Davao ready to welcome post-pandemic boom
Opportunities abound in the Philippines’ biggest city
UNKNOWN to most people, the Philippines’ largest city is not found in congested Metro Manila in Luzon, but rather in southern Mindanao. Covering 2,443 square kilometers that encompasses everything from highly urbanized land, to coastal areas, to vast stretches of agricultural land and natural areas, Davao City is the biggest city by land area in the Philippines, and the third-largest (after Quezon City and Manila) by population, estimated at more than 1.6 million. In fact, with an annual population growth rate of 2.25 percent, almost double the national average of 1.35 percent, Davao could surpass Manila in size within the next few years, according to current projections.
Although for most Filipinos Davao is most noteworthy for being the hometown of President Rodrigo Duterte, who served as the city’s mayor for a total of 27 years before being elected as president in 2016, Davao has long been considered an attractive, and for some, a superior alternative to increasingly congested and costly cities such as Metro Manila and Cebu. The track record of development in Davao that boosted the popular and sometimes controversial former Mayor Duterte – the office is now held by his daughter and current vice-presidential candidate, Sara Duterte-Carpio – to national prominence and eventually the presidency, is reflected in the city’s well-planned and rapidly-growing infrastructure, transportation, logistics, business process management-information technology (BPM-IT), agribusiness, and tourism sectors.
While it is true his former bailiwick has benefitted from Duterte’s position as president, Davao’s natural attributes serve as an effective recipe for growth and productivity. The city has a well-educated, youthful workforce with one of the highest literacy rates in the country (about 98.7 percent), a pleasant, consistent climate that offers a year-round growing season outside the Philippine’s“typhoon belt,”and is ideally located for good logistics connections with the interior of Mindanao, the rest of the Philippines, and the East and Southeast Asian region.
To better appreciate the advantages Davao has to offer, let’s take a look at three particular areas of growth: Transportation and logistics infrastructure, agribusiness, and tourism.
Transportation and logistics development
Unlike Metro Manila, which continues to struggle with ever-worsening gridlock and still lacks a comprehensive transportation infrastructure master plan, Davao’s development has been carried out according to a clear roadmap divided into short-term (2016-2022), medium-term (2023-2030), and long-term (2031-2045) initiatives.
Large-scale infrastructure initiatives designed to ease movement in and around Davao City as well as expand its logistical capabilities include recent upgrades to the facilities and road linkages of the Francisco Bangoy International Airport. Manila-based shipping giant International Container Terminal Services Inc. (ICTSI) has also carried out significant expansion and upgrades of the various facilities of its Sasa International Seaport terminal at the Port of Davao, greatly increasing the port’s capacity and flexibility. In addition, further expansion of the port is planned via a proposed 19.9-billion project offered by Chelsea Logistics Holdings Corp. On the landward side, recent developments include the 23-kilometer Davao City Coastal Bypass Road, and implementation of a comprehensive Land Use Plan, which includes, among other things, refinements in planning processes to integrate construction, upgrade, or relocation work on utility networks (electric and communications cabling and water supply) with road construction projects.
In terms of transportation networks and management, the city implemented a Comprehensive Transport and Management Plan with technical assistance from the Australian government in 2018. This plan provides for, among other things, development of a High Priority Bus System and light rail transit system for improved public transportation in the city; development of three provincial bus terminals to streamline overland connections with other points in Mindanao; and an aggressive program of traffic enforcement, including increasing the staff of the City Traffic and Transport Management Office (CTTMO).
More recently, the Asian Development Bank (ADB) has also joined in supporting transportation development in Davao with a proposed $924.6-million Davao Public Transport Modernization Project.
Agribusiness development
Thanks to its extensive agricultural areas connected to a highly urbanized core, Davao characterizes itself as an “agri-industrial city,” and is a leading producer of such crops as coconut, durian, banana, cacao and coffee. As a natural market and logistical hub for agriculture in southern and eastern Mindanao, the city of Davao has applied a great deal of planning and development effort to expanding its agribusiness sector, an effort which is closely integrated with both overall economic planning and poverty reduction initiatives.
The centerpiece of Davao’s agribusiness strategy is the ongoing development of the P230-million Food Terminal Complex (FTC), located on property owned by the National Development Corporation (NDC) near the Davao Fishport Complex at Daliao, Toril.
The FTC is to a full-service facility that functions as a consolidation, processing, packaging, storage, and distribution center for farm products from within Davao City – due to its large land area, the city does have a sizable number of farms located within its jurisdiction – and coming into the city from elsewhere in Mindanao.
The FTC project, when fully realized, will have seven components, for which the city is currently shopping for investors, including a trading center; cold storage facility; a food processing center; dry storage warehouse facility; cargo handling and transport; common-bonded warehouses for trading activities; and other commercial and industrial spaces within the complex.
At present, the first sub-component of the larger Food Terminal Complex is already in operation, a P70-million wholesale vegetable processing facility. This project is a joint effort of the Davao City government and the Department of Agriculture, and is intended to facilitate the efficient movement of produce in and out of the city and around the region. The vegetable processing facility also supports city efforts to boost production and incomes among local farmers under the Vegetable Production Enhancement Program.
Tourism development
Davao’s broad vision for city development recognizes the attributes of the city and surrounding area as a tourism destination, and its multi-year strategy seeks to leverage these as a key economic driver. First, Davao’s tropical climate, tempered by its coastal location, makes it an ideal year-round destination, particularly since it lies well south of the Philippines’ typhoon belt and rarely experiences dangerous weather. Second, the city’s reputation as a safe environment, established by the tough law-and-order stance of former Mayor Duterte and maintained by his daughter and successor, is attractive to overseas visitors. With enhancements to the airport boosting its capacity to two million passengers annually, access from elsewhere in the Philippines and Asia has been improved. International destinations regularly served by the Davao airport include Hong Kong; Singapore; Manado, Indonesia; Doha, Qatar; and Quanzhou, China.
Not surprisingly, the Covid-19 pandemic and associated restrictions on travel severely affected Davao’s tourism sector, and delayed some development plans. With the easing of restrictions, however, Davao is looking to jumpstart the sector, which is one of the biggest economic drivers for the city and surrounding region. The Department of Tourism (DoT) has set a target of 1.4 million visitors for the region for 2022, virtually all of whom will be visiting or transiting through Davao City.
At this point, with whatever permanent changes to travel and tourism the post-pandemic “new normal” might impose still being somewhat uncertain, the city is currently reassessing its longer-term tourism initiatives from before the pandemic to see how these may need to be modified or expanded. These include the creation of a P600-million sports complex on a 20-hectare parcel of land from the University of the Philippines’reservation. According to information provided on the city government’s official website, “The project aims to create an environment-friendly complex such as indoor / outdoor sports facilities, open space, sports academy (classrooms, auditorium, library, sports laboratory, sports medicine clinic) and quarters for athletes undergoing training and sports officials.”Another large-scale proposal is the development of the Sta. Ana Waterfront, an initiative to create new shopping areas, hotels, conference centers, and other attractions, at an estimated cost of P12 billion.