HOW PH CAN BENEFIT FROM URBANIZATION

tion, and develop financial markets.” “Well-functioning land market and efficient land use are important in creating sustainable and competitive cities. Rural to urban migration—one of the significant drivers of urbanization—is propelled partly by an efficient LAM system that provides secure property rights and well-functioning land markets,” it said.

Binding constraints

But there are a number of challenges that affect land use in urban areas—the so-called binding constraints hampering the overall competitiveness of Philippine cities.

These include a weak LAM system; outdated and ineffective land use planning and regulations; increasing informality in urban centers; and highly politicized property taxation and valuation practices, which negatively impact financing for urban development.

The country’s weak LAM system, according to the study, was due partly to the presence of multiple agencies involved in land administration; incomplete cadastral surveys that have resulted in many unresolved conflicts and boundary disputes among local government units (LGUs); and backlogs in titling in the face of rising land values.

Due to inadequate LAM system, weak planning and ad hoc spatial development, Metro Manila saw the continued growth in the number of informal settler families (ISFs).

From 2007 to 2011, the growth rate of ISFs reached 7.3 percent, consisting of more than half a million households, representing a quarter of the metro population, data from the study showed.

The study also pointed out that the average real property tax (RPT) collection by all LGUs in the Philippines stood at only 31 percent of total local revenue collections in 2014—lower than the average RPT collection for middle income and high income countries, which stood at 35.5 percent and 37.7 percent, respectively.

In fact, Philippine cities were said to miss up to P20.3 billion in RPT when they are not aggressive in tax collection. Of the amount, P15.9 billion are foregone in 51 metropolitan areas and highly urbanized cities.

Proposed reforms

“The weak LAM infrastructure, including the land information system, has created substantial inefficiencies in the land markets and has contributed to inefficient property valuation and taxation,” it stated.

“These in turn limit the capacities of LGUs to finance local infrastructure investments and leads to poor land use plan- ning that yields sub-optimal urban growth and spatial development. But the most glaring manifestation of these issues perhaps in the proliferation of informality in cities across the country,” the World Bank study further explained.

It also pointed out that the current state of land policies, systems and processes suggested the need for fundamental reforms if the Philippines aims to optimize the benefits of urbanization for economic growth and poverty reduction.

To enable the Philippines to benefit from rapid urbanization, the study had put forward recommendations. Theseinclude addressing growing informal settlements; streamlining institutional arrangements for land services; developing integrated land information system; developing a metrowide physical planning framework; and improving property taxation and valuation.