 Tu

Meeting with PIA, Travel to Manila

Discussion on the way forward

Dec 14 We

Courtesy call to Japanese Embassy

Dec 15 Th

Courtesy call to DOTr and JICA Philippine Office

Dec 16 Fr

Team returned to Japan (Source: Study Team)

2-7

and

Chapter 3

Justification, Objectives and Technical Feasibility of the Project

(1) Background and Necessity of the Project 1)

Scope of the Project

The city of Cagayan de Oro, located in Northern Mindanao, is the capital of Misamis Oriental. Being a port city, it has been the center of agro-industrial business in Northern Mindanao. Cagayan de Oro Port (Base Port) under the Philippine Ports Authority (PPA) has been developed and taking important roles over decades as a logistic base for sea transportation and as a gateway to Manila, Cebu and other regions and also to neighboring countries in Southeast Asia. PPA’s port facilities are utilized for both passengers and cargoes that reached nearly 100% of its capacity, which soon caused remarkable congestion in the port areas. The mixture of passengers and cargoes created inefficient port activities, offshore vessels waiting, decrease of productivity and long-time truck transportation, which consequently caused serious problems for cargo transportation. In order to improve these situations, the Philippine Government requested from the Japanese Government in 2000 a financial assistance to build a new container terminal at Tagoloan, located opposite the PPA base port across Macajalar Bay. The request was granted with a special Yen loan program (STEP), called an Obuchi Fund, by which the Project for the Mindanao Container Terminal (MCT) - Phase I, with a total project cost of 8.3 billion JPY, was completed in 2004. MCT is located inside the PHIVIDEC Industrial Estate (PIE), 10 km away from the PPA base port, which is capable of handling an annual container volume of 250,000 TEU, with berth length of 300 m, depth of -13 m, and terminal yard area of 9 ha. The recent port statistics for MCT show a steady increase of container handling volume since its opening. The recorded volume in 2013 was 225,000 TEU, nearly hitting 90% of its capacity. Meanwhile the Cagayan de Oro PPA base port recorded 183,000 TEU, 188,000 TEU and 206,000 TEU in 2012, 2013 and 2014, respectively. Along with their terminal expansion program, the volume shows a steady increase. Based on these port statistics, it is evident that the container volume is definitely increasing in the Northern Mindanao areas. The PHIVIDEC Industrial Authority (PIA), which is responsible for administration of the PHIVIDEC Industrial Estate (PIE) and MCT, recently observed the occurrence of vessels offshore waiting, despite their efforts to improve storage capacity and handling productivity. This will create a shortage of terminal capacity very soon. Considering the above background, this study aims to conduct a pre-feasibility study on the proposed Mindanao Container Terminal Expansion Project.

3-1

2)

Current Situation Analyses and Future Prospects

a)

Container Cargo handling Volumes

a-1)

Status of Container Cargoes

i)

Whole Philippines

As shown in Figure 3-1 and Table 3-1, container handling volume in the Philippines has a tendency to increase; the overall volume in 2015 was 5.8 million TEU, among which 2.4 million (40%) was domestic and 3.4 million (60%) was foreign cargoes. Ninety percent (90%) of these container cargoes are handled by the PPA’s base ports situated nationwide, while 8% is handled by private ports (refer to Figure 3-2). Figure 3-1 Container Volume Trend in the Philippines Grand Total 7,000

1,000 TEU

6,000 5,000 4,000 3,000 2,000 1,000

(B) Out

(B) In

(T) Out

(T) In

(G) Out

(G)In

(P) Out

(P) In

4,000

3,000

3,000

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2000

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

0 2003

0 2002

1,000

2001

1,000

2003

2,000

2002

2,000

2001

1,000 TEU

4,000

2000

2015

Foreign Cargo

Domestic Cargo

1,000 TEU

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0

(B) Outbound

(B) Inbound

(T) Outbound

(T) Inbound

(B) Export

(B) Import

(T) Export

(T) Import

(G) Outbound

(G)Inbound

(P) Outbound

(P) Inbound

(G) Export

(G)Import

(P) Export

(P) Import

(B): BASE PORT, (T): TERMINAL PORT, (G): OTHER GOV. PORT, (P): PRIVATE PORT (Source: PPA/Graphed by Study Team)

3-2

Figure 3-2

Container Volume Share by Type of Port (2015 Philippines) Foreign Cargo(2015)

Domestic Cargo(2015) (P)

(P) Import

Inbound

(P)

Outbound 5%

(P) Export

4%

4%

4% (B)

(B) Export

Outbound

46%

45% (B)

(B) Import

Inbound

46%

46%

(B): BASE PORT, (T): TERMINAL PORT, (G): OTHER GOV. PORT, (P): PRIVATE PORT (Source: PPA/Graphed by Study Team)

Table 3-1 Container Volume Trend in Philippines (Unit: 1,000 TEU,%) Port Category

Cargo Category

Grand Total

Total

　

Domestic

Outbound

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

3,131

3,202

3,464

3,609

3,785

3,710

3,785

3,998

4,092

4,012

4,498

4,932

5,213

5,238

5,525

5,811

Share 100%

737

765

826

832

876

860

843

808

790

803

820

958

1,018

1,015

1,066

1,163

20.0% 20.9%

　

Inbound

764

798

846

851

886

838

828

806

777

790

820

965

1,047

1,042

1,105

1,213

　

Subtotal

1,501

1,562

1,672

1,683

1,762

1,698

1,671

1,613

1,567

1,593

1,640

1,924

2,065

2,057

2,171

2,375

40.9%

Export

810

819

889

962

999

999

1,048

1,176

1,271

1,197

1,414

1,506

1,556

1,563

1,642

1,718

29.6% 29.5%

　

Foreign

　

Import

820

820

903

964

1,025

1,013

1,067

1,209

1,253

1,222

1,444

1,503

1,591

1,619

1,712

1,717

　

Subtotal

1,629

1,640

1,792

1,925

2,023

2,012

2,115

2,385

2,525

2,418

2,858

3,009

3,147

3,182

3,354

3,435

59.1%

2,994

3,033

3,271

3,417

3,603

3,531

3,556

3,781

3,895

3,820

4,315

4,708

4,942

4,940

4,999

5,341

91.9%

BASE PORT

Total

　

Domestic

　 　 　

Foreign

Outbound

696

710

757

762

809

785

750

723

712

724

744

881

940

936

979

1,075

18.5%

Inbound

699

716

760

771

808

772

737

713

694

704

731

870

946

940

996

1,087

18.7%

Subtotal

1,395

1,426

1,517

1,532

1,617

1,558

1,487

1,437

1,406

1,428

1,475

1,751

1,886

1,875

1,974

2,162

37.2%

Export

792

801

869

939

980

977

1,018

1,146

1,245

1,177

1,400

1,472

1,508

1,500

1,471

1,582

27.2%

　

Import

807

807

885

945

1,006

996

1,050

1,198

1,244

1,215

1,439

1,486

1,548

1,565

1,554

1,596

27.5%

　

Subtotal

1,599

1,607

1,754

1,884

1,986

1,974

2,068

2,344

2,489

2,392

2,839

2,957

3,056

3,065

3,024

3,178

54.7%

31

32

37

37

38

28

22

22

17

9

9

13

11

11

15

16

0.3%

Outbound

15

16

18

18

18

14

11

11

8

5

5

6

5

5

7

8

0.1%

　

Inbound

16

17

19

19

20

14

11

11

8

5

4

6

5

6

7

8

0.1%

　

Subtotal

31

32

37

37

38

28

22

22

17

9

9

13

11

11

15

16

0.3%

TERMINAL PORT

Total

　

Domestic

　

Foreign

Export

　

Import

　

Subtotal

OTHER GOV. PORT

Total

　

Domestic

0

1

1

1

1

3

37

21

1

1

1

1

7

8

1

1

0.0%

Outbound

0

0

1

1

0

1

14

8

0

1

1

0

3

3

0

0

0.0%

　

Inbound

0

1

1

1

0

1

15

8

1

1

1

1

4

4

1

1

0.0%

　

Subtotal

0

1

1

1

1

1

29

16

1

1

1

1

7

8

1

1

0.0%

Export

1

4

2

　

Import

1

4

2

　

Subtotal

2

8

4

　

Foreign

PRIVATE PORT

Total

105

135

154

154

144

149

171

176

　

Domestic

179

181

173

210

253

279

511

453

7.8%

Outbound

27

39

52

52

48

60

68

66

69

74

70

70

70

71

80

80

1.4%

　

Inbound

48

64

65

60

58

51

65

73

74

81

84

88

92

91

101

117

2.0%

　

Subtotal

75

103

117

113

106

112

133

139

143

155

154

158

162

162

181

196

3.4%

Export

18

19

20

22

19

21

26

27

26

20

14

34

48

63

171

136

2.3%

　

Import

13

14

18

19

19

16

12

10

9

7

4

17

43

54

158

120

2.1%

　

Subtotal

30

33

38

41

38

37

38

37

36

26

19

52

91

117

329

257

4.4%

　

Foreign

Source: Statistics Annual Report (Philippine Ports Authority (PPA))

http://www.ppa.com.ph/?q=statistics-annual-report

(Source: PPA/Tabulated by Study Team)

3-3

ii)

Cagayan De Oro Port

As shown in Figure 3-3 and Table 3-2, Cagayan de Oro Port administrated by PPA, handles the majority of container cargoes for domestic transport. Domestic volume showed a slight decline from 2005 until 2009, however, it turned upward to reach 200,000 TEU in 2015. (Outbound and inbound were both 100,000 TEU.) Not a single foreign container was handled at this port since 2011. Figure 3-3 Container Volume Trends at Cagayan de Oro Port Grand Total 250

1,000 TEU

200 150 100 50

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0

Out

In

Foreign

200

200

1,000 TEU

250

150 100

150 100 50

0

0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

50

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1,000 TEU

Domestic 250

Outbound

Export

Inbound

Import

(Source: PPA/Graphed by Study Team)

Table 3-2 Container Volume Trends at Cagayan de Oro Port (Unit: 1,000 TEU) Port Category CDO Base Port

Cargo Category Total

Domestic

Foreign

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Subtotal

140

148

159

182

195

206

202

178

162

150

141

164

162

183

188

206

2015 237

Out

69

73

79

91

95

101

100

88

81

76

69

81

81

91

93

103

119 118

In

71

75

79

91

100

105

103

91

81

74

71

83

81

92

94

104

Subtotal

131

140

149

169

176

183

185

167

144

124

116

147

162

183

188

206

237

Outbound

64

69

75

85

87

90

93

84

72

63

59

74

81

91

93

103

119

92

94

104

118

Inbound

66

71

74

85

89

93

92

82

71

61

57

73

81

Subtotal

9

8

9

13

19

23

17

12

18

26

24

17

0

Export

4

4

4

6

8

11

6

3

9

14

10

7

0

Import

4

4

5

7

11

12

11

8

9

13

14

10

(Source: PPA/Graphed by Study Team)

3-4

iii)

Mindanao Container Terminal (MCT)

(i)

Historical Trends of Container Cargo Handling Volume

MCT was completed/opened in January 2004 and was directly operated by PIA until 2008. In June 2008, a private operator, Mindanao International Container Terminal Services, Inc. (MICTSI), through international bid, was awarded a concession contract for a period of 25 years. Thereafter, MICTSI started terminal operation. Figure 3-4 indicates the container volume trend since its opening to date. As shown in the figure, the cargo handling volume became slowdown in/after 2008 Lehman Shock but increased year by year toward 2013, and reached about 230 thousand TEU. However, it became 200 thousand TEU in 2014 and 180 thousand TEU in 2015. In 2016, the volume has revived up to 213 thousand TEU fortunately based on the latest information provided by PIA. The recent foreign and domestic volume shares are 60~70% and 30~40%, respectively, the majority of which is foreign containers. MCT does not handle cargoes other than container. Figure 3-4 Container Volume Trend at MCT Lumber decreased APL moved in, Lumber Processing

Lorenzo, NMC moved in

N O T E

Note: The actual record by MICTSI is 173,400 TEU up to Oct 2016. By adding the remaining months, the total volume in 2016 is expected to be 213,000 TEU. (Source: PIA & MICTSI/Graphed by Study Team) The container handling volume at MCT has been steadily increasing since 2006, however, it dropped in 2014. The factor analysis of such increase/decrease may be described as follows. «Factor of Increase (2006~2012) » The shipping companies Lorenzo Shipping and NMC Container Lines, who used to be located at Cagayan De Oro Port, moved to Tagoloan in 2006, since there are enough expandable area and poor accessibility between the national highway and the Port. Likewise, APL (American President Line) did 3-5

the same in 2010 because of heavy traffic congestion near the Port, expected increase of container cargo handling after Lehman Shock, and the superiority of MCT having some modern port facilities as an international gateway port. As the result of their moves to Tagoloan where MCT is also located, their cargoes accordingly shifted from PPA to MCT. With the increase of lumber processing business toward China and other export/import and outbound/inbound cargoes by Del Monte/Nestle, etc., it pushed up the volume to 225,000 TEU, hitting 90% of the terminal capacity in 2013. «Factor of Decrease (after 2014)» As resented in Figure 3-5, the economic growths of Europe, USA and Japan etc. were almost flat after 2014, the one of China and the Philippines has gradually declined lower. On the other hand, the exchange rate against USD in Peso became 41 pesos as the bottom value in 2013 like the same trend near Lehman Sock in 2008 but is shifting higher again after 2013.

It is generally assumed that the

volume of export decreased in 2014 and 2015 by the events of lowering the domestic economy growth and shifting a strong peso. Figure 3-5 GDP Growth Rate of Major Countries and Exchange Rate against USD in Peso 15.0

GDP Growth Rate(%)

10.0

5.0

0.0

-5.0

-10.0

2005

2006

Chaina

2007

2008

EU

2009

2010

Korea

2011

2012

Japan

2013

2014

Philippines

2015 USA

(Source: World Bank/Graphed by Study Team) 57.5

PHILIPPINE PESO

55.0 52.5 50.0 47.5 45.0 42.5 40.0

2005 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Exchange Rate against USD （Monthly Av.)

(Source: CEIC)

Such economic events might affect decrease of MCT’s export containers which is probably sensitive those impacts. For instance, the export volumes of containerizable pineapple, lumber, coconut, chemical products and banana met the peak in 2013 and then decreased in 2014 to less than sixty 3-6

percentage (60%) from previous year based on export statistics compiled by PhilExport covering PPA and PIA jurisdictions. Especially the volume of lumber further decreased in 2015. This decrease was corresponding to an analysis of lumber processing companies in Tagloan, who mentioned during a field interview that the buyers of the lumber from China had shifted to economically preferable market in Indonesia and Malaysia. Moreover, it is presumed that agriproducts such as pineapple and banana sometime make adjust their productions by the reasons not only of crop pests and/or disease but also price support. (ii)

Breakdown of Container Cargoes Handled

The container statistics of MCT, including export/import and outbound/inbound, laden/empty and sizes, are shown below: «Export/Import and Outbound/Inbound» As shown in Figure 3-6 and table 3-3, MCT lately handled approx. 200,000 TEU annually. According to the interview with the terminal operator, the volume dropped due to various reasons such as lumber decrease in 2014 and 2015, however, it is expected to recover up to the 200,000 TEU level. The statistics do not deal with the data by commodity due to unavailability, hence, below shows analysis categorized by laden/empty and size. Figure 3-6 Actual Container Volumes at MCT (2011-2015) Grand Total

FOREIGN

250,000

250,000

150,000

200,000 102,476

107,274

111,728

99,303

(TEU)

(TEU)

200,000 88,738

100,000 50,000

106,543

108,000

112,811

100,914

150,000 100,000 50,000

88,479

0

61,757

61,771

65,941

71,344

62,424

55,592

2011

2012

2013

2014

2015

2012 In

2013

2014

2015

Out

EXPORT

54,580

250,000

5,000

200,000

4,000

150,000

3,000

100,000 44,845

46,244

41,549

36,704

33,900

40,704

41,333

39,088

36,378

33,146

2011

2012

2013

2014

2015

OUTBOUND

IMPORT

Transshipment

(TEU)

(TEU)

DOMESTIC

0

64,210

0 2011

50,000

70,639

61,698

2,000

623

1,000 0

INBOUND

1,296 0 2011

0 2012 EXPORT

(Source: PIA/Graphed by Study Team)

3-7

2013 IMPORT

0 501 2014

0 2015

Table 3-3 Container Volume Trend at MCT (Unit: TEU) Grand Tot al

FORE IGN

DOME S TIC

Trans s hipment

TOTA L

2011

2012

2013

2014

2015

210, 508

215, 274

224, 539

200, 217

177, 217

Out

102,476

107,274

111,728

99,303

88,738

In

106,543

108,000

112,811

100,914

88,479

TOTA L

123, 469

127, 698

141, 983

126, 635

110, 172

EXPORT

61,771

65,941

71,344

62,424

55,592

IMPORT

61,698

61,757

70,639

64,210

54,580

TOTA L

85, 549

87, 576

80, 637

73, 082

67, 046

OUTBOUND

40,704

41,333

39,088

36,378

33,146

INBOUND

44,845

46,244

41,549

36,704

33,900

TOTA L

1, 489

1, 919

501

EXPORT

-

-

1,296

501

IMPORT

-

-

623

2011

2012

2013

2014

2015

158, 154

161, 332

163, 220

144, 814

131, 073

(Unit: BOX) Grand Tot al

FORE IGN

DOME S TIC

Trans s hipment

TOTA L Out

77,606

80,338

81,529

71,760

65,788

In

79,657

80,994

81,691

73,054

65,285

TOTA L

81, 208

83, 904

90, 726

79, 837

71, 798

EXPORT

40,980

43,401

45,474

38,685

35,787

IMPORT

40,228

40,503

45,252

41,152

36,011

TOTA L

76, 055

77, 428

70, 885

64, 566

59, 275

OUTBOUND

36,626

36,937

35,017

32,664

30,001

INBOUND

39,429

40,491

35,868

31,902

29,274

TOTA L

891

1, 609

411

EXPORT

-

-

1,038

411

IMPORT

-

-

571

2011

2012

2013

2014

2015

TOTA L

4. 32

2. 65

3. 90

3. 94

2. 67

Out

2.62

2.64

3.93

3.95

2.66

In

2.67

2.67

3.81

2.71

2.67

TOTA L

1. 52

1. 52

1. 56

1. 59

1. 53

EXPORT

1.51

1.52

1.57

1.61

1.55

(Unit: TEU/BOX) Grand Tot al

FORE IGN

DOME S TIC

Trans s hipment

IMPORT

1.53

1.52

1.56

1.56

1.52

TOTA L

1. 12

1. 13

1. 14

1. 13

1. 13

OUTBOUND

1.11

1.12

1.12

1.11

1.10

INBOUND

1.14

1.14

1.16

1.15

1.16

TOTA L

1. 67

1. 19

1. 22

EXPORT

1.25

1.22

IMPORT

1.09

Source: PHIVIDEC INDUSTRIAL AUTHORITY (PIA)

(Source: PIA/Tabulated by Study Team)

3-8

«Laden or Empty» According to the latest five-year actual data as presented in Figure 3-7 and Table 3-4, 80% of the volume handled in MCT is LADEN for both foreign and domestic cargoes. Figure 3-7 Laden/Empty Container Volume Trends at MCT Grand Total

Grand Total 100%

250,000 55,577

49,505

55,640

150,000 100,000 50,000

153,442

165,769

2011

2012

166,980

46,964

80% 32,180

152,752

145,038

2014

2015

Share (%)

(TEU)

200,000

27%

23%

25%

24%

18%

73%

77%

75%

76%

82%

2013

2014

2015

60% 40% 20% 0%

0 LADEN

2013

2011

2012

EMPTY

LADEN

FOREIGN

250,000

100%

200,000

80%

Share (%)

(TEU)

FOREIGN

150,000 100,000 50,000

44,148

38,050

35,773

85,419

91,924

97,835

90,379

86,125

2011

2012

2013

2014

2015

36,256

24,047

31%

28%

31%

29%

22%

69%

72%

69%

71%

78%

2013

2014

2015

60% 40% 20%

0

0% LADEN

2011

LADEN

100%

200,000

80%

Share (%)

(TEU)

EMPTY

DOMESTIC

250,000

150,000

50,000

2012

EMPTY

DOMESTIC

100,000

EMPTY

17,527

13,732

11,493

10,709

8,133

68,023

73,845

69,145

62,373

58,913

2011

2012

2013

2014

2015

20%

16%

14%

15%

12%

80%

84%

86%

85%

88%

2011

2012

2013

2014

2015

60% 40% 20%

0

0% LADEN

EMPTY

LADEN

EMPTY

(Source: PIA/Graphed by Study Team) Table 3-4 Laden/Empty Container Volume Trends at MCT (Unit: TEU) Grand Tot al

FORE IGN

DOME S TIC

2011

2012

2013

2014

2015

TOTA L

209, 019

215, 274

222, 620

199, 716

177, 217

LADEN

153,442

165,769

166,980

152,752

145,038

EMPTY

55,577

49,505

55,640

46,964

32,180

TOTA L

123, 469

127, 698

141, 983

126, 635

110, 172

LADEN

85,419

91,924

97,835

90,379

86,125

EMPTY

38,050

35,773

44,148

36,256

24,047

TOTA L

85, 549

87, 576

80, 637

73, 082

67, 046

LADEN

68,023

73,845

69,145

62,373

58,913

EMPTY

17,527

13,732

11,493

10,709

8,133

(Source: PIA/Tabulated by Study Team) 3-9

«Sizes» According to the latest five-year actual data as shown in Figure 3-8 and Table 3-5, container sizes for both foreign and domestic were constant for these years. Foreign containers comprised 70% 40-foot containers and 30% 20-foot containers. Whereas domestic containers comprised 80% 20-ft. and 20% 40-ft (see Figure 3-9 and Table 3-6). Figure 3-8 Container Volume Trends by Container Size at MCT (Foreign) FOREIGN

FOREIGN

150,000

100%

(TEU)

84,320

87,432

102,166

92,800

Share (%)

80% 100,000

76,132

50,000

0

38,967

40,126

39,504

33,119

33,486

0 2011

0 2012

0 2013

0 2014

0 2015

１0'

20'

40'

60%

68%

68%

72%

73%

69%

32%

31%

28%

26%

30%

0% 2011

0% 2012

0% 2013

0% 2014

0% 2015

40% 20% 0%

45'

１0'

EXPORT 80% 45,020

51,554

47,106

Share (%)

(TEU)

41,490

39,290

20,000 20,198 0 2011

20,867 0 2012 １0'

20'

19,623 0 2013 40'

60%

16,014 0 2015

68%

72%

75%

71%

33%

32%

28%

24%

29%

0% 2011

0% 2012

0% 2013

0% 2014

0% 2015

40% 20%

14,983 0 2014

67%

0%

45'

１0'

IMPORT

45'

80%

42,830

42,412

50,612

45,694

Share (%)

(TEU)

40'

100%

60,000

36,842

20,000 0

20'

IMPORT

80,000

40,000

45'

100%

60,000

0

40'

EXPORT

80,000

40,000

20'

19,259

19,881

18,136

17,472

0 2011

0 2012

0 2013

0 2014

0 2015

20'

40'

69%

69%

72%

71%

68%

30%

31%

28%

28%

32%

0% 2011

0% 2012

0% 2013

0% 2014

0% 2015

40% 20%

18,769

１0'

60%

0%

１0'

45'

(Source: PIA/Tabulated by Study Team)

3-10

20'

40'

45'

Table 3-5 Container Volume Trends by Container Size at MCT (Foreign) (Unit: TEU) FORE IGN

TOTA L

TOTA L

2011

2012

2013

2014

2015

123, 469

127, 698

141, 983

126, 635

110, 172

20'

38,967

40,126

39,504

33,119

33,486

40'

84,320

87,432

102,166

92,800

76,132

s ub t ot al １0'

E XP ORT

45'

182

140

313

716

554

s ub t ot al

61, 771

65, 941

71, 344

62, 424

55, 592

20'

20,198

20,867

19,623

14,983

16,014

40'

41,490

45,020

51,554

47,106

39,290

45'

83

54

167

335

288

s ub t ot al

61, 698

61, 757

70, 639

64, 210

54, 580

20'

18,769

19,259

19,881

18,136

17,472

40'

42,830

42,412

50,612

45,694

36,842

45'

99

86

146

380

266

s ub t ot al

85, 419

91, 924

97, 835

90, 379

86, 125

20'

27,693

30,263

28,010

26,087

27,844

40'

57,634

61,578

69,670

63,916

58,022

45'

92

83

155

376

259

s ub t ot al

49, 016

49, 171

61, 523

51, 022

41, 178

20'

13,600

13,161

13,946

12,146

11,708

40'

35,416

36,008

47,568

38,876

29,468

2

9

36, 403

42, 753

36, 312

39, 357

44, 947

20'

14,093

17,102

14,064

13,941

16,136

40'

22,218

25,570

22,102

25,040

28,554

45'

92

81

146

376

257

s ub t ot al

38, 050

35, 773

44, 148

36, 256

24, 047

１0'

IMP ORT

１0'

LADE N

TOTA L

１0'

E XP ORT

１0'

45' IMP ORT

s ub t ot al

2

１0'

E MP TY

TOTA L

１0'

E XP ORT

20'

11,274

9,863

11,494

7,032

5,642

40'

26,686

25,854

32,496

28,884

18,110

45'

90

56

158

340

295

s ub t ot al

12, 755

16, 770

9, 821

11, 402

14, 414

20'

6,598

7,706

5,677

2,837

4,306

40'

6,074

9,012

3,986

8,230

9,822

45'

83

52

158

335

286

s ub t ot al

25, 295

19, 004

34, 327

24, 854

9, 633

１0'

IMP ORT

１0' 20'

4,676

2,157

5,817

4,195

1,336

40'

20,612

16,842

28,510

20,654

8,288

45'

7

5

5

9

(Source: PIA/Tabulated by Study Team)

3-11

Figure 3-9 Container Volume Trends by Container Size at MCT (Domestic) DOMESTIC

DOMESTIC

150,000

100% 80%

19,158

20,426

19,588

50,000

17,098

15,584

66,289

67,075

60,976

55,943

51,437

2011

2012

2013

2014

2015

Share (%)

(TEU)

100,000

22%

23%

24%

23%

23%

77%

77%

76%

77%

77%

2014

2015

60% 40% 20%

0

0% １0'

20'

40'

2011

45'

OUTBOUND 80%

8,852

8,172

7,462

6,308

32,414

32,450

30,877

28,898

26,826

2011

2012

2013

2014

2015

Share (%)

(TEU)

8,234

20%

21%

21%

21%

19%

80%

79%

79%

79%

81%

2014

2015

60% 40%

0% １0'

20'

40'

2011

45'

2012 １0'

INBOUND

40'

45'

100% 80%

8,234

8,852

32,414

2011

8,172

7,462

6,308

32,450

30,877

28,898

26,826

2012

2013

2014

2015

Share (%)

60,000

(TEU)

2013 20'

INBOUND

80,000

20,000

45'

20%

0

40,000

40'

100%

60,000

20,000

2013 20'

OUTBOUND

80,000

40,000

2012 １0'

24%

25%

27%

26%

27%

76%

75%

72%

74%

73%

2014

2015

60% 40% 20% 0%

0 １0'

20'

40'

2011

45'

2012 １0'

(Source: PIA/Graphed by Study Team)

3-12

2013 20'

40'

45'

Table 3-6 Container Volume Trends by Container Size at MCT (Domestic) (Unit: TEU) DOME S TIC

TOTA L

TOTA L

OUTB OUND

INB OUND

s ub t ot al

2011

2012

2013

2014

2015

85, 549

87, 576

80, 637

73, 082

67, 046

１0'

91

69

53

36

23

20'

66,289

67,075

60,976

55,943

51,437

40'

19,158

20,426

19,588

17,098

15,584

45'

11

7

20

5

2

s ub t ot al

40, 704

41, 333

39, 088

36, 378

33, 146

１0'

45

31

24

18

10

20'

32,414

32,450

30,877

28,898

26,826

40'

8,234

8,852

8,172

7,462

6,308

45'

11

s ub t ot al

44, 845

36, 704

33, 900

TOTA L

46, 244

41, 549

46

38

30

19

13

20'

33,875

34,625

30,099

27,045

24,611

40'

10,924

11,574

11,416

9,636

9,276

7

5

5

s ub t ot al

68, 023

73, 845

69, 145

62, 373

１0'

69

64

45

28

16

20'

54,448

58,065

53,335

48,043

45,731

40'

13,506

15,716

15,760

14,298

13,164

5

5

2

33, 614

31, 558

30, 243

45' OUTB OUND

2

１0'

45' LA DE N

16

s ub t ot al

32, 131

34, 436

１0'

24

26

17

13

8

20'

28,129

29,126

28,107

25,949

24,725

40'

3,978

5,284

5,490

5,596

5,508

35, 892

39, 409

35, 531

30, 815

28, 670

45' INB OUND

s ub t ot al

2

１0'

45

38

28

15

8

20'

26,319

28,939

25,228

22,094

21,006

40'

9,528

10,432

10,270

8,702

7,656

5

5

45' E MP TY

TOTA L

OUTB OUND

INB OUND

58, 913

s ub t ot al

17, 527

13, 732

11, 493

10, 709

１0'

23

5

8

9

7

20'

11,841

9,010

7,641

7,900

5,706

40'

5,652

4,710

3,828

2,800

2,420

45'

11

7

16

s ub t ot al

8, 574

6, 897

5, 474

4, 820

2, 904

１0'

22

5

7

5

3

20'

4,285

3,324

2,770

2,949

2,101

40'

4,256

3,568

2,682

1,866

800

45'

11

s ub t ot al

8, 953

6, 835

6, 019

5, 889

5, 230

１0'

1

1

2

4

5

20'

7,556

5,686

4,871

4,951

3,605

40'

1,396

1,142

1,146

934

1,620

45'

8, 133

16

7

(Source: PIA/Tabulated by Study Team) a-2)

Cargo Demand Forecast

i)

Future Potential of Container Cargoes

As aforementioned in Figure 3-3, the volume in 2016 will surely recover and is estimated to be 213,000 TEU. MICTSI now intends to increase domestic cargoes, not limited to foreign containers.

3-13

The future demand considering the business plans of the major consignors may generate a cargo increase for MCT due to the following factors. Nestle will continuously be the core of MCT cargo generation by expanding their business field. Del Monte is currently pursuing expansion of the plantation. By this expansion, production of canned and juice products will increase. Dole who is stationed mainly in Davao is lately advancing their plantation in Bukidnon. In order for Del Monte to cope with this situation, Del Monte plans to expand their field not only for pineapple but also banana plantations. Lumber export volume currently has declined compared to 2012, however, Chinese buyers are looking for a new supply field in Mindanao, which is expected to recover exports back to 2012 level. The volume of container cargoes generated in PIE is not quite big, at the moment. According to PIA records, container generation is 1,000 TEU/month. One of the major consignors in PIE is Jocobi Carbon (Phil-KAO, Del Monte and Nestle are located outside the PIE). Currently, San Miguel has started soya bean food production for domestic outbound as well as export, which will be the new cargo demand. As mentioned above, container cargo volume is generally in an increasing tendency. On the other hand, however, PPA is ambitious to expand foreign container functions at the base port, which may be a threat to MCT. PIA is required to accept this threatening fact and to cope with this situation by taking prompt efforts to strengthen MCT functions. ii)

Container Cargo Demand Forecast

ii-1) Method of Demand Forecast and Outline of the Result Currently, in MCT, it is difficult to conduct a detailed demand forecast based on the trend of demand for each product or related socioeconomic trend, since statistics on the amount of cargoes for each product are not collected. Therefore, in this study, the demand forecast (macro projection) is conducted based on container growth (GRDP elasticity) to GRDP growth of Region X (Northern Mindanao) in which MCT is located. On that basis, considering the development plan of the competing Cagayan de Oro Port in the region, the future demand forecast is estimated. The flow and the outline result of the demand forecast are shown in Figures 3-10 and 3-11. The details of the demand forecast will be explained later. As mentioned above, it was very difficult to obtain the detailed data to be used for micro projection. However the detailed analysis was as much as possible undertaken based on collected data for import/export container cargo trend and some results of interview to major shipping companies. In case commodity based statics can be obtained from port authority and Bureau of Custom (BOC), upon implementation of full-scaled

3-14

F/S, micro analysis, the verification of the result of the demand forecast based on GDP elasticity and further detailed projection could be made accordingly. Figure 3-10 Philippine

Flowchart of Demand Forecast

Region X

Real GDP Population (actual, projection) [ UN, IMF ]

Real GRDP (actual) [ PSA ], (projection) [ MST ]

CDO

By Region

Container Growth Elasticity To GRDP (actual)

Share, Growth Rate of Real GRDP, Population (actual) [ PSA ]

(projection) [ MST ] Low, Baseline, High Case

MCT+CDO

MCT+CDO GRDP per Capita, Population (actual) [ PSA ], (projection) [ MST ]

Future Container TEU

Container Growth Elasticity To GRDP (projection) [ MST ] Low, Baseline, High Case

Container TEU (actual) [ PIA, PPA ]

MCT

Future Container TEU

Future Container TEU

(projection) [ MST ] Low, Baseline, High Case

(projection) [ MST ] Low, Baseline, High Case

Note: UN: United Nations, IMF: International Monetary Fund, PSA: Philippine Statistics AUthority, PIA: Phividec Industrial Authority, PPA: Philippine Ports Authority, MST: METI Survey Team

(Source: Study Team) Figure 3-11 Result of the Estimated Container Amount (MCT)

Bas eline

Low

Cas e

High

Bas eline

Low

ac t ual

projec tion

2015

2016

2020

2025

2030

Total

177, 217

213, 000

280,815

433,046

613, 436

Foreign

110,172

132,417

197,370

321,370

466,044

Domestic

67,046

80,583

83,445

111,676

147,392

Total

177, 217

213, 000

270,045

396,623

528, 802

Foreign

110,172

132,417

189,888

294,605

400,756

Domestic

67,046

80,583

80,157

102,018

128,046

Total

177, 217

213, 000

259,587

362,950

454, 289

Foreign

110,172

132,417

182,620

269,841

343,208

Domestic

67,046

80,583

76,967

93,109

111,081

Ty pe

Magnific ation

A nnual Growt h Rate

2030/ 2015 2030/2016 2015-2030 2016-2030

Tot al

3. 5

2. 9

8. 6%

7. 8%

Foreign

4.2

3.5

10.1%

9.4%

Domestic

2.2

1.8

5.4%

4.4% 6. 7%

Tot al

3. 0

2. 5

7. 6%

Foreign

3.6

3.0

9.0%

8.2%

Domestic

1.9

1.6

4.4%

3.4% 5. 6%

Tot al

2. 6

2. 1

6. 5%

Foreign

3.1

2.6

7.9%

7.0%

Domestic

1.7

1.4

3.4%

2.3%

700,000 613,436 600,000 528,802 500,000

400,000

454,289

300,000 224,539 200,000

213,000 177,217

100,000

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

High

Ty pe

Carg o Volu m e (TEUs)

Cas e

Actual

Low

Baselin e

Hig h

METI Survey Team

(Source: Study Team) ii-2) Container Demand Forecast in the Philippines The container demand in the whole Philippines was figured out by macro projection based on container volume and GDP, and is to be used as reference for the projection of future container volume in MCT. 3-15

iii)

Future GDP setting (2015 to 2021)

As shown in Table 3-7, the GDP in the whole Philippines has been increasing and the economic Compound Average Growth Rate (CAGR) from 2009 to 2014 was approximately 6.3%. Furthermore, IMF announced the projection of GDP for each country until 2021. It says the Philippines’s economic CAGR from 2014 to 2021 is expected to be approximately 6.2%, which is as high economic growth as the present situation (see Table 3-8). In this study, considering the present situation and the economic CAGR until 2021 by IMF, we adopted the projection by IMF, for GDP from 2015 to 2021. Table 3-7 Changes of Actual GDP (actual: UN) Real GDP : at constant 2005 price, USD YEAR Real GDP

(unit: Billion USD, %/year)

actual

actual

2009

2010

2011

2012

2013

2014

122

131

136

145

156

165

CAGR

6.3%

Source: ~2014: GDP by Type of Expenditure at constant (2005) prices - US dollars (United Nations)

(Source: UN/Tabulated by Study Team)

Table 3-8 Changes of Actual GDP (projection: IMF) Real GDP : at constant 2005 price, PHP YEAR Real GDP

actual

(unit: Billion PHP, %/year)

projection

projection

2014

2015

2016

2017

2018

2019

2020

2021

7,164

7,580

8,035

8,533

9,070

9,651

10,278

10,947

CAGR

6.2%

Source: World Economic Outlook Database (IMF, July 19, 2016)

(Source: IMF/Tabulated by Study Team) iv)

Future population setting (2016 to 2030)

In general, the GDP per capita increase accompanies economic growth. Therefore, to figure out the future GDP after 2016, the estimated GDP per capita is multiplied by the future population value. Since the United Nations (the U.N.) announced projections of future population for several cases, we use “medium fertility” for this study. As shown in Table 3-9, according to the world population prospects (medium fertility) by the U.N., it is expected that the population in the Philippines will increase steadily and the CAGR of the population will be about 1.6% from 2009 to 2014, and about 1.5% from 2014 to 2021. Furthermore, the Philippines population in 2030 will increase to approximately 120,000,000 which is 1.3 times that of 2015, and the CAGR of the population from 2021 to 2030 is estimated to be about 1.3%.

3-16

Table 3-9 Population Transition (actual, projection: UN) (unit: 1,000 people) actual

YEAR Polulation

actual

actual

projection

projection

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

91,642

93,039

94,501

96,017

97,572

99,139

100,699

102,250

103,797

105,341

106,887

108,436

109,988

CAGR

1.6%

1.5%

* ~2015 : actual / 2016~ : projection (medium fertility variant) Source: World Population Prospects: The 2015 Revision (United Nations Population Division)

(unit: 1,000 people) projection projection

YEAR

projection

projection

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Polulation

109,988

111,538

113,085

114,624

116,151

117,666

119,167

120,653

122,123

123,575

CAGR

1.5%

1.3%

* ~2015 : actual / 2016~ : projection (medium fertility variant) Source: World Population Prospects: The 2015 Revision (United Nations Population Division)

(Source: UN/Tabulated by Study Team) v)

Projection of GDP per capita (2002 to 2030)

Using the GDP and the actual population and the projection of population above, it is expected that the Philippines’ GDP per capita will increase from $1,665/person (actual) in 2014 to $2,294/person (projection) in 2021. Additionally, it is expected that the economic CAGR from 2009 to 2014 will be about 4.6%, and the economic CAGR from 2014 to 2021 will be about 4.7% (refer to Table 3-10). The Philippines’ population will steadily increase, and the GDP per capita will grow more since the current value is still under $3,000/person. Therefore, the economic CAGR from 2021 to 2030 is assumed to be about 4.7%, which is the same as the value from 2014 to 2021 given by IMF. Table 3-10

CAGR

Set Value of Economic CAGR of GDP Per Capita (Philippines) 2009 – 2014

2014 – 2021

2121 – 2030

(actual)

(projection)

(setting)

4.6%

4.7% ※

4.7%

Notes: Calculated based on GDP in 2014, population actual value and predicted GDP by the IMF, and estimated population by the United Nations. (Source: Study Team) vi)

Projection of future GDP (2022 to 2030)

The GDP for the whole Philippines from 2021 to 2030 is figured out by multiplying the estimated future population (medium fertility) by the U.N. and the set value of the economic CAGR of the GDP per capita (4.7%) which was stated before. Further, the GDP from 2015 to 2021 is set to be the projection value by IMF as mentioned before.

3-17

vii)

Container demand forecast in the Philippines

«Container volume transition» As presented in Figure 3-12, container volume in the Philippines has been increasing. The total amount has increased remarkably from about 3,000,000 TEU in 2000 to 5,800,000 TEU in 2015, which is about 1.9 times growth for 15 years (economic CAGR is about 4.2%). Foreign trade containers occupy 60% of the total and their container volume was about 3,400,000 TEU in 2015 which is about 2.1 times as much as in 2000, and its economic CAGR is about 5.1%. On the other hand, domestic trade containers occupy about 40% of the total and their container volume was about 2,400,000 TEU in 2015 which is about 1.6 times as much as in 2000, and its economic CAGR is about 3.1%. As stated above, foreign trade containers have been increasing remarkably in the Philippines. Figure 3-12

Container Volume Transition (Philippines)

Container Volume (1,000 TEUs)

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500

Foreign

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0

Domestic

Container Cargo

(Unit: 1,000 TEUs)

Grand Total Domestic

Foreign

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

3,131

3,202

3,464

3,609

3,785

3,710

3,785

3,998

4,092

4,012

4,498

4,932

5,213

5,238

5,525

5,811

Inbound

764

798

846

851

886

838

828

806

777

790

820

965

1,047

1,042

1,105

1,213

Outbound

737

765

826

832

876

860

843

808

790

803

820

958

1,018

1,015

1,066

1,163

Subtotal

1,501

1,562

1,672

1,683

1,762

1,698

1,671

1,613

1,567

1,593

1,640

1,924

2,065

2,057

2,171

2,375

Export

810

819

889

962

999

999

1,048

1,176

1,271

1,197

1,414

1,506

1,556

1,563

1,642

1,718

Import

820

820

903

964

1,025

1,013

1,067

1,209

1,253

1,222

1,444

1,503

1,591

1,619

1,712

1,717

Subtotal

1,629

1,640

1,792

1,925

2,023

2,012

2,115

2,385

2,525

2,418

2,858

3,009

3,147

3,182

3,354

3,435

(Source: PSA/Graphed and Tabulated by Study Team) «Macro projection of future container volume (Philippines)» As mentioned above, the Philippines’ container volume has been increasing steadily. However, there are different growth rates between foreign trade and domestic trade. Therefore, the correlation of GDP with each foreign and domestic trade is shown here, and the future container volume will be estimated.

3-18

(Foreign containers) As presented in Figure 3-13 and Table 3-11, foreign containers in the Philippines are highly correlated with GDP. When it is shown as a logarithmic trend line, the fixed coefficient R2 for the correlation equation is 0.98 (coefficient R is 0.99).

200

3,000

150

2,000

100

1,000

50 0

Container (Foreign)

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

0

GDP

Container Volume (1,000 TEU)

4,000 y = 2,565,779.27 ln(x) - 9,752,139.95

3,500

R² = 0.98

3,000 2,500 2,000 1,500 1,000 60

80

100

120

140

160

GDP (billion USD)

(Source: Study Team) Table 3-11 Measures of Correlation Strength coefficient R 0.0～0.2 0.2～0.3 0.3～0.4 0.4～0.5 0.5～0.7 0.7～1.0

Measure of correlation strength No correlation Low correlation Some correlation Mid-level correlation High correlation Very high correlation (Source: Study Team)

3-19

180

GDP (billion USD)

4,000

2000

Container Volume (1,000 TEU)

Figure 3-13 Transition and Correlation of Container Volume and GDP (Philippines: foreign containers)

(Domestic containers) As shown in Figure 3-14 and Table 3-11, domestic containers in the Philippines are also highly correlated with GDP. When it is shown as a logarithmic trend line, the fixed coefficient R2 for the correlation equation is 0.67 (coefficient R is 0.82).

2,500 2,000

150

1,500 100 1,000 50

500 0

GDP (billion USD)

200

Container (Domestic)

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

0 2000

Container Volume (1,000 TEU)

Figure 3-14 Transition and Correlation of Container Volume and GDP (Philippines: domestic containers)

GDP

Container Volume (1,000 TEU)

4,000 3,500 3,000 y = 870,362.26 ln(x) - 2,359,714.84

2,500

R² = 0.67

2,000 1,500 1,000 60

80

100

120

140

160

180

GDP (billion USD)

(Source: Study Team) (Projection result of future container volume) Based on the correlation equations for foreign and domestic trade, the container volume in the whole Philippines in 2030 is estimated to be about 8,900,000 TEU in total, about 5,700,000 TEU for foreign containers, and about 3,200,000 TEU for domestic containers (see Figure 3-15). Compared to 2015, it is 1.5 times (CAGR 2.9%) as total, 1.7 times (CAGR 3.5%) for foreign containers, and 1.3 times (CAGR 1.9%) for domestic containers. Additionally, when taking a point in 2011, GDP elasticity of containers (ratio of container growth to GDP growth) is approximately 1.0 (refer to Table 3-12). 3-20

MCT’s container volume in 2015 was about 180,000 TEU in total, which contributes about 3% of the total container volume (about 5,800,000 TEU) in the Philippines.

10,000 8,000 6,000 4,000 2,000

Foreign

2030

2028

2026

2024

2022

2020

2018

2016

2014

2012

2010

2008

2006

2004

2002

0 2000

Container Volume (1,000TEUs)

Figure 3-15 Projection Result of Future Container Volume (whole Philippines)

Domestic

(Source: Study Team) Table 3-12 Changes of GDP, Container Volume, and GDP Elasticity Total

(Unit: billion USD, 1,000 TEUs) actual 2011

GDP

2012

2013

2014

actual

prediction

2015

2020

2025

2030

MIN

AVE

MAX

136

145

156

165

175

237

320

428

-

-

-

4,932

5,213

5,238

5,525

5,811

6,857

7,889

8,888

-

-

-

Foreign

3,009

3,147

3,182

3,354

3,435

4,217

4,987

5,733

-

-

-

Domestic

1,924

2,065

2,057

2,171

2,375

2,641

2,902

3,155

-

-

-

Container Total

Elasticity Total

0.99

0.96

0.97

0.98

0.98

0.97

0.97

0.96

0.97

0.99

Foreign

0.98

0.96

0.97

0.97

0.98

0.98

0.97

0.96

0.97

0.98

Domestic

1.01

0.97

0.98

0.99

0.97

0.97

0.97

0.97

0.97

1.01

(Source: Study Team) vii-1) Container Demand Forecast in Northern Mindanao In Northern Mindanao (Region X) where MCT is located, Cagayan de Oro port (PPA base port) by PPA handles containers. However, because APL (American President Line) moved from Cagayan de Oro to MCT in 2010, Cagayan de Oro port hasn’t handled foreign containers since 2011, but it has been handling mainly domestic containers. Further, Cagayan de Oro port is planning to construct a new Opol port on its west side, aiming for improvement of traffic congestion and modernization of a hinterland behind the wharf at which the RORO ships moor (a main transportation mode for domestic containers). Further, a preparation of a new container terminal is under planning. Therefore, as of 2015, it would stimulate competition with MCT, which handles about 180,000 TEU (110,000 TEU for foreign containers, 70,000 TEU for domestic containers). 3-21

In light of this background, the future demand for each port will be figured out by estimating the future demand in Northern Mindanao (Region X), and taking a competing relation between MCT and Cagayan de Oro port into consideration. viii) Conditions of cargo throughput in a hinterland area (exporting cargo) To understand conditions of cargo throughput in a hinterland area of MCT and Cagayan de Oro port, cargo information of each port was given by PHILEXPORT. Although the information is only about exporting cargoes and may not cover all exporting cargoes due to big changes by time, it is possible to know the conditions of cargo throughput of major companies. According to this data, almost every exporting cargo handled in both ports is from Misamis Oriental (MOR) in Region X where both ports are located. Therefore, it is expected that competition will occur between MCT and Cagayan de Oro port, especially with cargoes from MOR (refer to Figure 3-16 and Table 3-13). Figure 3-16 Changes of Exporting Volume by Area (Hinterland areas)

100% 80% 60% 40% 20% 0% 2006

2007

MOR

2008

BUK

2009

LDN

2010

MOC

2011

CAM

2012

2013

Out of Region X

2014

2015

UNKNOWN

(Source: PhilExport/Graphed by Study Team) Table 3-13 Province Misamis Oriental (MOR) Bukidnon (BUK) Lanao del Norte (LDN) Misamis Occidental (MOC)

Camiguin (CAM)

2006

Changes of Exporting Volume by Area (Hinterland areas) 2007

Total

2009

2010

2011

2012

2013

2014

(unit: ton) 2015

6,699,273

988,485

4,677,150

3,949,579

7,414,795

2,999,637

1,457,325

8,896,597

3,969,603

6,657,114

81,323

122,261

214,833

187,329

66,436

190,180

77,091

42,873

39,923

38,975

92,686

271,356 107

246,345 3,000

14,731

12,022

9,917

13,829

10,293

14,287

3,823 60 34

267

Out of Region X UNKNOWN

2008

0 1,444,901

227

90,820

6,784,739

1,294,520

6,608,347

4,386,254

1,878

2,649

4,503

7,430

9,799

16,685

590,706

369,250

307,586

374,308

60,747

15,061

8,088,546

3,573,737

1,856,423

9,335,037

4,090,365

6,742,121

Source: PhilExport

(Source: PhilExport/Tabulated Study Team) The most exported products are ore, followed by pineapples, lumber, coconuts and chemicals. The past changes in the amount of each product are shown in Table 3-14.

3-22

As seen in the table, it is almost same trend between the statistics and the results of the interview for relevant companies of lumber and wood products. By collecting commodity base statistics from port authority and/or Bureau of Custom, further detailed demand forecast can be carried out. Table 3-14

Changes of Exporting Volume by Product (Hinterland area) (unit: 1,000ton)

Item

2006

2007

2008

2009

2010

2011

1

ORE

5,469

2

OTHERS

1,111

3

PINEAPPLE

83

172

2012

2013

2014

2015

23

4,814

2,829

6,362

2,071

874

1,006

944

869

849

854

6,938

2,745

5,471

474

1,333

863

718

302

139

142

164

133

194

118

165

4

LUMBER

23

17

142

120

279

172

161

310

182

169

5

COCONUT

52

100

153

171

124

90

47

100

83

108

6

CHEMICAL

21

54

69

41

49

34

40

102

20

34

7

WOOD

4

13

19

46

159

87

65

35

3

1

8

SCRAP

16

0

32

12

25

20

8

235

20

4

9

BANANA

4

36

44

62

30

45

39

42

30

30

0

0

13

9

15

12

12

19

12

19

1

12

8

21

18

16

15

3

2

10 PULP 11 RUBBER 12 CARBON

1

2

3

3

2

3

3

7

9

11

13 LOGS

0

0

0

0

10

6

3

4

2

1

0

0

0

14 WASTE 15 SHOES

1

16 MANGO

1

1

1

1

1

1

0

0

0

0

0

0

0

1

1

1

1

1

0

1

1

0

0

0

0

0

0

0

0

0

0

1

1

0

0

0

0

0

0

0

0

0

0

0

17 COAL 18 FRP

1

0

19 CHARCOAL

8

0

20 USED

0

0

21 MACHINE

0

0

0

1

0

22 SEASHELLS

0

0

23 PARTS

0

0

0

0

0

0

0

0

0

0

24 CERAMICS

0

0

0

0

0

0

0

0

0

0

25 PALM ACID

0

26 VALVE

0

27 JEWELRY TOTAL

6,785

0

0

1,295

6,608

0

0 4,386

8,089

3,574

1,856

9,335

0 0

4,090

6,742

Notes: Blanks in the table indicate no handling. Zero indicates handling less than 500 tons. Source: PhilExport

(Source: PhilExport/Tabulated Study Team) ix)

Projection of GRDP (by area) «Projection of GRDP per capita (2015 to 2030: PHP base) » Actual GRDPs per capita by area are shown in Table 3-15. In Mindanao District, Region IX (Davao Region) is the highest, followed by Region X (Northern Mindanao) where MCT is located. The economic CAGR is about 4.5% for Region IX and about 4.2% for Region X, which is the same economic growth level as the whole Philippines.

3-23

The future actual GRDP per capita is estimated by assuming the economic CAGR is the same level as actual value (2009 to 2014), in consideration that the Philippines’ actual economic CAGR from 2009 to 2014 (CAGR 4.6%) and the projection by IMF from 2015 to 2021 (CAGR 4.7%) are almost the same level, and it will grow more since the current GDP per capita is still under $3,000/person. Table 3-15 Changes of GRDP Per Capita (actual: PSA) P E R CA P ITA GROS S RE GIONA L DOME S TIC P RODUCT : at c ons t ant 2000 pric es actual

2009

2010

2011

2012

2013

2014

2009-2014

t ot al

58, 199

61, 570

62, 328

65, 332

68, 741

71, 726

4. 3%

s ubt ot al

74, 872

79, 470

80, 000

83, 805

88, 412

92, 014

4. 2% 4.6%

Region P hilippines Luz on

(Unit: PHP/people, %)

actual

CAGR

NCR

National Capital Region

162,321

171,442

173,057

181,748

195,070

203,132

CAR

Cordillera Administrative

70,672

74,107

73,490

70,156

72,759

73,908

0.9%

I

Ilocos

35,813

37,819

38,087

40,325

42,588

44,530

4.5%

II

Cagayan Valley

31,519

30,851

32,017

33,816

35,462

37,267

3.4%

III

Central Luzon

46,546

50,207

52,372

55,163

56,528

60,513

5.4%

IV-A

CALABARZON

73,271

79,699

78,231

81,562

84,687

86,683

3.4%

IV-B

MIMAROPA

37,724

37,002

37,283

38,239

38,138

40,016

1.2%

V

Bicol

20,580

21,004

20,979

22,502

24,005

24,688

3.7%

37, 406

39, 829

41, 246

42, 796

44, 556

46, 394

4. 4%

V is ay as

s ubt ot al

VI

Western Visayas

30,943

31,927

33,296

35,139

35,874

37,162

3.7%

VII

Central Visayas

44,993

49,966

52,192

56,061

59,211

63,351

7.1%

VIII

Eastern Visayas

Mindanao

s ubt ot al

36,058

36,694

36,784

33,850

34,952

33,743

-1.3%

35, 575

36, 707

37, 346

39, 514

41, 274

43, 579

4. 1%

IX

Zamboanga Peninsula

34,353

34,245

33,489

37,077

37,991

39,826

3.0%

X

Northern Mindanao

46,818

48,940

50,506

52,842

54,678

57,590

4.2%

XI

Davao Region

46,721

48,487

49,112

51,657

54,188

58,291

4.5%

XII

SOCCSKSARGEN

36,688

36,688

37,533

39,417

41,814

43,578

3.5%

XIII

Caraga

24,264

26,504

28,203

30,985

33,037

35,142

7.7%

ARMM

Autonomous Region in Muslim Mindanao

13,867

14,588

14,271

14,052

14,380

14,607

1.0%

Source: Philippine Statistics Authority.

(Source: PSA/Tabulated Study Team) «Projection of population by area (2015 to 2030) » Firstly, we calculated the actual population for each area by dividing GRDP by GRDP per capita. Then, using the actual population for each area, the ratio of population growth from 2009 to 2014 for each area is calculated (refer to Table 3-16). When figuring out the future population for each area, it must be matched to world population prospects (medium fertility) by the U.N.Firstly, we calculated the future population for each area, assuming that the ratio of population growth per area is the same value as the actual rate (2009 to 2014). Then, the gross population in 2030, as forecasted by the U.N., is multiplied by the ratio (share) of the future population for each area that can be calculated in the previous step (adjustment).

3-24

Table 3-16 Changes of Population by Area (actual) P opulat ion

(Unit: 1,000 people) actual

actual

2009

2010

2011

2012

2013

2014

2009-2014

t ot al

91, 642

93, 039

94, 501

96, 017

97, 572

99, 139

1. 6%

s ubt ot al

51, 924

52, 771

53, 671

54, 593

55, 544

56, 504

1. 7%

Region P hilippines Luz on

CAGR

NCR

National Capital Region

11,776

11,944

12,110

12,317

12,510

12,704

1.5%

CAR

Cordillera Administrative

1,607

1,629

1,651

1,677

1,702

1,727

1.4%

I

Ilocos

4,735

4,780

4,824

4,875

4,925

4,974

1.0%

II

Cagayan Valley

3,216

3,251

3,284

3,326

3,365

3,404

1.1%

III

Central Luzon

10,046

10,218

10,404

10,572

10,757

10,944

1.7%

IV-A

CALABARZON

12,421

12,725

13,069

13,391

13,739

14,095

2.6%

IV-B

MIMAROPA

2,726

2,765

2,807

2,843

2,883

2,924

1.4%

V

Bicol

5,396

5,458

5,522

5,593

5,663

5,732

1.2%

17, 920

18, 131

18, 342

18, 587

18, 825

19, 063

1. 2%

V is ay as

s ubt ot al

VI

Western Visayas

7,077

7,151

7,225

7,310

7,393

7,476

1.1%

VII

Central Visayas

6,755

6,851

6,947

7,062

7,171

7,282

1.5%

VIII

Eastern Visayas

Mindanao

s ubt ot al

4,088

4,129

4,170

4,215

4,260

4,305

1.0%

21, 798

22, 137

22, 487

22, 837

23, 203

23, 572

1. 6%

IX

Zamboanga Peninsula

3,383

3,433

3,488

3,535

3,588

3,641

1.5%

X

Northern Mindanao

4,261

4,331

4,405

4,474

4,549

4,625

1.7%

XI

Davao Region

4,433

4,503

4,575

4,645

4,719

4,794

1.6%

XII

SOCCSKSARGEN

4,064

4,144

4,230

4,313

4,401

4,491

2.0%

XIII

Caraga

2,418

2,446

2,475

2,508

2,540

2,572

1.2%

ARMM

Autonomous Region in Muslim Mindanao

3,241

3,279

3,315

3,363

3,406

3,450

1.3%

(Source: Study Team) «Projection of GRDP by areas (2015 to 2030: USD base) » For GRDP by area (USD base), the GDP projection of the Philippines (USD base) is multiplied by the ratio (share) of GRDP per area (USD base), which is calculated by multiplying GRDP per capita for each area (PHP base) by population for each area (see Table 3-17).

3-25

Table 3-17 Changes in GRDP by Area (projection) GROSS RE GIONA L DOME STIC P RODUCT (GRDP ) : at c ons t ant 2005 pric e, USD Region Philippines

t ot al

Luz on

s ubt ot al

(Unit: billion USD, %)

actual

actual

projection

CAGR

2009

2014

2015

2020

2025

2030

2009-2014

2014-2030

121. 8

165. 1

174. 7

236. 9

319. 9

427. 8

6. 3%

6. 1%

88. 8

120. 7

127. 7

173. 1

233. 0

309. 8

6. 3%

6. 1%

156.5

6.5%

6.2%

NCR

National Capital Region

43.7

59.9

63.5

86.7

117.3

CAR

Cordillera Administrative

2.6

3.0

3.0

3.4

3.9

4.3

2.7%

2.4%

I

Ilocos

3.9

5.1

5.4

7.2

9.4

12.1

5.8%

5.5%

II

Cagayan Valley

2.3

2.9

3.1

3.9

4.9

6.0

4.9%

4.6%

III

Central Luzon

10.7

15.4

16.5

23.6

33.4

46.8

7.6%

7.2%

IV-A

CALABARZON

20.8

28.4

30.0

40.8

54.9

72.8

6.4%

6.1%

IV-B

MIMAROPA

2.3

2.7

2.8

3.2

3.6

4.1

2.9%

2.6%

V

Bicol

2.5

3.3

3.4

4.4

5.7

7.1

5.3%

5.0%

15. 3

20. 5

21. 7

29. 8

41. 4

57. 7

6. 0%

6. 7%

VI

Western Visayas

5.0

6.5

6.8

8.7

11.0

13.8

5.2%

4.9%

VII

Central Visayas

6.9

10.7

11.6

17.8

27.1

40.7

9.1%

8.7%

VIII

Eastern Visayas

3.4

3.4

3.4

3.3

3.3

3.2

0.0%

-0.3%

17. 7

23. 8

25. 2

33. 9

45. 4

60. 2

6. 1%

6. 0%

Vis ay as

s ubt ot al

Mindanao

s ubt ot al

IX

Zamboanga Peninsula

2.7

3.4

3.5

4.4

5.5

6.8

4.9%

4.5%

X

Northern Mindanao

4.6

6.2

6.5

8.8

11.8

15.6

6.3%

6.0%

XI

Davao Region

4.7

6.5

6.9

9.4

12.7

16.9

6.5%

6.2%

XII

SOCCSKSARGEN

3.4

4.5

4.8

6.4

8.4

10.8

5.9%

5.6%

XIII

Caraga

1.3

2.1

2.3

3.6

5.5

8.4

9.4%

9.0%

ARMM

Autonomous Region in Muslim Mindanao

1.0

1.2

1.2

1.4

1.5

1.7

2.7%

2.3%

(Source: Study Team) x)

GRDP elasticity setting «Changes of GRDP elasticity of MCT and Cagayan de Oro port» Shown below are changes of the ratio of container growth in MTC and Cagayan de Oro port to GRDP growth of Region X (Northern Mindanano) where MCT is located. When calculating GRDP elasticity, the 2011 ratio is applied in order to avoid the influence of short-period changes of GRDP and containers. The GRDP elasticity to container volume ratio of both ports is: for foreign containers, 0.91 at minimum, 0.96 at average, and 1.01 at maximum; and for domestic containers, 0.98 at minimum, 0.99 at average, and 1.02 at maximum. In actuality, from 2011 to 2016, the maximum values of both foreign and domestic containers exceeded 1.0 while the average and minimum values were less than 1.0. This shows that container growth to GRDP growth is relatively small.

3-26

Table 3-18 Changes of GRDP Elasticity (actual) (Billion USD, TEU) GRDP Container

Region X

2011

2012

2013

2014

2015

2016 **

5.1

5.5

5.8

6.2

6.5

6.9

(2011 ratio)

-

(1.07)

(1.06)

(1.06)

(1.06)

(1.06)

Total

210,508

215,274

224,539

200,217

177,217

213,000

(2011 ratio)

-

(1.02)

(1.03)

(0.98)

(0.96)

(1.00)

123,469

127,698

141,983

126,635

110,172

132,417

(2011 ratio)

Foreign

-

(1.03)

(1.07)

(1.01)

(0.97)

(1.01)

Domestic

85,549

87,576

80,637

73,082

67,046

80,583

(2011 ratio)

-

(1.02)

(0.97)

(0.95)

(0.94)

(0.99)

Elasticity* Total

MIN

AVE.

MA X

(1.06)

(1.06)

(1.07)

(0.96)

(1.00)

(1.03)

(0.97)

(1.02)

(1.07)

(0.94)

(0.97)

(1.02)

-

0.96

0.97

0.92

0.90

0.94

0.90

0.94

0.97

Foreign

-

1.01

1.04

1.03

1.01

1.01

1. 01

1. 02

1. 04

Domes tic

-

0.99

0.91

0.94

0.97

0.97

0. 91

0. 96

0. 99

* (Elasticity) = (Container 2011 ratio) / (GRDP 2011 ratio) ** In October 2016, actual cargo volume of MICTSI is 173,400TEU. If including the remaining month it is estimated to be 213,000 TEU in 2016.

(Source: Study Team) «Comparison of GDP elasticity with Foreign Countries’» As presented in Tables 3-19 and 3-20, in the Philippines, current GDP elasticity (maximum) of domestic containers slightly exceeds 1.0, and the other is less than 1.0. In general, for emerging countries whose economic growth run at a high level, economic scale expands accompanying an increase of GDP per capita and population and GDP elasticity of containers tend to exceed 1.0. It is said that when GDP per capita exceeds $3,000/person, the number of middle-income earners increases and consumption is also activated, resulting in an increase of movement of freight. The Philippines GDP per capita in 2014 was $1,665/person, which leaves ample room to grow more. Because it is expected that the movement of freight in the Philippines will increase accompanying economic growth in the future, here, we sorted out changes of GDP elasticity to GDP per capita and containers in the following four countries: Indonesia, Sri Lanka, China, and Thailand, whose past GDPs per capita were the same as the current Philippine one. They are used as a reference for the setting of GDP elasticity, later. As shown in the table below, the Philippines’ GDP per capita in 2014 ($1,700/person) was reached by Indonesia and Sri Lanka in 2010, China in 2004, and Thailand in 1990. Economic growth in the four countries has been continuing steadily since then. The GDP per capita in 2014 for each country was about $2,000/person for Indonesia and Sri Lanka, and about $4,000/person for China and Thailand. Further, GDP elasticity in the four countries when GDP per capita exceeds $1,700/person was 1.02 at minimum and 1.04 at maximum (average of four countries), which exceeds the Philippines’ actual (1.0) from 2000 to 2014. Besides, container volume of the four countries includes foreign and domestic containers and transshipment containers (T/S). Taking into account the trends in the economic growth of the four countries mentioned above, container cargo growth in the Philippines is expected to continue growing, exceeding GDP growth in the future (GDP elasticity value is expected to be 1.0 or more). 3-27

Table 3-19 Changes of GDP Per Capita and GDP Elasticity (1/2) Country

Actual Year

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

82

85

88

92

98

103

108

116

120

122

131

136

145

156

165

77,932

79,605

81,294

82,972

84,596

86,141

87,593

88,966

90,297

91,642

93,039

94,501

96,017

97,572

99,139

GDP per capita　（USD/people）

1,057

1,065

1,080

1,111

1,163

1,197

1,238

1,300

1,334

1,330

1,409

1,438

1,512

1,595

1,665

Cargo Volume （1,000TEU） *

3,032

3,091

3,325

3,468

3,676

3,634

3,676

4,351

4,471

4,307

4,947

5,289

5,686

5,860

5,869

0.99

1.01

1.01

1.00

0.99

0.99

1.00

1.00

1.00

1.00

1.01

1.01

1.00

1.00

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

251

263

228

230

242

250

262

274

288

304

321

341

362

379

402

Real GDP　（billions USD） Philippines Population （1,000 people）

GDP elasticity ** Year Real GDP　（billions USD） Indonesia

Actual

2000

Population （1,000 people） GDP per capita　（USD/people）

199,927 202,854 205,753 208,644 211,540 214,448 217,369 220,308 223,269 226,255 229,264 232,297 235,361 238,465 241,613 1,256

1,296

1,110

1,104

Cargo Volume （1,000TEU） *

1,142

1,168

1,204

1,245

1,290

1,345

1,401

1,470

1,538

1,588

1,665

3,798

3,902

4,540

5,177

5,369

5,503

4,316

6,583

7,405

7,255

8,483

0.99

1.05

1.06

1.04

1.03

0.97

1.03

1.03

1.02

1.03

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

GDP elasticity ** Year

Sri Lanka

1996

1997

1998

1999

2000

Real GDP　（billions USD）

16

17

18

19

20

20

21

22

23

24

26

28

30

31

33

Population （1,000 people）

18,374

18,478

18,572

18,671

18,784

18,915

19,061

19,217

19,374

19,526

19,672

19,814

19,950

20,079

20,201

885

937

977

1,013

1,067

1,045

1,079

1,134

1,186

1,250

1,336

1,416

1,490

1,533

1,646

1,733

1,727

1,765

1,959

2,221

2,455

3,079

3,687

3,687

3,464

4,000

1.01

1.00

1.01

1.03

1.03

1.05

1.06

1.05

1.03

1.03

GDP per capita　（USD/people） Cargo Volume （1,000TEU） * GDP elasticity ** Year Real GDP　（billions USD） China

Population （1,000 people） GDP per capita　（USD/people）

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

534

583

667

759

859

953

1,048

1,144

1,233

1,327

1,439

1,558

1,700

1,870

2,059

1,154,606 1,172,328 1,188,450 1,202,983 1,216,067 1,227,841 1,238,235 1,247,259 1,255,263 1,262,714 1,269,975 1,277,189 1,284,350 1,291,485 1,298,573

462

498

561

631

706

777

846

917

983

1,051

Cargo Volume （1,000TEU） *

1,133

1,220

1,324

1,448

1,585

41,000

44,726

55,717

61,898

74,725

1.01

1.07

1.05

1.06

1986

1987

1988

1989

1990

GDP elasticity ** Year

Thailand

2014

1980

1981

1982

1983

1984

1985

Real GDP　（billions USD）

44

46

49

51

54

57

60

66

75

84

93

Population （1,000 people）

47,385

48,337

49,266

50,183

51,105

52,041

53,003

53,980

54,934

55,813

56,583

922

957

989

1,025

1,065

1,094

1,134

1,219

1,357

1,499

1,643

GDP per capita　（USD/people） Cargo Volume （1,000TEU） * GDP elasticity **

(Source: Study Team)

3-28

Table 3-20 Changes of GDP Per Capita and GDP Elasticity (2/2) Country

Actual

Actual

Actual

Year Real GDP　（billions USD） Philippines Population （1,000 people） GDP per capita　（USD/people） Cargo Volume （1,000TEU） * GDP elasticity **

Indonesia

Sri Lanka

China

Thailand

Year

2011

2012

2013

2014

Real GDP　（billions USD）

427

453

478

502

Population （1,000 people）

244,808 248,038 251,268 254,455

GDP per capita　（USD/people）

1,745

1,826

1,903

1,974

Cargo Volume （1,000TEU） *

8,966

9,639

11,273

11,901

GDP elasticity **

1.03

1.03

1.03

1.03

Year

2011

2012

2013

2014

Real GDP　（billions USD）

36

38

41

44

Population （1,000 people）

20,316

20,422

20,522

20,619

GDP per capita　（USD/people）

1,772

1,874

2,000

2,138

Cargo Volume （1,000TEU） *

4,263

4,321

4,306

4,908

GDP elasticity **

1.03

1.02

1.01

1.02

Year

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Real GDP　（billions USD）

2,291

2,582

2,949

3,232

3,530

3,904

4,275

4,604

4,958

5,320

Population （1,000 people）

1,305,601 1,312,601 1,319,625 1,326,691 1,333,807 1,340,969 1,348,174 1,355,387 1,362,514 1,369,436

GDP per capita　（USD/people）

1,755

1,967

Cargo Volume （1,000TEU） *

67,245

84,811 103,823 115,942 108,800 130,290 144,642 161,319 170,859 181,635

2,235

2,436

2,646

2,911

3,171

3,397

3,639

3,885

GDP elasticity **

1.01

1.02

1.03

1.03

1.01

1.02

1.02

1.02

1.01

1.01

Year

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Real GDP　（billions USD）

101

110

120

129

140

148

144

133

139

145

150

159

171

182

189

Population （1,000 people）

57,226

57,762

58,238

58,723

59,266

59,879

60,545

61,251

61,974

62,693

63,415

64,137

64,817

65,405

65,864

GDP per capita　（USD/people）

1,761

1,906

2,055

2,202

2,359

2,467

2,373

2,166

2,239

2,313

2,364

2,487

2,638

2,778

2,874

3,179

3,387

3,799

4,233

4,847

5,115

1.03

1.04

1.04

1.05

1.04

Cargo Volume （1,000TEU） * GDP elasticity ** Country

Actual

2005

GDP elasticity **

Actual

Year

MIN

AVE

MAX

0.99

1.00

1.01

1.03

1.03

1.03

1.01

1.02

1.03

1.01

1.02

1.03

1.03

1.04

1.05

Real GDP　（billions USD） Philippines Population （1,000 people） GDP per capita　（USD/people） Cargo Volume （1,000TEU） * GDP elasticity ** Year Real GDP　（billions USD） Indonesia

Population （1,000 people） GDP per capita　（USD/people） Cargo Volume （1,000TEU） * GDP elasticity ** Year Real GDP　（billions USD）

Sri Lanka

Population （1,000 people） GDP per capita　（USD/people） Cargo Volume （1,000TEU） * GDP elasticity ** Year Real GDP　（billions USD）

China

Population （1,000 people） GDP per capita　（USD/people） Cargo Volume （1,000TEU） * GDP elasticity ** Year

Thailand

2006

2007

2008

2009

2010

2011

2012

2013

2014

Real GDP　（billions USD）

199

210

213

212

227

229

246

253

255

Population （1,000 people）

66,174

66,354

66,453

66,548

66,692

66,903

67,164

67,451

67,726

GDP per capita　（USD/people）

3,003

3,158

3,207

3,179

3,410

3,428

3,665

3,752

3,769

Cargo Volume （1,000TEU） *

5,574

6,339

6,726

5,898

6,649

7,171

7,469

7,702

8,284

GDP elasticity **

1.04

1.05

1.05

1.03

1.03

1.03

1.03

1.03

1.03

* Container cargo volume was sorted out from "Container port traffic" (THE WORLD BANK). ** The GDP elasticity value was calculated based on 2000 years. Also, the minimum value (MIN), the average value (AVE), and the maximum value (MAX) indicate actual values in the Philippines since 2000. For Indonesia, Sri Lanka, China and Thailand, the minimum value (MIN), the average value (AVE), and the maximum value (MAX) are calculated for elasticity values after reaching the same level as the Philippine GDP per capita in 2014 .

(Source: Study Team) 3-29

Average

MIN

AVE

MAX

GDP elasticity

1.02

1.03

1.04

«GRDP elasticity setting» As mentioned before, GRDP elasticity of containers of both MCT and Cagayan de Oro port is different between foreign trade and domestic trade, therefore, GRDP elasticity is set for each. Moreover, taking the future changes of the socioeconomic environment and factors of container change into consideration, the baseline case, high case, and low case are set to increase the range. (Foreign containers) As shown in Table 3-21, foreign containers are expected to increase accompanying an increase of GDP per capita. Therefore, GDP elasticity is set to exceed the recent actual of MCT and Cagayan de Oro port, taking the changes of economic growth in Indonesia, Sri Lanka, China, and Thailand into consideration. (High case 1.04, Baseline case 1.03, Low case 1.02) (Domestic containers) As shown in Table 3-21, domestic containers could exceed the recent actual GDP elasticity in the future as well as foreign containers, however, the value is set to be the same as actual, here. (High case 1.00, Baseline case 0.99, Low case 0.98) Table 3-21 GRDP Elasticity Setting Case High Case Baseline Case Low Case

Foreign Container Cargo 1.04 1.03 1.02

Domestic Container Cargo 1.00 0.99 0.98

(Source: Study Team) xi)

Projection of future container volume (Region X: Northern Mindanao)

Based on the study result above, the future container volume in Region X (Northern Mindanao) is calculated by using the equation below. (equation) (Projection of future container volume: C i+1 ) ＝ (actual container volume: C i ) × (GRDP growth: r G

i+1 )

× (GRDP elasticity: E)

＝ C i × (G i +1/G i ) × E here, i: year, C: container volume, r G : GRDP growth, G: GRDP, E: GRDP elasticity As presented in Figure 3-17, the future container volume in 2030 is expected to be about 1,100,000 TEU for the baseline case, which is 2.4 times as much as the current condition (2016). For the high case and low case, it is expected to be about 1,300,000 TEU and 950,000 TEU, respectively, and they are 2.7 times and 2.1 times as much as the current condition (2016).

3-30

High

Baseline

Low

Case

Type

actual 2016

2020

2025

2030

Total

413,930

459,882

614,596

879,749

1,253,002

Foreign

110,172

132,417

197,370

321,370

516,044

Domestic

303,759

327,466

417,226

558,378

736,958

Total

413,930

459,882

590,673

804,694

1,090,985

Foreign

110,172

132,417

189,888

294,605

450,756

Domestic

303,759

327,466

400,785

510,088

640,229

Total

413,930

459,882

567,456

735,387

948,611

Foreign

110,172

132,417

182,620

269,841

393,208

Domestic

303,759

327,466

384,836

465,547

555,403

Type

Elasticity

Total High

Foreign

1.04

Domestic

1.00

Total Baseline

Magnification

Annual Growth Rate

2030/2015 2030/2016 2015-2030 2016-2030 3.0

2.7

7.7%

7.4%

4.7

3.9

10.8%

10.2%

2.4

2.3

6.1%

6.0%

2.6

2.4

6.7%

6.4% 9.1%

Foreign

1.03

4.1

3.4

9.8%

Domestic

0.99

2.1

2.0

5.1%

4.9%

2.3

2.1

5.7%

5.3%

Total Low

projec tion

2015

Foreign

1.02

3.6

3.0

8.9%

8.1%

Domestic

0.98

1.8

1.7

4.1%

3.8%

1,400,000 1,253,002 1,200,000 1,090,985 1,000,000 948,611 800,000

600,000 412,383 400,000

459,882 413,930

200,000

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Case

Projection of Future Container Volume (Region X: Northern Mindanao)

Carg o Volu m e (TEUs)

Figure 3-17

Actual

Low

Baselin e

Hig h

METI Survey Team

(Source: Study Team) xi-1) Container Demand Forecast for MCT The future container volume of MCT is calculated based on the projection result of Region X (Northern Mindanao) mentioned before, taking the future planning of competing Cagayan de Oro port into consideration. (Foreign containers) Foreign containers are assumed to be handled mainly in MCT, however, in Cagayan de Oro port, a construction planning for facilities for improvement of a container handling system is in progress. Currently, foreign containers are not handled in Cagayan de Oro port and it hasn’t announced any aims for foreign containers. However, there is a construction plan for new wharfs of 260 m in 2025 and 450 m in 2030. Therefore, thinking that a new high-standard container terminal will be constructed, the estimate of foreign containers handled in Cagayan de Oro port is shown in Table 3-22 Table 3-22 Setting of Foreign Containers in Cagayan de Oro Port 2030

2035

2040

2045

2050

50,000 TEU

100,000 TEU

200,000 TEU

300,000 TEU

450,000 TEU

(Source: Study Team)

3-31

(Domestic containers) As for domestic containers, currently Cagayan de Oro port plays an important role in transportation of domestic containers in Region X and has a market share of 70-80% of the sum of MCT and Cagayan de Oro port (78% of actual in 2015, 75% of projection in 2016). Furthermore, PPA which manages Cagayan de Oro port is planning to provide an Opol port which mainly handles domestic containers on the west side, for improvement of traffic congestion and strengthening of a container handling system. Based on this background, it is predicted that Cagayan de Oro port (and Opol port) will continue to play an important role in the transportation of domestic containers, and it will have a market share of 80% in 2030 which is almost the same value as the latest, and 85% after 2035 (refer to Table 3-23). Table 3-23 Setting of domestic containers in Cagayan de Oro port 2016 – 2030

2030 – 2035

2035 –

80%

80～85%

85%

(Source: Study Team) Based on the setting above, the demand forecast (the cargo volume projection) of MTC and the Cagayan de Oro port (including Opol port) is shown below. xii)

Projection result of future cargo volume in MCT

As shown in Figure 3-18, the future cargo volume in 2030 in MCT, in the baseline case, is expected to be about 530,000 TEU in total (400,000 TEU for foreign cargo, 130,000 TEU for domestic cargo) which is 2.5 times (CAGR 6.7%) as much as the present (2016). In the high case it is expected to be about 620,000 TEU in total, and in the low case it is expected to be about 620,000 TEU in total, which is respectively about 2.9 times and 2.1 times as much as the present. xiii) Projection result of future cargo volume in Cagayan de Oro port (including Opol port) As shown in Figure 3-19, the future cargo volume in 2030 in Cagayan de Oro port (including Opol port), in the baseline case, is expected to be about 560,000 TEU in total (50,000 TEU for foreign cargo, 510,000 TEU for domestic cargo) which is 2.3 times (CAGR 6.1%) as much as the present (2016). In the high case it is expected to be about 640,000 TEU in total, and in the low case, it is expected to be about 490,000 TEU in total, which is respectively about 2.6 times and 2.0 times as much as the present.

3-32

Figure 3-18 Projection Result of Future Container Volume (MCT)

Bas eline

Low

ac t ual

projec tion

2015

2016

2020

2025

2030

Total

177, 217

213,000

280, 815

433, 046

613, 436

Foreign

110,172

132,417

197,370

321,370

466,044

Domestic

67,046

80,583

83,445

111,676

147,392

Total

177, 217

213,000

270, 045

396, 623

528, 802

Foreign

110,172

132,417

189,888

294,605

400,756

Domestic

67,046

80,583

80,157

102,018

128,046

Total

177, 217

213,000

259, 587

362, 950

454, 289

Foreign

110,172

132,417

182,620

269,841

343,208

Domestic

67,046

80,583

76,967

93,109

111,081

Magnif ic at ion

Annual Growt h Rat e

Cas e

Ty pe Tot al

3. 5

2.9

8. 6%

7.8%

High

Foreign

4.2

3.5

10.1%

9.4%

Domestic

2.2

1.8

5.4%

4.4%

Bas eline

Low

2030/ 2015 2030/2016 2015-2030 2016-2030

Tot al

3. 0

2.5

7. 6%

6.7%

Foreign

3.6

3.0

9.0%

8.2%

Domestic

1.9

1.6

4.4%

3.4%

Tot al

2. 6

2.1

6. 5%

5.6%

Foreign

3.1

2.6

7.9%

7.0%

Domestic

1.7

1.4

3.4%

2.3%

700,000 613,436 600,000 528,802 500,000

400,000

454,289

300,000 224,539 200,000

213,000 177,217

100,000

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

High

Ty pe

Carg o Volu m e (TEUs)

Cas e

Actual

Low

Baseline

Hig h

METI Survey Team

(Source: Study Team) Figure 3-19 Projection Result of Future Container Volume (including Opol port) Ty pe Total

Bas eline

Low

projec t ion

2015

2016

2020

2025

2030

236,713

246,882

333, 780

446,703

639,567

Foreign 236,713

246,882

333,780

446,703

589,567

Total

236,713

246,882

320, 628

408,071

562,184

Domestic

236,713

246,882

320,628

408,071

512,184

Total

236,713

246,882

307, 868

372,437

494,322

Foreign

Foreign

50,000 236,713

246,882

Magnific at ion

307,868

372,437

444,322

Annual Growt h Rate

Ty pe Total

2. 7

2.6

6.9%

7. 0%

High

Foreign

-

-

-

-

Low

600,000

50,000

Cas e

Bas eline

639,567

50,000

Domestic

Domestic

700,000

2030/ 2015 2030/2016 2015-2030 2016-2030

Domestic

2.5

2.4

6.3%

6.4%

Total

2. 4

2.3

5.9%

6. 1%

Foreign

-

-

-

-

Domestic

2.2

2.1

5.3%

5.4% 5. 1%

Total

2. 1

2.0

5.0%

Foreign

-

-

-

-

Domestic

1.9

1.8

4.3%

4.3%

562,184

500,000 494,322 400,000

300,000

246,882

200,000

236,713

100,000

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

High

ac tual

Carg o Volu m e (TEUs)

Cas e

Actual

METI Survey Team

(Source: Study Team)

3-33

Low

Baseline

Hig h

xiii-1) Study for adequacy of future demand forecast The current development project of MCT is under planning based on the “10% growth case” of JICA’s feasibility study (“MINDANAO LOGISTICS INFRASTRUCTURE IMPROVEMENT PROJECT” (2011)), and it is expected to handle 1,200,000 TEU as of 2030. In addition to this case, this research is studying for 2.5% growth, 5.0% growth and 7.5% growth. As to this demand forecast, MCT is expected to handle about 530,000 TEU in 2030 in the baseline case, which is about a half less than the aiming value of the development project of MCT above (1,200,000 TEU). Furthermore, MCT’s ratio of market share to container throughput in the whole Philippines is about 3% at present and it will be about 6% in 2030 (about 530,000 TEU to about 9,000,000 TEU of the Philippines). It is difficult to say that MCT is providing sufficient services to satisfy cargo owners’ demands, because of competition with Cagayan de Oro port since it started operation, congestion of vessels for the little space of the berth window, and inefficiency of cargo works due to scarcity of cargo handling machines. Therefore, it is considered that demand will expand behind the scheduled plan above. Additionally, it is said to be certain that development of Mindanao Island will be promoted by President Duterte, who is from Mindanao. As these things indicate, it is valid that the ratio of market share to whole container throughput in the Philippines will increase from 3% to 6% (refer to Figure 3-20). Figure 3-20 Comparison of Projection Results of Cargo Volume 3,500 Baseline 3,000

2.5% Growth

Container Volume (TEUs)

5.0% Growth 2,500

7.5% Growth 10.0% Growth

2,000

1,500

現 MCT 整備計画の目標値

1,000

500

0 2020

2025

2030

2035

2040

Cas e

2020

2025

2030

2035

2040

Baseline

270

397

529

701

969

2.5% Growth

230

261

295

334

378

5.0% Growth

293

374

478

610

778

7.5% Growth

371

533

765

1,098

1,576

10.0% Growth

467

752

1,211

1,950

3,141

Baseline: METI Survey Team 2.5%~10% Growth: JICA-PREPARATORY STUDY "MINDANAO LOGISTICS INFRASTRUCTURE IMPROVEMENT PROJECT"

(Source: Study Team) 3-34

b)

Current Situation of Calling Vessels

i)

Status of Container Cargoes

(i)

Shipping Companies and Shipping Routes

Current operating container vessels calling to the existing MCT are of three (3) foreign shipping companies, namely MCC SINGAPORE/MAERSK LINE (MCC-S/M), SITC

CONTAINER LINES PHILIPPINES

(SITC-P) and AMERICAN PRESIDENT (APL), and of three (3) domestic shipping companies, namely MCC TRANSPORT PHILIPPINES (MCC-TP), LORENZO SHIPPING CO. (LSC) and NMC CONTAINER LINES, INC. (NMC). In 2016, CMA CGM acquired Neptune Orient Lines (NOL) of which APL is a subsidiary, and APL is under the umbrella of CMA CGM. NMC, as a company of MAGSAYSAY TRANSPORT AND LOGISTICS GROUP (MTL), is the solely held whole stockholder of LSC. Accordingly, both NMC and LSC belong to MLT. Current foreign shipping routes operating from/to MCT are shown in Figure 3-21. As seen in the figure, the direct routes are between MCT and three (3) countries, namely China (APL, MCC-S/M & SITC), Hong Kong/Taiwan (APL) and Singapore (MCC-S/M & APL), and the indirect routes are between MCT and eleven (11) countries, namely Japan (APL & SITC), USA (APL), Thailand, Vietnam & Hong Kong (SITC), Germany & Portugal (APL & MCC-S/M), Spain, Lebanon & Algeria (
Shipping Routes from/to MCT (Foreign Shipping) USA

JAPAN APL, SITC

Indirect Route

APL

THAILAND, VIETNAM SITC & HONG KONG

SINGAPORE

GERMAN

MCC-S/M, APL

HONG KONG APL

APL, MCC-S/M

CHINA

Foreign Shipping Route

APL, MCC-S/M, SITC

TAIWAN

PORTUGAL

APL

APL, MCC-S/M

KOREA SPAIN

APL, MCC-S/M, SITC LEBANON & ALGERIA MCC-S/M

(Source: PIA)

3-35

MCC-S/M

Current domestic shipping routes operating from/to MCT are shown in Figure 3-22. LSC and NMC are operating the following four (4) domestic shipping routes: (i)

MANILA→CEBU→MCT→CEBU→MANILA (Loading/Unloading)

(ii) MANILA→CEBU→MCT→MANILA (Loading/Unloading) (iii) MANILA→MCT→CEBU→MANILA (Loading/Unloading) (iv) MANILA→MCT→ILOILO→BACOLODO→MANILA (Loading/Unloading) On the other hand, MCC-TP is operating the following cycle routes: MCT (Unloading) → General Santos (Loading/Unloading) → Davao (Loading/Unloading) → MCT (Loading) → Bohol (Loading/Unloading) →Batangas (Loading/Unloading)

Figure 3-22

Shipping Routes from/to MCT (Domestic Shipping)

LSC/NMC MCC-TP

(Source: LSC/NMC & MCC-TP/ Illustrated by Study Team) (ii)

Calling Vessel Dimensions

Actual calling vessel dimensions were obtained based on the actual vessel records from 2011 to 2016 that have been databased by MICTSI. Figures 3-23 and 3-24 respectively show Actual Calling Vessel Dimensions of Foreign and Domestic Vessels (LOA: Length Overall, Width, Draft and DWT: Dead Weight Tonnage). 3-36

As seen in Figure 3-23, it seems that the foreign vessels are getting larger from Feedermax to Panamax size (LOA: Av. 180 m/Max. 231 m, Width: Av. 27 m/Max. 31 m, Draft: Av. 10 m/Max. 12 m, and Dead Weight Tonnage: Av. 23,000 DWT/Max. 43,000 DWT) in the past five (5) years. According to a foreign shipping company, they are now under examination for introducing a wider Panamax sized vessel to maximize container cargo capacity per vessel without deepening its draft to feeder services from the regional hub ports within the Asian region. As seen in Figure 3-24, it seems that domestic vessels are staying the same as the feeder size (LOA: Av. 110 m/Max. 150 m, Width: Av. 18 m/Max. 24 m, Draft: Av. 7 m/Max. 9 m, and Dead Weight Tonnage: Av. 6,500 DWT/Max. 14,000 DWT) in the past five (5) years.

250 200 150 100 50 0

40 WIDTH (m)

LOA (m)

Figure 3-23 Chronological Change of Calling Vessel Dimensions (Foreign Vessels)

30 20 10 0

2011 2012 2013 2014 2015 2016

2011 2012 2013 2014 2015 2016

DWT (10,000 DWT)

DRAFT (m)

15 10 5 0

5 4 3 2 1 0

2011 2012 2013 2014 2015 2016 MAX

2011 2012 2013 2014 2015 2016 MIN

AVERAGE

(Source: MICTSI/Processed & graphed by Study Team)

250 200 150 100 50 0

40

WIDTH (m)

LOA (m)

Figure 3-24 Chronological Change of Calling Vessel Dimensions (Domestic Vessels)

30 20 10 0

2011 2012 2013 2014 2015 2016

2011 2012 2013 2014 2015 2016

DWT (10,000 DWT)

DRAFT (m)

15 10 5 0 2011 2012 2013 2014 2015 2016 MAX

5 4 3 2 1 0 2011 2012 2013 2014 2015 2016

MIN

AVERAGE

(Source: MICTSI/ Processed & graphed by Study Team) 3-37

ii)

Current Issue for Vessels Calling to MCT

In several interviews with MCT shipping companies, they complained about the increase of offshore waiting time and frequent repetition of such events due to congestion of the existing quay at MCT. On the other hand, MICTSI believes that the quay is not congested based on the actual record taken by MICTSI, as shown in Figure 3-25.

BERTH UTILIZATION RATIO BOU (%)

Figure 3-25 MCT Berth Utilization Ratio by MICTSI 80 70 60 50 40 30 20 10 0

2011

2012

2013

2014

2015

(Source: MICTSI/ Graphed by Study Team) To further examine the discrepancy between the accounts of the shipping companies and MICTSI, the Study Team obtained the detailed calling vessel records from PIA, and the estimated Berth Occupancy Ratios (BOR) of foreign, domestic and whole vessels. The average number of berths was calculated using the existing berth length divided by the average LOA for each foreign and domestic vessel, and the total and actual occupied times were sourced from the records. The following is the formula to estimate BOR: The allowable BOR applied the forty-five percent (45%) for 1 berth and fifty percentage (50%) for 2 berths as shown in Table 3-24. Berth Occupancy Ratio BOR =

Total Berth Occupied Time Number of Berth × Actual Berth Occupaied Time

× 100 %

Table 3-24 Allowable Berth Occupancy Ratio

(Source: UNCTAD, Port Development)

(Source: Port Designer’s Handbook)

Table 3-25 shows calculation results of BORs by vessel type, and Figure 3-26 presents comparison of BORs by vessel type for the data from 2011 to 2015. As seen in Figure 3-26, all BORs of foreign vessels (average berth length is 206-226 m) exceed sixty percent (60%) for allowable BOR of forty-five percent (45%) when one (1) berth is available. If the foreign vessels continuously call at the existing berth, it is clear that offshore waiting already occurs. In the case of domestic 3-38

vessesl (average berth length is 149-151 m), all BORs are forty to forty-two percent (40-42%) less than the allowable BORs of both berthing cases. However, the actual BOR may exceed the allowable ratio of both cases in the future if the LOA of the domestic vessel is larger than the existing one and the number of vessels increases in the future. In the case of whole vessels (average berth length is 172-182 m), all the BORs are forty-five to fifty-two percent (45-52%) more than the allowable BORs of one (1) berth case, which means that offshore waiting already happens. Table 3-25 Computation Results of BOR by Vessel Type (2011-2015) 2011

Year Descreption Berth Length Ave.Vessel Length Av. Berth Length Bertging Gap Nr of Berth Total Service Time Berth Serviceable Hour Berth Serviceable Day Weighted Berth Available Time Berth Occupancy Rate

Foreign

Domestic

Tba

hr/yr

3,586

300 108 149 41 1.91 4,053 0.59 24 365 5,174

BOR

%

58.0

41.0

Lq

m

Lav

m

Lab

m

Bg

m

Nb

nr

Ts

hr/yr

Weight

160 206 47 1.35 2,809 0.41

Tbsh hr/day Tbsd day/hr

2013

2012 All

Foreign

Domestic

129 172 43 1.63 6,861 1.00

160 207 47 1.34 3,102 0.45

8,760

3,961

300 110 149 40 1.91 3,717 0.54 24 365 4,745

48.1

58.5

41.0

All

Foreign

Domestic

131 182 52 1.50 6,819 1.00

165 213 48 1.30 3,335 0.49

8,760

4,258

300 116 153 36 1.90 3,857 0.56 24 365 4,925

51.9

60.3

41.2

2014 All

Foreign

Domestic

138 180 42 1.58 7,192 1.00

165 210 45 1.33 2,938 0.43

8,760

3,751

300 108 151 42 1.88 4,228 0.62 24 365 5,397

52.0

58.9

41.7

2015 Total

Foreign

Domestic

129 171 43 1.65 7,165 1.00

176 226 50 1.21 2,583 0.38

8,760

3,297

300 109 151 42 1.88 3,450 0.50 24 365 4,405

49.6

64.7

41.7

All

137 182 45 1.53 6,033 1.00

8,760

45.0

(Source: Study Team) Figure 3-26 Comparison of BORs by Vessel Type (2011-2-2015) 80

BERTH OCCUPANCY RATE (%)

70 60 50 40 30 20 10 0

2011 Foreign Vessel

Domestic Vessel

2012

2013

All Vessels

BOR Limit (2-Berths)

2014 BOR Limit (1-Berth)

2015 Upper Limit

(Source: Study Team) The abovementioned is a preliminary examination and the results may be different depending on frequency and/or berthing patterns of the actual foreign and domestic vessels. However, it is clearly suggested that some countermeasure is to be urgently taken, necessary for the dissolution of offshore waiting caused by congestion of the existing berths.

3-39

c)

Current Terminal Operation of MCT

The current status of MCT operation is enumerated hereunder. (i)

Shipping Companies

Below are the shipping companies that call at MCT. MCC calls for both foreign and domestic. As for domestic shipping, Lorenzo Shipping and NMC Container Lines have both been taken over by Magsaysay Liner Group. Foreign:

APL, SITC, MCC

Domestic: MCC, Lorenzo Shipping, NMC Container Lines Among the shipping companies above, Lorenzo Shipping and NMC Container Lines moved their business station from Cagayan de Oro to Tagoloan in 2006. APL did the same in 2010. The main routes of the container vessels calling at MCT are: MCT-Manila-Cebu/Davao-Kaohsiung/Hong Kong/Shanghai for foreign routes, and MCT-Manila-Cebu/Bohol-Davao for domestic. (ii)

Berth Window

According to MICTSI, the berth window of the existing berth is being allocated to the three shipping comapnies, namely APL, SITC and MCC. Refer to Figure 3-27. Figure 3-27

Berth Window at MCT (Effective June 2016)

(Source: MICTSI)

3-40

The domestic shipping lines Lorenzo Shipping and NMC Container Lines have not been given a berth window at MTC. They only can berth and load/unload for a limited time in between the foreign vessels given berth window; there is a growing dissatisfaction among those domestic shipping lines. Under the circumstances thereof, PPA is trying to bring them back to the Cagayan de Oro area. (iii)

Container Handling Productivity

MICTSI’s observation on container handling productivity is 25 moves/hour/crane as an average. This figure seems to be a rather standard level in comparison with the world’s major container terminals. Two (2) Quay Gantry Cranes and four (4) RTGs were installed by the Phase I project. Among those, one (1) RTG often malfunctions, which creates inefficient cargo handling at MCT. As a remarkable example, one trailer was forced to wait for one day just to move one empty container out from MTC. It is recognized that the shortage of cargo equipment is apparently noticed these days. (iv)

Vessels Waiting Offshore

According to the interviews with foreign shipping companies, it is reported that an average offshore waiting time for container vessels recently is 2 to 24 hours. MICTSI mentions that the berth occupancy rate is 40% and the yard occupancy rate is 38% based on their observations. It is worthy of special mention that the said berth occupancy and the tight berth window do not seem to tally with each other. This fact shall be analyzed and examined in a separate clause. Due to the ninety-day rule (the customs house regulates that the number of days to store empty containers is not more than 90 days), and the fact that free storage is limited to 5 days, the reported yard occupancy rate seems lower than the actuality. All the shipping companies emphasized the following MCT operational concerns that are dissatisfying the users: lack of hard infrastructure (shortage of berth length, shortage and malfunction of handling equipment) and soft infrastructure (low operational efficiency). The belated response of MICTSI and PIA were pointed out as well. MCT seems to have been operated by MICTSI normally with no remarkable issues so far. However, on the other hand, the above issues have been raised and made clear recently. Therefore, PIA is required to cope with the situation at the earliest possible time. 3)

Effects of Project Implementation

Considering “2) Current Situation and Future Issues” in Chapter 3, the project is to be composed of hard components such as urgent berth extension to resolve the congestion of the existing berth and expansion of the container terminal depending on the container cargo demand forecast, and soft components such as implementation of a technical cooperation project to enhance the operational capacity of MCT as well as the administrative capacity of PIA for strengthening competitiveness with the PPA Cagayan De Oro Port. The following are the expected effects of undertaking the above project components: 3-41

Dissolution of vessel offshore waiting and improvement of operational efficiency of shipping companies and terminal operator Facilitation of cargo handling efficiency and capacity in securing certain terminal facilities and equipment Enhancement of competitiveness and service quality of MCT by efficient terminal operation and administrative management 4)

Alternative Study with Other Options

a)

Hard Components

If no countermeasure is taken for dissolution of vessel offshore waiting, it is assumed that re-arrangement of the berth window may be an alternative measure to concurrently accommodate two (2) vessels on berth. The berth window is basically determined in coordination with shipping companies and other relevant parties. In case the berth window is changed for the convenience of shipping companies and terminal operator, it is anticipated that current operation would be rather complicated and negative effects such as further delays in delivery may arise from the complications, especially for forwarders, consignees and consignors, including factory production line. In principal, all concerns related to port logistics such as shipping companies, terminal operator, forwarders, consignees, consignors, etc., mostly value “on time” cargo transportation. Therefore, decreasing anxiety by extension of an additional berth is more preferable than increasing uncertainness in vessel calling by creating constraint by the re-arrangement of the existing berth window. For yard utilization, to enhance existing terminal capacity, it is considered that the vacant area of about 4.5 ha (300 m x 150 m) on the unused backside of the existing container yard may be used. If the area can be used as an additional container yard, terminal storage capacity could increase at least from 250,000 TEU per year to more than 380,000 TEU per year. However, the berth capacity of 250,000 TEU is not corresponding to the storage capacity enhanced, so that strengthening of the existing crane productivity or installation of additional QGC is required accordingly to meet same capacity at the berth and storage. Experientially, it is difficult to attain more than 32 moves per hour per crane due to limitation of manpower operation as well as unavoidable loading/unloading circumstances. In such case, installation of an additional QGC could be the single option to resolve it. From the actual dimensions of the berth length, at most one additional QGC could be installed. In view of the loading/unloading operation at the berth, as well as the actual combination of called vessels at MCT, the additional QGC would probably be unused without efficient contribution for improvement of the berth capacity because the current calling vessel arrangement on the berth (av. 110 m x 2 vessels or 180 m vessel on 300 m berth length) is not fit for simultaneous operation of three (3) QGCs. b)

Soft Components

To enhance MCT operation capacity, PIA port administration capacity, and competitiveness with PPA Cagayan De Oro Port, it is an option to outsource specialist(s) from private companies in the port logistics industry or public sector such as PPA. However, there would remain a question of how PIA could continuously afford higher remuneration for such specialist(s) for a certain period until the said aim could be accomplished or how PIA can settle an issue if the hired specialist(s) has a conflict of interest that might be pointed out by the Commission on Audit (COA) or such authorities. 3-42

(2) Basic Approach/Determination of the Project Contents 1)

Basic Approach for Determination of Project Contents

This study will be conducted based on the following approach in order to formulate the project. a)

Linkage with National Plan and Relevant Development Plan

Project contents shall have a clear linkage with the Medium Term Development Plan of the Philippines 2011-2016, the Mindanao Strategic Development Framework 2010-2020 and be in line with the concept of the PIA Development Plan. The project is required to contribute to the economic development of Northern Mindanao in terms of contents and time. It also shall have an effective linkage with the planned/ongoing road projects. b)

Contribution to Advantageous Competitiveness for MCT

MCT shall be attractive to the port users (shipping) and consignors (locators) in both hard and soft facilities. For this to materialize, current situations and any complaints and/or demands shall be adequately accommodated to seek for better improvement, including dissolving vessels’ offshore waiting, improving container handling productivity, and increasing the berth window, among others. The project shall be implemented such that terminal capacity will be developed on a phased basis so as to meet with future cargo demand. Recognizing the fact that Cagayan de Oro base port is also pursuing their expansion project, both ports are required to compete to provide better services to the port users, and, as a result, both will supplement each other. To make it happen, MTC’s required facilities shall be constructed/installed in place in a timely manner. c)

Environmental and Social Considerations

The proposed project shall consider well the environmental and social aspects, and the design and construction method shall be planned accordingly. It shall also contribute to the region’s environmental conservation and enhancement of employment. d)

Consistency with Capacity of Implementation Agency

The contents and implementation scheme of the proposed project shall be physically and financially acceptable to PIA, the government implementation agency. For this, provision of a soft loan with a low interest rate, minimization of initial investment and maintenance cost, and provision of high quality facilities with sophisticated Japanese technologies, among others, shall be ensured.

3-43

2)

Determination of Project Contents

a)

MCT Expansion Scenario

i)

MCT Phased Expansion Plan

As shown in Figure 3-28, the MCT phased expansion plan is to resolve urgent issues such as berth congestion as the Short Term Expansion Plan (Phase II-1), to dissolve insufficient port facilities based on the demand forecast as the Middle Term Expansion Plan (Phases II-2 and II-3), and to describe the future port master plan as the Long Term Expansion Plan (Phases III and IV). Figure 3-28

100m

200m

500m

300m

30m

300m

MCT Phased Expansion Concept Plan

100m

Phase II-1

Phase I

Phase II-3

150m

150m

200m

Phase IV Phase II-2

Phase III

100m

LEGEND Phase II-1 Phase II-2 Phase II-3

400 m

Phase III Phase IV

200 m Long Quay (W=30m, Depth=-13m), 2 ha Apron/Container Yard (L200m x W100m), 2 nrs Over Panamax-size QGCs 4 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, 4 nrs RTG Cranes etc. 100 m Long Quay (W=30m, Depth=-13m), 5 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc. 300 m Long Quay, 5 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc. 500 m Long Quay, 11 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc.

(Source: Google Earth/Drawn by Study Team) The proposed expansion scenarios for each phase are briefly summarized as follows: ii)

Short Term and Middle Term Expansion Scenarios

(i)

Expansion Scenario for Urgent Resolution of Existing Issues (Short Term Plan: Phase II-1)

As recognized in a)-2 Container Cargo Demand Forecast, 2), (2) in Chapter 3, MCT is expected to increase its cargo handling volumes. Aside from this, MCT is required to expand more berths to dissolve vessel offshore waiting and to enhance berth capacity for efficient berth operation. As shown in Table 3-26

and

Figure 3-29, the BOR is estimated as thirty-two percent (32%) for foreign vessels, twenty-one percent (21%) for domestic vessels and twenty-five percent (25%) for whole vessels under the same conditions of Year 2015, if the berth length is extended 200 m (existing 300 m vs total 500 m). The values will be lower than 3-44

the existing by the direct effect of the extension of the berth. In other words, the berth occupied time of a calling vessel is shorter than that of the existing, in association with an increase of the berth length, without restriction upon vessel calling. Table 3-26 Computation Results of BORs for Foreign and Domestic Vessels (300 m vs 500 m berth length) Year

2015

Descreption Berth Length

Foreign

Ave.Vessel Length Av. Berth Length Bertging Gap Nr of Berth Total Service Time

Lq

m

Lav

m

Lab

m

Bg

m

Nb

nr

Ts

hr/yr

Weight

Berth Serviceable Hour Tbsh hr/day Berth Serviceable Day Tbsd day/hr Weighted Berth Available Time Tba hr/yr Berth Occupancy Rate

BOR

%

Domestic

All

Foreign

Domestic

300

All

500

176 226 50 1.21 2,583 0.38

109 151 42 1.88 3,450 0.50 24 365

137 182 45 1.53 6,033 1.00

176 226 50 2.18 2,583 0.43

109 151 42 3.34 3,450 0.57 24 365

137 182 45 2.74 6,033 1.00

3,297

4,405

8,760

3,750

5,010

8,760

64.7

41.7

45.0

31.6

20.6

25.1

(Source: Study Team) Figure 3-29 Comparison of Estimated BORs for Foreign and Domestic Vessels (300 m vs 500 m)

BERTH OCCUPANCY RATE (%)

80

300m Berth

200m Extension

500m Berth

70 60 50 40 30 20 10 0 2015 Foreign Vessel

Domestic Vessel

All Vessels

2015 BOR Limit (2-Berths)

2022 BOR Limit (1-Berth)

Upper Limit

(Source: Study Team) (ii)

Expansion Scenario based on Cargo Demand Forecast (Middle Term Plan: Phases II-2 & II-3)

According to a)-2 Container Cargo Demand Forecast, 2), (2) in Chapter 3, the forecast was executed for three (3) cases, namely low, base line and high growth cases, in consideration of container cargo share with Cagayan De Oro Port within the North Mindanao region. In this expansion scenario, the base case was applied as mean cargo growth. Figure 3-30 presents the Middle Term Expansion Scenario, including Short Term Expansion, corresponding to the cargo demand forecast of the base case. As shown in Figure 3-30, the new 200 m quay, including 2 QGCs, to be considered in the Short Team Expansion Plan (Phase II-1) for target year 2022, is expected to secure berth capacity of 200,000 TEU/year, and further quay construction is not to be required until the year 2029. A 2 ha container yard is expected to equip the container yard with capacity of 60,000 TEU/year but it will lack a container yard area until the 3-45

year 2024. The Middle Term Expansion Plan (Phase II-2) is required for the target year 2024 to provide an additional 4 ha container yard with a capacity of 140,000 TEU/year, relevant mechanical and electrical systems, buildings and 4 RTGs. Figure 3-30 MCT Middle-Term Expansion Scenario (Demand Forecast: Base Case) 800

Actual Forecast (Base Case)

Berth Capacity Yard Capacity

600

Phase I'+II: 600,000 TEUs

Phase II-3 (100,000 TEUs)

500 Phase II-2 (140,000 TEUs)

400 300

Phase II-1 (60,000 TEUs) Phase I : 250,000 TEUs

Enhancement of Operating Efficiency

200 Phase I' (300,000 TEUs)

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

0

2015

100

2014

Container Handling Volume (1,000 TEUs／year)

700

(Source: Study Team) After the container cargo handling volume attains 500,000 TEU/year in 2029, it is anticipated that the 200 m quay and 6 ha container yard shall be expanded in Phases II-1 and II-2. The Middle Term Expansion Plan (Phase II-3) for target year 2029 is to further expand a 100 m quay, 3 ha container terminal, relevant mechanical and electrical systems, buildings and terminal gate, etc. (iii)

Summary of Project Components for Short Term Expansion and Middle Term Expansion Plans

Based on the aforementioned in i)-1 and i)-2, the project components of the Short Term Expansion (Phase II-1) and Middle Term Expansion (Phase II-2 and II-3) Plans are summarized in Table 3-27. Table 3-27 Major Project Components of Short-Term and Middle-Term Plans CONTAINER TERMINAL CAPACITY STAGE

TARGET PHASE YEAR

Quay EXISTING

EXPANSION

Container Yard ACCUMLATED

EXISTING

(1,000 TEU)

Short Term

EXPANSION

CONPONENT

ACCUMLATED

REMARK

(1,000 TEU)

I’

2019

250

50

300

250

50

300

Enhamcement of Operating Efficiency etc.

II-1

2022

-

(200)

(200)

-

60

60

200 m long quay, 2ha container yard and 2-Oover- Quay & QGCs to be provided as prior investment Panamax QGCs etc. for urgent mitigation of Phase I quay congestion

II-2

2024

200

-

200

60

140

200

4ha Container Yard, Buildings, Utilities Mecanical/E;ectrical, 4-RTGs etc.

II-3

2028

200

100

300

200

100

300

100 m long quay, 3ha Container Yard, Buildings, Utilities Mechanical/Electrical, Entrance Gate etc.

Middle Term

(Source: Study Team) 3-46

By Operator

iii)

Long Term Expansion Scenario

The Long Term Expansion Scenario is to conceptually develop a container terminal as Phase III to be located at the southeast side of Phase II, and a container terminal as Phase IV to be located at the northwest side of Phase II as presented in Figure 3-30. These expansions are to be defined as a port master plan in association with future economic development of the whole Northern Mindanao region. Table 3-28 introduces the dimensions and scales assumed at the present. Table 3-28 Major Project Components of Long Term Plan CONTAINER TERMINAL CAPACITY STAGE

PHASE

TARGET YEAR

Quay EXISTING

EXPANSION

Container Yard ACCUMLATED

EXISTING

(1,000 TEU)

EXPANSION

CONPONENT

ACCUMLATED

REMARK

(1,000 TEU)

III

2037

-

300

300

-

300

300

300 m long quay, 9ha Container Yard, Buildings, Utilities Mechanical/Electrical, Entrance Gate, 2QGCs, 4-RTGs etc.

IV

2046

-

500

500

-

500

500

500 m long quay, 11ha Container Yard, Buildings, Utilities Mechanical/Electrical, Entrance Gate, 4QGCs, 8-RTGs etc.

Long Term

(Source: Study Team) It is noted that the dimensions and scale of the plan should be further reviewed and modified depending on the corrected container cargo demand forecast taking account of actual cargo volumes time by time, since the above Long Term Expansion Scenario is at the master plan level.

3-47

(3) Outline of the Project 1)

Concept Design and Required Facilities

a)

Port Planning

i)

Basic Planning Criteria for MCT Short Term and Middle Term Expansion Plans

(i)

Target Vessels

As mentioned in b) Current Situation of Calling Vessels, (1) in Chapter 3, the dimensions of foreign vessels are LOA of average 180 m/maximum 231 m, vessel width of average 27 m/maximum 31 m, draft of average 10 m/maximum 12 m, and dead weight tonnage of average 23,000 DWT/maximum 43,000 DWT, and those of domestic vessels are LOA of average 110 m/maximum 150 m, vessel width of average 18 m/maximum 24 m, draft of average 7 m/maximum 9 m, and dead weight tonnage of average 6,500 DWT/maximum 14,000 DWT. Figure 3-31 shows the frequency of actual vessels called at MCT for foreign and domestic vessels from 2011 to 2015. Frequency of Vessels Called at MCT for Foreign and Domestic Vessels (2011-2015)

170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0

Foreign Domestic

2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015

Frequency (Number of Vessel)

Figure 3-31

-90

90-100

100-110

110-120

120-130

130-140

140-150

150-160

160-170

170-180

180-190

190-200

200-

LOA ( (m)

(Source: PIA/Processed and Graphed by Study Team) At present, only the dimensions of foreign vessels are larger, but there is a possibility that the dimensions of domestic vessels will be larger as well, depending on container cargo growth and ship re-arrangement in the future. The dimensions of the target vessels of these plans for foreign and domestic vessels are summarized in Table 3-29. (ii)

Planned Berth Length and Depth

In the Short Term Expansion (Phase II-1) and Middle Term Expansion (Phase II-2 and II-3) Plans, it is essential that 2 vessels calling can berth simultaneously. Upon examination of the present situation of calling vessels, three (3) tandem berthing patterns, such as foreign vessel + foreign vessel, foreign vessel + domestic vessel, and domestic vessel + domestic vessel, are to be considered in the berth length planning. Table 3-30

3-48

shows the required and planned berth lengths for each case. As seen in the table, the total required berth lengths at each phase were determined as 500 m for the Short Term Expansion Plan and 600 m for the Middle Term Expansion Plan. Resultantly, the planned berth lengths to be developed for Phases II-1 and II-3 are, respectively, 200 m and 100 m. Table 3-29 Dimensions of Target Vessels VESSEL TYPE

LOA

WIDTH

DRAFT

DEAD WEIGHT TONNAGE

(m)

(m)

(m)

(DWT)

(TEU/Vessel)

（ m/vessl）

180

27

10

25,000

1,800

226

Middle Term Panamax

240

32.3

12

40,000

3,000

295

Short Term

Feeder

110

18

7

6,500

600

141

Middle Term Handy

150

25

10

15,000

1,000

193

EXPANSION CLASSIFACTION PHASE

Foreign

Domestic

Short Term

Handymax

VESSEL LOADING REQUIRED BERTH CAPACITY LENGTH

(Source: Study Team) Table 3-30 Required and Planned Berth Lengths in Short Term and Middle Term Expansion Plans REQUIRED BERTH LENGTH PHASE

FOREIGN +FOREIGN

FOREIGN +DOMESTIC

Planned Berth Length

DOMESTIC +DOMESTIC

(m/2 BERTHS)

Phase I

Phase II

I+II

II-1

II-2

II-3

Total

Total

(m)

(m)

(m)

(m)

(m)

(m)

Short Term

452

367

282

300

200

-

-

200

500

Middle Term

590

488

386

300

(200)

-

100

300

600

(Source: Study Team) The Datum Level (DL) of the existing MCT (Phase I) was established at Mean Lower Low Water Level (MLLW), same as the Chart Datum Level (CDL). The planned depth of the existing MCT was -13 m from DL. According to Table 3-29, the maximum vessel draft is 12 m and the planned depth of the Short Term and Middle Term Expansion Plans was determined as -13 m from DL. (iii)

Basic Scale of Container Terminal

As shown in Figure 3-28, an independent container terminal, comprised of a 300 m quay (apron width 60 m) and 13.5 ha (300 m x 450 m), will be constructed when the Short Term Expansion (Phase II-1) and Middle Term Expansion (Phase II-2 and II-3) are completed. Table 3-32 presents the basic scale of the Short Term Expansion (Phase II-1) and Middle Term Expansion (Phases II-2 and II-3).

3-49

Table 3-31 Basic Scale of Short Term Expansion and Middle Term Expansion Plans Quay DEVELOPMENT PHASE Short Term Middle Term

Target Year

Container Yard Marshalling Yard

Other Area

Quay

Apron

Back Yard

Access Road etc.

Length

Width

Area

Dimensions

Area

Dimensions

Area

Dimensions

(m)

(m)

(ha)

(m)

(ha)

(m)

(ha)

(m)

II-1

2022

200

60

2

200 x 100

-

-

-

-

II-2

2024

-

-

4

200 x 200

-

-

-

-

II-3

2028

100

60

3

100 x 300

4.5

300 x 150

1.5

100 x 150

(Source: Study Team) ii)

Container Terminal Planning for MCT Phase II

ii-1) Berth Capacity Short Term Expansion (Phase II-1) and Middle Term Expansion (Phases II-2 and II-3) respectively planned a 200 m quay and a 100 m quay, including 2 QGCs to accommodate for 16 rows of Over-Panamax sized vessel. Some actual recoded data obtained from MICTSI were used in the computation of the berth capacities. The berth capacity is calculated from the following formula: BP = CP × CN × WH × CA × BOR × TF where, BP

:

Berth Capacity (TEU)

CP

:

Hourly Crane Moves (moves/hr)

CN

:

Number of Crane (nr)

WH

:

Annual Crane Service Hour (hr)

CA

:

Crane Serviceable Ratio (%)

BOR

:

Berth Occupancy Ratio (%)

TF

:

TEU Factor

Table 3-32 shows the results of the computation of the berth capacities for each phase. As seen in the table, the berth capacities were estimated as 200,000 TEU/200 m quay in the Short Term and Middle Term Expansions (Phases II-1 and II-2) and 300,000 TEU/300 m quay in the Middle Term Expansion (Phase II-3).

3-50

Table 3-32 Estimated Berth Capacities for Short Term Expansion and Middle Term Expansion Plans DESCRIPTION

UNIT

SHORT TERM

MIDDLE TERM

PHASE II-1

PHASE II-2

PHASE II-3

Berth Length

La

m

200

200

300

Hourly Crane Move

CP

move/hr

25

25

31

Number of Crane

CN

unit

2

2

2

Annual Crane Service Hour

WH

hr

8,760

8,760

8,760

Crane Serviceable Ratio Berth Occupancy Ratio TEU Factor

25 (actual) 、31 (maximum efficient)

CA

%

90

90

90

Pause rate 10% considered

BOR

%

11

37

45

Allowable value 45% (1 berth), 50% (2 berths)

TF

Berth Capacity

REMARK

BP

TEU

1.35

1.35

1.35

58,539

196,903

296,951

60,000

200,000

300,000

1.35 (actual) rounded up at 10 thousand place

(Source: Study Team) ii-2) Container Yard Capacity (i)

Marshalling Yard Area

Marshalling yard areas for the Short Term Expansion (Phase II-1) and Middle Term Expansion (Phases II-2 and II-3) are determined after computations of required storage container number, required ground slot number and required ground slot area, step by step. The following are the formulas for each parameter: (Required Storage Containers) ＝f×

⁄

where, f e D

:

Required Storage Container (TEU)

:

Peak Factor (f=1.2-1.3)

:

Annual Container Handling Volume (TEU)

:

Annual Turnover Ratio (%)

:

Annual Working Days (days)

:

Average Container Storage Days (days)

:

Required Ground Slot (TEU)

:

Required Storage Container (TEU)

=1.25

:

Maximum Stacking Factor

=5 (stacking)

:

Effective Factor

=0.75

=1.25

(Required Ground Slot) ＝

⁄

×

where,

3-51

(Required Ground Slot Area) 1−ℎ ×

＝

+

ℎ×

where,

h

:

Required Ground Slot Area (m2)

:

Required Ground Slot (TEU)

:

Reefer Container Ground Slot Number Ratio

: :

=0.1 (10%)

2

Dry Container Occupied Area (m /TEU)

=14.9

2

Refer Container Occupied Area (m /TEU)

=19.5

(Required Marshalling Yard Area) ＝

×

where, B j

:

Required Marshalling Yard Area (m2)

:

Required Ground Slot Area (m2)

:

Marshalling Area Factor (j=2.0-3.0, <15 m)

Table 3-33 shows the results of the computation of the marshalling yard area for each phase. As seen in the table, the marshalling yard areas were estimated as 2 ha (Phase II-1), 4 ha (Phase II-2) and 3 ha (Phase II-3). The areas estimated for Phases II-1 and II-3 include part of the apron. Table 3-33 Estimated Marshalling Yard Areas DESCRIPTION Annual Container Handling Volume

V0

% V 0'

TEU

Dy

day

Average Container Storage Day

Dt

day

Annual Turnover Ratio（ Dy/Dt ）

e

Peak Factor

ｆ V1

Required Storage Container

PHASE II-2

60,000 42

40

18

42

40

18

100

42

40

18

365

365

365

4.00

7.03

5.40

4.00

7.03

5.40

4.00

52

68

91

52

68

91

52

68

91

607

444

1.25 148

1,198

1,416

1,036

2,796

1,011

740

g1

5

5

5

0.75

0.75

0.75

Required Container Ground Slot

V2 h

TEU

Refer Container Ground Slot Ratio Dry Container Occupied Area

i1

Refer Container Occupied Area

162

118

39

320

378

276

92

746

270

197

0.1

0.1

0.1

m2

14.9

14.9

14.9

i2

m2

19.5

19.5

19.5

Gy j

m2

2,485

1,818

m2

7,455

5,454

B

606

4,909

5,798

3

ha

4,242

1,414 11,454

4,142

3,030

4,242 34,363 12,425

9,090

3 1,818 14,727 17,395 12,726

f=1.20-1.30 247

1,997

66

533 h=0.05-0.15 Actual Actual

1,010

8,182 Depth <15m

3

1.5 2

3.4 4

(Source: Study Team)

3-52

Actual by MICTSI

1.25 345

g2

Required Marshalling Area

Actual (2016)

Maximum

5.40

Max. Stacking Factor

Marshaling Area Factor

TOTAL

100

7.03

Effective Factor

Ground Slot Area

Total 300,000 TEUs

TOTAL IMPORT EXPORT EMPTY

25,200 24,000 10,800 60,000 58,800 56,000 25,200 140,000 42,000 40,000 18,000 100,000

1.25 TEU

100,000

TOTAL IMPORT EXPORT EMPTY

100

REMARK

PHASE II-3

140,000

IMPORT EXPORT EMPTY

Container Share

MIDDLE TERM

PHASE II-1

TEU

Container Type Weighted Annual Container Handling Volume Annual Working Day

SHORT TERM

UNIT

3,030 24,545 2.5 Integer rounded up 3

(ii)

Backyard Area

The backyard area is required only for the Middle-Term Expansion (Phase II-3) because the area is not necessary to develop in the Short Term Expansion (Phase II-1) and Middle Term Expansion (Phase II-2). The dimensions of the area depend on the dimensions and types of yard facilities and buildings to be accommodated in the area. Also, such yard facilities and buildings as finalized are to reflect the preference and convenience of the terminal operator and/or port administration body. In this planning stage, the minimum basic yard facilities and buildings were determined referring to those of the existing MCT as follows, and the total occupied area was estimated as 10,000 m2. 1,300

m2

Terminal Control Building

850

m2

Maintenance Shop

850

m2

Entrance Gate (7 lanes)

800

m2

Power House, Substation, Generator House, etc.

600

m2

Mechanical System Buildings

400

m2

5,200

m2

10,000

m2

Administration Building

Container Repair/Washing Area etc. Total

The backyard area is calculated by the following formula: From this formula, the required backyard area was given as 4.5 ha (45,000 m2 = 10,000 m2 x 4.5). =

×

where, C k iii)

:

Required Backyard Area (m2)

:

Facility and Building Occupied Area (m2)

:

Backyard Area Factor (k=4.0-5.0)

=4.5

MCT Phase II General Layout Plans

Considering the aforementioned, Figures 3-32, 3-33 and 3-34 respectively present the terminal layout plans for MCT Phases II-1, II-2 and II-3.

3-53

3-54

Figure 3-32

(Source: Study Team)

General Layout Plan (MCT Phase II-1)

3-55

Figure 3-33

(Source: Study Team)

General Layout Plan (MCT Phase II-2)

3-56

Figure 3-34

(Source: Study Team)

General Layout Plan (MCT Phase II-3)

b)

Port Facility Planning and Construction Program

i)

Port Facility Planning

(i)

Basin

The depth of the basin in front of the 300 m quay to be constructed in MCT Phase II shall be -13 m from DL, same as the existing basin at MCT Phase I. In fact, most of the basin area was already dredged during the construction of MCT Phase I, and PIA confirmed in 2016 that there was variation in depth in front of the existing quay constructed in MCT Phase I. The costal shoreline of the targeted area to construct in MCT Phase II is being recessed toward the land side, and the scored sand materials are probably spread in front of the area. Therefore, dredging of the basin has been planned for MCT Phase II. (ii)

Quay and Apron

The elevation of the quay was adapted as +3.20 m from DL, same as the existing MCT Phase I. A marine fendering system, bollards for berthing and other related accessories were considered concurrently with the quay. The quay structure was selected based on the preliminary comparative study for the three (3) suggested quay structure types, namely steel sheet pipe pile wall with steel sheet pipe pile anchorage, and two (2) decks on piles (racked piles and vertical piles with steel strut members) as shown in Table 3-34. As seen in the table, the most suitable structure type was deck on piles (vertical piles with steel strut members), because the type is advantageous in terms of structural suitability, less interference with other work items, and the possibility to minimize the construction period, even though the cost is a bit higher than the other types. The total width of the apron was determined as sixty (60) m and the crane rails of 30.5 m gage span, including other necessary accessories for 16-row Over Panamax type, were intended for installation at the apron on the portion of the quay. The purpose of the back area of the quay as a part of the apron was to secure certain space for temporary placement of hutch covers of container vessels or temporary work space or traffic lanes of heavy duty cargo handling equipment (CHE). Heavy duty concrete pavement was selected for the area. (iii)

Container Yard

The marshalling area requires the securement of certain ground slots for each phase. The volume of the required ground slots for each phase are 320 TEU (Phase II-1), 746 TEU (Phase II-2) and 533 TEU (Phase II-3). Based on actual container handling volumes, the volume of reefer containers was five percent (5%) of the total volume in 2015. To consider future cargo demand forecast, the ratio was reasonably set as ten percent (10%) and the ground slots of the reefer containers were assumed as 1,600 TEU. The CHE in the marshaling area was to apply RTGs (5 over 1) and the maximum stacking height was determined as 5 containers in order to efficiently operate loading and unloading activities. The marshalling area was assumed to apply heavy duty concrete pavement over all including pavement markings without container slippers and RTG travelling lanes like MCT Phase I. Because the container yard re-arrangement is easier on demand, if the terminal operator further pursues for cargo handling/storage efficiencies.

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3-58 Up to -17 m quay

Slightly lower

Construction Cost

Track Record

Steel Pipe Pile, φ800-1200 L=35-47m @6m * Suitable independent structural type for site having deeper hard stratum * Easy importation of steel materials upon procurement * Less interference between marine work and land civil work

(Source: Study Team)

Up to -20 m quay

Moderate

Moderate

* Reflection waves generated due to vertical * Certain retaining wall separately required at wall structure backside of quay structure * Numerous steel sheet piles required * Numerous steel pipe piles required * Work sequence and method complicated * Marine workboats required especially for (pilling work, dredging, reclamation, earthwork, piling work stonework, concrete work etc.) Slightly longer

Disadvantage

Advantage

Steel Sheet Pipe Pile, φ1200 L=41m (wall type) * Same as existing quay structure (reliable track record at this site) * Easy importation of steel materials upon procurement * Possible landside construction without workboats such as pilling barge

Construction Period

Structural Component/ Material Procurement/ Construction Method

Component

Up to -14 m quay

Slightly higher

Slightly shorter

* Structural integrity required for any external forces * Certain period required for fabrication of strut members * Marine workboats required especially for piling work (but not more than alternative B)

Steel Pipe Pile, φ1300 L=35-47m @10m * Integrated structural type with deck on piles and retaining wall (an alternative compromised between alternatives A and B) * Less steel quantity and easy importation of steel materials upon procurement * Less interference between marine work and land civil work

DL-13 m

3 Deck on Piles (Vertical Steel Pipe Pile + Strut Type)

Design Depth (m)

2 Deck on Piles (Raked Steel Pipe Pile Type)

Seabed to DL-20 m: N>10 (Clayey/Sand SILT), DL-25 to -44 m: N=10-20 (Clayey/Sand SILT) and DL-44m deeper: N=30 (Silty Sand/Gravel-sized Coral Fragments

1 Steel Sheet Pipe Pile w/ Steel Sheet Pipe Pile Anchorage

Subsoil Conditions

Typical Section

Structural Type

Alternative

Table 3-34 Preliminary Comparative Study of Quay Structure Types

(iv)

Buildings

Referring to the existing MCT Phase I, the administration building, terminal control building, power house/substation/generator house, mechanical equipment facilities, other relevant buildings, and container repair/washing area were arranged in the backyard area in order not to hamper container handling operation. The maintenance shop is to be located preferably near the RTG path in its flow. The administration building, terminal control building, power house/substation/generator house, mechanical equipment facilities and other relevant buildings are planned to be made of RC structure with pile/spread foundations. The maintenance shop and other lighter small shed are planned to be made of RC and steel frame structure with spread foundation. Basically, it was assumed that the administration building is to be constructed in Phase II-2, and the rest of the buildings are to be constructed in Phase II-3. (v)

Mechanical Systems

The water supply system, firefighting system, sewerage system, oil supply system, weighing bridge and ceiling crane are considered as mechanical systems in MCT Phase II. The water supply system is to function in the use of PIA’s existing deep well system, and to supply water to vessels and other necessary facilities. The firefighting system is to provide fire hydrants and fire equipment in the container terminal, as well as inside relevant buildings. The sewerage system is to install sewerage treatment equipment to purify the waste water for discharging to the sea with satisfaction of environmental requirements. The oil supply system is to deposit and supply fuel for RTGs and other yard cargo handling equipment such as reach stacker, top lifter, tractor-trailer, etc. Furthermore, the weighing bridge and ceiling crane are to be installed, respectively, at the entrance gate and the maintenance shop. Tentatively, it is assumed that parts of the water supply, firefighting and sewerage systems are to be provided in Phase II-1, parts of the water supply, firefighting, sewerage, and oil supply systems and weighing bridge (4 lanes) are to be installed in Phase II-2, and part of the water supply, firefighting, and sewerage systems and weighing bridge (3 lanes) are to be placed in Phase II-3. (vi)

Electrical Systems

In MCT Phase II, electrical systems are considered as lighting and power supply systems, generator (750 kVA), power supply equipment, transformers for substation and power house. Lighting and power supply systems are to install power cables, cable pipes, duct bank, illumination equipment or such. The generator is provided for emergency power supply to QGCs as well as other limited buildings and/or facilities inside the container terminal, and transformers are to convert high voltage power into medium and low voltages to be placed in the substation and power house. Tentatively, it is assumed that part of the lighting and power supply systems and transformers are to be installed in Phase II-1, part of the lighting and power supply systems and transformers, and generator (750 kVA) are to be installed in Phase II-2, and part of the lighting and power supply systems are to be placed in Phase II-3. (vii) Cargo Handling Equipment To adapt to wider Panamax vessels in the future, two (2) QGCs that have longer outreach for 16-row container vessels (Over-Panamax size) in Phase II-1 and four (4) RTGs able to stack 5 containers (5 over 1) were considered for MCT Phase II procurement. 3-59

(viii) Navigational Aids To increase calling vessel traffic concurrently with container cargo volumes, it is imperative that certain vessel traffic is strictly controlled. Therefore, for navigational aids, two (2) navigational buoys and one (1) light beacon were considered as part of the project components of MCT Phase II. ii)

Construction Program

The major construction works of MCT Phase II are comprised of dredging work, reclamation and landfill, manufacturing of steel pipe pile (SPP), delivery of SPP, pile-driving work, concrete works for superstructure, mechanical and electrical works, building works, paving works for apron, yard, service road, etc. If the reclamation and landfill can’t be completed on time, mechanical, electrical, building and paving works will be delayed accordingly. It is duly noted that securing the reclamation and landfill materials is important to prevent such a delay, and the quantity of work is not too big a volume. The general work sequence of MCT Phase II construction (civil, building, mechanical and electrical works) is shown in Figure 3-35. Figure 3-35 General Construction Work Sequence (Civil, Building and M&E Works)

(Source: Study Team) 3-60

Year & Quarter

3-61

Preparatory Works

Marine Works

Dredging qand Reclamation

Quay

Civil Works

Pavements

Drainage System

Other Associated Civil Works

Utility Works

Mechanical Works

Electrical Works

Building Works

Equipment

B

C

C1

C2

D

C1

C2

C3

E

E1

E2

F

G

Commencement of Port Operation

Defects Notification Period (DNP)

Mobilization/Demobilization

A

Construction Stage

Description

2017

2018

2019

2020

2021

2022

2023

2024

2024

2025

2026

2027

2028

2029

(Source: Study Team)

Phase II-1

Phase II-2

Phase II-3

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

2016

Table 3-35 Tentative Construction Schedule for MCT Phase II (II-1, II-2 and II-3)

As shown in Table 3-35, the assumed construction periods are two (2) years for Phase II-1, 1.5 years for

Phase II-2 and 2 years for Phase II-3. Strict supervision and careful monitoring are required because the

procurement of QGC requires two (2) years for design, manufacturing, installation, testing and commissioning, and that of RTG requires one-and-a-half (1.5) years for design, manufacturing, installation,

testing and commissioning.

2)

Description of the Proposed Project

The project site is located at the southeast of the existing MCT in Tagoloan, Misamis Oriental. The project is to construct a new container terminal in phased development as planned (Phases II-1, II-2 and II-3). The estimated total project cost is 5.3 billion PHP (12.8 billion JPY), consisting of 2.3 billion PHP (5.5 billion JPY) in Phase II-1, 1.3 billion PHP (3.2 billion JPY) in Phase II-2, and 1.7 billion PHP (4.1 billion JPY) in Phase II-3. Table 3-36 shows the project components of the proposed project. Table 3-36 Major Components of Proposed Project MCT PHASE II

DESCRIPTION Basin Quay

Civil Facilities

PHASE II-1

PHASE II-2

Dredging

✔

✔

Deck on Piles (vertical/strut type)

✔

✔

Quay Accessories

✔

✔

Seawall

✔

✔

Reclamation and Landfill

✔

✔

✔

Pavement

✔

✔

✔

Fencing

　

✔

✔

Landscaping

　

✔

✔

Administration Bldg.

✔

Maintenance Shop

✔

Entrance gate

✔

Security Booth

✔

Power House

✔ ✔

✔

Pump House

✔

Generator House

✔

Parking Garage

Mechanical Systems

✔

Water Supply System

✔

✔

✔

Fire Fighting System

✔

✔

✔

STP

✔

✔

✔

Oil Supply System

✔

Weigh Bridge

✔

✔

✔

✔

Electrical Works Exterior Emergency Generator Set

✔

Electrical Systems Power Supply Equipment Transformer (Substation)

Navigation Aids

QGC

✔ ✔

✔

Transformer (Power House) Cargo Handling Equipment

✔ ✔

Public Toilet Substation

REMARK

✔

Terminal Control Bldg.

Buildings

PHASE II-3

✔ ✔

✔

RTG

✔

Navigational Buoy

✔

Beacon Light

✔

(Source: Study Team) The above components are defined as hard components of the proposed project, which is possibly considered for application of a Japanese Yean Loan. As mentioned in 3) Effects of Project Implementation, (1) in

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Chapter 3, the project essentially requires not only hard components but also soft components for enhancing capacity of operation and port administration, and competitiveness to Cagayan De Oro Port. 3)

Issues and Countermeasures upon Application of Proposed Technologies

The main proposed technologies are steel pipe pile for quay (strut beam method and high tension steel pipe pile), marine fendering system, crane rail, cargo handling equipment (QGC and RTG) and navigation aids (navigational buoy and beacon light). Of the above-listed, it is well known that marine fendering systems and navigation aids are reliable as Japanese products with many historical supply records competitively to many ports around the world. On the other hand, steel pipe pile for quay (strut beam method and high tension steel pipe pile), crane rail and cargo handling equipment (QGC and RTG) are also reliable with certain historical supply records to many ports, however, such technologies are getting involved in tough price competition due to the appearance of international competitors in neighboring countries such as China and Korea. Therefore, adapting such steel pipe pile for quay and cargo handling equipment requires some cogitation in making bidding documents for the procurement at the project planning and design stages, e.g., being weighted for importance in procurement records for past projects, presentation of special technical specifications, request of quality monitoring documents for the past 10 years including countermeasures for error, mistakes, negligence, etc. Also, it has been informally announced that a certain period would be required for manufacturing strut beams for quay and QGC. In case other non-Japanese manufacturers are able to do so earlier than Japanese manufacturers, some people may feel that Japanese manufacturers have less competitiveness in view of the late delivery, aside from quality and cost. It is consequently required that knowledge of quality, price and delivery for specific Japanese products intended to be introduced in the project should be positively and explicitly provided to the implementation agency and such Japanese manufacturers should facilitate self-help improvement in view of the quality, price and delivery for enhancing competitiveness.

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(4) Required Studies for Project Implementation Required studies for implementation of the proposed project would be as follows: 1)

Future Demand in Anticipation

The demand forecast in this report is based on the assumption that the competition between MCT, which is the subject of the project, and Cagayan de Oro port (Opol port) will become active hereafter. However, because of the scarcity of data for container cargoes, it is macro-estimated based on the regional economic trends (GRDP, population, etc.). Hereafter, it is considered that a detailed demand forecast will be needed to carry on the project specifically. Therefore, the following are required points, problems, and agendas for further study. a)

Preparation of statistics

In MCT and Cagayan de Oro port, although there are statistics of container throughput by exporting and importing, there are no statistics data by product or data about cargo flow. It is very important for studying demand forecast to take statistics on each product or cargo flow. Hereafter, the statistics data as shown below will be needed. Preparation of statistics (Example) ●

Preparation for classification of products (large, medium and small classification)

●

Preparation for data of cargo amount: every year (By foreign or domestic, inbound or outbound (domestic), products, laden or empty, sizes, tons, TEU, number, etc.)

●

Survey on cargo flow: periodically (once in five years) (By concentrated-occur regions, foreign or domestic, inbound or outbound (domestic), products, companies, etc.)

b)

Continuous activities for strengthening ties with cargo owners (companies) and understanding needs and seeds

In this survey, we asked some large cargo owners (companies) that use MCT and Cagayan de Oro port for information about the current container throughput, the conditions of port utilization, and the future stream. PIA (PHIVIDEC Industrial Authority), which manages MCT, possesses PIE (PHIVIDEC Industrial Estate: site area 3,000 ha), and currently 64 companies (774 ha) are in operation. PIA has already bought up about 93% of land (2,472 ha) that is available for development, and it is expected that it will invite more enterprises to promote regional economic growth.

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Currently, regardless of being inside or outside PIE, various companies use MCT. When planning for increase of MCT utilization, it would be required to understand the plans (strategies) of companies, especially those inside PIE, before planning improvement of services. Furthermore, it is necessary to provide large cargo owners outside PIE a better quality service than Cagayan de Oro port, which is going to construct new wharfs and systems. Based on these points of view, hereafter, continuous activities for strengthening ties with cargo owners and understanding needs and seeds are required, to help demand forecast accurate. The following are examples of the activities:

c)

●

Hold a periodic meeting with companies inside PIE: periodically (whole)

●

Survey cargo companies (main companies) inside and outside PIE: periodically (individual)

●

Activities for improvement of service and promotion of utilization of MCT: as needed

●

Invitation of enterprise for PIE: as needed

High-level method of demand forecast

Currently, there is congestion of vessels because of scarcity of berth window and construction of a new berth is a pressing issue. In this project, it is indicated, by analyzing this agenda quantitatively, that construction of a new berth is promptly necessary. On the other hand, it is necessary to know accurate demand forecast, which is required for further study for this project, therefore, it is important to conduct a more specific demand forecast than the macro projection in this case. Furthermore, the current transportation networks with Davao district, which is a main economic base on Mindanao Island, is not enough, as well as Cagayan de Oro. Therefore, competition inside the island is not taken into consideration, however, fighting for cargoes between areas is possible to occur depending on development conditions of Mindanao in the future. Although the statistics data required for specific demand forecast are not enough, the method of demand forecast which should be considered hereafter is shown below: Understanding specific data about cargo volume by product Gather and sort out container volume by product in MCT and Cagayan de Oro port. (Harbor administrator, etc.) Foreign cargoes: Gather and sort out container volume by customs statistics (for each HS code). (Harbor administrator, etc.) Especially for large cargoes, ask companies for the information. Understanding changes of cargo flow accompanying development trends of Mindanao Understanding rising companies (including plans) and new cargo demand by industry policy. Understanding conditions and changes of cargo flow (by asking for information). Conduct micro projection In consideration of changes of container volume by products above and socioeconomic trends, conduct a micro projection based on correlation analysis and plans of companies.

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2)

Issues for Determination of the Project Contents

a)

Prompt Authorization of Basic Policy and Project Scheme of MCT Expansion

A problem facing MCT is that some container vessels are forced to wait for berthing offshore. Accordingly, it is important for PIA to develop port facilities to cope with this problem. In this regard, the medium and short term basic policy (planning) of port development for the next 10 to 20 years needs to be authorized as soon as possible. PIA signed a concession contract with the Philippines’ largest terminal operator, ICTSI, for the operation of MCT in 2008; MICTSI (a subsidiary of ICTSI) started operation with a 25-year concession (MCT was constructed using a Japanese ODA). For the expansion of MCT, PIA needs to decide whether to apply for an ODA again or adopt another scheme such as PPP (Public Private Partnership). (New Philippine President Rodrigo Duterte was elected in June 2016, however, new members of the board and an administrator of PIA have not been appointed as of January 2016. Until these appointments are made, PIA cannot make any official decision.) b)

Improvement of Port Administration by PIA

The present MCT (Phase I) was constructed by Japanese ODA and started operation in 2004. MCT is PIA’s only container terminal and thus PIA lacks experience in development, operation and management as compared to PPA, which oversees many public ports throughout the country. Officials of PIA thus have much room for improvement in terms of port administration. Therefore, improving PIA’s port administrative capabilities (soft measures) as well as developing the required infrastructure (hardware), such as port facilities and equipment, are both crucial. c)

Comprehensive Port Development Management by the Government of the Philippines

PPA and CPA are overseen by the Department of Transport (DOTr) in the Philippines. However, some other governmental ports have their own specially designated authorities, such as the Subic Bay Metropolitan Authority in the case of Subic Port and PIA in the case of MCT, which are not under the DOTr. Such ports are developed and managed by their respective authorities. Therefore, it is important, but often difficult, to develop the various ports in a country in such a way that their roles and functions complement each other. Accordingly, the Philippine Government should recognize that MCT’s expansion needs to be coordinated with other ports in the Mindanao region from a cross-jurisdictional point of view, particularly with its neighboring port, Cagayan de Oro port.

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3)

Advantages of the Proposed Technologies

As described in 3) Issues and Countermeasures upon Application of Proposed Technologies, (3), Chapter 3, the proposed technologies in this project are steel pipe piles for quay (strut beam method and high tension steel pipe pile), marine fendering system, crane rail, CHE (QGC and RTG), and navigation aids (navigational buoy and beacon light). Table 3-37 presents the superiority and adequacy of the proposed technologies. Table 3-37 Proposed Japanese Technologies

Major Japanese Companies

Superiority and Adequacy of Proposed Technologies Other Companies in Neighboring Countries

Marine Fandering System

Bridgestone Co. Sumitomo Rubber Industry Ltd. Shibata Industrial Co., Ltd.

IRM (India) Yantai Taihong Rubber (China)

Crane Rail

Nippon Steel & Sumitomo Steel Metal Co. JFE Steel Co.

Steel Pipe Pile／Strut Beam Method

Quality/Record * High quality rubber composition and durability as world wide tire manufacturer * High market share internationally

Technologies/Services

Cost

* Possible technical services after supply upon request * Disclosure of technical information and design guideline

* Possible cost down by mass procurement of row materials * Possible manufacture ring and transportation cost savings by manufacture ring in foreign factories injected by Japanese capital

He Steel Co.／Bao Steel Co. (China) * High quality Posco／Hundai Steel Co.（Korea）etc. * High accuracy * High durability = long life (10% longer proven) * Many overseas supply records

* Less installation period due to product accuracy * Long period quality assurance for heavy QGC travelling

* Higher cost competitiveness in view of life-cycle cost * Possible manufacture ring/transportation cost savings by manufacture ring in Vietnam factory injected by Japanese capital

Nippon Steel & Sumitomo Steel Metal Co. JFE Steel Co. Ltd. Kubota Co.

He Steel Co.／Bao Steel Co. (China) * High quality Posco／Hundai Steel Co.（Korea）etc. * High reliability * Many overseas supply records

* Less total steel weight by combination of strut beam method * Less number of steel piles without soil improvement * Minimized for seabed disturbance * Possible shortening of total construction period

* Possible manufacture ring/transportation cost savings by manufacture ring in Vietnam factory injected by Japanese capital * Cost down by optimal design & time saving by simple work sequence

QGC

Mitsui Engineering & Shipping Co. IHI Co.

ZPMC (China) Hundai San Ko Heavy Industry Co. (Korea)

* High quality * High reliability * Many overseas supply records

・Possible custom made products ・Strict technology control in design, material procurement, assembling and delivery ・Utilization of Japanese products in assembled members and parts

* Possible cost down by mass procurement of row materials * Time and cost savings by increase of production line

RTG

Mitsui Engineering & Shipping Co. Sumitomo Heavy Industry Ltd.

ZPMC (China) Hundai San Ko Heavy Industry Co. (Korea)

Ditto

Ditto

Ditto

Navigational Aids

Zeni Lite Buoy Co., Ltd. Ryokuseishya Co.

Daekee (Korea) Wei Zhou Chongqing Hi-Sea Marine Equipment (China)

* High quality and reliability * Long business achievement more than 50 years * Many overseas supply records

* Specialization for navigational aids * Accumulation of know-how and other technoligies

* Sufficient after care in package * Possible manufacture ring and transportation cost savings by manufacture ring in foreign factories injected by Japanese capital

(Source: Study Team) As mentioned above table, the proposed technologies are well-known to be generally reliable in quality and technology wide. Especially, marine fendering system and navigational aids are very competitive at international market and are resultantly adequate as the proposed Japanese technologies. In case of steel pipe pile including strut beam method, crane rail and cargo handling equipment, they are also competitive in terms of quality and technology with high reliability. Currently the manufacturers having such technologies move on making their best efforts to make manufacturing and transportation costs lowered by mass supply of raw materials and establishment of overseas factories invested by Japanese capital. Such technologies are also adequate for as the proposed technologies.

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(5) Effects of Implementation of the Project Although competition among major shipping companies for upsizing container vessel dimensions has been indicated in a report namely “The Impact of Mega-Ships” prepared by OECD in 2015, the upsizing of the container vessels is still on the move in not only trunk shipping routes but also Asian regional shipping routes by the cascade effect that larger container vessels operated in upper shipping routes become next container vessels to be operated in lower shipping routes. In general, it is required to improve existing port infrastructure namely deepening and widening access channel and basin, and to enhance quay crane productivity namely introducing additional QGC and/or increasing QGC container handling efficiency, if the container vessels are upsizing. As the result of the above, shipping companies have been exposed to the menace of fluctuation of fuel oil price and associated transportation cost, are continuously enforced to reduce number of regular liner by introducing upsized container vessel (which is consequently connected to reduction of offshore vessels passing on shipping routes), and to produce “on-time” container cargo transport services by strengthening shipping alliance and utilizing its world-wide network. As the result of the above, shipping companies have been exposed to the menace of fluctuation of fuel oil price and associated transportation cost, are continuously enforced to reduce number of regular liner by introducing upsized container vessel (which is consequently connected to reduction of vessels on shipping routes), and to produce “on-time” container cargo transport services by strengthening shipping alliance and utilizing its world-wide network. Foreign container vessels calling to MCT are mostly operating across the trunk shipping route connecting between Singapore and Far East Asia, which is essential for oil tankers and LNG vessels navigating from Middle East to Japan. Decrease of offshore vessels affected by reduced regular liner services makes risk lowered specially for marine accidents, which would contribute improvement of marine safety and stable energy supply to Japan.

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Chapter 4

Evaluation of Environmental and Social Impacts

(1) Current Situation of Environmental and Social Aspects Environmental and social considerations (ESC) are an important aspect of the study to determine environmental and socio-economic viability of infrastructure projects. DENR, through EMB, is mandated to oversee and manage a project’s environmental and social impact evaluation on behalf of the government. In case of the project being financed by JICA, the proponent must comply not only with the EIA rules and regulations of DENR-EMB but also with the Guidelines for Environmental and Social Considerations of JICA itself. 1)

Existing Environmental Impact Assessment (EIA) and Environmental Compliance Certificate (ECC)

Funded by an ODA from Japan, Mindanao Container Terminal Project Phase I (MCT-I) was constructed from January 2002 to March 2004 with PHIVIDEC as the executing agency. MCT Phase I (MCT-I) was designed and implemented to provide a port facility that will complement the function of Cagayan de Oro City base port. Prior to commencement of MCT-I implementation, an Environmental Impact Assessment (EIA) was prepared for the Project in compliance with DENR’s regulatory permitting requirements. This action was an important ESC requirement of the Japanese government as the ODA provider. The activities complied with the steps prescribed by DENR in carrying out the environmental impact assessment process. Subsequently, an Environmental Compliance Certificate (ECC) was issued in October 1999 by EMB-DENR, paving the way for the construction phase. In the ECC, certain conditions were stipulated that must be complied with by PHIVIDEC. Notable among the conditions were the submission to EMB, within six (6) months after receipt of the ECC, of the following reports by Proponent: 

Coastal stability study before start of construction



Seawater quality sampling study



Bathymetric study



Detailed Environmental Management Plan

Another condition stipulated in the ECC is the conducting of a baseline survey for air and noise as well as water quality surveys that should be conducted at specified sites in the MCT-I vicinity before construction or, optionally, one year after ECC issuance. Except for the first requirement above, the proponent made the necessary steps to comply with the rest of the above special conditions. 2)

Existing Natural Environment

The area encompassing the existing MCT-I area covers 48 hectares. Additional areas of 15.6 hectares and 9.4 hectares are reserved for Phase II and Phase III, respectively. The expanded MCT complex is shown in Figure 4-1.

4-1

Figure 4-1 Mindanao Container Terminal (MCT) Phase-I and Expansion Areas

100m

200m

500m

300m

30m

300m

100m

Phase II-1

Phase I

Phase II-3

150m

140m

200m

Phase IV Phase II-2

Phase III

100m

LEGEND Phase II-1 Phase II-2 Phase II-3

400 m

Phase III Phase IV

200 m Long Quay (W=30m, Depth=-13m), 2 ha Apron/Container Yard (L200m x W100m), 2 nrs Over Panamax-size QGCs 4 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, 4 nrs RTG Cranes etc. 100 m Long Quay (W=30m, Depth=-13m), 5 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc. 300 m Long Quay, 5 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc. 500 m Long Quay, 11 ha Apron/Container Yard, Yard Utilities (M&E Works), Buildings, Entrance Gate etc.

(Source: Study Team) a) i)

Land Environment Soils and Geology

It is mentioned that the vicinity of Tagoloan is generally underlain by two major rock formations: a) quaternary terrace gravel, and b) quaternary alluvium. The quaternary terrace gravel cover the south-southeastern and north-northeastern part of the area, forming generally horizontal layers of tuffaceous sandstone, mudstone, siltstone and shale. Some layers contain sparse lenses of coralline limestone to pebbly sandstone. Both sides of the Tagoloan river floodplain are underlain by quaternary volcanics and pyroclastic materials derived from underlying igneous rocks. ii)

Land Use

The general land use plan for Tagoloan municipality was approved by the Municipal Council in 2005. This land utilization plan allocates 42% to agricultural lands and 18% to industrial lands (including PHIVIDEC Industrial Estate). Built-up areas (residential, institutional, commercial and open spaces) constitute 13%, while forest lands account for 20%. The remaining areas are devoted to grass lands, quarry areas, utilities and agro-industrial areas. During and after the implementation of the MCT-I in 2004, much of the areas were developed for various structural components of the MCT. An additional area reserved for expansion is currently vegetated with grasses, acacia trees, mangoes, bananas and other shrubs. 4-2

iii)

Vegetation

The town of Tagoloan is an agro-industrial municipality of which more than 3,200 hectares of its land area is reported by the municipality as agricultural land. Crops planted in these areas include rice, corn, coconuts, bananas, papayas, mangoes, peanuts, vegetables, root crops and cashews. More than 1,540 hectares of the municipal lands are classified as forest lands. Areas not cultivated are vegetated with wild grasses like cogon, and shrubs as well. For the MCT expansion area, a recent ocular investigation showed no extensive vegetation nor agricultural crops. Grass, shrubs and trees, like mature acacia trees, mangoes and bananas, are scattered over the area. No recent inventory of plants and trees in these areas is available that would enable detailed characterization of existing vegetal cover. iv)

Geologic Structures and Geo-Hazards

The prominent geological structure in the area is a northwest-trending Tagoloan fault. It traverses from southwest to northeast along the Tagoloan River from the south end of Barangay Santa Ana and extending to the north-northeastern section of Barangay Poblacion of Tagoloan. Parallel to the fault line is the northeast and southwest-trending fault traversing from the northern part of Santa Ana along Mamala Creek proceeding thenceforth to north of Barangay Santa Cruz along Tagpayao Creek. It appears that PHIVIDEC, including the MCT complex, is vulnerable to movement of these faults. v)

Climate and Climate Change Vulnerability

The prevailing climate of Tagoloan is Type III, based on Modified Corona’s climate classification of the Philippines, which is characterized by not very pronounced dry and wet seasons implying relatively uniform climatic conditions annually. The relatively drier months of the year occur from February to April. The rest of the year exhibits relatively wet months. The coastal areas of Northern Mindanao, including Macajalar Bay, are vulnerable to sea level rise induced by climate change and global warming. b)

Water Environment

Two and a half (2.5) years after the EIA preparation, primary baseline surveys of the natural environment were undertaken by PHIVIDEC. Seven (7) field sampling sessions were carried out from May 2002 to November 2003. Sampling and analyses covered surface (inland) waters, ground water, coastal waters and air/noise in the impact zone of the MCT-I. No recent water quality surveys of the natural environment around MCT-I and vicinity are available after those surveys. In 2008, MMC of Xavier University conducted an ecological profiling of Macajalar Bay, including the coastal waters of coastal barangays of Tagoloan. The survey was, however, focused on the marine environment in Macajalar Bay, especially in relation to, among others, the marine biodiversity and productivity of the Bay. The results of the 2002-2003 surveys indicate the following conditions of the environment at that time:

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i)

Seawater Quality

The coastal waters of Macajalar Bay which is the receiving body of water of all natural discharges from the Tagoloan River and other tributary creeks and streams in the Tagoloan-Villanueva areas. It is also the receiving body of wastewater (treated/untreated) from the MCT complex and the PHIVIDEC industrial estate in general. Depending on the location, the results of quality sampling and the prevailing usage of the waters, a two-fold classification of seawater was adopted for the bay: a) Class “SB” for coastal areas regularly used for Recreational Water Class 1 (areas regularly used by the public for bathing, swimming, skin diving, etc.) and Fishery Water Class 1 (spawning areas for chanos or bangus and similar species); and b) Class “SC” categorized as good for Recreational Water Class II (e.g., boating, etc.), and Fishery Water Class II (commercial and sustenance fishing) and marshy and/or mangrove areas declared as fish and wildlife sanctuaries. In the 2002-2003 surveys conducted for MCT-I, sampled from three adjacent sites – all located 200 m offshore of Tagoloan shoreline. Based on the observed range of values of the seawater quality parameters, the general quality of the coastal waters of Tagoloan was still good, based on tested quality parameters, since no evidence of serious and increasing pollution was observed. ii)

Groundwater Quality

The quality of the groundwater samples taken from two (2) existing well sites near the MCT main entrance gate shows slight to high levels of hardness. The analysis also indicates a level of phenols higher than the DENR’s threshold level, high levels of total coliform, low to excessive levels of hardness, chlorides, turbidity, color, and total dissolved solids (TDS). The findings suggest that the water should be improved by appropriate physical and chemical treatment prior to possible use as potable water. Considering the 14-year gap between when the survey was conducted in 2002-2003 and today, it is likely possible that the quality of groundwater has deteriorated due to urban crawl and population increase. iii)

Surface Waters

Tagoloan is largely affected by the Tagoloan River system – one of the major river basins of Mindanao. The Pugaan River and Alae River are minor creeks that contribute to surface water affecting neighboring communities of Tagoloan. The Tagoloan River basin drains an area of 1,577 sq. km and discharges to the southeast of MCT. A total of 10 towns and 94 barangays are encompassed within the basin boundaries. During the 2002-2003 field surveys, seven sites were used as sampling points: 3 in the Tagoloan River, 3 in Alae Creek and 1 in a pump intake station near the Tagoloan River. Notably, the level of fecal contamination in the majority of the stations exceeds 500 MPN/100 ml, reaching a very high level of 160,000 MPN/100 ml at one site. It can be deduced that as early as 1999 Tagoloan river waters at Tagoloan-Villanueva stretches were already contaminated with animal or human sewage. Except 4-4

for the excessive BOD levels at the Alae River near Bugo in Cagayan de Oro, other water quality parameters exhibit levels that do not exceed DENR’s quality thresholds. At present, it is likely that the conditions of surface waters near the Project site have continued to deteriorate due, evidently, to the continued rise in population and, further, because no major wastewater treatment initiatives have been implemented so far. In the case of MCT, the breakdown and resulting non-operation of the STP, which was designed to treat 115 m3/day of raw sewage, implies that sewage is being discharged into the environment with no appropriate and effective treatment. iv)

Flooding and Drainage

Several areas of the 10 barangays comprising Tagoloan are susceptible to flooding. In particular, those barangays/villages proximal to the Tagoloan River, Pugaan River and Alae River and those along the coastal areas are susceptible to flooding. Occurrence of high tide coinciding with riverine flooding causes extensive damage to agricultural crops and fishponds coupled with inundation of residential lands and houses. In January 2009, heavy rains accompanied by high tide and storm surge inundated Barangays Baluarte, Natumolan, Poblacion, Rosario, Santa Cruz and Sugbongcogon. The latter barangay is, to a major extent, the host of the MCT complex. Being located in the plains, the MCT complex is not prone to landslides and mass wasting which affects the vicinity of Barangay Rosario, which lies near the foot slopes of the surrounding hills to the northeastern part of Tagoloan. c)

Air Environment and Noise Conditions

Updated air and noise pollution data are not available during the current SMCTEP study. The 2002-2003 survey of the natural environment provides insight on the levels of these environmental quality parameters. In that survey, air quality and noise measurements were made at four sampling stations near the northern (2 stations), eastern (1) and southern limits (1) of the MCT complex. Judging from these sampling results, noise and air quality are still below the threshold limits set by DENR. Air pollution contributed by MCT operation are not expected to become the source of nuisance pollution considering that there are no stationary continuous exhaust or emission sources within the MCT complex. Emissions from nearby industrial plants (i.e., Philippine Sinter Corp) and coal power plants (i.e., FDC, STEAG, etc.) are the major and significant contributors of air pollution over the PIE airshed. d)

Marine and Coastal Ecology

Macajalar Bay is a major fishing ground of Northern Mindanao. This fishing ground has been facing threats brought about by industrialization, rapid development and coastal migration. Along the southern coast of this fishing ground is the location of the PHIVIDEC Industrial Estate. PIE is home to several heavy, medium and light industries such as, among others, Philippine Sinter Corporation, Del Monte Philippines, Mindanao Container Terminal, a 210-megawatt Mindanao coal-fired power plant, FDC 405-megawatt coal-fired power plant, petroleum and oil depots, shipping and transport industries, and other manufacturing and processing plants that are located in the estate. 4-5

i)

Coral Cover

Three decades of regular assessment showed a consistent decline of coastal coral cover from a good rating of 59% in 1997, down to a fair rating of 38% in 2008 and a recent survey of the fraction of dead coral at 24% shows that, over the years, the coral reefs in the bay have gone from bad to worse. The 2008 Ecological Assessment of Macajalar Bay reports that the once-excellent coral reef off the coast of Barangay Baluarte was found to be in dismal condition, with only 16% of live coral cover left and 62% already dead. Dead corals were covered by silt, indicating that the demise of the corals is due to siltation. ii)

Reef Fish

In the same survey, the coastal waters of Barangay Baluarte exhibited very low fish density at an estimated 713 fishes per square kilometer. About 94% of them are major groups without commercial value. The overall fish biomass density was estimated to be 7.71 MT/km2 of reef area. It is considered to be very low. Ranked first by category are the major groups at 4.45 MT/km2; second is target species at 2.52 MT/km2; third is the indicator species at 0.74 MT/km2. The estimated fish biomass by barangay in several towns, including Tagoloan and Villanueva, is reported to be critically low (>5 MT/km2). Target species are fishes with high commercial value, while indicator groups serve as a measure of the environmental condition that exists in a given locality. Their decreasing number indicates a deteriorating water quality condition. Almost a third of the reef biomass is composed of economically important fishes, dominated by surgeonfishes (indangan) and parrotfishes (molmol). The presence of butterflyfishes, however, indicates that the reef still has the potential for recovery. A few edible species of invertebrates are found in the shallow waters along the coast of Macajalar Bay like sea urchins and shelled organisms. iii)

Macrobenthic Fauna

Survey samplings for Tagoloan were established in Barangay Baluarte and Casinglot in the intertidal section of the bay, both with sandy substrate and seagrasses. A total of 19 macrobenthic invertebrates were identified in the Casinglot area. The three most abundant species were: hermit crabs (umang), boloceroides (sun-like anemone) and pyrene versicolor. There are 10 macrobenthic fauna found in Barangay Baluarte. The top three most abundant are: hermit crabs, mollusca and nassus mud snails. iv)

Seagrass and Seaweed Resources

Seagrasses provide shelter and foods to a diverse community of animals, from tiny invertebrates to large fish, crabs, turtles, marine mammals and even birds and humans. There are 9 out of 13 Philippine species of seagrass found in Macajalar Bay. Shallow seagrass beds cover the coastal waters of the bay at a range of <25-51%. Likewise, there are 62 out of 200 Philippine seaweed species found in the bay. These are 13 brown species (dominated by samo sargassum oligocystum), 25 green (dominated by lumot) and 24 red (dominated by guso Gracilaria salicornia). It is only in Barangay Casinglot, within the whole area of Tagoloan, where seaweeds can be found. It has the smallest cover, only 1.2%, among the 14 areas along Macajalar Bay.

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v)

Mangrove Resources

Mangrove forests are vitally important to coral reef and commercial fisheries as well as protection against storm surges, tsunamis and excessive coastline erosion. There is a high diversity of mangroves in the Bay at 18 out of 40 species in the Philippines, with an overall stand basal area of 219/m2/ha. The mangroves are dominated by Sonneratia alba (pagatpat) followed by a number of Avicennia (piapi). There are four (4) mangrove species found in Tagoloan. Of the 14 areas of Macajalar Bay, Tagoloan has the lowest stand basal area with a relative density of 1.6%. Mangrove seedlings were not found in the area, only saplings, and flowering and fruiting mangroves. 3)

Existing Social Environment

a)

Present Social Conditions

The Study Team visited several offices under the Municipal Government of Tagoloan and obtained updated information on social and economic conditions in the municipality. i)

Demography

Tagoloan is located 19 kilometers northeast of Cagayan de Oro City. The municipality has a total land area of 7,938 hectares. PSA-Region 10 reports that Tagoloan has a total population count of 73,150 as of August 1, 2015, with a population density of more than nine (9) persons per hectare. Sugbongcogon and Casinglot are host communities to MCT-I and the proposed MCT expansion area. Sugbongcogon is the second smallest barangay with an area of 87 hectares and serves as the main host of MCT-I. Barangay Casinglot has an area of 680 hectares and will play one of the hosts to the proposed MCT Expansion Project. The location of the proposed MCT expansion project is largely within the political boundary of Barangay Casinglot. The population growth rate, based on the historical population record for the municipality, has increased from 1.28% annually (from 2007 to 2010) to 2.54% annually from 2010 to 2015. In 2015, PSA ranked Tagoloan second highest in population with a percentage share of 8.23% of the provincial population. The Province of Misamis Oriental has a population of 888,509 as of 2015. Cagayan de Oro City is a chartered city with a population of 675,950. ii)

Employment, Income and Wages

To date, there are more than 400 business and commercial establishments in Tagoloan, including banks/financial services, educational institutions, trading firms, etc., now operating in the urban centers and barangays of Tagoloan. Private and public employment are the main sources of income in the urban centers. In the rural barangays and areas of Tagoloan, agricultural activities are still the main source of income and employment provider.

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iii)

Social Welfare and Health Services

A total of 21 Day Care Centers cater to children aging from 3 - 5 years old. Presently, the Municipal Health Office of Tagoloan conducts weekly visits to all Barangays to deliver services and assess effectiveness of their health programs of action. iv)

Morbidity and Mortality

There are many causes of illness in the municipality, even as it has grown into a first-class municipality. In 2015, the leading cause of morbidity which accounts for 57% of the total is acute respiratory infection, followed by animal bites (11.4%), hypertension (8.6%), and wound injuries (5%). There is much higher incidence of infection for those aged 1 to 50 years old. Hypertension and diabetes mellitus are much more prevalent in the older population, while pneumonia and diarrhea afflicted the younger population, age range of 1 to 4 years old. In the same year, the 5 leading causes of mortality are chronic hypertensive vascular disease (CHVD), which accounts for 19% of the annual total, followed by cancer (13%), pneumonia (10.5%), cardio respiratory arrest (10%) and asthma (8.6%). v)

Poverty and Informal Settlers

In 2015, the poverty incidence among households in Region 10 fell from 35.1% in 2006 to 34.9 in the first semester of 2015. Evidently, 4 families out of 10 have incomes lower than the poverty threshold or minimum family income that is required to meet the cost of basic needs of the family. Within the direct impact area of the MCT expansion area, no informal settlers were observed in the September 2016 ocular investigations. In the indirect impact areas outside of the project, however, the presence and number of informal settlers remain to be determined. It is expected that in the unlikely event that an actual need for resettlement develops for any affected families in the indirect impact areas, PIA’s eight (8) resettlement areas can adequately accommodate them. vi)

Indigenous Peoples and Ancestral Domain

Indigenous peoples in Northern Mindanao and their ancestral lands are located mainly in the western and southwestern margins of the Tagoloan River Basin. In a letter to PHIVIDEC in March 1999, the DENR-10 office confirmed that no certificate of ancestral domain (CAD) encompasses any portion of PHIVIDEC, hence no indigenous peoples occupy any part of the PHIVIDEC reservation. b) i)

Present Economic Conditions Agricultural Production

Most of the land area of Tagoloan is basically suitable for agricultural production—a feature that has played an important role in supporting the town’s industrial development. However, during the past several years, as 4-8

PHIVIDEC industrial estate was established and expanded in area, sizeable areas of the municipality’s agricultural land have been converted to non-agricultural purposes—in particular, for industrial use. Most of the land conversions are now part of the PHIVIDEC estate. Poultry and livestock production is also a major component of the agricultural economy of the municipality. The increase of poultry and hog raisers is due to the support and demand of San Miguel Corporation giving contract growing to the local growers. ii)

Fishery Production

Misamis Oriental province is involved, one way or another, in fishing or fishery-related activities in addition to agricultural activities. Municipal fishing is the main category of fishing prevalent in the province, with catches being landed in six (6) main municipal fish landing sites. The volume of fish catch landed was highest in Laguindingan at almost 38 tons or 28% of total landings Of the roughly 148 species of fish caught by municipal fishermen in the bay, the most abundant were common sardine (tamban), arrow squid, flying fish, bullet tuna and skipjack tuna. According to the Municipal Agriculture Office (MAO), studies are being conducted for the possibility of seaweeds growing along the shores of Barangay Casinglot, located northeast of MCT. The local government is also active in fingerling dispersal in the waters of the Tagoloan River (30 hectares) and the Pugaan River (12 hectares). Based on the records, it appears that fish landed in Tagoloan in 2015 increased to 46 MT annually compared to 26 MT in 2008. There are no officially declared fish sanctuaries in Tagoloan coastal waters. This area of Macajalar Bay has the lowest fish densities. iii)

Mineral Resource Extraction

Misamis Oriental is rich in certain mineral deposits, with cement raw material (limestone) and clay deposits topping the list. Mining activities in the province concentrated on extraction of chromite, feldspar, silica, bentonite, gold, coal, phosphate deposits, guano and shale. Tagoloan is only a minor player in terms of its potential for mineral resource extraction. Only 52.20 hectares of sand and gravel deposits are available for sand and gravel extraction. iv)

Manufacturing, Processing and Storage

Presently available data indicate that the PHIVIDEC zone is a host to 64 local and foreign companies engaged in various economic activities, including power generation, wood processing, food processing, industrial processing plants, container terminal, arrastre and mooring services, metal and car assembly plants, wood and furniture making, activated carbon plants, agro-industrial complex, food and beverage manufacturing plants, medical and orthopedic device production center, steel making and ore sintering plants, petroleum storage facilities, trucking and hauling services, and brokerage and manpower services.

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v)

Infrastructure and Utilities «Roads and Highways» Available inventory of roads and their status in the municipality as of 2005 showed that only 34% of the total 65 km of combined length of all road types within Tagoloan are concreted, while 8.24% are asphalt; 51% are gravel-surfaced and 7% are unpaved. The municipality is traversed by a major road artery – the Butuan-CDO-Iligan Road from south to north and northeast. It traverses the coastal barangays and towns and passes by Laguindingan – the site of the new Laguindingan International Airport. The soon-to-be-completed Alae Bypass Road will connect to the Butuan-CDO-Iligan highway to the Sayre Highway, providing a direct link to the PHIVIDEC estate. «Power and Water Supply System» The main source of electric power for the municipality is supplied by Cagayan Electric Power and Light Company (CEPALCO). In the early 2000’s, of the total population of the municipality, almost 60% of the total households were already served or connected, while an estimated 40% were still unserved. The domestic water supply of the municipality is supplied by the Tagoloan Water District (TWD). In the early 2000’s, almost 50% of the households were already served. The remainder source their potable water requirements from shallow wells, deep wells and other means. A fresh water source of the TWD is from the Jasaan River. Locators of PHIVIDEC within Tagoloan and Villanueva are partly supplied by the industrial estate from its several deep-well pumping stations in Barangay Sugbongcogon and Barangay Santa Cruz. «Transportation and Communications» Passenger inland transport services are adequately provided by several private passenger bus lines, minibuses, taxis, and jeepney units plying the CDO-Tagoloan (and onwards) roads. Cargo transport services are likewise not a serious problem due to availability of cargo trucks plying the CDO-Butuan-Iligan highway which pass through PHIVIDEC zone. Private cars and vans and rental vehicles are other modes of inland transport. Laguindingan Airport, which sits on a 4.17 km2 site, is the hub of domestic air transport service in Northern Mindanao. Relatively new, it provides a 2,100 m long concrete runway and a two-story passenger terminal. It is connected to the Iligan-CDO highway by a short concrete access road. There are several seaports, including MCT, that operate within and near the PHIVIDEC estate and which service the shipping needs of locators in the estate and other port users.

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The municipality is being served by both PLDT, SMART and global telecommunication companies, with both fixed landlines and mobile cellular communication system. «Environmental Management Services and Facilities» The municipality’s solid waste disposal site is located in Barangay Santa Ana. This controlled dump site serves only the barangays of Tagoloan. Locators of PHIVIDEC are not allowed to dump their garbage in said dumpsite. The municipal government of Tagoloan considers that the conditions of bays/coastal areas, creeks and rivers are becoming critical due to dumping of untreated solid and liquid wastes. The situation becomes importantly critical considering that certain sections of the freshwater bodies are being reserved and developed for fingerling dispersal. The average solid waste generated in Tagoloan is 30 MT per day.

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(2) Environmental Improvement Effects with Implementation of the Project 1)

Improvement Effects on Natural Environment

Project construction and operation invariably brings about beneficial and adverse effects to the natural environment in the impact zones. For MCT-I, construction impacts generated were in a short-term period from 2002-2004. Other impacts on the natural environment have become permanently established as of today, 12 years after construction ended. More significant and palpable impacts of MCT over the past years and in future years are related to operations of facilities in the MCT Complex. a)

Positive Effects on Natural Environment

Implementation of MCT-I generated long-term positive impacts on the natural physical environment. The impact of MCT-I on the land environment was to convert previously privately occupied and low-productivity agricultural land. Now an area developed to light-medium industries, the land has become protected from erosion and drainage problems. While previous vegetation was removed, certain areas are being maintained with green ornamentals, fruit trees and shrubs. The built-up MCT complex has benefited from paved road systems, a well-designed drainage system, sewage treatment plant, lighting facilities and secure perimeter fences. These facilities and structures brought positive effects in the improvement of the land asset of PHIVIDEC. Coastal erosion has been minimized and controlled with the installation of slope protection/revetments and pile works, which, at the same time, provide a safe ship berthing facility. The construction and operation of a 115 m3/day wastewater treatment plant was intended to prevent the discharge of untreated and polluting sewage and oily wastewater into the environment. At present, however, the STP needs major maintenance and repair works to put it back in operation. In the meantime, while the STP is not operational, minimally treated sewage is currently being discharged into the drainage mains and ultimately into the bay. Based on the self-monitoring reports, where proper collection, transport and treatment is reportedly being carried out diligently, the discharge of hazardous oily and greasy wastewater into the drains and into the bay is not permitted, thus keeping the natural water environment free form grease and oily wastes. b)

Negative Impacts on Natural Environment

Direct evidence of impacts on the natural physical environment during project operation comes from results of self-monitoring reports (SMR) that the EMB requires from locators. For MCT, SMRs based on actual periodic sampling and analyses are available for years 2015 and 2016 (3 quarters). These reports present actual measurements made for water and energy consumption at MCT, hazardous waste generation (including lead acid battery, used fluorescent bulbs, used waste rags, waste oil and discarded fuel filters), as well as method of storage, transport and disposal implemented. Hazardous wastes generated are in relatively small quantities except for used fuel filters and waste/used gear and engine oil. Based on MCT’s hazardous waste generator’s quarterly reports for 2015-2016, waste/used oil 4-12

generated is transported and treated by a DENR-accredited private waste transporter and waste treater. Used oil filters and other hazardous wastes are collected and stored in appropriate containers and disposed of in duly designated on-site areas. 2)

Improvement Effects on Social Environment

a)

Positive Effects on Social Environment

The evident effects of the MICT-I implementation, especially from its operation, are manifested in tangible social and economic indicators. Consistent with the concept plan of the project, MCT-I operation provided the needed relief to the looming congestion of containerized cargo shipping in Cagayan de Oro base port in a timely manner. Without MCT-I, the above-mentioned container cargoes or part of this volume would have passed through and been handled at CDO base port, obviously causing congestion and delayed cargo loading/unloading process. MCT operations generated major and significant benefits to host LGUs (Tagoloan and Villanueva) in the form of their share in the real estate collections of PIA. With such a significant contribution by MCT operations to the LGUs’ resources, it is expected that more and better social and economic services are being delivered by each LGU to their constituencies. Other significant and positive socio-economic effects generated by MCT operation include mainly employment in MCT and allied service sectors at PIA. In the PIA Annual Reports, it is mentioned that part of PIA’s social responsibility is sharing the project benefits with the host communities of Tagoloan, Villanueva and Misamis Oriental. Around 40% of this comes from MCT contribution to the total PIA revenue. Additional social and economic benefits from MCT contributions to PIA’s income are set aside by management for financial assistance to veterans of the Philippines. b)

Negative Impacts on Social Environment

The operation of MCT-I during the 2-year construction phase generated positive and mostly short-duration negative impacts. Significant beneficial social and economic impacts were generated during operations. Benefits accrued to the general population of Tagoloan and the rest of the communities in the project impact zone. Reduction of agricultural areas within the MCT-I reservation would be a negative but minimal impact. However, in the final analysis, the land use conversion of the area has yielded more benefits to the municipal, provincial and, more importantly, the regional economy in the form of the upgrading of the container port infrastructure in Northern Mindanao, accelerated industrialization and higher income of the PIA estate.

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(3) Environmental and Social Impacts with Implementation of the Project Based on the preliminary MCT expansion plan (MCTEP) of the Study Team presented in Chapter 3, certain port facilities/equipment will be constructed and/or procured for the second phase of the MCT project. Impacts of project activities, which will come in different forms and varying degrees of significance and scale/magnitude during the construction phase, will affect both the natural environment and the socio-economic environment. The impacts will either be beneficial or adverse to the environment, which is not so different from MCT-I although lesser in extent and significance. 1)

Environmental and Social Consideration Items

a)

Potential Impacts on Natural Environment

i)

Construction Phase

Based on the recommended expansion plan of the Study Team, major works that will affect the natural environment include removal of vegetation during site clearing, pile driving and dredging at the berthing area, earth excavation and filling, hauling of materials, emissions, and noise generation from heavy equipment use all during the construction stage. These impacts are summarized in Table 4-1 below. ii)

Operation Phase

During operation, potential impacts will include generation of domestic sewage and hazardous wastes, solid waste production, accidental oil spillage in the berthing area and vicinity, noise from vessels and heavy machinery operation, gaseous emissions from standby generators, increased vessel traffic at the port zone, and increased vehicle traffic and congestion along the CDO-Butuan-Iligan highway. The expanded MCT capacity will demand higher energy consumption, causing an increase in greenhouse gas (GHG) emissions at the energy generation site. Table 4-2 shows these potential impacts. The magnitude of the above impacts can be quantified when more specific or detailed information on the facilities to be constructed/installed are available, which will be during the feasibility and detailed engineering phases.

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4-15

Impact Area

Natural Environment

Social and Economic Environment

Negative

f) Positive Negative

g) Women’s, Veterans’s and Children’s Welfare

h) Vehicular Traffic, Congestion

Solid Waste Generation

Negative

Negative

a) Occupational Health and Safety of Workers

e) Communicable Disease

Negative

g) Ecological Environment

Positive

Positive

f) Visual Aesthetics, Landscape

d) Workers’ Living Standard

Negative

e) Availability of Open Space

Positive

Positive

d) Topography and Terrain

c) Employment, Livelihood and Income

Negative

c) Noise Environment

Positive/ Negative

Negative

b) Air Quality

b) Land Values

Negative

Nature

a) Water Quality (due to Erosion/Siltation)

Potential Impacts

High

High

High

Medium

High

High

High

High

Medium

High

High

Medium

Medium

Medium

Medium

Probability of Occurrence

(Source: Study Team)

Significant

Significant

Significant

Minimal

Significant

Significant

Significant

Minimal

Minimal

Significant

Minimal

Minimal

Minimal

Minimal

Significant

Magnitude

Short term

Short term

Short term

Short term

Short term

Short term

Long term

Short term

Long term

Long term

Long term

Long term

Short term

Short term

Short term

Impact Duration

Vicinity of MCTEP

Vicinity of MCTEP

Vicinity of MCTEP

Vicinity of MCTEP

Vicinity of MCTEP

Vicinity of MCTEP

Geographic Extent

Along CDO-Iligan-Butuan Hwy

Host Communities

Within MCTEP Area

Host Groups

Host Communities

Host Communities, LGU and Contractors/Subcontractors

PIA Zone/Host Communities

Host Communities

Coastal Waters of Tagoloan and Vicinity

Table 4-1 Matrix of Potential Impacts during Construction Phase – MCTEP

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Impact Area

Natural Environment

Social/Economic Environment

Negative

Positive

e) Workers’ Living Standard

h) Vehicular Traffic and Congestion

Positive

d) PIA and MCTSI Income

Negative

Positive

c) Population and Employment

g) Vessel Traffic at Port Zone/Berthing Area

Positive/ Negative

b) Land Values

Positive

Negative

a) Occupational Health and Safety of Workers

Veterans’/Women’s/Children’s/Host LGUs’ Welfare

Significant

Negative

e) Ecological Environment (Marine/Coastal Ecology)

f)

Significant

Negative

d) Noise Environment

High

Significant to Moderate

(Source: Study Team)

Medium

High

High

High

High

High

Medium

Medium

High

High

High

High

Probability Occurrence

Minimal

Significant

Significant

Significant

Significant

Significant

Minimal

Significant

Negative

c) Available Open Space

Significant

Significant

Magnitude

Negative

Negative

Nature

b) Air Quality

a) Water Quality

Potential Impacts

Long term

Short term

Long term

Long term

Long term

Long term

Long term

Short term

Long term

Short term

Long term

Long term

Long term

Impact Duration

Table 4-2 Matrix of Potential Impacts during Operation Phase – MCTEP

Influence areas of CDO-Butuan Hwy & Vicinity

Within Port zone

Veterans/Host Communities and LGUs

Host Communities

PIA and MCTSI

Host Communities

PIA Zone

MCTEP Complex

Vicinity of the Port Zone and Coastal Waters of Tagoloan

Vicinity of the MCT Area

Vicinity of the MCT Area

Atmosphere/Airshed of PHIVIDEC

Vicinity of the Port Zone

Geographic Extent

b) i)

Potential Impacts on Social Environment Beneficial Social and Economic Impacts

Social and economic impacts are expected with certainty for MCTEP implementation and operation. Such socio-economic impacts will likely be more significant in magnitude and extent after construction and during long-term operation of the Project. Positive or beneficial social and economic impacts are anticipated to be extensive and will include improved land values within the PHIVIDEC estate, more employment and better income-generating opportunities in MCT, increased income for PHIVIDEC/government due to higher MCT revenues, increase in LGU’s share in income and expanded benefits to veterans/dependents and other PHIVIDEC beneficiaries. A major positive ramification of expansion of MCT operation is the inevitable economic progress of Tagoloan and Villanueva. Coming with the expanded operating capacity of MCT will be PHIVIDEC’s rise in strategic attractiveness that will convince locators/investors to choose it as an investment/manufacturing site or hub for export-oriented business operations. Quantification of social and economic benefits can be computed during the feasibility stage of the Project. ii)

Adverse Impacts on Socio-Economic Conditions

As presented in the mentioned table, negative impacts with varying magnitude and probability of occurrence will be expected due to, among others, threat/risk on occupational safety and health of MCT port workers whose places of assignment are inherently exposed to risks from moving machinery and equipment, increased sea vessel traffic that raises the possibility of accidents and oil spills in the port zone, and road traffic congestion due to increased volume of moving land vehicles along the CDO-Butuan-Iligan corridor. In the same manner that it has happened under the operation of MCT-I, a negative economic impact during operation of the expanded port will come in the form of entry of illegal goods and materials through the port. However, with appropriate security measures and operational safeguards in place, such adverse impacts can be prevented. 2)

Alternative Study with Other Options

The study considered two alternatives for MCT Expansion: a) Expansion to the north-northeast section of the existing MCT and b) Expansion to the south-southwest side. The first alternative is technically possible but socially and legally untenable: certain portions of the section are not yet under PIA ownership and some locators will be physically affected by expansion. The second alternative is the better and physically feasible option because ownership of the area in this section is already transferred to PIA. As it is today, problems pertaining to ownership and informal settlers are not foreseen. Under this alternative, the expansion will be implemented in three stages as presented in Section 4.2 and in Chapter 3 of this Report (MCT Phased Development Plans). Under this alternative, three construction options are being assessed based on criteria of cost effectiveness and

4-17

duration of construction. The option which yields the least cost and shortest duration of construction will be the best choice among the options available. 3)

Expected Stakeholders

The anticipated project stakeholders under the MCT expansion Project will include individuals, groups, LGUs, government agencies and instrumentalities, communities, non-government and people’s organizations, project beneficiaries, government agencies, private manufacturing companies, and private organizations, among others, who will be directly and indirectly affected by the construction and operation of the Project. Specifically, expected stakeholders will be PIA, MCTSI, PPA, the Bureau of Customs, local and foreign port users, forwarders and shipping agents, PIA locators and exporters/importers, Tagoloan and Villanueva LGUs, Misamis Oriental LGU, Cagayan de Oro LGU, Fishermen and fishermen’s organizations, the Macajalar Bay Development Alliance, NGOs and POs in Misamis Oriental, DENR-EMB, DPWH, Del Monte Philippines, and various other locators within PIA estate, among others.

4-18

(4) Laws/Regulations of the Country for Environmental/Social Consideration and Required Measures for Clearance 1)

Outline of the Laws/Regulations for Environmental/Social Consideration

The Philippine Environmental Policy was legislated through Presidential Decree (PD) 1151, issued in 1977 by the President. The decree established a government policy to formulate a comprehensive and integrated program to address environmental protection in all its aspects. It mandated the need for environmental impact assessment to uphold the constitutional mandate for the state to: a) create, develop, maintain and improve conditions under which man and nature can live in harmony with each other; b) fulfill the social, economic and other requirements of present and future generations; and c) insure the attainment of an environmental quality that is conducive to a life of dignity and well-being. Subsequently, the Philippine Environmental Impact Statement System (PEISS), was established through PD 1586 on June 11, 1978, a statute that strengthened and firmed up the environmental impact assessment required in PD 1151. Under PD 1586, no person, partnership or corporation can undertake or operate any declared environmentally critical project (ECP) or a project located in a declared environmentally critical area (ECA) without first securing an Environmental Compliance Certificate (ECC). The PEISS’s full implementation commenced after the issuance of Presidential Proclamation 2146 in 1981 when the technical definition of Environmentally Critical Projects (ECPs) and Environmentally Critical Areas (ECAs) was provided. Following the provisions of the law, a series of DENR rules and regulations were subsequently issued, all designed to rationalize, streamline and simplify the EIS system. DENR Administrative Order 2003-30, otherwise known as “Implementing Rules and Regulations of PD 1586, Establishing the Philippine Environmental Impact Statement System”, lays down the most substantive technical and comprehensive legal provisions related to EIS system implementation. This issuance spells out in detail the categories of projects, the types and applicability of different environmental assessments, requirements, and the conditions and procedures that must be followed in EIA preparation and in the review process as well. Table 4-3 summarizes the legal framework under which the Philippine EISS operates.

4-19

Table 4-3 Legislations and Regulations Governing the Philippine EISS LEGISLATION/LAW/ORDER PD 1151 (19770

PD 1152 (1997)

PD 1586 (1978)

IRR OF PD1586 (1979)

PROCLAMATION 2146 (1981)

Revised IRR for PD 1586 (1984)

EXEC. ORDER (EO) 192 (1987)

DENR DAO 92- 21 (1992) as amended by DAO-96-37 (1996) RA 7160 – LOCAL GOVT CODE OF THE PHILIPPINES (1991)

RA8749 PHILIPPINE AIR ACT OF 1999

CLEAN

RA 9003 – ECOLOGICAL SOLID WASTE MGMT ACT OF 2000 RA 9275- PHIL. CLEAN WATER ACT OF 2004 DENR ADM. ORDER 2003-30Revised IRR for PD 1586 (2003)

DENR MC2010-14 (2010) DENR MC 2011-005 (2011)

SUBJECT/FEATURES/COVERAGE Established the Philippine Environmental Policy declaring the constitutional mandate of the State: a) create, develop, maintain and improve conditions under which man and nature can live in harmony with each other; b) fulfill the social, economic and other requirements of present and future generations; and c) insure the attainment of an environmental quality that is conducive to a life of dignity and well-being Mandates all land use management and enforcement agencies to incorporate significant environmental impacts in decisions related to locational considerations of industries/projects Mandates all public and private proponents of projects that affect the environment to prepare an Environmental Impact Assessment; Centralized the EIS function under the National Environmental Protection Council and authorized the President and NEPC to proclaim projects under the EIS System Spells out the parameters of the EIS, established a system of EIS review/approval, established procedures for EIS implementation, provides penalties for non-compliance, established procedures for public participation in the EIS system, among others Proclaims what are environmentally critical projects (ECP) and environmentally critical areas (ECA) under the EIS system Defines limits of EIS coverage of ECPs and defines criteria for ECAs, and, among others, established fees, compliance monitoring requirements, set up basis for ECP closure and ECC cancellation for violations of ECC conditions Reorganized the Department of Environment and Natural Resources (DENR), abolished NEPC and transferred its fucntions to DENR; created Central and Regional Offices of DENR and its Bureaus Decentralized certain EIA functions to regional offices, set up need for Multi-sector Monitoring Team (MMT), and Environmental Guarantee Fund (EGF) and established need for public hearings in EIA Devolved governmental functions to local government units, including creation/empowerment of Environment and Natural Resources Officers in Provinces (PENRO), cities (CENRO) and municipalities (MENRO) Provides legal basis to reduce air pollution and incorporates environmental protection into development plans and projects to be implemented by public and private proponents Provides for an ecological solid waste management program and set up institutional mechanism, incentives; declares certain acts prohibited and provides penalties in relation to solid waste management practices Provides legal basis of pursuing economic growth in a manner consistent with protection, preservation and revival of freshwater, brackish water and marine water resources of the country Further fine-tuned legal, technical and other requirements of the EIS System implementation, including, among others, types and levels of environmental impact assessment for specified projects as well as conditions/procedures applicable in EIA preparation and EIS Review Standardized requirements and enhancement of public participation in the streamlined implementation of the EIS System Incorporated Disaster Risk Reduction (DRRM) and Climate Change Adaptation (CCA) concerns in the Philippine EIS System

(Source: EMB – DENR)

4-20

A schematic presentation of the EIA process is presented in Figure 4-2 below in accordance with the prevailing DENR- EMB implementing rules and regulations. Figure 4-2 Philippine EIS Process

(Source: EMB-DENR Revised Procedural Manual for DAO 03-30)

4-21

2)

Required EIA Description in the Host Country

Pursuant to DENR Administrative Order 2003-30, major expansion of an environmentally critical project (ECP) such as MCT-I will require the preparation of an Environmental Performance Report and Management Plan (EPRMP). Summarily, an EPRMP is aimed at evaluating actual project impacts versus predicted effects, and importantly, assessment of the performance of the project in terms of the adequacy/inadequacy of environmental management plans put in place, considering how plans addressed or responded to the generated impacts. It is intended to reformulate the EMP to make it better responsive in mitigating adverse impacts and/or enhancing positive impacts when expansion is implemented. For MCT expansion, fortunately, the original EIA undertaken by PIA in 1999 covered all the projected three phases of the MCT project. Thus, it covered the total berth length of 800 meters. For this effort, the ECC issued by EMB actually encompasses all phases and works/features of the entire MCT project. The most likely procedure, in terms of environmental permitting and clearance, will be for PIA to obtain reconfirmation by EMB of the ECC issued in 1999. Such can be done during the full scaled feasibility study.

4-22

(5) Necessary Actions by the Host Country for Implementation of the Project 1)

Necessary Actions by PIA

The necessary action plans for implementation of the MCTEP, vis a vis the PEISS requirements, will undergo several steps. Under existing government laws and regulations, the necessary action plan for project implementation will consist of several steps and actions presented below. After the study on MCTEP is completed by the Study Team, and anticipating smooth project review by the GOP and project financing entity, necessary actions related to environmental and social considerations must be undertaken by PIA as follows: a)

Confirmation of validity of Environmental Impact Assessment (EIA) and Environmental Compliance Certificate (ECC) prepared and issued in 1999. This would require formal consultation between PIA and the EMB central office (issuer of ECC). The objective of this consultation is to present the approved scope of the MCTEP project and obtain confirmation that the original 1999 ECC is valid and sufficient to satisfy the environmental regulatory permitting requirements for MCTEP implementation. This action must be carried out preferably prior to or during the conduct of the full feasibility study of MCTEP.

b)

In the event that EMB confirms the validity of the original EIA/ECC, then only the conditions and requirements enumerated in the ECC will be complied with and no new EIA will be necessary. In such case, implementation can proceed using the original ECC; otherwise, amendment and/or modification of the EIA and ECC will have to be carried out during the FS period.

c)

With MCTEP financed via ODA, the funding agency will most likely require specific performance by PIA of a more detailed environmental and social consideration study to be carried out in compliance with the regulatory requirements under its own Guidelines for ESC Considerations Guidelines. For this, PIA must undertake such requirements prior to or during the feasibility study period.

d)

For more efficient and effective implementation of the Environmental Management Plan and Environmental Monitoring Plan during construction, PIA must operationalize its Environmental Management Unit (EMU). Likewise, the Multi-partite Monitoring Team (MMT) should be reconstituted and provided operating funds to carry out its periodic monitoring activities during the construction phase. During the operation phase, regular and complete quarterly compliance monitoring reports should be prepared by MCT/PIA and submitted to EMB-DENR Region 10.

Assuming that the implementation mechanism and approach that was observed in MCT Phase I in 2002-2004 will similarly be followed, it can be safely assumed that PIA, through its governing board, will be again tasked to implement the MCT Expansion Project. Unless funded under a special ODA agreement, the implementation will follow the provisions of the Government Procurement Reform Act (RA 9184) as applied to ODA-funded projects.

4-23

Further, the ODA loan agreement that will be entered into by the government through the PIA and the ODA source will, to a large extent, govern the overall terms of implementation of the MCTEP. 2)

Recommendations

As the prescribed government practice and following formal procurement procedures, the following actions/activities need to be undertaken by PIA to pursue implementation of MCTEP: refer to Figure 4-3. a)

Conduct of MCT Expansion Project technical, economic and financial feasibility study by PIA. Under prevailing government guidelines NEDA will be directly involved in this process in accordance with its mandate to undertake all feasibility studies of major infrastructure projects. Under a special financing agreement, however, the FS may be performed by PIA with assistance from the financing entity, in which case NEDA may not directly involve itself in the conduct of the study.

b)

Upon feasibility study completion, PIA must formulate an implementation program (IP) and endorse this to the Investment Coordinating Committee - Cabinet Committee (ICC-CC) for project evaluation leading to ICC approval. Under the Joint Memorandum of February 18, 2013, by the Department of Finance and NEDA on behalf of ICC, project appraisal will focus on the technical and economic feasibility and financial viability of the proposed. A favorable appraisal must be obtained before the project will see further implementation progress.

c)

After favorable appraisal by ICC, the project is referred to the Department of Finance (DOF) for determination of appropriate funding source, i.e., ODA, PPP, GOP financing or other means.

d)

When ODA is the preferred project financing source, the succeeding activities to procure contracts for engineering design services, supply of equipment/goods and construction services must be carried out by PIA. Open international competitive bidding may be the mode of procurement, unless the financing source and GOP agrees on special procurement for EPC from suppliers identified by the ODA source and acceptable to the government.

e)

Detailed Engineering design must be undertaken subsequently, the cost of which will be sourced from the funding source. PIA can implement this activity with technical assistance from experts as may be necessary.

f)

Unless otherwise specified in the terms of ODA financing, PIA shall launch the prequalification and bidding process for procurement of equipment/materials/machinery (goods) and construction services.

g)

After completion of the bidding and award process, PIA must set a Project Management Office (PMO) that will directly manage and supervise the procurement and construction activities under the Project.

4-24

4-25

PROJECT IMPLEMENTATION

Prepare/Submit Requirement to Validate ECC

Ask EMB-DENR for ECC Validity

Prepare Implementation Program; Submit to NEDA-ICC

Undertakes Full FS through JICA

Select Consultants

PIA/JICA

NO

YES ECC VALID?

EMB

(Source: Study Team)

After Funding Source is confirmed loan agreement will be negotiated and concluded between GOP/DFA and Funding Source/Financing Institution *

Appraise/Approve Project Implementation P

NEDA-ICC

Figure 4-3 Pre-Implementation Action/Activities to be Undertaken by the Philippines

Confirmation of Funding Source*

DOF

Chapter 5

Financial and Economic Evaluation

(1) Project Implementation Scheme The Mindanao Container Terminal (MCT) was conceived and constructed by PHIVIDEC Industrial Authority (PIA), as an implementing agency, with the use of a Japanese loan scheme. Operation and management of MCT is currently being done by Mindanao International Container Terminal Service, Inc. (MICTSI) under the Concession Contract. According to the terms and conditions of the Concession Contract, the concession period is twenty five (25) years extendable for 10 years. MICTSI has a right to implement a terminal expansion work subject to examination and approval of PIA. This means MICTSI is not fully responsible for expansion of the terminal. Considerable options for expansion would be: -

PIA to implement with its own fund

-

PPP scheme with PIA and private firm

-

PIA to implement with an ODA financial assistance

This clause deals with possible alternative schemes for implementation of the MCT Expansion Project, and selection of the most appropriate option that would be beneficial to PIA. Table 5-1 shows a comparison study of alternative options for the implementation scheme. The table studied the following cases, namely: “Private (MICTSI) to develop independently”, “PIA to develop by use of either Philippine budget or Japanese ODA financing”, and “Public and Private Partnership scheme”. The results are summarized as follows: 

In case of implementation by Private independently: This entails no cost to PIA. Ownership of the expanded facilities (berth, container yard, cranes, etc.) goes to MICTSI. Therefore, there exists two ownerships, namely, the existing Phase I facilities by PIA, and the expanded Phase II-1 facilities by MICTSI. Such a mixture would create confusion and inefficiency of operation and maintenance procedures. The expanded facilities will not yield revenue to PIA which consequently shows less benefit to PIA.



In case of PIA’s implementation by the Philippine budget (Non-ODA): Ownership of the expanded facilities goes to PIA. Therefore, PIA will be able take initiatives in any negotiations with the operator. However, loan interest is higher than the ODA scheme, which is disadvantageous to PIA from a financial point of view.



In case of PIA’s implementation by the Japanese ODA loan: Ownership stays with PIA, as mentioned above. The lowest interest will be available for PIA’s loan. This scheme requires JICA’s feasibility study as a preparatory study; in addition PIA will be able to receive not only financial assistance but also technical assistance during the course of the JICA study that will contribute to the capacity building.



Implementation by both Public and Private under the PPP scheme: A Special Purpose Company (SPC) shall be established. Both public and private share the required financing, hence, PIA would lessen the construction cost. As per BOT Law, PIA will hold the ownership of the expanded facilities after expiration of the contract period. However, 5-1

due to the small project scale, the profitability is low, therefore, private applicants would not show interest in this project (SPC cannot be established). Consequently, this scheme would yield less benefit to PIA. As the result of the above comparison study, it is definite that the scheme to implement the project by the use of a Japanese ODA loan will be the most beneficial to PIA. Therefore, cost estimation and financial/economic analysis herein shall be made on such assumption that a Japanese ODA will be applied.

5-2

5-3

MICTSI MICTSI

Management

Operation

Disadvantages : Unbenefits to PIA

Advantages : Benefits to PIA

TerminalOperator(Private), PIA

PIA

PIA（ Phil.Govt.）

TerminalOperator(Private), PIA

PIA

ODA loan (Same as MCT Phase I)

Expansion by Public PIA without ODA PIA with ODA

TerminalOperator(Private), SPC

SPC

SPC: Special Purpose Company (Private or Private & Phil.Govt)

Expansion through PPP PIA and Private

(Source: Study Team)

Phase II concept to develop MCT in phased stages to tally with the demand increase, meaning the size of expansion is minimal, hence investors may not show much interest in PPP project for MCT expansion

PPP scheme will not be possible without private applicant(s)

Procedures are complicated, this could delay due to applicants' convenience, etc.

PPP procedures shall be in compliance with BOT law (PIA has no experience on BOT on MCT development)

Expansion by MICTSI will not be possible without MICTSI's approval toward net phase

Technical assistance is mandatory under the ODA procedure

PIA's revenue from Phase II depends on the PPP contract

Financing interest rate is higher than the case with ODA

Technical assistance will not be rendered from the financer

PIA can receive technical assistance from an ODA donner PIA takes initiatives and advantageous in Concession Contract negotiation with the Teminal Operator.

Berth allocation may be difficult due to the two owners.

There exists two owners of port facilities in MCT: Management, Operation and Maintenance will be inefficient MICTSI will use the new quay with their own priority, in which case, PIA's revenue from the current quay may decrease.

.

PIA can negotiate the concession PIA can negotiate the concession PIA will own the expanded facilities after the BOT contract on favorable terms with the on favorable terms with the period by BOT law terminal operator for Phase II terminal operator for Phase II

New operation requires less additional coordination because the same operator will do.

PIA may reduce the investment

PIA will own the expanded facilities and receive revenues through them

No investment by PIA

PIA will own the expanded facilities and receive revenues through them

Phase II = Phase II-1 Quay Expansion (200m), Phase II-2 CY Expansion (4ha), Phase II-3 CY Expansion (9ha)

MICTSI (Private)

Finances

* Scope of Operation

Expansion by Private MICTSI

MCT Expansion Cases

Table 5-1 Comparison of Project Implementation Scheme

(2) Project Cost Estimate 1)

General

This clause deals with the estimation of the required project cost for Phase II. Among which, the objective scope and relevant cost are split into three (3) separate phases, namely Phase II-1, II-2 and II-3. The estimation covers: i) Construction cost (site expenses such as preparation cost, common temporary cost, field expense, general expense, direct construction cost, and cargo handling equipment cost); ii) Consultant fees for design and supervision; iii) Acquisition cost; iv) Contingency (price escalation and reserve); and v) Value added tax. The latest market prices and indicators are reflected to determine the various unit rates used for estimation. Required quantities for each construction item are roughly calculated by separate phases. 2)

Assumptions for Cost Estimate

a)

Applied Unit Rates

The scope and components of the proposed MCT Phase II Expansion Project are quite similar to those of Phase I, such as civil works, building, utilities, and navigational aids, etc. Therefore, necessary unit rates were referred to the Phase I BOQ data by applying price escalation from the time of Phase I until now. For price escalation of local currency (PHP), price indicators established in the national statistics of the Philippines issued by the Philippine Statistics Authority (PSA) were used, while for foreign currency (JPY) deflators are referred to the deflators for construction works issued by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). Specific materials and installation costs, such as steel pipe piles, quay gantry cranes applicable to Post-Panamax-type container vessels, and RTG cranes applicable for 5–box height, etc., that were not contained in the Phase I scope were referred to the quotations from suppliers, contractors and manufacturers as required. Those unit rates were finally set forth after comparison and examination with the latest market prices and relevant information. b)

Applied Currencies and Exchange Rates

The project cost shall be expressed in Philippine Pesos for both local currency (PHP) and foreign currency (Japanese Yen). The exchange rate is referred to the data established by the Bank of Tokyo-Mitsubishi UFJ (BTMU) in November 2016, namely: PHP/JPY=2.50, USD/JPY=113.42. c)

Land Acquisition and Compensation

The candidate site for the Phase II MCT Expansion is acquired and owned by PIA, hence compensation cost for land acquisition is excluded in the estimation. 5-4

d)

Other Ratios

Among the project costs hereof, consultant fees for design and supervision and contingency (price escalation and reserve cost) shall be estimated by applying constant percentage ratios, as shown in Table 5-2. Table 5-2 List of Other Ratios Cost Item

Ratio to be Applied

Consultant Fees (Design and Supervision)

8% of Construction Cost

Contingency

Price Escalation

5% of Total Construction and Consultant Cost

Reserve for Additional Works

10% of Civil Works (On-land and Marine Works)

(Source: Study Team) e)

Value Added Tax (VAT)

Value Added Tax (VAT) shall be added to the total construction and consultant cost, the ratio of which is 12% according to the commercial transaction in the Philippines. 3)

Cost Estimate

As the result of project cost estimation based on the assumptions shown in 2) hereof, the total project costs are calculated as follows: Phase II-1:

2.30 Billion Pesos

(or 5.53 Billion Yen)

Phase II-2:

1.33 Billion Pesos

(or 3.20 Billion Yen)

Phase II-3:

1.68 Billion Pesos

(or 4.02 Billion Yen)

Phase II Total:

5.31 Billion Pesos

(or 12.75 Billion Yen)

Breakdown of the project costs and detailed construction costs are tabulated in Tables 5-3 and 5-4, respectively.

5-5

5-6 1,229,281

54,879

Equivalent in JPY (1,000 JPY)

Total

G

512,201

Value Added Tax (12%)

F

457,322

34,662

38,424

28,462

750

14,232

1,849

119,134

211,404

8,405

355,774

Local Portion

(E+F)

Direct Construction Cost (A+B+B'+C+D)

E

Additional Works （10%）

ContingencyPrice Escalation （5%）

D

C

Cargo Handling Equipment

6.0

Acquisition

Utility Works

5.0

B'

Building Works

4.0

Navigational Aid

Civil Works

3.0

Consultancy

Marine Civil Works

2.0

B

General & Temporary Cost

1.0

7.0

Constuction (1.0+2.0+3.0+4.0+5.0+6.0+7.0)

Disciption

A

No.

4,645,742

1,935,726

207,399

1,728,327

64,756

151,234

112,025

749,250

23,489

84

18,826

605,157

3,506

1,400,312

Foreign Portion

Phase II-1

1,245,502

518,959

55,603

463,356

34,106

39,023

28,906

327

3,125

48,219

76,957

215,883

16,810

361,322

Local Portion

2,152,355

896,815

96,087

800,727

20,122

70,964

52,566

10,777

438,072

162,616

15,408

23,191

7,012

657,076

Foreign Portion

(Source: Study Team)

5,528,133

2,303,389

262,278

2,041,111

49,709

94,829

140,487

750,000

37,721

1,933

137,960

816,561

11,911

1,756,087

Total

Phase II-2

3,200,800

1,333,667

151,690

1,181,977

27,114

54,993

81,472

11,104

441,197

210,834

92,366

239,074

23,822

1,018,398

Total

Table 5-3 Breakdown of Project Cost

1,706,680

711,117

76,191

634,926

47,840

53,371

39,534

88,962

25,677

57,558

306,206

15,776

494,179

Foreign Portion

4,021,360

1,675,567

193,214

1,482,353

60,033

67,730

100,340

148,181

140,817

478,025

433,629

53,599

1,254,251

Total

5,096,093

2,123,372

227,504

1,895,868

140,993

159,534

118,173

327

3,875

121,670

193,947

755,484

338,827

63,037

1,477,168

Local Portion

Unit:

8,504,777

3,543,657

379,678

3,163,980

132,717

275,569

204,125

10,777

1,187,322

275,067

41,169

99,575

911,363

26,294

2,551,567

Foreign Portion

Phase II Total

12,750,294

5,312,622

607,182

4,705,441

136,855

217,552

322,299

11,104

1,191,197

396,737

235,116

855,059

1,250,190

89,331

4,028,735

Total

1,000 PHP

(Exchange Rate: 1 Peso=2.40 Yen, 1 US$=113.42 Yen)

2,621,309

1,092,212

117,023

975,189

72,225

82,088

60,806

59,219

115,140

420,466

127,423

37,822

760,071

Local Portion

Phase II-3

5-7

Navigational Aid

Navigational Tower & 4-Buoys, 1-Light House

7.0

7.1

Total Equivalent in JPY

Stopper & Guide Magnet

6.2.3

(1,000 JPY)

5 Stacks

RTG

6.2.1

16Row s, 30m Rail span

Quay Gantry Crane

Container Yard Pavem

6.2

Cargo Handling Equipment

6.0

6.1

Transformer (Substat 3phase 6.6 kV/230V, 60Hz

Transformer (Power H3phase 6.6 KV/230V, 60Hz

5.4.5

Elec Machine

5.4.3

5.4.4

Emergency Generator750kVA

5.4.2

Incl. Relevant Machines

20t

Electrical Works

Roof Crane

Power Supply

5.1.6

Incl. Weigh Meter

Incl. Tank

5.4.1

Weigh Bridge

5.4

Oil Depot

Sewerage Treatment STP

5.1.3

5.1.4

Fire Fighting

5.1.2

5.1.5

Water Supply

5.1.1

Incl. Pump

Mechanical Works

5.1

Steel, Footing Foundation

RC, Footing Founsation

Roofed Garage

Generator House

4.10

RC, Footing Founsation

Utility Works

Pump House

4.9

RC, Footing Founsation

RC, Footing Founsation

4.11

Substation

4.8

RC, Footing Founsation

RC, Footing Founsation

RC, Footing Founsation

5.0

Power Supply Bldg

4.7

Security Booth

Public Toilet

Terminal Gate

4.6

RC+Steel, Steel, Footing Founda

4.5

3F, RC, Pile Foundation

4.4

Building Works

4.0

Maintenance Shop

Road Marking

3.9

4.3

Vegetation

3.8

RCP 300-1050mm

Administration Bldg

Fence & Gate

3.7

Terminal Control BldgRC, Pile Foundation

Drainage

3.6

Dredged Sand

4.1

Earth Fill (Recycle)

3.5

Borrow Pit

Concrete Pavement

4.2

Road Pavement

Earth Fill (Borrow)

3.3

3.4

Earth Works

Container Yard PavemConcrete Pavement t=300

3.2

-13m

3.1

Revetment

Civil Works

Dredging

2.3

3.0

Crane Rail

2.4

161,330

Quay Wall

2.1

2.2

Strut Beam Steel Pipe Pile

211,404

Marine Civil Works

2.0

355,774 853,859

750

750

1,080

9,379

10,459

719

82

2,971

3,772

14,232

1,849

1,849

3,269

7,333

8,022

6,787

86,931

6,792

119,134

43,442

223

6,409

8,405

General & Temporary Cost

1.1

8,405

General & Temporary Cost

1.0

Local Portion

Direct Construction C 　

Description

A

No.

　

1,400,312 3,360,750

749,250

749,250

4,874

9,481

14,355

2,503

1,035

5,597

9,134

23,489

84

84

174

1,005

12,721

3,920

1,006

18,826

7,254

2,772

6,461

588,670

605,157

3,506

3,506

Foreign Portion

Amount

Phase II-1

361,322 867,173

327

327

546

2,580

3,125

3,125

1,150

1,080

13,352

2,351

18,758

36,691

37

3,946

1,438

164

5,942

11,527

48,219

5,766

15

1,849

19,138

14,683

35,506

76,957

258

2,619

3,963

14,666

6,932

173,863

13,583

215,883

16,810

16,810

Local Portion

Amount

657,076 1,576,982

10,777

10,777

652

437,420

438,072

438,072

4,892

4,874

13,801

95,147

18,962

137,676

5,193

1,478

5,006

2,069

11,193

24,939

162,616

8,830

300

84

1,214

2,658

2,323

15,408

348

12,992

7,839

2,011

23,191

7,012

7,012

Foreign Portion

　　

1,018,398 2,444,154

11,104

11,104

1,197

440,000

441,197

441,197

6,042

5,954

27,153

97,498

37,721

174,368

5,230

5,424

6,444

2,234

17,136

36,467

210,834

14,595

315

1,933

20,352

17,341

37,829

92,366

258

2,619

3,963

15,014

19,924

181,702

15,594

239,074

23,822

23,822

Total

760,071 1,824,171

42,206

42,206

37

3,236

370

13,370

17,013

59,219

5,486

1,883

677

14,683

36,402

56,009

115,140

581

5,893

8,618

32,999

7,603

19,351

119,264

195,596

30,562

420,466

43,442

111

3,205

80,665

127,423

37,822

37,822

Local Portion

　　

494,179 1,186,031

42,665

42,665

5,193

11,264

4,656

25,185

46,297

88,962

715

37

53

2,658

8,564

13,649

25,677

784

952

36,270

6,208

8,819

4,525

57,558

7,254

1,386

3,231

294,335

306,206

15,776

15,776

Foreign Portion

Amount

Phase II-3

1,254,251 3,010,202

84,872

84,872

5,230

14,499

5,026

38,555

63,309

148,181

6,201

1,920

730

17,341

44,967

69,658

140,817

581

5,893

8,618

33,782

8,555

55,621

125,472

204,415

35,087

478,025

50,696

1,497

6,435

375,000

433,629

53,599

53,599

Total

　

1,477,168 3,545,202

327

327

546

2,580

3,125

750

3,875

1,150

2,161

13,352

2,351

70,344

89,357

74

3,946

5,393

617

22,284

32,312

121,670

5,486

5,766

15

3,699

19,138

1,883

677

29,366

35,506

36,402

56,009

193,947

839

8,512

15,850

54,998

15,625

33,070

119,264

456,390

50,937

755,484

86,884

334

9,614

241,995

338,827

63,037

63,037

Local Portion

Amount

2,551,567 6,123,762

10,777

10,777

652

437,420

438,072

749,250

1,187,322

4,892

9,748

13,801

95,147

71,109

194,697

10,385

1,478

18,773

7,760

41,975

80,370

275,067

715

8,830

300

168

1,214

37

53

5,316

2,323

8,564

13,649

41,169

1,307

1,957

61,983

6,208

20,578

7,542

99,575

14,509

4,158

9,692

883,005

911,363

26,294

26,294

Foreign Portion

4,028,735 9,668,964

11,104

11,104

1,197

440,000

441,197

750,000

1,191,197

6,042

11,909

27,153

97,498

141,453

284,054

10,459

5,424

24,165

8,376

64,259

112,683

396,737

6,201

14,595

315

3,867

20,352

1,920

730

34,682

37,829

44,967

69,658

235,116

839

8,512

15,850

56,304

17,582

95,053

125,472

476,968

58,479

855,059

101,393

4,492

19,306

1,125,000

1,250,190

89,331

89,331

Total

Unit: 1,000 PHP Phase II Total

(Exchange Rate: 1 Peso=2.40 Yen, 1 US$=113.42 Yen) (Source: Study Team)

1,756,087 4,214,608

750,000

750,000

5,954

18,860

24,815

3,222

1,117

8,568

12,907

37,721

1,933

1,933

3,269

7,507

9,027

19,509

90,851

7,797

137,960

50,696

2,994

12,870

750,000

816,561

11,911

11,911

Total

Phase II-2

Table 5-4 Breakdown of Construction Cost

(3) Outline of Preliminary Economic/Financial Analysis 1)

Financial Analysis

The purpose of the financial analysis is to appraise the financial viability of the Project, from the viewpoint of capital investment, as to whether it can yield sufficient returns. In this Study, to measure the financial viability quantitatively, the Financial Internal Rate of Return (FIRR) on gross capital bases is calculated and compared with the loan interest rate as to whether the FIRR can exceed the loan interest rate. In this Study, the Economic Internal Rate of Return (EIRR) method, as well as NPV and B/C Ratio, is used to evaluate and appraise the economic feasibility of the Project. Sensitivity analysis is also conducted. a)

Prerequisites for the Financial Analysis «Base Year» Incomes and expenses estimated in the financial analysis are expressed as the price of some fixed year throughout the “Project Life” mentioned below. The year is called the “Base Year.” In this analysis, November 2016 is adopted as the “Base Year” since the expenses and revenues of the Project are prepared on the basis of the current price of the same year. «Project Life» It is assumed that engineering services on the Project will commence in 2019, and a total of 40 years until 2056 is adopted as the “Project Life” including the construction period for infrastructure and the operation period of the terminal. «Foreign Exchange Rate» The following foreign exchange rates are adopted for this analysis: PhP 1.0 = ¥ 2.5, US$1.00 = ¥ 113.42 as of November 2016. «“With-the-Project” Case and “Without-the-Project” Case» A cost-benefit analysis is conducted on the difference between the “With-the-Project” case in which an investment is made and the “Without-the-Project” case in which no investment is made (refer to Figure 5-1). That is, the revenues and expenses arising from the investment for the Project are calculated in market price and compared. A total of 220,000 TEU of international containers were handled at MCT in 2015, and its handling capacity is estimated at about 300,000 TEU. After CIP is saturated with international containers, it is assumed that all of the international containers will be transferred to the new container terminal.

5-8

Figure 5-1 “With” Case and “Without” Case With Case (MCT Expansion)

Without Case (Existing MCT)

MCT

MCT 500

180m

140m

140m

300

180m

Alternative -1

140m

Alternative -2

180m

Offshore Waiting

180m

SEASIDE

240m

(Source: Study Team) b)

Calculation of the FIRR

The financial internal rate of return (FIRR) is used to appraise the financial viability of the Project. The FIRR is the discount rate that makes net present values of cash inflow and outflow during the project life equal. The formula is expressed as follows:

where,

n : Project life I

: Year

Ii : Cash inflow in the i-th year Oi : Cash outflow in the i-th year R : Discount rate c)

Sensitivity Analysis

Sensitivity analysis is executed to determine whether the Project will remain feasible if changes in the assumptions used in the calculation/projections were to take place according to the degree in which they are likely to vary from the estimated or projected values. The following three (3) cases are examined in this Study as sensitivity analyses: Case 1:

Increase in projected costs by 10% and 20%

Case 2:

Decrease in revenues by 10% and 20%

Case 3:

Combination of Cases 1 and 2 5-9

d)

Net Present Value (NPV)

Expenses and revenues that will be generated each year during the Project life are converted to the present value by applying the weighted average cost of the capital (WACC) as a social discount rate. Through this process, values of expenses and revenues decrease as time passes. If the NPV is negative, the Project should probably be rejected. e)

Financial Analysis on MCT Expansion Project

The FIRR on the MCT Expansion Development Project is calculated in order to confirm the financial viability of the Project as a whole. «Revenues» Revenues are gained by providing port services to users such as shippers and shipping lines. PIA revenues include vessel charges, cargo charges, storage charges, arrastre share, and stevedoring share. The fixed fee for minimum deposit and the valuable fee of the handling charge for international containers goes to PIA as a concession fee and the rest of the portion belongs to the terminal operator. Recent PIA revenues per international container (TEU) based on MCT’s financial documents are summarized in Table 5-5. Future PIA revenues are estimated by multiplying the unit TEU revenue and the estimated international TEU. Table 5-5 MCT Revenues per International Container (TEU) (Unit: PhP/TEU) Year

2013

2014

2015

3-Year Average

Revenue Per TEU

563

723

784

690

(Source: Study Team) «Expenses» [Expenses for Initial Investment] The amount disbursed for initial investment is estimated at PhP 12,750 million, including indirect cost. The cargo handling equipment has a capacity of 300,000 TEU per year at the commencement of the operations at the new container terminal, and will increase its capacity up to 500,000 TEU as the cargo handling demand increases. [Operator’s Expenses for Operations and Maintenance] Based on the actual records of MICTSI, the Study Team assumes the operator’s expenditures for operations and maintenance of the new container port (see Table 5-6). Expenditures include the following items:

5-10

●

Personnel and labor costs

●

Maintenance costs for equipment

●

Fuel and lighting

●

Insurance and other expenses Table 5-6 Operator Expenses for Operations and Maintenance (Unit: PhP/TEU) Capacity

300,000 TEU

400,000 TEU

500,000 TEU

Operation Expenses

179,012

231,583

276,262

(Source: Study Team) «Maintenance Costs for Infrastructure» PIA will bear maintenance costs for infrastructure. This is assumed to be 1% of the initial investment expenses of depreciable infrastructure. No maintenance expenses for infrastructure are required for 5 years after commencement of the operations. «Renewal Investment» A Terminal Operator will bear renewal expenses for cargo handling equipment, which will be renewed when its useful life expires throughout the Project life. Individual use lives are assumed referring to actual operational experiences: Fifteen (15) years for reach stacker, forklift and tractor/chassis, twenty (20) years for rubber tire mounted gantry cranes (RTG), and 25 years for quayside gantry cranes. «FIRR of MCT Expansion Project» The resulting FIRR is shown in Table 5-7 for the Phase II Project.

5-11

Table 5-7 FIRR for Phase II Project Expenses Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 Total

Construction

8,219 24,656 131,495 1,005,873 1,180,808 47,661 619,172 658,305 15,653 23,480 716,757 841,411 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 5,273,490

PIA Management

0 0 0 0 0 244,794 259,716 275,667 292,712 310,923 330,379 351,163 373,362 397,069 422,383 449,407 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 478,252 15,185,629

Operation Expenses

0 0 0 0 0 218,068 231,360 245,570 260,754 276,977 294,309 312,823 332,599 353,718 376,267 400,341 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 426,037 13,527,674

Revenue Maintenance of Construction

Total expenses

Renewal of Equipment

0 0 0 0 0 0 0 0 0 0 21 21 21 32 32 32 32 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 47 1,276

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,394 0 0 0 0 0 0 0 0 0 0 1,394

Value added of Export

8,219 24,656 131,495 1,005,873 1,180,808 510,523 1,110,248 1,179,542 569,119 611,380 1,341,466 1,505,418 705,981 750,819 798,683 849,780 904,322 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 905,730 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 904,336 33,989,344

0 0 0 0 0 792,951 841,287 892,956 948,169 1,007,160 1,070,184 1,137,507 1,209,415 1,286,210 1,368,207 1,455,744 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 49,190,169

Total Revenue

Revenue Expenses

0 0 0 0 0 792,951 841,287 892,956 948,169 1,007,160 1,070,184 1,137,507 1,209,415 1,286,210 1,368,207 1,455,744 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 1,549,182 49,190,169 FIRR= NPV= B/C=

-8,219 -24,656 -131,495 -1,005,873 -1,180,808 282,428 -268,961 -286,585 379,051 395,780 -271,282 -367,910 503,434 535,390 569,524 605,964 644,861 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 643,452 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 644,846 15,200,707 11.0% 48,025,423 1.57

(Source: Study Team) «Sensitivity Analysis of MCT Expansion Project» The resulting FIRRs of Case 1, 2, and 3 in the sensitivity analysis explained previously are shown in Table 5-8. Table 5-8 FIRR of Sensitivity Analysis Base Case

Expenses Increase

Expenses Increase

By 10%

By 20%

Base Case

11.0%

8.4%

5.9%

Revenue Decreases By 10%

8.1%

5.4%

－

Revenue Decreases By 20%

4.7%

－

-1.4%

(Source: Study Team)

5-12

«Net Present Value (NPV) and Benefit-Cost Ratio (BCR) of MCT Expansion Project» Expenses and revenues that will be generated each year during the Project life are converted to the present value by applying the loan interest rate as a social discount rate. Through this process, values of expenses and revenues decrease as time passes. The resulting NPV is PhP 48,000 million while the BCR is 1.57. «Financial Evaluation» The resulting FIRR in the base case of the MCT Expansion Project is 11.0%, which exceeds the loan interest rate (0.1% in the case of a JICA STEP Loan). In addition, even in sensitivity analyses, all of the cases of 10% variance exceed the loan interest rate mentioned above. 2)

Economic Analysis

The economic analysis is carried out to study the economic benefits as well as economic costs arising from the Project, and to evaluate whether the benefits of the Project exceed those that could be obtained from other investment opportunities in the Philippines. In the economic analysis of the development plan, the “With” case is compared to the “Without” case. All of the benefit and cost differences between the “With” case and “Without” case will be calculated in market price, then they will be converted to economic price. In this Study, the Economic Internal Rate of Return (EIRR) method, as well as NPV and B/C Ratio, is used to evaluate and appraise the economic feasibility of the Project. Sensitivity analysis is also conducted. a)

Prerequisites for Economic Analysis «Base Year» For the financial analysis, the year 2016 is adopted as the “Base Year” since the market survey was conducted for the estimation of construction costs in this year. «Project Life» It is assumed that engineering services on the Project will commence in 2019, and a total of 40 years, until 2056, is adopted as the “Project Life” including the construction period for infrastructure and the operation period of the terminal. «Foreign Exchange Rate» The following foreign exchange rates are adopted for this analysis: PhP 1.0 = ¥ 2.5, US$1.00 = ¥ 113.42, as of November 2016.

5-13

«“With-the-Project” Case and “Without-the-Project” Case» A cost-benefit analysis is conducted on the difference between the “With-the-Project” case, in which an investment is made, and the “Without-the-Project” case, in which no investment is made. That is, the revenues and expenses arising from the investment for the Project are calculated in market price and compared. A total of 220,000 TEU of international containers were handled at MCT in 2015, and its handling capacity is estimated at about 300,000 TEU. After CIP is saturated with international containers, it is assumed that all of the international containers will be transferred to the new container terminal. b)

Calculation of the EIRR

The Economic Internal Rate of Return (EIRR) based on a cost-benefit analysis is used to appraise the economic feasibility of the Project. The EIRR is the discount rate that makes the costs and benefits of a project during the project life equal. The formula is as follows:

where,

n : Period of economic calculation (project life) I

: Year

Ii : Benefits in the i-th year Oi : Costs in the i-th year R : Discount rate c)

Sensitivity Analysis

Sensitivity analysis is executed to determine whether the Project will remain feasible from the viewpoint of national economy when some factors vary. Based on the NEDA Guideline, the following three (3) cases are examined in this Study as sensitivity analyses:

d)

Case 1:

Increase in projected costs by 10% and 20%

Case 2:

Decrease in revenues by 10% and 20%

Case 3:

Combination of Cases 1 and 2

Net Present Value (NPV)

Costs and benefits generated each year during the Project life are converted to the present value by applying a Social Discount Rate (SDR). Through this process, costs and benefits decrease as time passes. The SDR is set at 15% in this analysis, following the NEDA guidelines.

5-14

«“With” and “Without” Case» In the “With” case, the new container terminal is constructed and commences its operations when demands of international containers exceed the annual handling capacities of MCT (300,000 TEU). The new terminal has an annual handling capacity of 300,000 TEU at the beginning of operations and can expand its capacity up to 600,000 TEU as the demand increases. In addition, larger container vessels can be accommodated at the quay where the water depth alongside is 13 meters. «Benefits of the Project» [Value Added of Exporting Commodities] The value added of exporting commodities that will overflow from the CIP in the “Without” case is counted as one of the Project benefits. Although both exporting and importing commodities contribute to generate value added in the Philippines, only export commodities are counted as a benefit in this EIRR analysis so that Project benefits will be estimated conservatively. Based on the Philippine Customs statistics, the average commodity value in an exporting container is estimated at PhP 1.3 million/Laden Export TEU (see Table 5-9). The percentage of operating income of the total sales is estimated to be in the vicinity of 7%, which is generally adopted to estimate the value added in other development studies. Table 5-9 Value Added of Exporting Commodities Year

Export Value ($'000)

Export Full TEU

$'000/Full TEU

PhP '000/Full TEU

2007

1,766,481

57,230

30.9

1.321

2008

1,527.040

50.368

30.3

1,298

2009

1,253,157

42.695

29.4

1.256

Av.=

1,292

(Source: Study Team) «Cost of the Project» [Costs for Initial Investment] Costs for initial investment can be categorized into direct cost and indirect cost, with the former further classified into two (2) groups: civil works and cargo handling equipment. The main components of the civil works include channel, basin, revetment, wharf structure, pavement and buildings in the terminal. The construction cost for the access road to the terminal is also included in the initial investment costs. These costs are initially estimated at the market price, and then converted to the economic cost using conversion factors mentioned previously after removal of the transfer items such as VAT.

5-15

[Operation Costs and Maintenance Costs for Equipment] The following items are included in the operations and maintenance costs for the MCT Expansion Project: ●

Personnel costs for workers and management of Terminal Operator

●

Maintenance costs for cargo handling equipment

●

Fuel cost

●

Lighting and utility costs

●

Insurance and other costs

Operations and maintenance costs are needed both for “With” case and “Without” case until throughput reaches 300,000 TEU. Therefore, economic costs for operations and maintenance are counted for the throughput portion of more than 300,000 TEU. The economic cost is almost equivalent to the financial cost after applying conversion factors and removing transfer items. [Maintenance Costs for Infrastructures] This is assumed to be 1% of the costs for initial investment of depreciable infrastructure and architecture. No maintenance costs are required for 5 years after commencement of the operations. [Renewal Cost of Cargo Handling Equipment] Cargo handling equipment will be renewed when its useful life expires throughout the Project life. Individual useful lives are set as they are in the financial analysis. Renewal cost in the “Without” case is counted as a benefit of the Project in this economic analysis. «EIRR of the MCT Expansion Project» The EIRR of the MCT Expansion Project is estimated at 39.3% under the conditions mentioned above (see Table 5-10).

5-16

Table 5-10 Financial and Economic Costs for Initial Investment Cost Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 Total

Construction

5,938 17,814 95,005 726,743 853,134 34,435 447,352 475,625 11,309 16,964 517,857 607,919 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,810,097

PIA Management

0 0 0 0 0 176,864 187,645 199,169 211,484 224,642 238,699 253,715 269,754 286,883 305,172 324,696 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 345,537 10,971,617

Operation cost

0 0 0 0 0 157,554 167,158 177,424 188,395 200,116 212,638 226,015 240,302 255,561 271,853 289,246 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 307,812 9,773,745

Benefit Maintenance of Construction

Renewal of Equipment

0 0 0 0 0 0 0 0 0 0 15 15 15 23 23 23 23 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 922

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,007 0 0 0 0 0 0 0 0 0 0 1,007

Total Cost

Value added of Export

5,938 17,814 95,005 726,743 853,134 368,853 802,154 852,219 411,188 441,722 969,209 1,087,664 510,071 542,467 577,048 613,966 653,372 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 654,390 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 653,383 24,557,387

0 0 0 0 0 62,747 503,172 990,131 1,526,470 2,115,267 2,759,823 3,463,571 4,230,141 5,063,362 5,967,237 6,945,998 8,004,168 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 227,692,719

Total Benefit

Benefit - Cost

62,747 503,172 990,131 1,526,470 2,115,267 2,759,823 3,463,571 4,230,141 5,063,362 5,967,237 6,945,998 8,004,168 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 8,089,593 227,692,719 FIRR= NPV= B/C=

-5,938 -17,814 -95,005 -726,743 -853,134 -306,105 -298,983 137,912 1,115,282 1,673,545 1,790,614 2,375,906 3,720,070 4,520,895 5,390,188 6,332,032 7,350,796 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,435,203 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 7,436,210 203,135,332 39.3% 689,529,966 10.69

(Source: Study Team) «Economic Sensitivity Analysis of MCT Expansion Project» The resulting EIRRs of Case 1, 2, and 3 in the sensitivity analysis explained previously are shown in Table 5-11. Except for the worst scenario (cost increases & benefit decreases by 20% each), the MCT Expansion Project has an EIRR value of more than 15% in all cases. Table 5-11 Economic Sensitivity Analysis of MCT Expansion Project Base Case

Cost Increase

Cost Increase

By 10%

By 20%

Base Case

39.3

37.1

35.2

Benefit Decrease By 10%

36.9

34.8

－

Benefit Decrease By 20%

34.3

－

30.6

(Source: Study Team)

5-17

«NPV and B/C Ratio of the MCT Expansion Project» Assuming a social discount rate of 15%, the B/C ratio is calculated at 1.29 for the base case, and the NPV of the Project is estimated at PhP 689,529 million. «Economic Evaluation» The leading view on economic evaluation is that a Project is feasible if the EIRR exceeds the opportunity cost of capital. In the Philippines, it is generally considered that a project with an EIRR of more than 15% is economically justifiable for infrastructure or social service projects. The MCT Expansion Project has an EIRR of more than 40% (base case), which is much higher than the opportunity cost of capital in the Philippines. Even after the sensitivity analysis, the EIRRs of many cases are higher than the target. This means that the planned projects are economically feasible.

5-18

Chapter 6

Planned Project Schedule

(1) Assumptions The Mindanao Container Terminal (MCT) Expansion Project shall be deemed to be implemented with the following assumptions: 

PIA, after this pre-feasibility study, shall be responsible to promptly make internal decisions toward implementation of this project. PIA shall coordinate among PIA internally as well as with relevant departments/bureaus, and shall prepare/submit an official request to JICA for the conducting of a full-scale feasibility study. PIA may also request a technical assistance for capacity building.



The MCT Phase II project, considering carefully the current situation of container handling and vessels offshore waiting, shall be developed on a phased basis. Phased development ensures early functioning and that it will be financially friendly to PIA. (Completion/opening target for Phase II-1 Expansion is expected within the President's term.)



PIA is supposed to apply Japanese STEP Loan proceeds for financing of the Phase II project.



The Implementation Schedule is planned to minimize the period of procurement procedures, such as design, tendering and construction, on an assumption that the Japanese STEP Loan would be applied.



The Phase II Project has been split into three (3) phases, namely, Phase II-1, II-2 and II-3. Both Phase II-2 and II-3 are to repeat the implementation using separate ODA loan proceeds to ensure continuity.



It has been confirmed by DENR/EMB that the existing Environmental Compliance Certificate (ECC) issued at the time of the Phase I project is still valid and covers the Phase II area. However, PIA shall be responsible to coordinate with EMB for necessary study and updates of the environmental monitoring items due to changes in the 10-year time prior to the Loan Agreement.



In accordance with the JICA Guideline for Procurement, PIA shall be responsible to employ a consultant for the purpose of acquiring a STEP Loan. The Consultant shall now be responsible to conduct detailed design, tender assistance, supervision works and environmental monitoring. The Consultant is also mandated to extend technical transfer to PIA through his services.

6-1

(2) Implementation Schedule For construction of the proposed MCT Expansion Project, as justified in Chapter 3, and with the assumptions shown in the previous clause, the implementation schedule has been prepared in Figure 6-1. The schedule herein intends to complete the Phase II-1 scope before CY 2022. In order for Phase II-1, II-2 and II-3 to implement seamlessly, Phase II-2 shall start before completion of Phase II-1, and likewise for the next phase, so that the whole Phase II project may be implemented in a smooth manner. Figure 6-1 Implementation Schedule for MCT Expansion Project Description

Year & Quarter

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

F/S, D/D & Bid Preparation Stage 1

METI-PreF/S

2

JICA Feasibility Study/FS Review

3

EIA Report, ECC Approcation & Approval

4

Disclosure of Approved EIA & ECC in Japan

5

JICA Appraisal

6

Exchange of Notes (E/N)

7

Loan Agreement (L/A)

8

Selection of Consultant

9

Detailed Design and Bid Documents

11

Bidding for Construction Works Port Construction Stage

A

Mobilization/Demobilization

B

Preparatory Works

C

Marine Works

Phase II-1

C1 Dredging qand Reclamation C2 Quay D

Civil Works

C1 Pavements C2 Drainage System C3 Other Associated Civil Works E

Utility Works

E1 Mechanical Works E2 Electrical Works F

Building Works

G

Equipment

2029

2030

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

Defects Notification Period (DNP) Commencement of Port Operation

(Source: Study Team)

6-2

Phase II-2

Phase II-3

Chapter 7

Implementing Organization

(1) Organization of Implementing Agencies 1)

Establishment and Inauguration of PHIVIDEC Industrial Authority (PIA)

Based on PD (Presidential Decree) No. 538, promulgated in August 1974, the PHIVIDEC Industrial Authority (PIA) is a state-owned company established and inaugurated as a subsidiary of Philippine Veterans Investment Development Corporation (PHIVIDEC). 2)

PIA’s Purpose and Specific Powers

The PIA Charter (PD No. 538) stipulates seventeen (17) provisions in Section 4. “Purpose and Specific Powers”. The following are the extractions of the provisions from the Charter: a)

To operate, administer and manage the PHIVIDEC Industrial Areas and other areas which shall hereafter be proclaimed, designated and specified in subsequent Presidential Proclamation; to construct, acquire, own, lease, operate and maintain infrastructure facilities, factory buildings, warehouses, dams, reservoirs, water distribution, electric light and power systems, telecommunications and transportation networks, or such other facilities and services necessary or useful in the conduct of industry and commerce or in the attainment of the purposes and objectives of this Decree;

b)

To take water from any public stream, river, creek, lake, spring, waterfall or underground aquifers as may be necessary for the attainment of the purposes of this Decree; to alter, straighten, obstruct or increase the flow of water in streams or in water channels intersecting or connecting therewith or contiguous to its works or any part thereof; and to undertake land reclamation as well as own, hold, purchase or lease foreshore areas within or adjacent or approximate to the Areas;

c)

To acquire and hold agricultural lands in excess of the areas permitted to private corporations or associations by the Constitution;

d)

To determine and regulate the enterprises to be established within the Areas in order to ensure the implementation of its plans for the sound development and operation of the Areas in furtherance of the herein declared national policy;

e)

To construct, operate and maintain or otherwise to grant the use of or to rent, lease or let, for a consideration and under such terms, arrangements and conditions it may deem reasonable and proper, any and all port facilities, including stevedoring and port terminal services, or any concession properly incident thereto or in connection with the receipt, delivery, shipment and transfer in transit, weighing, marking, tagging, fumigating, refrigerating, icing, storing and handling of goods, wares and merchandise; Provided, however, that where the piers and/or harbors are owned and/or operated by private persons, the fees and charges to be levied shall not exceed that being collected by the Government for similar services;

f)

To fix, assess and collect charges and fees, including rentals, for the lease, use or occupancy of lands, buildings, structures, warehouses, all the facilities and services mentioned herein and other properties owned and administered by the Estate; and to fix and collect the fees and

7-1

charges for the issuance of permits, licenses and the rendering of services not enumerated herein, the provisions of law to the contrary notwithstanding; g)

To sell, lease, or otherwise dispose of, lands and other properties owned or administered by the Authority for such use by the Area enterprises, for such housing or commercial purposes within the Areas and for such maximum industrial development of the Areas;

h)

To levy, assess and collect a real property tax on real properties within the Areas. The appraisal values and tax rates shall be in accordance with the rules and regulations promulgated by the Secretary of Finance for chartered cities. The Authority shall retain three-fourths of the real property tax collected and the remaining one-fourth shall be turned over to the local government or governments, as the case may be, which, previous to the establishment of the Areas were collecting a real property tax from real properties within the area; Provided, that such share of the real property tax of the local government or governments shall not be less than what they were receiving prior to the establishment of the Areas; provided, finally, that realty taxes accruing within the Areas at the time the Authority has not taken over actual possession of a portion or portions of the properties therein shall continue to be collected by the respective local governments.

i)

To grant such franchise for and to operate and maintain within the Areas electric light, heat or power systems, transportation, communication within, to and from the Areas, warehousing, ice plant or cold storage;

j)

To prescribe and enforce within the Areas rules and regulations for pollution control;

k)

For the due and effective exercise of the powers conferred by law and to the extent requisite therefore, to exercise exclusive jurisdiction and sole police authority over the Areas;

l)

To promulgate such rules and regulations as may be reasonable, necessary and desirable for the attainment of the objectives of this Decree; such rules and regulations shall be binding on the persons, proprietorships, partnerships and corporations residing or located in the Areas;

m) To recommend the establishment of other Industrial Areas as it may deem advisable, and to recommend the issuance of a proclamation to fix and delimit the site of the Areas; n)

When essential to the proper administration of its corporate affairs or when necessary for the proper transaction of its business or for carrying out the purposes of this Decree, to contract indebtedness and issue bonds;

o)

To create and operate and/or contract to operate such agencies, functional units, office and departments of the Authority as it may deem necessary or useful for the furtherance of any of the purposes of this Decree;

p)

To adopt, alter and use a corporate seal which shall be judicially noticed, make contracts, lease, own or otherwise dispose of personal and real property; sue and be sued, and otherwise do and perform any and all acts and things that may be necessary or proper to carry out the purposes of this Decree;

q)

To perform all other functions enumerated in Section 2 of Presidential Decree No. 243, as amended by Presidential Decree No. 353.

7-2

3)

PIA’s Organization

As shown in Figure 7-1, PIA formulates its organization comprising six (6) departments, namely, Legal Services, Internal Audit, Corporate Planning and Business Development, Estate Management, Port Management and Support Services under the Office of the Administrator in order to accomplish and exercise PIA’s Purpose and Specific Powers as mentioned in the above 2). The Office of the Board Directors is the highest body of PIA, which shall discuss and determine important matters, and make conclusions for such matters. Figure 7-1 PIA’s Organization Chart OFFICE OF THE BOARD OF DIRECTORS

Board Secretariat OFFICE OF THE ADMINISTRATOR

MANAGEMENT INFORMATION SYSTEMS DIVISION

LEGAL SERVICES DIVISION

INTERNAL AUDIT DEPARTMENT

CORPORATE PLANNING AND BUSINESS DEV’T. DEPT

ESTATE MANAGEMENT DEPARTMENT

PORT MANAGEMENT DEPARTMENT

SUPPORT SERVICES DEPARTMENT

POLICY PLANNING AND EVALUATION DIVISION

ENGINEERING AND MAINTENANCE DIVISION

PORT REVENUE DIVISION

CASH AND BUDGET DIVISION

BUSINESS DEVELOPMENT DIVISION

PUBLIC UTILITIES DIVISION

PORT OPERATION DIVISION

ACCOUNTING DIVISION

REVENUE ASSESSMENT DIVISION

RESOURCE MANAGEMENT DIVISION

ENTERPRISE ASSISTANCE DIVISION

(Source: PIA/Drawn by Study Team) Although PIA has the employment capacity of one hundred and fifty (150) posts as full time and part time staff, a staff of seventy-two (72) have been employed and a staff of fifty (50) are under recruitment as of December 2016, according to PIA. 4)

Jurisdiction

PHIVIDEC (Philippine Veterans Investment Development Corporation), established under Presidential Decree No. 243, as amended by PD Nos. 353 and 981, is a governmental organization under the umbrella of the Department of National Defense (DND). It is accordingly recognized that PIA is under the jurisdiction of DND.

7-3

5)

Financial Situation

a)

Income

The income of PIA is sourced from i) the charges and fees of MCT, public and private ports administered by PIA, and power charges and fees, ii) the rental charges and fees for tenants, sales of lots, and service revenues from water supply and other agricultural business within the PHIVIDEC Industrial Estate (PIE), iii) tax revenues, such as real property tax, and the charges and fees for permit and license. According to the financial statement of PIA for the year 2015, the income is composed of 77% port and power charges and fees, 22% water supply service, etc., and 2% tax revenues, as presented in Figure 7-2. The breakdown of the port and power charges and fees is to be split into 59% port charges and fees, comprising 24% from MCT and 35% from other ports within the PIE area, and 18% power charges and fees. It is noted that the dependence on port charges and fees is about 60% higher for the total income amount. Figure 7-2 PIA’s Income in Year 2015 Tax Revenues, Charges & Fees for Permit and License and Others 2% Port Service (Other Ports) 24% Port & Power Charges & Fees 77% PIE Rental Charges & Fees/ Water Supply Services etc. 21%

Port Services (MCT) 35% Power Service 18%

(Source: PIA/Graphed by Study Team) b)

Expenses

PIA’s Expense are categorized into: i) personnel expenses, such as salary, overtime allowance, social service costs, etc.; ii) operation and maintenance costs, such as commission expense, repair cost, communication cost, membership charges, losses, depreciation expense, etc.; and iii) financial costs, such as bank charges, interest, etc. According to the financial statement of PIA for the year 2015, the expenses is composed of the personnel expenses of 12%, operation and maintenance costs of 43%, and the financial costs of 45%, as presented in Figure 7-3. The percentage of the personnel expenses is 12% and is comparatively lower against the total expenses.

7-4

Figure 7-3 PIA’s Expense in Year 2015 Personnel Costs （Salary, Overtime Allowance, Social service costs etc.） 12%

Financial Costs (Bank Charge, Interest etc.) 45%

Operation & Maintenance Costs （Commission Expense, Repair Cost, Communication Cost, Losses, Depreciation ） 43%

(Source: PIA/Graphed by Study Team) 6)

Skill Level

The existing MCT Phase is under concession agreement including terminal operation and management, and terminal facility maintenance, which was concluded between PIA and Mindanao International Container Terminal Service, Inc. (MICTSI) on 2008. Although there are certain capable staff in PIA, there are not enough personnel to strictly supervise, advise on and recommend something necessary on time. In PIA, the Port Management Department (PMD), which is playing important roles of port management and collection of port charges and fees officially determined, has only 10 staff to date. Since 2006, after commencement of MCT operation, PIA has proceeded to accumulate port statistics, technical knowledge and know-how through experiences but has not utilized them enough for further improvement and development of MCT and other ports within PIE. In connection to the administrative capability of PIA to handle MCT Phase II expansion project, some personnel still remain stayed in PIA who knows the process of project formation. It is assumed that PIA is the capable to prepare such project application of MCT Phase II expansion project with due assistance by the consultant.

7-5

(2) Organization of the Host Country for Implementation of the Project The development of MCT Phase II is one of great concern, not only for PMD but also all other Departments in PIA. The development must be supported particularly by the Legal Services Division (LSD), the Corporate Planning and Business Development Department (CPBDD) and the Estate Management Department (EMD). As aforementioned, all the matters and recommendations will be discussed within the Joint Committee organized by all Department Heads of PIA, and then will be deliberated by the Office of Board Directors for approval. It is suggested that PMD should chair the joint committee composed of the representatives of LSD, CPBDD and EMD at the project facilitation stage as presented in Figure 7-4. Figure 7-4 Recommended PIA Organization for Project Facilitation Stage of MCT Phase II PORT MANAGEMENT DEPARTMENT

CORPORATE PLANNING AND BUSINESS DEV’T. DEPT

LEGAL SERVICES DIVISION

ESTATE MANAGEMENT DEPARTMENT

(Source: Study Team) Where the project enters into the implementation stage, PIA is required to closely communicate and coordinate, in the Philippines, with DND, the Department of Finance (DOF), the National Economic Development Authority (NEDA), the Department of Foreign Affairs (DFA), the Department of Transportation (DOTr), the Department of Public Works and Highways (DPWH), the Department of Environment and Natural Resources (DENR), Local Government Units (LGUs), the existing MCT terminal operator and other relevant stakeholders, and, in Japan, with the Embassy of Japan in the Philippines, and the Japan International Cooperation Agency (JICA) Philippine Office or such. In this stage, the only department to be newly established shall be temporarily named the “Project Management Office (PMO)” and should be established with a special task force committee composed of LSD, the Internal Audit Department (IAD), CPBDD, EMD, PMD, the Support Services Department (SSD) and the Management Information System Division (MISD), as shown in Figure 7-5. Figure 7-5 Recommended PIA Organization for Project Implementation Stage of MCT Phase II PROJECT MANAGEMENT OFFICE

LEGAL SERVICES DIVISION

INTERNAL AUDIT DEPARTMENT

CORPORATE PLANNING ＆ BUSINESS DEV’T. DEPT

ESTATE MANAGEMENT DEPARTMENT

PORT MANAGEMENT DEPARTMENT

(Source: Study Team)

7-6

SUPPORT SERVICES DEPARTMENT

MANAGEMENT INFORMATION SYSTEMS DIVISION

Chapter 8

Technical Advantages of Japanese Companies

(1) International Competitiveness and Involvement of Japanese Companies in the Project 1)

International Competitiveness of Japanese Companies

Certain Japanese construction, manufacturing and specialist cargo handling equipment companies were involved all in past similarly scaled container terminal development projects in the Philippines, such as Subic Bay Port, Batangas Port and MCT Phase I. In the case of MCT Phase II Expansion, which would be considered to apply an international bidding same as the said previous projects, such Japanese companies could perform their services in reliable quality based on sufficient experiences in the Philippines, accumulated knowledge of local practices, and many connections with local construction and material supply companies. Moreover, they are internationally advantageous, shortening the construction period through application of advanced materials and/or efficient methods that are well-researched, developed and technically verified in the governmental institutes or well recognized industrial associations. Currently, some Japanese companies have some alternative ways against price competitiveness; i.e. laying in large volume of raw materials, establishing overseas factories by Japanese capital etc. As aforementioned, it is therefore emphasized that Japanese companies are evidently competitive especially for port sector in the Philippines, because they becomes better providers of sustainable services and products based on certain experiences, reliable quality, specialized technologies and fair reasonable price these days. 2)

Possibility for Project Involvement of Japanese Companies

Even though Japanese companies are competitive, there are still many competitors who can win in price completion. It is common state of mind that most beneficiaries would get services and/or products in cheaper price. Some people say that “Japanese service and/or products are better quality but expensive”. It is not true but true. The better service and products are generally more expensive than ordinal or less ordinal services and products. Likewise the better service and products are better quality and durability. The Philippine National Development Plan 2017-2022 (draft version) currently stipulates securing “international standard” for new port expansion, which would supports enhancement of fair project involvement of the quality companies. To meet “international standard”, it is required to justify the necessity to apply proposed services and products. The justification is the most important process. In other word, the justification required to meet “international standard” is to specify particular specifications of the services and/or products in the process of procurement. Consequently, the specified particular specifications could be “spec-in” to relevant bidding documents for procurement. This opportunity is to prevent value cracking by unfair price competition and could reasonably induce the possibility of project involvement of Japanese companies in due course.

8-1

(2) Possible Materials to be Procured from Japan and Relevant Cost 1)

Major Materials/Equipment to be Possibly Procured from Japan

The following are the major materials/equipment to be possibly procured from Japan in this project: Steel Pipe Pile (for quay construction), Marine Fendering System Crane Rail QGC (Quay Gantry Crane) RTG (Rubber Tired Gantry Crane) Navigational Aids 2)

Rough Amount of Major Materials/Equipment to be Possibly Procured from Japan

According to the cost estimate of MCT Phase II as presented in Chapter 5, the rough amount of the major materials/equipment, including relevant construction and installation costs, are extracted as shown in Table 8-1. Table 8-1 Rough Amount of Major Materials and Equipment for the Project Amount

Description

Philippine Pesos (PHP)

Steel Pipe Pile and Marine Fendering System

Japanese Yen (JPY)

883,005,122

2,119,212,292

9,691,773

23,260,255

QGC (2 units)

749,250,000

1,798,200,000

RTG (4 units)

438,072,134

1,051,373,123

10,776,562

25,863,750

2,090,795,592

5,017,909,420

Crane Rail

Navigational Aids (Buoys & Light Beacon) Total

(Exchange Rate: 1 PHP＝JPY 2.40, 1 USD＝JPY 113.42) The above total amount is about 40% of the total project cost, including VAT to be imposed by the Government of the Philippines (GOP). It is noted that all the materials and equipment listed above require “spec-in” for making the relevant bidding documents.

8-2

(3) Necessary Actions in Enhancing the Involvement of Japanese Companies 1)

Financing

It is also beneficial for involvement of Japanese companies to propose attractive financing support for GOP and to undertake smooth and quick procedures for project implementation. The Study Team assumes that the financing of the project will be sourced from a Japanese Yean Loan administered by the Japan International Cooperation Agency (JICA). According to classification of average income for major countries in the year 2016, as well as the summary of the conditions for Japanese Yean Loan, the Philippines has been categorized as a middle income country (GNI per capita is in the range between 1,986 USD and 4,125 USD). If the general conditions apply to this project, the interest is one point four percent (1.4%) and the repayment period is twenty five (25) years including a grace period of seven (7) years. If the special conditions called STEP (Special Terms for Economic Partnership) apply to the project, the interest is zero point one percent (0.1%) and the repayment period is forty (40) years including a grace period of ten (10) years. In view of the interest, the repayment period and the grace period, STEP can provide such great merit to GOP as well as Japanese companies because it is restricted as a “tied” option. 2)

Assistance for Undertaking of Feasibility Study

The Study Team understands that this study is a pre-feasibility study (F/S) and the project needs to carry out a full-scale F/S as soon as possible. For undertaking the full-scale F/S, it is very important that Japanese consulting firms who have many international experiences, as well as experience with Japanese ODA scheme for port planning and engineering, such as ORIENTAL CONSULTANTS GLOBAL CO., LTD. (OCG), execute the full-scaled F/S. If required, it may be possible that the review and verification of the pre-F/S can be combined with the Detailed Design (D/D) to expedite the Japanese ODA scheme. For the MCT Phase II project to succeed, an increase of container cargoes at MCT is essential and attraction of large-scaled factories is necessary for PIA and hinterland development of the surrounding regional economy. It will be valuable for PIA that the full-scaled F/S should comprehensively include the industrial development and enterprise attraction planning. 3)

Assistance for Dispatching Technical Advisor(s) and Undertaking of Technical Cooperation Project

As previously mentioned, the income generated from port services has reached sixty percent (60%) of PIA’s total income, and the income generated from MCT has attained forty percent (40%) of the total income. The stable income obtained from the port services is quite important to support the backbone of PIA. PIA is so required to actively concern itself with the development, expansion, promotion and enhancement of MCT and other ports within PIE. As stated in Chapter 7, PIA actually has some problems and issues to improve in aspects of finance, engineering and administration. It is, therefore, necessary to detach port technical advisor(s) and to undertake a technical cooperation project for enhancement of PIA’s capacities as a port authority by accumulating the experiences, knowledge and know-how of a Japanese port think tank well experienced in many international ports such as THE OVERSEAS COASTAL DEVELOPMENT INSTITUTE IN JAPAN (OCDI). 8-3

Reproduction Prohibited

（様式２）

二次利用未承諾リスト 報告書の題名 Study on Mindanao Container Terminal Expansion Project in the Republic of the Philippines 委託事業名 Study on Economic Partnership Projects in Developing Countries in FY2016 受注事業者名 Oriental Consultants Global Co., Ltd., The Overseas Coastal Area Development Institute of Japan 頁 4 18

タイトル 図表番号 (Executive Container Volume Trend at MCT Summary) Superiority and Adequacy of Japanese (Executive Manufacturers and Proposed Japanese Summary) Technologies

1-11

Fig 1-11

General Layout of PPA Cagayan de Oro Port

1-16

Fig 1-12

Outline of PHIVIDEC Industrial Estate

1-16

Fig 1-13

Utilization of PHIVIDEC Industrial Estate

1-17

Fig 1-14

1-18

Fig 1-15

1-30

Fig 1-16

1-30

Fig 1-17

1-31

Fig 1-18

1-33

Fig 1-19

1-35

Fig 1-20

Ports in PHIVIDEC Industrial Estate General Layout of Mindanao Container Terminal (MCT) Masterplan and Future Development Plan for Cagayan de Oro Port Ongoing Development Plan at Cagayan de Oro Port Development Plan for Opol Port (Right) and Laguindingan Port (Left) MCT Expansion Plan by PIA Development Plans for Road Network in Cagayan de Oro

3-5

Fig 3-4

Container Volume Trend at MCT

3-7

Fig 3-6

Actual Container Volumes at MCT (2011-2015)

3-9

Fig 3-7

laden/Empty Container Volume Trend at MCT

（様式２） 3-10

Fig 3-8

3-12

Fig 3-9

3-22

Fig 3-16

3-35

Fig 3-21

3-36

Fig 3-22

3-37

Fig 3-23

3-37

Fig 3-24

3-38

Fig 3-25

Container Volume Trend by Container Size at MCT (Foreign) Container Volume Trend by Container Size at MCT (Domestic) Changes of exporting volume by areas (Hinterland areas) Shipping Routes from/to MCT (Foreign Shipping) Shipping Routes from/to MCT (Domestic Shipping) Chronological Change of Calling Vessel Dimensions (Foreign Vessel) Chronological Change of Calling Vessel Dimensions (Domestic Vessel) MCT Berth Utilization Ratio by MICTSI

3-40

Fig 3-27

Berth Window at MCT (Effective June 2016)

3-48

Fig 3-31

3-8

Tab 3-3

Frequency of Vessels Called at MCT for Foreign and Domestic Vessels (2011-2015) Container Volume Trend at MCT

3-9

Tab 3-4

Leiden/Empty Container Volume Trend at MCT

3-11

Tab 3-5

3-13

Tab 3-6

3-22

Tab 3-13

3-23

Tab 3-14

3-67

Tab 3-37

4-9

Tab 4-3

Legislations and Regulations Governing the Philippine EISS

7-3 7-4 7-5

Fig 7-1 Fig 7-2 Fig 7-3

PIA's Organization Chart PIA's Income in Year 2015 PIA's Expense in Year 2015

Container Volume Trend by Container Size at MCT (Foreign) Container Volume Trend by Container Size at MCT (Domestic) Changes of Exporting Volume by Area (Hinterland areas) Changes of Exporting Volume by Product (Hinterland areas) Superiority and Adequacy of Proposed Technologies