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The Big Story

Emerging Asian economies race to build metros amid choking congestion

Manila, Jakarta and Ho Chi Minh City invest heavily in new transport systems

Workers move a steel girder at a metro construction site in Ho Chi Minh City. (Photo by Shinya Sawai)

HO CHI MINH CITY/MANILA -- The distance between Maye Cristobal's house and her office in Manila's Makati business district is just 5km, but the 26-year-old lawyer often has to travel for one and a half hours. And that's just one way.

"It's hell!" she said of her traffic-clogged taxi journey.

Such outbursts are common in Metropolitan Manila when commuters talk about their daily journey to and from work. It was echoed by Joshua Dalupang, a 25-year-old communications officer, when he described his two-and-a-half-hour commute to his office in Makati, 22km away from his house.

From Dalupang's house in northern Manila, an Uber takes him to a station, where vans operating without a government license are waiting to ferry passengers to business districts. He knows the vehicles are illegal, but they are far more efficient than the train. "Queues are too long. Trains are bursting and always break down," Dalupang argued, referring to the 17km Metro Rail Transit Line 3, the busiest among the capital's three railways.

Manila's traffic problem is notorious. According to Numbeo, a crowdsourced online database of social trends, the Philippine capital was the world's 10th-most congested city last year. The chronic traffic problems are a symptom of the country's rapid growth in recent years, where rising disposable income has boosted car sales to record levels, hitting over 400,000 in 2016 amid patchy public transportation options. As a result, the country is suffering an economic loss worth $18 billion annually caused by road congestion that suppresses the economy's overall productivity, according to the Japan International Cooperation Agency (JICA).

Similar factors are at work across Southeast Asia, home to some of the world's fastest-growing economies. The youthful, expanding workforces that have helped boost the economies of the Philippines, Indonesia and Vietnam have also exacerbated congestion problems in their major cities. This has left them struggling to meet demand for public transportation systems.

Earlier this year, the Asian Development Bank estimated that the seven major emerging states in the Association of Southeast Asian Nations -- excluding Singapore, Brunei and Laos -- need to invest $147 billion every year in infrastructure, including transport, through 2020 to maintain the growth momentum, while they are actually investing only $55 billion. As ratios to gross domestic product, those nations need to invest about 6.1% of their GDP into infrastructure but in reality only spend less than half that, at 2.3%.

Limited public transport options and soaring car sales have made traffic jams a common sight in Manila. (Photo by Ken Kobayashi)

Nowhere is this underinvestment more obvious than in Jakarta, which has offered travelers the worst nightmare imaginable in terms of gridlock for many years -- consistently earning it a top-five spot in "most congested cities" lists. Commuters in the Indonesian capital can wait for more than an hour just to go to a building five blocks away on a workday afternoon. A visitor arriving at the Soekarno-Hatta international airport can easily spend over three hours on the road before reaching the center of the city -- and there are no other options.

Across the region, however, governments are pushing to address their transport infrastructure gaps. Indonesian President Joko Widodo, Philippine President Rodrigo Duterte and Thai Prime Minister Prayuth Chan-ocha have been staking their political fortunes on greater transportation investment, and Vietnam is pressing ahead with metro projects in Ho Chi Minh City and Hanoi. 

Malaysia, long a leader in public transportation development, is expanding its urban railway networks and pursuing long-range express railway projects totaling $8.68 billion. And in Bangkok -- which held the record as Southeast Asia's traffic jam capital until the 1990s -- is expanding its well-functioning mass rapid transit railways, which are now concentrated in the center of the city and at the airport.

The result is that by 2025, every one of ASEAN's six largest countries is expected to have up-and-running urban railway service.

Behind this infrastructure boom is financing from China and Japan, which are increasingly competing to fund MRT and other infrastructure projects in the region. Such financing is often tied with consulting, engineering and construction companies of the same nationality. 

All of the upcoming MRT lines in Jakarta, Ho Chi Minh City and Manila are funded by Japan and overseen and advised by JICA. But one JICA official working in the region admitted that the agency can feel pressure from China, which harbors ambitions to overturn Japan's position as a leader in transport planning. 

Last month, Duterte visited Japanese Prime Minister Shinzo Abe in Tokyo to secure a commitment for the construction of a $7 billion subway project -- just one part of Duterte's push to  spend 8.4 trillion pesos ($165 billion) to usher in a "golden age of infrastructure" during his six-year term. Around two-thirds of the spending plan has been earmarked for transportation-related projects, such as railways, roads, airports and bridges.

The mercurial leader, who has attracted global attention by ordering the execution of drug peddlers and users, wants at least part of the line to start commercial operation before his term ends, said Arthur Tugade, the country's transportation secretary. Manila, a 620-sq.-km megacity, has a population of close to 13 million, a figure that spikes during the day when people from nearby provinces flock there to work.

The city hopes to relieve its congestion with a 25.3km underground line that will have 13 stations from the capital's northern suburbs to the terminus at the Manila airport in the south. Once completed in 2025, travel time from northern Manila to the airport is expected to be reduced to about 30 minutes from 2-3 hours.  

Latecomer advantage

In an underground space close to Ho Chi Minh City's historic opera house, city officials, construction contractors, civil engineers and on-the-ground workers gathered on Oct. 31 to celebrate the completion of the country's first deep-underground tunnel. It was the first time the country had used a modern boring machine.

By one estimate, road congestion costs Ho Chi Minh City about $820 million a year. (Photo by Shinya Sawai)

From the other side of the remaining thin wall of soil, the machine operator started spinning a 6m-diameter disc cutter. The wall soon fell, completing the tunnel. Attendants clapped their hands and cheered. 

The tunnel will form part of Ho Chi Minh City Metro Line 1, which will stretch about 20km to connect the Ben Thanh market in the center of the city to the Suoi Tien amusement park in the northeast. Line 1, backed by JICA and Japanese construction contractors, is scheduled to start commercial operation in late 2020.

The city's transportation master plan envisions six metro lines and two light-rail lines. The ground will soon be broken for lines 2 and 5, which will be built with funding from the Asian Development Bank, the German development bank KfW, the Spanish government and the European Investment Bank.

With its economy growing at over 6% a year, Vietnam is desperate to avoid the congested roads and lack of public transportation that have long plagued Jakarta and Manila. Tran Vinh Tuyen, vice chairman of the city's People's Committee administrative group, who is in charge of the metro project, told the Nikkei Asian Review that construction of the MRT is "urgent," although to a visitor's eyes the road traffic looks far better than that of Jakarta, Manila and Bangkok. 

The business capital of Vietnam has about 1.98km of road per square kilometer of land, far less than the city's long-term goal of 9.5km, Tuyen pointed out. "Congestion hinders movements of goods to and from ports and factories outside the city, thus manufacturing-sector growth," Tuyen said.

In a 2016 study, Ho Chi Minh City University of Technology estimated road congestion is costing the city about $820 million a year. The city was estimated in May to have about 8 million motor vehicles, up 5.8% from a year earlier, including 600,000 four-wheelers and 7.4 million bikes.

The number of four-wheel autos is already three times the level that city transportation planners had projected for 2020 -- and it is rising fast. Visitors notice in Ho Chi Minh City that the ratio of motorcycles to four wheelers on the road has dropped compared with even a few years ago.

ASEAN's sixth-largest economy, Vietnam has two major MRT projects already in the construction phase: Hanoi and Ho Chi Minh City. Hanoi planned to complete construction of a 13km segment of its elevated Metro Line 2 by September this year, but work was halted due to a delay in China's disbursement of $250 million in loans past due since March, according to central government officials.  

Funding is always a huge hurdle for the less-well-off countries in the region. While the Hanoi Metro project failed to avoid a halt in construction work due to the funding shortage, Ho Chi Minh City has been forced since this summer to bridge-finance its Metro Line 1 project because the central government has failed to disburse the necessary cash.

The Metro Line 1 is primarily funded by a Japanese official development assistance loan implemented by JICA to the Vietnamese Ministry of Finance, which is then supposed to disburse the necessary amount as the project proceeds. The country's legislature has set a public-debt ceiling for 2017 at 65% of GDP, and the public-debt-based disbursement for 2017 has already surpassed 64.5%. So the government has simply stopped disbursing more money.

Ho Chi Minh City's Tuyen, the chief negotiator with the central government, is running around in the government district of Hanoi trying to get the projects back on track. "We will do our best to keep up the schedule," he told the Nikkei Asian Review in mid-November.

Presidential dream

After 25 years of spectacular public transport misfires and abandoned projects, Jakarta's commuters appear set to finally have relief. With 1,000 new cars hitting the roads each day, there is a sense of urgency to completing Indonesia's first MRT project, which is planned to open as soon as 2019.

"Jakarta MRT shall start service on time by all means," Jakarta Gov. Anies Baswedan vowed to President Widodo after Baswedan was inaugurated in October.

Construction on the 24km North-South line was 83% complete by the end of October, and MRT Jakarta, a province-run business entity to invest in and operate the MRT after commercial launch, said the work is proceeding right on schedule. The service launch is scheduled for March 2019. An 87km East-West corridor is in the study phase, with a target to begin operating in 2025.

Indonesia started discussing the idea of a Jakarta MRT in the 1980s, and the construction project was half-started a couple of times thereafter only to be canceled due to domestic politics or funding difficulties. Today, the Indonesian government estimates traffic congestion in the capital, which has a population of over 10 million, costs the nation about $5 billion annually.

Jakarta's long-suffering commuters will finally get some relief in 2019, when Indonesia's first metro system is set to open. (Photo by Shinya Sawai)

It was only after Widodo became Jakarta governor in 2012 that the $1.5 billion project actually started moving forward. About $1.2 billion was funded by Japanese direct development assistance loans from JICA. 

Even after becoming the president, Widodo has been visiting the MRT construction sites frequently, reflecting his passion about realizing the project.

In October, Widodo told Baswedan that he should focus on completing the city's light rail and mass rapid transit networks. He said Indonesia is lagging "far behind" other countries with its public transportation systems. "It is a must for the capital Jakarta to have ... alternative mass transports," he said. "We have to have the courage to catch up. These two [projects] will ease traffic congestion in Jakarta -- we've lost 28 trillion rupiah every year due to traffic jams in Jakarta."

Additional reporting by Nikkei staff writers Jun Suzuki and Erwida Maulia in Jakarta and Nikkei Asian Review associate editor Dominic Faulder in Bangkok.

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