PHILIPPINE PLANNING~ <16~ JOURNAL~ <}O' '"z(f)

(f) SCHOOL OF URBAN AND REGIONAL PLANNING • Vol. XXIV, No.1, October 1992 •

MANILA BAY

7 __ ? KM4 WILES

LAGUNA DE BAY

RESIDENTIAL AREAS INIIETROPOUTAN MANILA, 1968

LEGEND:_ Residential Area - 1968

_ Subdivision Being Developed in 1968

_ Squatter Concentrations -1968

PHILIPPINE PLANNING JOURNALVol. XXIV, No.1, October 1992

Issue EditorDavid Leonides T. Yap

Managing EditorDelia R. Alcalde

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TABLE OF CONTENTS

The Role of Infrastructure in Urban, Rural, 1and Regional Development:A Survey of Literature

Sophremiano B. Antipolo

The Urban Land Nexus Theory and the Spatial 12Structuring of Metropolitan Manila

Ernesto M. Serote

Slum and Squatter Problems inMetropolitan Manila: An Update

• Asteya M. Santiago

About the Contributors

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49

THE ROLE OF INFRASTRUCTUREIN URBAN, RURAL, AND REGIONAL DEVELOPMeNT:

A Survey of literature

Sophremiano B. Antipolo

INTRODUCTION:SETTING OUT THE ISSUES

It has been argued that the "economizingbehavior" and "economizing setting" are thetwo key elements that are central in theprocess of development. The former refers tothe human factor: the capacity, ability orwillingness to change. while the latter refers tothe physical. socio-cultural and institutionalfactors within which the "economizingbehavior" has to operate. One of the importantcomponents of the "economizing setting" ofurban, rural. and regional development isinfrastructure.

That infrastructure plays an important rolein development is generally well recognized.but the concept is so vaguely understood thatour knowledge of the relationships betweeninfrastructure investment and thp. developmentprocess is at best inferential.

Wharton (1967) argues that without acertain minimum of infrastructure investment,little rural, urban, and regional developmentcan take place. This does not mean, however,that the provision of some package ofinfrastructure will ensure development. But wedo know that, given certain conditions, thedevelopment of particular types of infra­structure will stimulate development, althoughwe may not know precisely what the conditionsare and what the required level is. Directlyproductive activities --such as agriculture,manufacturing and mining .- cannot progressvery far without the support of infrastructurefacilities.

The important issue is not how to resolvethe chicken-egg question or how to determinethe causality between two factors --i.e.,infrastructure and development --but todetermine what kind of infrastructure invest-

1

ment policy should be adopted. Answers to thisquestion will be attempted in this paper.Accordingly, this paper will answer thefollowing three (3) basic sets of questions:

1. What is infrastructure?

2. What is the role of infrastructure in spatialdevelopment? More specifically, what isthe relationship between infrastructure andthe socio-economic characteristics ofurban and rural areas and their capacity toattract productive investments?

3. What are the effects or impacts of infra­structure upon urban, rural-agricultural,and regional development?

INFRASTRUCTURE:DEFINITION AND ROLE

Definition

Although there is a large body of literatureon the subject of infrastructure, there has neverbeen any precise definition (Johnson, 1965).Different people have used it in differentcontexts, and there is considerable variation inthe degree of theoretical and empiricalattention given to the various aspects ofinfrastructure. The term "infrastructure" hasbeen used interchangeably with "overheadcapital". The following summary by Wharton(1967) indicates how much variation in implieddefinition and context exists on the use of theconcept of infrastructure.

Lewis (1955) appears to include publicutilities, docks, water supply, andelectricity. Higgins (1959) includestransport, public utilities, schools, andhospitals. Hirschman (1959) lists: lawand order, education, public health,

PHILIPPINE PLANNING JOURNAL Vol. XXIV No. 1 OCtober 1992

transportation, communications, power,water supply, irrigation, drainage.

Hirschman's definition is believed to bemore useful from an analytical standpointbecause it goes beyond the mere listing ofcomponents of social overhead capital. Hedistinguishes between a "wide" definition(includes all those listed above) and a "narrow"definition (limited to transportation and poweronly). Hirschman contends that transportationand power are the "hard core" of the concept ofsocial overhead capital, thus emphasizing theimportance of the two factors as preconditionsfor economic development.

Other definitions of some of thecomponents listed above have been made.Youngson (1964), however, argues that thewhole idea of trying to define social overheadcapital is "nonsense" because the importantissue is not so much whether or not infra­structure can be defined; rather, it is the factthat investment in infrastructure is a sine quanon for development. Youngson's argumentimplies that our concern should not be so muchwith the definition of the concept as withdetermining its relationship with development.However, in order to understand the rela­tionship, one needs an operational definitionthat specifies the parameter of the concept.Since one of the objectives is to determine theextent to which infrastructure plays a role in thedevelopment of rural, urban, and regionaldevelopment in terms of growth and potentialto attract new industries, there is a need todevelop a definition that can denote thedifferent features of infrastructure. One suchdefinition is that developed by StanfordResearch Institute (SRI) in its study of thecosts of urban infrastructure for industry asrelated to city size (SRI, 1968). According tothe SRI study, infrastructure is divided intophysical and social.

Physical infrastructure includes the...facilities directly supporting industrialproduction and distribution: electricpower, road and rail transport,telephone communications, watersupply, and sewerage and industrialwaste disposal. Basic requirements ofhousing, schooling, and hospital andhealth services for urban industrialemployees and their families, together

2

with the residential share of refusedisposal, police and fire protectionservices are covered in social infra­structure.

The definition is operational and appro­priate. It is operational in the sense that itdistinguishes between facilities that directlysupport productive activities and those thatprovide indirect support. Such distinctions areimportant in identifying priorities among typesof services that should be provided. Sinceprovision of infrastructure is costly and long­term in its effects, infrastructure investmentpriorities should be set depending uponwhether the national (or regional) objective isto promote only directly productive activities orto provide different types of social services aswell.

Role of Infrastructure in SpatialDevelopment

The role that infrastructure investmentplays in the development of settlements arisesfrom two (2) major factors: (a) infrastructure isa "basis" for urban and rural development; and(b) through the adoption of a strategicinvestment policy, infrastructure can be used toinfluence both the characteristics and growthpatterns of urban and rural areas.

Infrastructure as a Basis for Development

Hirschman (1979) has articulated thatinvestment in infrastructure is a 'basis' for thefunctioning of any type of activity on which anurban area sustains itself. He argues that noprimary, secondary or tertiary activities cantake place without the provision of basicservices, which he refers to as social overheadcapital (SOC). The same point is emphasizedby Wingo (1976). He contends that investmentin infrastructure has an important role in theurbanization process because development ofvarious elements of infrastructure providesurban areas a "uniquely productive environ­ment". The environment creates a favorablecondition not only for attracting privateInvestment in industries and other types ofactivities. but also for recruiting persons withdifferent backgrounds and skills. the conver­gence of which sets in motion the self­sustaining dynamics of urbanization.

Advocates of the balanced growth theorypresent the same notion in a slightly differentperspective when they argue that the right"bundle of investments· must be at the rightplace at the right time if investments are tohave any impact on development. Through the"big push" theory, they illustrate the signifi­cance that a bundle of investments can haveon the development of urban and rural areas(Bahrgava, 1966).

Within the context of the stages ofdevelopment, investment in infrastructure isbelieved to have a catalytic effect, particularlyduring the pre-industrial stage (Rosenstein­Rodan, 1967). Rodan identifies the implicittheory behind investment in infrastructure. Onthe supply side, by creating a minimum level ofsocial overhead capital, directly productiveinvestment can take place. On the demandside, by creating additional employment andincome through investment in the socialoverhead capital activities, effective demand israised in the area since additional workersemployed in the construction of social over­head capital will spend their wages onadditional goods. This increase in effectivedemand should create additional markets in anarea in which, due to the absence of demand,productive investment in industrial establish­ment appeared doomed to failure.

Rosenstein-Rodan's rationalization of theimportance of infrastructure, however, is basedon the basic premise that such an investmentwill create a spontaneous public investment indirectly productive activities. But such anargument may be valid only in the case ofdeveloped countries or regions, where theeconomy depends on outputs from primaryproducts (agriculture and mining), and wheremost potentially rich areas are faced withsevere locational disadvantages and arealmost isolated from the national economy.Investment in infrastructure is a must becauseit is the 'basis' upon which any local resourcescan be developed. It is an absolute prerequisitefor any type of development program.

According to Johnson (1967), the effectsof a lack of infrastructure facilities refer to morethan economic results. He pointed out that thelack of roads is the greatest handicap to aproductive economy, because physical isola­tion means not only an inability to sell productsand to buy necessary consumer goods, but

3

The Role of Infrastructure

involves an intellectual separation of the road­less villages from currents of thought andaction in urban areas and from information andideas in those rural areas that are in bettercontact with towns and cities.

Investment in infrastructure, accord­ing to Steele (1971), is an absolute necessityin less developed countries' efforts to moveinto industrialization. Mountjoy (1967) alsoemphasizes this point. He contends thatadvances in manufacturing by means ofsuccessful new promotions and the expansionof existing industry from workshop to factorycharacter will depend essentially upon prior orparallel expansion of infrastructure and utilities.

Infrastructure as a Policy Tool

According to Emmanuel (1973), countriespursuing regional development policies gene­rally use two main instruments to secure policyobjectives. The first refers to the financialincentives (loans, grants, tax reliefs, etc.),which bear directly on the balance sheet offirms. The second includes the development ofinfrastructure in areas in which a specialregional promotion effort is required. Althoughthere is significant interdependence betweenthe two (financial and non-financial incentives),there are substantial differences that resultfrom blending on the level of development of aparticular country. Often, maintaining thebalance between financial and non-financialincentives is the major problem. Thus, in thecase of developed countries, infrastructuremay be comparatively adequate and theproblem may be how to provide firms withother financial incentives to relocate or bring innew industries. On the other hand, in the caseof the less developed countries, the majorproblem is the deficiency of infrastructure, andother financial incentives would have no effectuntil infrastructure deficiencies are remedied.

Dyckman and Irvine (1973) believe thatinvestment in infrastructure is one of theimportant measures that can serve to coor­dinate national, regional, and local policies andthus help to develop well-integrated nationalurban systems. Richardson (1972) shares thesame idea and maintains that decisions on thelocation of infrastructure might be regarded asthe unifying theme in the coordination of the

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

national and urban policy. Richardson,however, notes that since infrastructuredecisions are taken at different levels ofgovernment, successful realization of thenational urban goals depends on thecompatibility of the regional and national goals.

urban areas, measured in terms of numberof industries in each urban area andpotential industrial absorptive capacity,and (iii) development of infrastructurefacilities.

Since the bulk of the infrastructureinvestment is publicly undertaken, the potentialfor accommodating investment to public policyis high and, thus, investment in infrastructure isstill a potent force as a policy instrument(Salama, 1974).

EFFECT I IMPACT OFINFRASTRUCTURE:A SURVEY OF EVIDENCE

Effects on Urban Spatial Development

Although it is accepted that investment ininfrastructure is a 'basis' for the functioning ofany type of activity and is also an importantpolicy instrument for managing the develop­ment of urban areas, there is, as yet,uncertainty on the extent to which it determinesthe growth and characteristics of the urbanareas, on one hand, and the location ofindustries, on the other. This section attemptsto examine whether any such relationshipexists.

Using regression and correlation analysismodels, Wubneh (1976) tested and confirmedthe following hypotheses:

• There is a positive relationship betweeninfrastructure, market size and industriallocation. A corollary hypothesis to this is:The potential industrial absorptive capacityof an urban area is positively associatedwith the availability of its infrastructureservices.

• The size and socio-economic characte­ristics of urban areas are positively relatedto the investment in infrastructure facilities.

• There is a significant positive correlationamong (i) spatial organization, measuredin terms of inter-urban traffic flow todetermine interaction, (ii) development of

4

Wubneh's findings indicate that marketand infrastructure are positively associatedwith the locational pattern of industries andalso that infrastructure is positively related tothe potential industrial absorptive capacity ofurban areas. The regression equations give areasonably adequate statistical explanation ofthe spatial variation of industries. The patternof location of industries is basically an outcomeof a cumulative result of locational decisionsundertaken by firms over a long period of time.The significant relationship between market,infrastructure and distribution patterns ofindustries reflects the importance of thesefactors (infrastructure and market) ininfluencing the locational decisions of firms. Acorollary to this analysis is the significance ofthe complementarity of infrastructure facilities.The availability of water, power, or roads alonemay not make a significant difference. It is thepresence of a combination of the variouselements of infrastructure that makes adifference in attracting industries or generatingdevelopment in a region.

The testing of the hypothesis on the sizeand characteristics of urban areas shows theexisting differences in the type of infrastructurefacilities between large and small urbanareas. Physical infrastructure is positivelyassociated with the size and socio-economiccharacteristics of the large urban areas.Physical infrastructure is an important factorin supporting productive activities directly and,thus, the large urban areas that have thephysical infrastructure advantages maintain afavorable climate for attracting new industries.On the other hand, the small and medium­sized urban areas, although they haverelatively 'better' educational and healthservices (social infrastructure) as a result oftheir being important administrative centers,lack: (a) physical infrastructure to directlysupport productive activities; and (b) theeconomic dynamism to initiate growth.Therefore, their potential to attract industriesis limited.

The abovementioned findings imply that ifsmall and medium-size cities are to playa rolein attracting more productive activities, thenphysical, alongside social infrastructure mustbe provided. In sum, it is necessary to point outthat the dimension of space should beconsidered as one of the factors that deter­mines the web of interrelationships amongeconomic activities. Particularly in the lessdeveloped countries, such considerations aresignificant because, as Johnson (1967) puts it,it is the poor and often faulty spatial structuringthat has strangled the development efforts ofmost developing countries.

Effects on Agricultural Output andInvestment

In a study by Binswanger et al. (1989), anattempt was made to determine the impact ofinfrastructure and financial institutions onagricultural output and investment. The studysought to quantify the interrelationshipsamong the investment decisions of govern­ment, financial institutions and farmers andtheir effects on agricultural investments andoutput.

Using econometric techniques, the studydefined the dependent variables to include thefollowing:

• Aggregate Crop Output - the index of 20major crops

• Agricultural Investments - represented byprivate investments in draft animals, milkanimals, small stock (sheep and goats),tractors, and irrigation pumps.

The independent variables included:

• Government Infrastructure - consisting ofprimary schools, government irrigation,rural electrification, regulated ruralmarkets, and total road length. (Note:Regulated rural markets do not include allrural markets but only those wheregovernment provides market infrastruc­ture and regulates all trade via asupervised auction system).

• Financial Institutions - represented only bythe rural branches of commercial banks.

5

The Role of Infrastructure

(This limitation stems from the absence ofdata on other forms of rural financialintermediaries).

The salient findings of Binswanger's studyare outlined below:

• Impact of Financial Institutions. For thefirst time, Binswanger's research presentsresults on the effects of the expansion offinancial intermediation of agriculturalinvestments and output. It was found thatthe expansion of the commercial banksinto the rural areas had a considerableeffect on fertilizer consumption and onfixed private investment. It also affectsagricultural output by 1.4 percent. Theeffects of bank expansion upon thedependent variables are noted as follows:It increased fertilizer demand by 22percent, investment levels in tractors by 18percent, and investment in pumps andmilk animals by 46 percent. Its effect uponaggregate crop output was 2 percent.

• Impact on Infrastructure. In addition toestimating the impact of banks, the studyalso showed that commercial banks preferto locate in well-watered (irrigated) areaswhere agricultural risks are relatively lowand avoid areas characterized by highrisks of drought and floods. Moreover,bank expansion is greatly facilitated bygovernment investments in roads andregulated markets, which enhance liquiditypositions of farmers and reduce tran­saction costs of both banks and farmers.As bank expansion raises investmentsandoutput, better geographic coverage ofthe banking system can, in favorableenvironments, help offset the effects ofhigher interest rates.

The analysis of government's ownadditional investment in irrigation suggestspositive and statistically significant impactupon bank expansion, private investment,and aggregate crop output.

• Improved Road Investment. This has beenshown to enhance agricultural output withan elasticity of about 0.25 (i.e., it increasesagricultural output by 25%). The studyfound that, on the average, improved roadinvestment directly contributed 8 percentto the growth of agricultural output and 10

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

percent to the growth of fertilizer use. Itwas also established that improved roadinvestment contributed to bank expansion.

• Electrification has a clear impact oninvestment in fixed capital, especially onpumps where it contributed an increase of30 percent to investment levels. Via theseinvestments, electrification increased out­put by 2 percent.

• Primary Education has added 7 percent tocrop output. This is considered largeas it was found to be statistically signifi­cant. This has come about primarily via anearly 30 percent increment to fertili­zerdemand.

Effects on Agricultural and RegionalDevelopment

Wanmali's (1988) study entitled: "Provisionand Use of Rural Infrastructure in the Growthof the Regional Economy" was placed withinthe growing field of interest in rural infra­structure and its impact on agriculturaldevelopment in the Third World. At the outset,Wanmali argued against the usual definition ofinfrastructure to mean just "hard infrastructure"(i.e., roads, telecommunications, electrification,and irrigation). He contended that this definitiontended to provide only a partial picture. Hestressed "that there are other elements ofinfrastructure that are equally important suchas the national, regional, and local governmentagencies involved in development planningand administration. He called this "institutionalinfrastructure".

Wanmali pointed out that various servicessuch as transport (bus and trucks), finance(credit and banking), animal husbandry, andinput distribution (seeds, fertilizers, pesticides,and agricultural and rural produce) are alsonecessary for the development of agriculture.He called these the "soft infrastructure". Thedistribution systems of these services havestrong economic as well as spatial featuresand depending upon their patterns ofavailability, these can improve or hinder accessto the rural population and. the prospects foragricultural development.

6

He also noted that previous research atthe International Food'Policy ResearchInstitute (IFPR) in Washington, D.C. has shownthat investment in hard infrastructure such asirrigation systems and roads, when coupledwith simultaneous investment in soft infra­structure of the type mentioned earlier, hasfacilitated an effective use of irrigation forintensive agricultural development which, inturn, has led to a rapid increase in regionalgrowth.

Wanmali pointed out that infrastructureand people are located in towns and villages.Accessibility to them can vary depending uponwhere any specific settlement is located in awider settlement system. Towns are seen asproviding better access than villages. Thus,locating services properly over a region be­comes a crucial factor in improving theiraccessibility to the farming population. Makingthese available in distant towns is not of muchhelp locally. There are further properties ofaccess which are worth noting. In thegeographic studies on spatial impact of deve­lopment, it is recognized that in any develop­ment effort, there exists decay some distanceaway from the center and towards the peri­phery. The analysis of such center-peripheryrelationships, particularly involving infra­structure and people is, in fact, becoming acenterpiece in all current literature on regionalplanning in the Third World.

The salient findings of Wanmali's study aresummarized below:

1) Input Demand Regression. Regressionmodels were developed to help explain theeffects of agricultural infrastructure anddistance upon the patterns of fertilizer andcredit use.

The dependent variable was measured interms of: (a) quantity of N-P-L fertilizerused, and (b) the amount of creditreceived for farming purposes. Fourindependent variables were included,namely: (a) proportion of cultivated areaunder high yielding varieties (HYV);(b) total cultivated area; (c) index ofagricultural infrastructure use; and,(d) distance.

From the estimated regression coeffi­cients, it was found that:

• the proportion of HYV had strongimpact on the quantity of fertilizerused. The coefficients were positiveand significant. However, thesevariables did not have a signifi­cant relationship with the amount ofcredit received;

• the total cultivated area was a criticalfactor in determining both fertilizerand credit received;

• the index of agricultural infrastructurewas significant only for the use of N­fertilizer and credit demand;

• as expected, an increase in thedistance to credit facilities had anegative effect on the amount ofcredit used.

In order to capture the pure effect ofaccess to rural infrastructure on householddemand for fertilizer, it was assumed thatall households in the study region haveaccess to rural infrastructure similar to themost developed areas. In this case, thestudy indicated that the householddemand for N-fertilizer would increase byalmost 260 percent in the study region.

2) Gross Output Value and Gross RevenueRegression. It was also hypothesized thatagricultural infrastructure will have animpact on the gross output value for thefarm. The independent variables included:total cultivated area, proportion of culti­vated area under HYV, proportion ofcultivated area that is irrigated, quantitiesof N-P-K fertilizer used, and index ofagricultural infrastructure.

The regression coefficients indicate that ofall the independent variables, only theproportion of area that was irrigated had asignificant impact on the gross outputvalue.

One final regression model was runrelating gross revenue per unit area withonly one independent variable - the index

7

The Role of Infrastructure

of agricultural infrastructure. Theestimated regression coefficient waspositive and significant, indicating that ifthe overall use pattern for agro-servicesimproved, gross revenue per unit area forthe farmers would increase.

The aforecited results of the analysis implythe significant role of accessibility in thehousehold use of services. It was alsoseen that the extent of output of, or returnfrom agriculture is influenced by access toa package of infrastructure servicesrelated to agriculture which were definedearlier as "soft infrastructure".

Effect on Rural Development

A study by Ahmed and Hossain (1988)entitled "Infrastructure and Development of theRural Economy of Bangladesh" focuses onrural roads as the centerpiece of infrastructure.To this was added a number of elementslike institutional facilities of markets, educa­tional services, financial services, etc. Thestudy shows immense bearing of rural infra­structure on rural development in the contextof Bangladesh and the developing countries.

The study generates a comprehensivepicture of the effects of development of ruralinfrastructure on product and factor markets,social development, agricultural production,household income, consumption pattern andsavings and investment propensities in ruralhouseholds.

The findings are summarized below:

• Effects on Rural Markets and SocialDevelopment. Development of infra­structure was found to have a positiveeffect on marketing of agriculturalproducts. Households in developedvillages obtain a larger proportion of theirbasic food needs from the market. About34 percent of rice consumed by thesample households in developed villageswere purchased compared to 29 percentfor underdeveloped villages. The signifi­cantly positive relationship of marketing ofpaddy rice with infrastructure developmentwas also confirmed by the regressionanalysis.

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 OCtober 1992

Institutionai credit was observed to coveronly a small fraction of rural households(14%) and credit requirements (25%); non­institutional sources are still the dominantconduits for rural credit. While access toinstitutional credit is relatively biased infavor of large landowning groups,borrowers from landless and smalllandowning classes dominate non­institutional credit. The interest rates innon-institutional markets are about 10times higher than institutional markets.However, with infrastructure deve­lopment, it was found that accessto institutional credit improved almostseven-fold, but mainly for landowninghouseholds. But infrastructure deve­lopment was found to transformnon-institutional supply systems fromone dominated by both moneylenderand"friends/relatives· to a system composedlargely of moneylenders. Growth ofmercantile practices in the credit market ishastened by infrastructure development.The analysis of the utilization of insti­tutional credit reveals a few facets ofdemand for rural credit. Most institutionalcredits are used for supplementary work­ing capital in business and currentinputs in agriculture. The demand forcredit to finance working capital inbusiness is sharply enhanced by infra­structure development.

In terms of social development, infra­structure was not found to have a sig­nificant impact on literacy, which wasaffected more by the size of the land­holding of the household. The deve­lopment of infrastructure, however,had a significant impact on conditionsof health and acceptance of familyplanning practices. Adoption of familyplanning practices in developed areaswas more than twice the rate in under­developed villages.

Effects on Agricultural Production.Infrastructure affects agricultural produc­tion through prices, diffusion of technologyand the use of inputs. A multivariateregression technique was used to isolatethe effect of infrastructure on thesevariables, after taking into account theeffect of other exogenous factors. It was

8

found that the price of the major output,paddy rice, did not differ much across thevillage at different levels of infrastructure,but the price of fertilizer was 14 percentlower and that of labor was 12 percenthigher in villages with developed infra­structure facilities.

The differences in the adoption of the newtechnology and prices were incorporatedin the input demand functions to estimatethe effect on the use of fertilizer and labor.The results suggest little impact on the useof labor, but 92 percent more use offertilizer in the developed villages. Theestimate of the production function sug­gests that the above effects on inputdemand would increase production in thedeveloped villages in the range of 7 to 18percent. In addition, the developed villagesproduced about 24 percent more than theunderdeveloped villages due to more effi­cient use of the inputs. The analysissuggests the positive crop productioneffect of infrastructure in the range of 31 to42 percent.

Effects on Employment. Infrastructureaffects the labor market basically throughchanging the composition of employment.The development of infrastructuregenerates opportunities for non-farmemployment where labor is less arduous,and productivity is higher. Households,which have necessary capital and skills,substitute agricultural labor for non­agricultural, creating more opportunitiesfor wage employment in agriculture for theremaining households. The shift of laborfrom agriculture increases the productivityof labor, while the shift from self­employment to wage employmentincreases the duration of employmentfor the poor, who have been forcedto take up very low productiveself-employment in non-agricultural acti­vities. The increase in the demand forhired labor puts an upward pressure onthe wage rate and hence increases thewage earnings for the same amount oflabor. Thus, the development of infra­structure does not substantially affecttotal employment but the changes inthe composition of employment which it

induces, lead to an increase in laborproductivity and wage rate and thereforetotal wage earnings.

• Effects on Household Income and Poverty.The analysis of income from cropproduction, livestock and fisheries, wages,and business and industries indicates thatinfrastructure development contributestremendously to increase householdincome. Income from crop productionincreased by 24 percent and income fromlivestock and fisheries increased by about78 percent due to infrastructure develop­ment. Wage income almost doubled. Whatis more significant was the distribution ofincome arising from infrastructure develop­ment. Income of landless and smallfarmers increased more from crops,wages, livestock and fisheries, than theincome of large landowners.

The implication of the development of ruralinfrastructure for alleviation of poverty is,by far, the most revealing result. Theconventional view that development ofrural infrastructure is likely to aggravatepoverty was found to be baseless.Contrary to this view, the results indicatesubstantial impact of infrastructure deve­loprnent on rural poverty alleviationthrough increased agricultural and wageincome for landless and small landowninghouseholds. The conventional view suffersfrom the inability to see the linkage effectsof rural infrastructure that indirectlyinfluence income generating activities ofthe poor in the society.

• Effects on Consumption Pattern. Thestudy brought out a number of veryimportant implications of infrastructuredevelopment on household expenditure.This was done through the estimation ofdetailed commodity-wide income con­sumption relations between developedand underdeveloped villages. The mecha­nism of inter-industry linkage andimplication of consumption expenditureswere highlighted. It appears that infra­structure development leads to a reduc­tion in the share of food expenditure and

9

The Role of Infrastructure

increases the share of non-food expen­diture. The average share of food was74.5 percent in the developed householdsand 80.9 percent in the infrastructureunderdeveloped group.

The substantial difference in the marginalpropensities of consumption betweenhouseholds located in developed andunderdeveloped areas imply that infra­structure development induces largerincreases in demand for non-cereal foodand non-food consumer goods andservices. The effects on the overall inter­industry production, employment andincome linkages are bound to be substan­tial. This is likely to be so becauseinfrastructure development enhancesincome from various sources. Thisincome, when spent on a larger proportionof non-cereal food, non-food, and ser­vices, generates additional employ­ment and income in the economyduring the subsequent rounds of acti­vities. Infrastructure development clearlydiminishes the propensity of consumptionof cereals and thereby changes the struc­ture of demand suitable for a diver­sified agriculture.

The study also found that infrastructuredevelopment increases the speed ofdiffusion of agricultural technology, re­duces the cost of marketing and improvesthe operation of the product market. Thepositive influence of these changes impliesa greater degree of supply response ininfrastructure developed areas.

• Effects on Savings-Investment Behavior. Itwas estimated that the average savingsrate was 14 percent, which was slightlyhigher in developed than in under­developed areas. Gross investment perhousehold was about 14 percent larger indeveloped than underdeveloped villages.The effect of infrastructure was directthrough its effect on income and viaincome to savings. Estimates of marginalpropensity of savings varied from 34 to 40percent.

PHiLIPPINE PLANNING JOURNAL Vol. XXIV No.1 October 1992

CONCLUSIONS AND POLICYRECOMMENDATIONS

The review of empirical evidence inthe preceding sections clearly pointed outthat, indeed, infrastructure has a role inspatial development through its capacity toprovide a 'basis' to attract industries.Policy makers should note, however, thatthe relationship between infrastructure andspatial development is not unidirectional;rather, it is reciprocal. Without some basicinfrastructure services, no meaningful de­velopment can take place. On the otherhand, the availability of infrastructurealone does not guarantee development; aregion or spatial planning unit must havethe potential for development and thesupply of infrastructure should be in res­ponse to effective demand for it. In otherwords, unless the lack of infrastructure is asignificant obstacle, the remedy of thedeficiency will not bring about the desiredchanges.

Infrastructure is a "bundle of services"and, as such, policies should stresscomplimentarity in infrastructure projectpackaging. Empirical analysis reveals thatthe supply of infrastructure has to be on acollective rather than individual basis:availability of water, power, or roads alonewill not make a dent in stimulating rural,urban, and regional development. Theremust be a "big push" that attempts to providea combination of services and at the sametime maintain the tenuous balance betweeninfrastructure needs and development.

The testing of hypothesis on the sizeand characteristics of urban areas revealsthat physical infrastructure (such as roads,electricity, etc.) is positively related to thesize of urban areas. Physical infrastructureis an important factor in supporting productiveactivities directly and, therefore, the largeurban areas that have physical infrastructureadvantages maintain a favorable climate forattracting industries. The policy implicationhere is that in order to promote widespreaddevelopment; small and intermediate citiesthat are potential centers for growth anddevelopment must be strengthened byproviding the right package of infrastructureinvestments.

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Econometric studies on the impact ofinfrastructure and financial institutions onagricultural output and investment revealthat government expenditure on physicalinfrastructure influences the private productionand investment decisions in agriculture and,therefore, are considered essential ingredientsof increased agricultural productivity. Govern­ment investments (both physical and human)can directly increase agricultural output byshifting the production frontier as in the case ofirrigation. Government investment also in­creases the rate of return to private agriculturalinvestment and, thereby, leads to greaterinvestment and output. Policy makers must,therefore, recognize that by increasing theviability and profitability of financial inter­mediaries, infrastructure can facilitate theemergence and growth of financial institutionsthat increase access to working and invest­ment capital or reduce the costs of borrowingfor longer-term investment.

Other econometric studies have demon­strated the important role of access in thehousehold use of services. It was also seenthat the extent of, or return from agriculture isinfluenced by access to a package ofinfrastructure services related to agriculture.

The study on infrastructure and rural deve­lopment has established that infrastructuredevelopment (especially roads) has the follow­ing favorable effects: (a) positive effect onmarketing agricultural products; (b) improvedaccess to institutional credit; (c) positive impacton agricultural production; and, (d) reduction inthe share of food expenditures and increase inthe share of non-food expenditures which havesubstantial effect on the overall inter-industryproduction, employment, and income linkages,i.e., infrastructure development enhancesincome from various sources and this income,when spent in larger proportions on non-cereal,non-food items and services, will generateadditional employment and income in theeconomy during the subsequent rounds ofactivities.

Indeed, physical, social, and institutionalinfrastructure are indispensable instruments inurban, rural-agricultural, and regional develop­ment, and easing infrastructure bottlenecks willenhance rural-urban, as well as, farm and non­farm linkages.

REFERENCES

Ahmed, Raissuddin and Hossain Mahabub(1988) Infrastructure and theDevelopment of the Rural Economy ofBangladesh. Washington, DC, USA:International Food Policy ResearchInstitute (IFPRI).

Bahrgava,. Ravindra (1966) "BalancedThought and Economic Growth" in Econo­mic Growth and Cultural Change. Vol. 14,NO.2.

Binswager, Hans et al. (1989) "How Infra­structure and Financial Institutions AffectAgricultural Outputs and Investment",Working Paper No. 163, Washington, DC,USA: The World Bank.

Dyckman, John and J. Irvine (1973). "UsingInvestment Criteria to Guide Urbanization."Paper presented at the Ninth Anniversaryof the Brazilian Bank, Rio de Janeiro,August 1973.

Err.manuel, E. (1973) Issues in RegionalPolicies, Paris: Organization of EconomicCooperation and Development (OECD).

Higgi:'ls, Benjamin (1959) Economic Develop­ment. Norton, New York, New York, USA.

Hirschman, Albert (1979) The Strategy ofEconomic Development. New Haven. CT.USA: Yale University Press.

Johnson, Edgar (1965) Market Towns andSpatial Development. New Delhi: NationalCouncil of Applied Economic Research.

Lewis, Arthur (1955) The Theory of EconomicGrowth. NeVIl York, New York, USA: Allenand Unwin.

Mountjoy, Alan (1967) Industrialization andUnderdeveloped Countries. New Delhi:Applied Economic Research.

Richardson, Harry (1972) "Optimality in CitySize, System of Cities and Urban Policy:The Skeptics View" in Urban Studies.Volume 9, February 1972.

11

The Role of Infrastructure

Rosentein-Rodan, Paul (1969) "How toIndustrialize an Underdeveloped Area" inRegional Economic Planning Techniquesof Analysis for Less Developed Areas.Edited by Walter Isard and J. Cumberland.New York: Praeger.

Salama, Ovida (1974) Planning and HumanValues. Cambridge, Massachusetts, USA:Apt and Associates.

Stanford Research Institute (1968) Costs ofUrban Infrastructure for Industry asRelated to City Size in DevelopingCountries. Menlo Park, CA, USA: StanfordResearch Institute.

Steele, David (1971) "Regional Planning andInfrastructure Investment Based onExperiences from TUrkey" in Urban Studies.VolumeS.

Wanmali, Sudhir (1988) Provision and Use ofRural Infrastructure in the Growth of theRegional Economy. Washington, DC,USA: International Food Policy ResearchInstitute.

Wharton, Clifton (1967) "The Infrastructure forAgricultural Growth" in AgriculturalDevelopment and Economic Growth.Edited by H.M. Southworth and B.Johnson. Cornell University Press,Ithaca, New York, USA.

Wingo, London (1969) "Latin AmericanUrbanization: Plan or Process?" inShaping an Urbanization Future. Edited byBemard Frieden and W. Nash. Cambridge,MA, USA: The MIT Press.

Wubneh, Mulatu (1976) "Spatial Dynamics andInfrastructure Investment: An Analysis ofthe Effects of Infrastructure on theDevelopment of Urban Areas". DoctoralThesis, Florida State University.

Youngson, A.J. (1967) Overhead Capital: AStudy in Development Economics,Edinburgh University Press.

THE URBAN LAND NEXUS THEORY AND THE SPATIAL STRUCTURINGOF METROPOLITAN MANILA1

Ernesto M. Serote

INTRODUCTION

The aim of this paper is to tryout aWestern model on a Third World material,specifically, to apply the urban land nexustheory in the analysis of urban development inthe Philippines. The implicit assumption is thatalthough Western and Third World societiesare different, there remain in the lattercontinuitiesof Western cultural elementsowingto past colonial experience and present neo­colonial relationships. Due to this contactbetween colonized and colonizing cultures inThird World societies, the latter societies arenecessarilymore complex than the former. Tounderstand them more fully therefore requiresthe use of more complicated models than whatare currentlyavailable in the literature.

The basic assumption of this paper is thatexisting theories of urban development,particularlythose which are based on Westernsocieties, can only partly explain the urbandevelopmentprocess in Third World countries.The value of this study lies in its being able toidentify not only those phenomena in ThirdWorld urban development which Westernmodelscan apprehendbut also those that theycannot explain. The latter are more importantin that they serve as material for the ela­borationof a new model that is more evocativeof, and responsive to the historical specifitiesand cultural diversitiesof Third World societies.The formulation of a new model reflective ofrealities in Third World urban development isan ongoingproject of this writer.

The urban land nexus theory was pickedout from a field of several others as theconceptual and analytical framework for thisstudy. Attributed to Allen J. Scott and his

associate Choukrey T. Roweis (Dear andScott, eds. 1981, 123-157), the urban landnexus theory belongs to the body of theoriesof, or rather, to a peculiar perspective intheorizing on urban development associatedwith the historical materialists. The choice ofScott's urban land nexus theory is by nomeans an indication of its qualitative standingamong other theories. It is simply due to theexplicit spatial focus of this theory whichstrongly appeals to a land use planner like thewriter.

The paper contains five major parts. Itstarts with an exposition of the theory itself.The second and third parts report on theapplication of the theory in analyzing thespatial structuring of Metropolitan Manila.These are followed by a critique of the theoryand evaluation of its applicability in theparticular case of Metropolitan Manila. Thepaper concludes with a beginning: the start ofexplorations into the need for, and the possibleconfiguration of a new model that will aid inunderstanding fully the urban developmentprocesses in Third World societies. In amanner of speaking, the whole exerciserepresents that stage in a fishing expeditionwhere one is just putting out to sea rather thancomingashore with the catch.

THE URBAN LAND NEXUS THEORY

The urban land use nexus theory is adescriptive model that seeks to explain thephenomenon of contemporary urban landdevelopment which is characterized by twocontrasting processes: the process ofspontaneous urbanization and the process ofdeliberate urban intervention (Roweis and

1 This article is an abridged version of the author's dissertation which he sUbm~tted to the Unive':Sity of SU:>se~,England in partial fulfillment of the requirements for the degree of Master of Arts In Urban and Regional StudieS In1988.

12

Scott in Dear and Scott, eds. 1981; Scott,1980). It is abstract phenomenon that ma­terializes in the form of land with structural andinfrastructural artifacts built over it by humanlabor and used in various ways. It is, moreover,a phenomenon that is socially produced in acomplex dynamic that is reducible to twoprincipal phases: 1) private firms and house­holds which develop, exchange, and utilizeurban land in accordance with their own privatemotives and benefit-cost calculations, and 2)the State which provides elaborate networks ofmaterial infrastructures that underpin the gene­ral processes of production and reproduction inaccordance with political calculations andsocial costs and benefits. The combined out­come of the activities and interactions betweenthese two phases in the urban land develop­ment process is the urban land nexus as a'finished used value' or a 'composite system ofdifferentiallocational advantages' (Scott, 1980,136).

The urban land nexus then, is the com­bined effect of the aggregate actions of manyindividual firms and households and thepolitical intervention of the State. Historicallyand analytically, according to Scott, privateactions take precedence over State interven­tion. But every intervention measure taken bythe State creates new dislocations and invitesa new round of private actions necessary toadjust to the changed configuration of differen­tial locational advantages which, in turn,create a new set of dysfunctions that justifyState intervention, and so on.

Analytically, the urban land nexus consistsof three elements or 'moments' as Scott callsthem, namely, the private component, the pub­lic component, and the private-public interface.

1) The private component. In a capitalistsociety, the structuring of the urban landnexus can be explained in terms of theconstant search for profits by capital aswell as the insistent desire of labor to livein environments that enhance reproductionand sustain the exchange value of laborpower. This requires, on one hand, effi­cient, fully serviced production space andon the other hand, a secure residentialspace for the reproduction of labor power.These requirements are often in conflictwith each other. In the process of

13

Urban Land Nexus Theory

satisfying these requirements through theappropriation, exchange, and utilization ofurban lands, certain irrationalities and dis­locations inevitably rise, despite claims tothe contrary by neo-classical equilibriumtheorists.

Neoclassical equilibrium theorists claimthat the urban land market is an autore­gulating mechanism, an efficient allocatorof land units among competing users, amaximizer of collective benefits, and arational sorter and arranger of land uses.Scott takes exception to these assertions.He observes that although land is private­ly appropriated, exchanged, and utilized, itis not produced nor consumed in discretepackages like any other consumer item.This means that the intrinsic use value ofurban land, namely, the differential loca­tional advantages that it has acquired,cannot be attributed to individual capi­talists alone but to State or collectiveaction as well (Roweis and Scott, in Dearand Scott, eds. 1981,142-143). Moreover,although the private component dominatesthe urban land development process, theoutcomes of its actions are beyond its fullcontrol. They are 'replete with locationalinter-dependencies that consistently evadethe integrative logic of the market' (Scott,1980, 139). The paradox of privatelydominated urban land development is thatin the process of private appropria­tion, exchange, and utilization of urbanland to satisfy the basic foundations ofviable capitalism -- namely, an efficientproduction space and a pleasant con­sumption space - those very foundationstend to be undermined. Scott concludesthat it is only with the intervention of theState that the capitalist city is held backfrom chaos and disarray.

2) The public component. The rationale forState intervention in the urban land nexusderives from the 'self-destructive logic ofcapitalist society as it mediated throughurban space' (Scott, 1980, 170). Throughthe instruments of urban planning such asland use zoning, building and subdivisionregulations, health and environmentallaws, new towns development, urban re­newal, public transport and utilities provi-

PHILIPPINEPLANNINGJOURNAL Vol. XXIV No. 1 October 1992

sion, and the like, the State seeks tomitigate the deleterious social effects andfailures arising from the contradictorybehavior of private firms and householdsin urban space. By these instruments, theState also seeks to steer urban societytowards collectively rational choices con­sistent with the capitalist social and pro­l2em relations.

The last phrase underscored is importantin that it defines the limitations and con­straints to what urban planning in acapitalist society can really accomplish.According to Scott, the State does nothave the mandate to reform fundamentalsocial and property relations in capitalistsociety within which it is embedded. In likemanner, urban planning, which is a mereinstrument of the State, can effect urbanchange and reforrTt only to the degree thatit serves the very purpose of capitalismand is able to break the inner contradic­tions of capitalist urbanization without,however, changing the social formationsthat cause those contradictions. By this,Scott rejects the idealist view of the Stateas some kind of superman who acts as anindefatigable watchman and keeper of thepublic interest and who can be relied uponat all times to set things right wheneverbreakdowns or failures occur. Scott pointsout the reality in practice that whereascollective intervention in the urban landnexus is preceded by some specific dis­sonance, breakdown or market failure, notall dissonance, breakdown or market fai­lure is automatically followed by collectiveinformation. Scott asserts that the Statewill intervene only when the irrationalitiesand dislocations of the urban land nexusbegin to undermine the viability of capi­talist society as a whole, and, in particular,the functional effectiveness of commodityproduction and the reproduction of laborpower in urban space (Scott, 1980; 171).

Herein lies the paradox of urban planningas a mode of State intervention in theurban land nexus. In its desire to resolveurban problems, the State seeks policiesthat promise maximum effectiveness butat the same time ensure minimum disrup­tion of existing social and property rela­tions. These policies are, of necessity,

14

reactive and merely palliative in nature,treating only the symptoms and neglectingthe basic causes of urban predicaments. Itis preciselybecause of these limitationsonits power that the State often becomespart of the problem rather than a solution.

3) The I2rivate-l2ublic interface. The dynamicsof the contradictory yet mutually inter­dependent imperatives of the private andpublic componentsare what Scott calls the'double dialectic' of the urban land nexus.It pushes the urban land nexus forward inan evolutionary spiral that manifests itselfin the changing form and character of theurban space. Scott describes the private­public dialectic as it moves through timethus:

The urban land nexus is...reproducedthrough time in a complex process involv­ing successions of mutually dependent,but eternally problematical, private andpublic decisions. Private action gives riseto a persistent tendency to dislocation andconflict in the urban land nexus. The Stateunceasingly attempts to rectify this situa­tion while itself producing further turbu­lence in the urban land nexus by shiftingaround the whole system of differentiallocational advantages (and concomitantlyaltering the expectations and rewards thatdifferent classes, strata and social frac­tions seek to procure from urban life). Thisthen sparks off further spontaneous read­justments in the configuration of the urbanspace (Scott, 1980, 173).

STRUCTURING OF THE PRODUCTIONSPACE

Using the urban land nexus theory as theanalytical framework, we seek to explain thespatial structuring of Metropolitan Manila. Thefollowingquestions will underlie the discussion:

1) What social classes are involved inurban land development in the Philip­pines? What problems arise out ofthe activities and land use decisionsof these different social classes?

2) How does the State react to the dys­functions and dislocationsarising from

decisions by the different social class­es in the urban land nexus? What arethe constraints to the power of theState in dealing with land-contingenturban problems? What problems andissues are likewise created by Stateintervention in the urban land deve­lopment process?

Analysis of the production space focuseson the pattern of distribution of manufacturing,office and commercial establishments over themetropolitan area. The concentration of manu­facturing industries in the Manila metropolitanarea did not happen until after the SecondWorld War, although the advantages of Manilaas a preferred industrial location over otherurban centers of the country had been in placesince the Spanish regime. As the primate cityof the Philippines, Manila shares with itscounterparts in the Southeast Asian region thevery conditions that contribute to primacy.Reed (1972) cites five of these characteristics,namely: 1) Their natural locational advantageof tidewater sites where transportation systemsserving extensive agricultural hinterlands couldbe readily linked to international maritime net­works; 2) Their preeminent role as administra­tive centers within the framework of their res­pective colonial powers; 3) The great diversityof their economic functions, housing the headoffices of banks, shipping firms, insurancecompanies and other commercial agencies ofWestern countries as well as serving as ware­housing and processing· centers for goodsshipped to and from Europe; 4) Their markedethnic diversity; and, 5) Their role as the fore­most beacons of Western education andculture in their respective hinterlands.

Post-independence industrial developmentis usually divided into three phases (Pernia etat, 1983): the import-substitution phase (1948­1960), the transition phase or period of decon­trol (1961-1968), and the regional awarenessperiod (1970s onwards). The spatial impact ofthese three phases can be summarized asfollows: a high concentration of industrial activi­ty in the National Capital Region (NCR) duringthe import-substitution phase; a slackening ofindustrial activity in the NCR with a corres­ponding expansion in the metropolitan peri­phery during the transition phase; and anindustrial decentralization during the regionalawareness period.

15

Urban Land Nexus Theory

The concentration of manufacturing in theNCR during the first phase can be attributed tothe type of industries that were developed andthe built-in locational advantage of Manila. Thevery rationale behind import substitution is toproduce local goods of comparable quality withimported ones. Naturally, this calls for theadoption of capital-intensive technology andhence, the importation of capital goods andraw materials and the use of skilled manpower.These requirements favor location in Manilabecause of the presence of the internationalport and allied services like financial andinsurance firms, easy access to the nationalgovernment bureaucracy, and the availability ofhigh-level technical manpower.

The transition phase saw a spill over ofmanufacturing to the metropolitan periphery(Central Luzon to the north and SouthernTagalog to the south). The a priori explanationfor this trend was that the cost of land andbusiness taxes in the NCR were escalating,and that the diseconomies of central citylocation, like general deterioration in the envi­ronment. were starting to be felt. A possibleexplanation could also be the technologicalchanges in the manufacturing process whichseek low-density horizontal lay-outs andhence, require more land expansion (Scott1980, Chapter 6). However, no studies alongthis line have yet been undertaken.

During the 1970s onwards the share ofactivity of the Frontier Regi()ns, such asnorthern Mindanao, (Figure 1) has grown.There is also a corresponding slowing down ofthis activity in the NCR On the whole, MetroManila still holds the lead in over-all industrialactivity, but this does not tell us anything abouthow the production space is structuredwithin the metropolis. We shall now look intothe pattern of distribution of industry within themetropolitan area.

1) Industrial· land use in Metropolitan Manila.Areas of high industrial concentrationinclude: the port area and along the PasigRiver in the city of Manila; at the con­fluence of major radial and orbital high­ways in the cities of Caloocan and Quezonand the towns of Malabon and Valenzuela;along the main radial road to the south inthe towns of Makati, Paraiiaque, Taguig,and Muntinlupa; and along both sides of

PHILIPPINE PLANNING JOURNAL Vol. XXIV No. 1 October 1992

•1. Doc:ot2. CqaYaD3. CenCI'll Luzoo4. MecroM.aniIa4-A. Soutbenl TIP10IS. IIicoI6. WCIlCnl Viayaa7. CeaCl'll Vilaya8. Eu&cm Viayaa9. WCIlCnl WiDdanIO

10. Northcm AlindanlO11. Southem Mincbnao12. CenuaJ WiDd.anao

, t l\JtiIII ,.

Q:J••~.

SCALE 1:2,000,000

LEGEND:

•CENTRAL INDUSTRIAL REGIONNCR ,CENTRAL LUZlJN,SOUTHERN TAGALOG

llll888lI TRADIT IONAL AGRICUTURAL REGION_ ILOCOS, SICOL, VISAYAS

~ FRONTIER REGION~ eAGAYAN VALLEY, MINDANAO

Figure 1

THE 13 ADMINISTRATIVE REGIONS OF THE PHILIPPINESAND ITS BROAD INDUSTRIAL REGIONS

(Source: Pernia, et.a/. 1983)

16

the Pasig River and its major tributary, theMarikina River, occupying portions of thetowns of Pasig, Mandaluyong, andMarikina (Figure 2).

According to Luna's study (PhilippineGeographical Journal Vol.8 Nos.3 and 4),most of the manufacturing firms that wereestablished prior to 1945 and between1945 and 1955 were located in the metro­politan core city of Manila. Within the cityof Manila, the locational pattern observedby Luna showed a concentration of large(500 or more workers) and medium-size(50-499 workers) industries near the portarea and along the Pasig River. Thesefactories were for the processing of bulkyraw materials such as steel, concreteproducts, lumber, plywood and veneerproducts, as well as for the assembly ofimported parts like motor vehicles andthose using imported heavy machinery likeprinting presses. Another pattern that Lunaobserved was the clustering of small­size firms in or around the traditionalcommercial district of Quiapo. These firms,like clothing and apparel manufacturing,jewelry and furniture making, shoe fac­tories and other craft leather, catered tothe local market. According to Luna, thesefirms were attached to these sites in theCBO because of the almost unlimitedavailability of cheap labor from the nearbyslums of Tondo.

The suburban drift of manufacturing, Lunacontinues, took place from 1955 onwards.This he attributes to four factors whichhave made Manila an increasingly unde­sirable location: 1) inadequate spacefor expansion; 2) traffic congestion; 3)increasing land and property values andtaxes; and, 4) restricted operations ofnoxious industries (Luna, 1964, 64-65).Luna also took cognizance of the emer­gence at about the same period of theplanned industrial estates developed bythe large estate developers (See the nextsection for a detailed description of theactivities of these developers.).

One or more significant finding of Luna isthat large firms tended to seek suburbanlocations more than the small ones did. Heattributes this to the fact that large firms

17

Urban Land Nexus Theory

can afford to relocate their manufacturingplants in the more spacious suburbs butretain their sales and display offices in theCBO. Small firms do not have the capa­bility for such spatial division of labor.

It is clear from the observed clusteringpattern that the locational decision of largefirms was influenced by the availability offacilities for bulk transport and access tothe ports of Manila. Firms locating by theriverside benefit from cheap transport bybarge up and down the Pasig River with itsmouth right on the north harbor (for inter­island transport) and the south harbor (forocean-going voyage). An additional fringebenefit of riverfront location is the free useof cooling water from the river which alsoreceives their industrial wastes. Firms thatdo not enjoy the 'luxury' of riverside loca­tion, such as those in private industrialestates, nevertheless have easy access tothe ports via high-capacity arterial roadsand the Philippine National Railways thatconverge in the ports of Manila.

This locational pattern observed from asmall-scale view is, however, deceptive.The truth is that there are hundreds ofother industries scattered all over theplace, many of them interspersed withresidential areas (Figure 3). This will bedescribed in conjunction with the con­sumption space in subsequent sections.

2) Office and commercial land uses. Thetertiary or service sector of the urbaneconomy is a major user of urban land andtakes up a sizeable portion of the pro­duction space. Compared to industrial landuse, it is more land-efficient because it iscapable of high-intensity utilization. Thehigh-rise buildings that pierce MetroManila's skyline are invariably occupied byoffices, hotels, banks, and corporate head­quarters of large businesses. Retail estab­lishments are also an important compo­nent of the tertiary sector of the productionspace.

The pattern of concentration of commer­cial and service activities in Metro Manilatakes two forms: nodal and linear (Figure4). It may be recalled in another article(Serote, 1991) that each town established

PHILIPPINE PLANNING JOURNAL Vol. XXIV No. 1 October 1992

MANUFACTURING ESTABLISHMENTS

GREATER MANILA 1960

SCALE ,. K.LOIKTERSo • • ,~,! ! ! iI!!!!!!!!!!I

Esr:.eLlSHED

0 b£'OtitE '900

0 '900 -'93S

A I". -I~""

! + 1942 _194'

-L • ,... -tUO

Figure 2

A LARGE-8CALE VIEW REVEALS HUNDREDS OF INDUSTRIESDISPERSED AU OVERTHEMETROPOUTAN AREA

(Source: TW. Luna, Jr.: PGJ Vol. 8 Nos. 3 & 4, 1964)

18

Utban Land Nexus Theory

LAGUNA DE BAY

LEGEND:• EXISTING PRI!OOMINATELY INDUSTRIAL AREAS

lID :~:A~~~ INDUSTRIAL AREAS ASSUMED

• LOCATION OF INDuSTRies INTERVrEWI'O

Ii FIRMS WITH TREATMENT P~N

® RIVER SAMP~INe STATION

... NWSA WATER PUMP STATION

t!l POWER STATION

~ 9 ' 1 , 1ClI,r , 'MIUS

o Io

MANILA BAY

Figure3

MAJORCONCENTRAnON OF INDUSTRIES IN METROPOLITAN MANILA

(Source: Philippine Planning Journal Vol. " No.2)

19

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

LAGUNA DE BAY

5 •,, .2

_ COIl\lERClAL MUS ..,II

_ nT/....no C_RCIAL ARIAI 2000

_ IWOR ARnRW. __ IXISTN....70__ =:'~=~"'_O OR

@ ..AJOR II'METS • SHOPPING C[NT'EAS

o I 2o

LEGEND

MAN/LA BAY

Figure 4

LOCATIONAL PATTERN OF COMMERCIAL AND SERVICE ACTIVITIESIN METROPOLITAN MANILA

(Sault!: Philippine Planning Journal Vol. II No.2)

20

by the Spaniards had an urban center(poblacion) and rural hinterlands (barrios).The poblacion serves, among others, asthe service center of the town. Becauseeach component town and city of Metro­politan Manila started as a Spanish town ­except Quezon City, which was created asthe new national capital in 1939 - eachone has a poblacion that still serves itsoriginal function as the central businessdistrict (CBO) for its hinterlands, even afterthe incorporation of Metro Manila in 1975.

The traditional regional CBO is the Quiapodistrict in the city of Manila. Now there arealternative CBOs, which were establishedby the large real estate developers, name­ly: the Araneta Center in Cubao, QuezonCity; Greenhills in San Juan; and theMakati Commercial Complex. A fourthcenter north of Manila, which is not deve­loped by any single developer, is theMonumento Area in Caloocan City. Allthese centers lie along the orbital roadEpifanio delos Santos Avenue or EOSA.Because of the shortage of parking spacein the Quiapo CBO, this traditional centerhas lost much of its patronage among car­owning shoppers.

The other pattern exhibited by the servicesector is linear, following the main tho­roughfares. Commercial uses can locatealong high-capacity, high-speed majorroads in Metro Manila where the mostcommon mode of mass transit is thejeepney. The jeepney is a product ofFilipino ingenuity. Small and highly ma­neuverable, this unique mode of urbantransport can be stopped at almost anypoint along the road making every streetfrontage equally accessible. At the sametime, jeepneys render Metro Manila'straffic an utter chaos.

The service sector is also highly dis­persed. Many tertiary activities are ambu­lant and mobile or otherwise interspersedwith residential areas. These are the acti­vities, which earlier research had calledthe informal sector or perhaps they formpart of what Santos calls the lower circuitof the urban economy (Santos, 1979).These activities may actually form part of alarger economic system, 'rent capitalism:

21

Urban Land Nexus Theory

the existence of which in the urban econo­my was detected by Fegan (1981). Thispoint will be picked up by another section.

3. Private capitalists. So far we have seenthe spatial and location patterns as evi­dences of the decisions and actions ofcapitalists. But who are these capitalists?

It appears from the spatial pattern ofindustrial location that there are two typesof capitalists in operation in the Philip­pines. One type consists of the largeindustrialists who also own the largefinancial, commercial and service estab­lishments. They are very small in number.Ooherty (n.d.) has identified only 89 indi­viduals and families who own or controlthe 47 groups that in turn control all largebusinesses in the country. As investors,they are said to be conservative and arewell represented in Congress so that theyare able to direct the course of Philippineindustrialization policy toward import-subs­titution and a well-protected market. Hidingunder the banner of economic nationalism,they have continually thwarted attempts bycontending groups to adopt an open mar­ket policy and export-oriented strategy(Snow, 1983; Estanislao, 1986; Villegas,1986). Their claim to nationalism, howev­er, is belied by the fact that they arenothing more than 'assemblers and re­packers' of American and Europeanbrands (Constantino and Constantino,1978, 230). An import-substitution stra­tegy, as earlier discussed, favored the useof imported capital equipment and rawmaterials. It is easy to see therefore, thatthese large industries tended to locate inareas accessible to the ports.

The other type of capitalists are membersof the urban middle class. These are thesalaried bureaucrats and self-employedprofessionals who also run small busi­nesses and industries. These small capi­talists do not really have much choiceabout where to locate their businesses.Because land rent can eat up a conside­rable portion of their capital investments,they save on land rent by using their ownresidential premises as production spaceas well. These are often unreported andundetected and therefore not subject to

PHILIPPINE PLANNING JOURNAL Vol. XXIV No.1 October 1992

regulation by the State. This writer hasstrong suspicions that these capitalists,who are normally classified under the nowwell-worn term 'informal sector: are in factpart of 'rent capitalism'.

4. Private capital and the State. We haveseen that private capital responds to theState industrialization policy of import­substitution by concentrating their invest­ments in Metro Manila. The location offirms within the metropolitan area, how­ever, was not subject to governmentregulation prior to the 1970s. Consequent­ly, private firms sought sites according totheir own perception of what makes forprofitable location. Riverside locationsturned out to be the early favorite becauseof the opportunities the river offered forcheap bulk transport. free cooling water,and as receiver of industrial wastes. Themost serious problem that riverside loca­tion has brought about is heavy pollutionof the Pasig River and its tributaries,including the inland lake, Laguna de Bay.The extent of pollution of the river isdescribed by Uichanco (1971, 84) thus:

Recent surveys have shown thatPasig River is a dead or dyingriver... The surface of its murkywater glistens with oil spills dis­charged by boats and industrialplants. The river is constantlycharged with a rich load oforganic and chemical pollutantsfrom dwellings and hundreds offactories flanking either bank.The effect of this mess hasbegun to be felt not only inGreater Manila area but alsofarther up, on Laguna de Bay...

To this problem the State has respondedwith the creation of the National Water andAir Pollution Control Commission in the1960s to monitor pollution levels andinstitute corrective measures. The Com­mission was staffed with highly competenttechnicians and scientists but its vastcoverage and limited budget had pre­vented it from performing its task effec­tively (Uichanco, 1971, 88). In 1973, aPresidential directive banning altogetherthe establishment of new industries or

22

expansion of existing ones within a radiusof 50 kilometers from the Manila City Hallcame into effect. The impact of this direc­tive on pollution levels or on the location ofindustries has not yet been empiricallyassessed.

Another locational pattern of the produc­tion space we noted is associated with theprivate large-estate developments. Themaster plans of these developers includedthe provision of industrial estates or thecreation of huge commercial complexes.The location of these industrial estatesand commercial centers is invariably alongmajor thoroughfares. To this extent it canbe said that even large-scale developersrespond to initial infrastructure invest­ments by the government. The most per­ceptible problem arising from this private­public interface is the traffic congestion inMetro Manila's streets. With river transportdiminishing in importance, industrial cargonow has to be conveyed by truck betweenthe industrial estates and the ports, there­by clogging up the streets with heavy utilityvehicles. Furthermore, the huge commer­cial complexes attract tremendous vo­lumes of traffic every day. Again, the Stateresponds to this problem by a combinationof experimental traffic managementschemes such as truck bans on certainhours of the day and construction oftransport infrastructures like overpass­underpass complexes and the newelevated light rail transit. But the traffic ofMetro Manila remains the most talked­about and intractable problem.

Not the least among the causes of MetroManila's knotty traffic problem are the ac­tivities of the unregulated self-provisioninghouseholds. Self-provisioning householdstend to undertake production activitieswithin residential areas. Often these pro­duction activities spill over into the side­walks and street curbs obstructing traffic.For example, small-scale garages underor in front of residential houses are oftenfound appropriating their street frontage astheir workshops. Also, the linear pattern ofcommercial concentration is largely theeffect of self-provisioning. Householdsfronting major streets usually convert partof their home lots into commercial or

industrial space ostensibly to save on theland rent they would otherwise pay in theestablished industrial estates of commer­cial centers. They do not have to worryabout access by their clients because thejeepney, which is itself a bane to trafficenforcers, will convey them there withoutfail.

There are many more examples of self­provisioning activities with varying impactson urban land utilization. But it is in thisaspect of private action where no Stateintervention seems to occur or where itdoes, it is hardly appropriate or adequate.

Thus, we have seen that public sectorinitiates development especially in thematter of providing infrastructures, utilities,and services. The State is also seen asthe initiator of industrial policy but onesector of private capital has had a stronghand in the formulation and perpetuationof such policy. There is every reason tobelieve that under new circumstances,other sectors would be in a position toredirect policy their own way. The policyhaving been laid, private capital respondsto it, but the spatial impact of this private­public interface can better be appreciatedat the regional rather than the urban scale.

Regarding regulation of industrial locationwithin the urban area, however, the Statehas not been successful because of toomuch centralization of political power.Local govemments, under whose jurisdic­tion urban planning is supposed to lie, aregenerallypowerless.

STRUCTURING OF THECONSUMPTION SPACE

In this section, only one componentof theconsumption space will be discussed- hous­ing. Residential use is the largest single cate­gory of land use embracingperhaps 80 percentof the total built-up area of the metropolis(Figure5).

Much of the city of Manila was developedby pioneering American developers. They alsostarted the trend toward suburban expansion.The demand for suburban residences initially

23

Urban Land Nexus Theory

came from the elite who were beginning to findtheir Manila quarters too crowded. In the early1930s, the first high-income subdivision in thesuburbs was built in an area called 'NewManila,' formerly part of San Juan town butnow part of Quezon City. The location wasquite a distance from the urban edge at thetime. In this enclave far removed from thecrowding and noise of the central city, thepoliticians, business leaders, landed elite fromthe provinces, and the foreigners then residingin Manilatook residencein eleganceand style.

The post-war decades saw a massiveinflux of new migrants from the provinces.Reconstruction of Manila necessarily involvedresubdividing the original lots into smaller par­cels to accommodate the new arrivals. Thishas given added impetusto suburbanization.

The provision of housing is literallyeverybody's business, what with about 85percent of all households nationwide providingfor their own housing (NEDA, 1986, 242). InMetropolitan Manila. the proportion of self­provisioning households may be smaller thanthe national figure because it is here thatreal estate developers of all types, sizes andmotivations operateand proliferate.

We now turn our attention to the activitiesof these developers. For want of a moreappropriate system of categorization we shalluse the formal-informal dichotomy, looselydefined, to describe the activities of privateland developersin Metro Manila.

1. Formal sector developers. The formalsector accounts for a larger land area butsmaller output because of the applicationof planning standards, subdivision andbuilding regulations, and observance ofzoning and environmental standards.

Belonging to this sector are the big land­owners that converted into real estatedevelopment corporations, an assortmentof speCUlative builders and realtors, andprivate institutions.

These large developers sold serviced lot&but retained control and enforcementpowers over building standards throughdeed restrictions and covenants. They

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

allocated commercial areas and leasedthem to big establishments which in turnbuilt their own structures according tostipulated design and height standards.These commercial areas have now be­come the alternative regional CBDs(discussed in the previous section). Theyalso provided industrial estates which theyleased to firms that built their own plants.The type of industries that were allowed tolocate in these private industrial estateswas restricted to non-pollutive ones.Recreational facilities for the well-off likegolf courses, polo fields, and race coursescomplemented the elitist character of theirland development.

Makati: An Illustration

Speculative developers and real estatebrokers are another segment·of the forma!development sector that have emergedrecently. Often in combination with banks,insurance firms and commercial housesdiversifying their investment portfolios,these developers purchase and consoli­date vacant lots in inner-city areas, rebuildcommercial buildings in city centers, andacquire and subdivide greenfield sites.Their target clientele are the middle tolower-middle income families. Residentialdevelopments they undertake are varied.One type involves development of green­field sites wherein the buyers build theirown houses, subject to government

As an illustrative example, we take a snapshot of the richest, most modern town in the countrytoday which was developed by the Zobel-Ayala family, the town of Makati. This Spanishindustrialist family had the foresight to buy up large areas of swampy wasteland by the southernborder of Manila long before the pressure of suburban expansion was felt. When the right timecame, they transformed the area into a modern town that is the pride of the country today.

The Ayalas first subdivided the low-lying areas and sold them to low income families. Theyreserved the higher ground with an area of more than 800 hectares for building the new city. The25-year master plan was prepared and strictly implemented. The primary purpose of the Makatidevelopment was to attract affluent families, foreign capitalists, business tycoons. and industrialtitans to reside there.

In 1948, the groundwork was laid for the most stylish subdivision in the country they namedForbes Park. after a former American Governor-General of the Philippines. Initial response wasreportedly cold and lots had to be sold at a loss. But the Ayala planners persisted in their belief thatif they could only attract some influential and wealthy families, the rest would follow in no time.True enough, after Forbes Park lots had been sold out, droves of the fashionable rich wanted toreside in Makati. To accommodate their demand, eight more exclusive subdivisions had to beopened in quick succession within a period of ten years or so.

To lure the business community further, the Makati developers allocated a strip along the mainthoroughfare, Ayala Avenue, for the construction of office tower blocks. The Ayala Corporationsbuilt a sample high-rise structure and soon large corporations were trying to outdo one another inputting up their own tower blocks. Then the developers opened a large commercial complex and anindustrial estate for non-pollutive industries. Because the residential lots have all been sold out andthe demand for residential space continues to rise, some commercial areas have been convertedinto high rise condominiems. Now, to businessmen, foreign legations, and just about anyone whocan afford the cost, Makati is the place to be.

24

regulations. Another type is mass cons­truction of house-and-lot packages forresale to owner-occupiers. Still anothertype is the construction of high-rise condo­miniums in inner-city areas for sale orlease to young professionals and busi­nessmen.

Private speculative developers are also inthe business of providing commercialspaces at a scale smaller than those of thelarge developers. They redevelop citycenter blocks or develop free-standingretail complexes in the suburbs. They donot develop industrial estates. As a rulethey do not provide public open spaces,but present subdivision regulations (Presi­dential Decree 957) require that amenityor open space is a built-in feature of thesubdivision plan.

Non-governmental institutions also under­take limited land development. Manyreligious orders have retained part of theirlandholdings which they now utilize forexpansion of their schools, seminaries,orphanages, and similar charitable institu­tions. Some charitable organizations alsoundertake low-cost housing developmentsfor the urban poor usually in the urbanfringe areas where cheap land may still befound.

2. Informal sector developers. Infor­mal housing comes in the form of owner­built dwellings over owned or leased landfor own use or for rent to other house­holds; housing constructed by numeroussmall landowners and unregistered con­tractors; and makeshift accommodation ofsquatters.

Self-provided housing on small owned orrented lots through in-filling of vacantareas outside of the formal subdivisionsconstitute a considerable portion of theconsumption space in the city. A typicalsmall lot owner probably acquired his lotthrough years of hard work and forcedsavings. The lot is rather small but bigenough for a two- or three- bedroomhouse for a family of six members. Build­ing construction is incremental, spreadover a period of years. A component ortwo is added or replaced each year de­pending on the family's savings. Borrowing

25

Urban Land Nexus Theory

is seldom resorted to because most ofthem are not qualified to take out loansfrom government or private financialschemes. Building standards and subdi­vision regulations are often violated. Thesize and shape of the house are cons­tantly changing according to the owner'sflight of fancy or availability of funds.

To such type of homeowners, the home isnot just for residential purposes. It can bea production space as well. Some familymembers are probably employed else­where but the family is engaged in somekind of production activity just the same ­a variety store, an automobile repair shop,and countless other pursuits performed inthe home that bring in additional familyincome - all ostensibly without the know­ledge of, or regulation by the State.

A good example of this family enterprise isobserved in Manila's university belt. In anarea of about three to five square kilo­meters in Sampaloc district, nearly adozen colleges and universities with acombined student population of close tohalf a million are huddled together incompact inner-city campuses. Becausetheir premises are so small, none of theseuniversities run facilities for student ac­commodation. Student housing is providedby the surrounding residents. Due to theenormous demand for bed space, nearlyevery household in the area shares roomswith students. To maximize their tax-freeearnings, the landlords often scrimp onnecessary investments like better lightingand ventilation or more sanitary facilities.This situation has been going on for yearsand yet the pitiful plight of student roomershas not caught the attention of the autho­rities.

The other type of informal sector housingis the squatter settlement (see Figure 5).The manner of construction of squatterhousing is similar to that of owner­provided housing. It is done incrementally,although the materials used are relativelycheap due to the ever-present possibilityof demolition. The production activitiesconducted in a squatters home are alsosimilar to those in owner-built homes, de­pending on the amount of space available.

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

MANILA BAY

Ir-) /

:y-~t:':"':"'-

. ~

---.--.-.0.......-

LAGUNA DE" BAY

o I 2 5 4 ~ & I 8KM.o Z 3 aMlLE5

LEGEND

.... .. RE~DENT'''L AREA-t968

\ ,

(!;'" _5U80'V'5'''''9 BE'NO DEVELDPEO/.1 t IN/968

>, (/ ~.. _ SQUATTER CONCENtRATlCNS-I'"

~'-~

Figure 5

RESIDENTIAL AREAS IN METROPOLITAN MANILA, 1968

(Source: Philippine Planning Journal Vol. II No.2)

26

The building of squatter settlements takesat least two patterns. One type involvesindividual families erecting their ownshacks on any available land - newlyreclaimed land, dried up river beds, privatevacant lots. idle government property. cor­ners of public parks. river banks, and evenmiddle islands of wide streets. The otherpattern involves bigger groups of familiesinvading public lands or private lands ofundetermined ownership and subdividingand renting them out among themselvesand to other squatter families. The settlersare later organized under the leadership ofthe 'developers,' first, for the purpose offighting off any attempts to eject them ordriVing away any other daimants. Then,having stabilized their occupation, theypush for legitimization of their daim bygovernmentauthorities.

The locational preference of squatters isnot much dictated by proximity to theproduction areas, as by the availability ofopen space to occupy. Because theirmeans of livelihood allows them to beambulant and mobile. their place ofresidence becomesof little consequence.

3. Government housing programs. Althoughhousing has largely been the concern ofthe private sector, the Philippine govern­ment has of late been increasing itsparticipation in housing provision. Consi­dering the magnitude of the housing needand the usually selective target clientele ofprivate developers. the State can really illafford to do less.

The central planning agency of thegovernment. the National Economic andDevelopment Authority (NEDA), estimatesthe housing need in Metro Manila to bearound 576,000 dwelling units represent­ing 17 percent of total housing need up tothe year 19~2 (NEDA. 1986.245). Out ofthis housing need the government hastargeted to provide less than two-fifths(38.9%) and expects the private sector toprovide 55 percent for the period 1987-92.

The State housing program consists ofthree components: housing finance, hous­ing production, and housing regulation(NEDA. 1986.240-242). The State housing

27

Urban Land Nexus Theory

finance system integrates savings, secon­dary mortgage trading, and credit insu­rance. It consolidates these funds andchannels substantial outlays for long-termmortgage funds, thereby enabling low­income families to have access to housingfinance.

Government housing production involvesnot only direct housing construction. butalso sites and services development andupgrading, fabrication and stockpiling ofconstruction materials, and standardiza­tion of construction technology. The leadagency for housing provision is theNational Housing Authority. Its main func­tions include the development of servicedlots for resale to low-income families, on­site upgrading of slum homelots. develop­ment of squatter resettlement sites, andconstruction of economic housing in jointventure with private developers. The now­defunct Ministry of Human Settlementsused to undertake research and develop­ment of standardized housing componentsand building design and constructiontech­niques to avoid waste and bring do....m totalconstruction cost. A special law (BP 220)was also enacted in 1982 lowering subdi­vision standards and building regulationsto further reduce construction cost of low­income housing.

The Human Settlements Regulatory Com­mission (now Housing and Land UseRegulatory Board) regulates urban landand housing through the following func­tions: approval of subdivision, townhouseand condominium projects; regulating thereal estate development business; imple­mentation of the urban land reform lawthrough control of developments in iden­tified areas for priority development(APDs); and, assistance to local authoritiesin town planning and zoning adminis­tration.

4. Households and the State. We noted howstructuring of the consumption space waslargely on account of the activities of theprivate developers and self-help buildersand that government participation has notbeen all that substantial. The profit motiveof private developers. however. requiresthat their target clientele come from those

PHILIPPINE PLANNING JOURNAL Vol. XXIV No.1 October 1992

who can afford to pay, thereby excludingmajority of those who need housing in thefirst place. Moreover, their high-class plan­ning standards had the double-barreledeffect of consuming so much land perperson and prematurely pushing up landvalues in the suburbs making land all themore inaccessible to a far greater segmentof the urban population. Even earlier go­vernment housing programs contributed tothis inequitable distribution of urbanland resources. Nominally targeting 'Iow­income' families, earlier government hous­ing programs did not really reach thosewho were most in need. Government soldhouses and lots like any other privatedeveloper, reaching only those house­holds who had the ability to pay. Thisexplains the preponderance of self-provi­sioning households and squatter families.

Government response to private actions inthe consumption space has varied withtime and according to the specific socialclasses. To the big landowners who havetheir own master plans to implement, thegovernment assumes a hands-off policy.To slum dwellers, on the other hand, itsearlier approach was slum clearance butnow it has been changed to on-site upgra­ding or renewal. Squatters who used to beharassed with eviction threats andrelocation to far-away resettlement sitesare now receiving more sympathetic andhumane treatment, at least by official pro­nouncements. To the large proportion ofthe population who are self-provisioninghowever, there is official acquiescenceand neglect.

Even the provision of infrastructures andutilities, which has the potential to shapethe direction and intensity of development,is not being used effectively by the State.Settlements can literally sprout overnightin any place and then the State is expect­ed to come in with a package of services.Often, it does.

One serious problem created by theseprivate practices, exacerbated by the dis­proportionate allocation of lands to highincome classes and further abetted by

28

State acquiescence, is the loss of vitalopen space. Metro Manila is literallychoking itself with practically everyavailable space being built over. Asthough this was not a serious enoughproblem, the State has promulgated apenalty tax on idle lands (PO 464). It istrue, the subdivision law (PO 957) requiresthat open space is built into thesubdivision plan, but the law seems tooth­less in the face of rampant clandestinesubdivisions and self-provisioning house­holds.

Another serious problem associated withunplanned spontaneous settlements isthat often the houses are too close tosources of nuisance or environmentalhazards like factories, garbage dumps,hospitals for contagious diseases, or alongriver banks because they are the onlyunbuilt areas left. In the late 1970s, theState started to enforce zoning regula­tions, but in the case of Metro Manila,zoning is a bit too late.

Thus, the structuring of the consumptionspace in Metro Manila reflects a socialstructure based on consumption relations.Those who can well afford it can choose tolive in luxurious villas while those whohave nothing but the will to survive canbuild their own shacks in the most unlikelyplaces. In between these extremes is aninfinite variety of housing accommoda­tions, access to which is invariablyaccording to one's ability to pay. Thismakes social and spatial mobility theo­retically an open possibility for everybody.That is why slum dwellers reportedlyregard their status as temporary, a waystation towards better things to come (seeLaquian, 1968). It is doubtful, however,whether the residential enclaves of the oldrich would ever change hands or that anyupstarts would be welcome in suchneighborhoods. But an indication of theincreasing demand for exclusive, high­class accommodation is the 'New Makati'that the Ayala Corporation is buildingsome 20 kilometers to the south of Makati.This is reminiscent of the 'New Manila' of ahalf a century ago.

CRITIQUE OF THE URBAN LAND NEXUSTHEORY

In this section, we look back to the urbanland nexus theory to determine whether it canadequately explain the processes described inthe previous two sections. We first identifythose phenomena that seem to fit the analyticalcategories of the theory. Then we consider theobserved 'phenomena that the theory cannotexplain and try to find out the reason orreasons why it can not. Sometimes, thereasons are known, in other cases the reasonsare not yet known. In the latter case weventure to make tentative explanations orspeculations, which may later be developed ashypotheses for further investigations.

If the urban land nexus theory wereperfectly operative in our study area, we wouldhave found, among other things, that: 1) theprivate sector, that is, firms and householdsacting singly or in interaction according to theirown logic and benefit-cost calculations, hascreated certain dysfunctions which are ref­lected in the pattern of their urban landutilization; 2) the State has reacted to thesedislocations through various modes of inter­vention such as investment in infrastructures,promulgation of corrective policies and en­forcement of regulatory measures, but in theprocess, it has created another set of land­contingent problems; and, 3) the private-publicreaction and counter-reaction take place at alltimes and moves urban development forward.

So far, the discussion tends to indicate thecomplexity of a Third World city like Metro­politan Manila and that a single model like theurban land nexus theory seems so inadequateto explain the mass of phenomena observed.To be sure, the basic model, namely, that theaction and reaction of the private sector andthe government moves the urban land nexus(hence, urban development) forward, has beenfound to be taking place in Metro Manila. Thetheory is useful generally in explaining deve­lopments in the formal organized sector. Also,the basic proposition that the private and publicsectors act according to their own benefit-and­cost calculations in response to certain prob­lems, but that often, they fail to address theproblem squarely and hence, create moreproblems, has found ample support in theMetropolitan Manila case. However, there are

29

Urban Land Nexus Theory

instances in which the private-public interfacejust does not happen, as, for example, in thecase of the self-provisioning households, whichthe State treats with acquiescence and neglect,or its hands-off policy with respect to the elitistplanning standards of the big land developers.

In short, the theory, when brought down tothe ground is faulted in some of its majorassumptions.

In the first place, the theory admits ofonly two contending social classes in capitalistsociety. This may be true in a highly indus­trialized capitalist society. But then, there isnow emerging in industrialized societies a thirdsocial class, which is neither capital nor labor.This new social class is composed of whitecollar workers - senior administrators, mana­gers, professional and high-level technicians ­in both private and public enterprises. This newmiddle class is reportedly replacing the oldmiddle class of self-employed entrepreneurs asthe dominant elite (Dickens, 1988, 4-7).

In late dependent non-industrialized ThirdWorld countries like the Philippines, society isstructured differently. As a non-industrializedsociety with a large proportion of self-employedpersons and an equally large public bureau­cracy, Philippine social structure may be moreappropriately analyzed in terms of the con­sumption and distribution relations, as advoca­ted by Santos (1979), rather than on the basisof production relations, as historical materia­lists are wont to do.

But even if we attempt to construct thePhilippine social structure from productionrelations using a patchwork of secondary data,we would probably come up with no less thanfour main social classes: a very small capitalclass, a growing middle class, a large urbanproletariat, and an even larger rural peasantry(Arce and Abad, in Bresnan, ed. 1986; Snow,1983).

Rural peasantry. The Philippines is stillpredominantly an agricultural society, observesSnow (1983, 8), with many small farmersproducing on a tenancy or share crop basis.Snow, citing World Bank figures, adds that,even as late as 1980, 46 percent of the coun­try's labor force was engaged in agriculture.

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

Urban proletariat. The long experience ofthe Filipino workers in agrarian relations hashampered their socialization into the disciplineof wage labor. Laquian (1966) observed thatthe urban proletariat was organized but its lea­dership was often too engrossed in its ownselfish ends to be concerned with generalwelfare. The lower classes are so torn intowarring factions and rivalries as to be able topose a united front in their common struggleagainst the upper classes.

Small capital class. Snow goes on to statethat much economic power still lies in thehands of rural landlords and plantation owners.A small group of industrialists, on the otherhand, dominates industrial development. Therelative size and power of this capital class isunmasked in the study by Doherty (n.d.) whichtraced the interlocking directorates amongfinancial, service, commercial, and manufac­turing enterprises. One group, according toDoherty, consists of the new elite who haverisen to prominence since the imposition ofmartial law in 1972. These are known as theMarcos cronies. A second group comes fromthe pre-martial law traditional elite and havegrown considerably under martial law throughtheir political connections. The third groupcomprises the old traditional elite or oligarchythat managed to hold their own despite occa­sional harassment from the regime. It isalleged that this old elite is back in the saddlefollowing the ascendancy into power ofPresident Aquino.

The urban middle class. The urban middleclass is not the equivalent of the Europeanbourgeoisie. Its membership comes fromsalaried functionaries in government andprivate bureaucracies. The higher, more seniorfraction of this class probably corresponds tothe new middle class in industrialized societiesdescribed by Dickens. Members of this classare described by Laquian (1966, 206) as"having benefited from general public educa­tion, are able to rationally perceive their worldthrough the mass media and most important ofall, they can eam a modest means of livelihoodwhich provides them with some degree ofindependence from the government andpoliticians." 'Modest means' and 'indepen­dence from the govemment' may be the key tounderstanding the phenomenon of self-provi­sioning described in the previous sections.Because 'modest means' is actually not nearly

30

enough to pay for the family's escalating needsagainst price inflation, many a household isdriven to engage in other activities outsideregular employment. Because the governmenttends to turn a blind eye on such activities,a shadowy economic system develops andthrives, giving rise to a totally different yetparallel set of economic and social relations ­rent capitalism.

The first exposition and naming of theconcept 'rent capitalism' is attributed to theGerman historical geographer Hans Bobek.Bobek (1962) claims that rent capitalismemerged as a peculiar economic form ofOriental civilization probably as early as thesecond millenium B.C. Rent capitalism in thePhilippines is said to have been introduced inthe country in the 19th century. Its existence orpersistence is confirmed by at least two scho­lars who have investigated the subject andhave written their Ph.D. dissertations on it(Marshall McLennan from the University ofCalifornia, Berkeley, in 1973; and Brian Feganfrom Yale University, in 1979). Both scholarsfocused their investigations of rent capitalism inthe rural economy. McLennan found theessence of rent capitalism in the Central Luzonprovince of Nueva Ecija in the relationsbetween landownerl creditor and the peasantthrough which part of the peasant's productwas extracted to meet rent and debt claims.For his part, Fegan observed in anotherCentral Luzon barrio in Bulacan province, thatthe so-called 'cash crop' being exchanged inthe world market is actually not produced forsale by peasant-producers but to pay for pre­existing debts. In another article on the samesubject, Fegan (1981) detected the existenceof rent capitalism in the urban economy, em­bracing some subsectors of the urban manu­facturing and service industries.

How does rent capitalism operate in theurban economy? Here is a description byFegan (1981,10):

Rent capitalism operates under arelationship wherein ... a capitalistprovides a piece of land, a capitalequipment or prime site in the marketplace, or money for daily buy-anci-selloperations, etc. to a dependent pettyentrepreneur. The capitalist then re­ceives a lease rent...a share rent...orinterest from the OPE at the end of

each production of sales run, in theform of either cash or a saleablecommodity. But the capitalist does notpay wages, does not bear risk, doesnot pay for material expended inproduction except as an advance atinterest to the DPE. The DPE ma­nages the operation, drives the paceof his own plus any hired labor,hustles to find sales, receives nowages but must make a "profif' overhis costs of rent and interest, mate­rials, land wages paid to others, inorder to make any margin for his ownexistence.

This is the shadowy economic system inwhich a great number of middle class familiesare probably engaged, on top of their regular'modest means of livelihood'. Depending ontheir command of capital resources they eitherbecome rent capitalists (RC) or dependentpetty entrepreneurs (OPE). According toFegan, the relationship between the RC andthe OPE is often exploitative but the OPE feelsthe RC is doing him a favor by providing him ameans (or extra means) of livelihood.

Given this complex web of economic andsocial relations therefore, Scott's concept ­and that of the historical materialists generally- of the capital-labor class struggle seems a bitcontrived, to say the least.

In the second place, Scott's conceptionof the role of the State vis-a-vis capital in acapitalist society falls far too short of the realityin the Philippines. Scott conceives of an essen­tially reactive State and one that is ultimatelysubservient to capital. This is not true in thePhilippines where big business and govern­ment are reinforced by the common practice ofpoliticians keeping business 'sidelines' or ofsuccessfulbusinessmen turning into politicians.

A former President of the PhilippineChamber of Industries, Dr. Augusto CaesarEspiritu, observes that business in thePhilippines is intertwined with the government.Businesses flourish or fail depending on theirconnections with the government. Espirituwrites (1979, 79):

Business empires were thus madepossible with government connec-

31

Urban Land Nexus Theory

tions. Politics became a handmaidenof business and many a businessman- legitimate or otherwise - turned topolitics partly for the boost that thiscould give to his business interests.

Other observers concur. For example,economists like Jesus Estanislao and BernardoVillegas, analyzing the economic crisis at theclose of the Marcos years (early 1980s), writethat government policies toward business andindustry have had selective impacts dependingon the latter's access to monopolistic privi­leges. Estanislao writes (in Bresnan, ed. 1986,213):

While a few enclaves of businessand industry that have access tomonopolistic privileges conferred bythe public bureaucracy continue to dorelatively well, the rest of the economysuffers from insufficient credit by low­er than average growth.

Similarly, Villegas blames the poor perfor­mance of the economy on the flawed economicpolicy of 'pampered overprotection' of somefavored industrial sectors through tariff, fiscal,and monetary controls which has kept thePhilippines closed to international competition(in Bresnan, ed. 1986, 154-155).

A leading authority on Philippine public ad­ministration,Dr. Aprodicio Laquian (1966, 208),goes further to say that big business is domi­nated by politicians - the exact opposite ofwhat obtains in advanced industrial capitalistsocieties. Businessmen, Laquianobserves,contribute to politicians' campaign funds notbecause they want to maximize power but tobuy their independence from government.Laquian believes that the national governmenthas enough resources to attain and maintainpower.

Thirdly, even as private business is domi­nated by the powerful national State, theprivate sector lords it over in the local areawhere the local authorities are virtually power­less. Herein lies another aspect of Philippinereality for which the urban land nexus theorycannot account. Scott assumes that politicalpower is uniformly spread through all the levelsof the State. In fact, Scott makes no such

PHILIPPINE PLA.NNING JOURNAL Vol. XXIV NO.1 October 1992

distinction between levels and the differentialallocation of political power.

The reality in the Philippines is such thatpolitical power is highly concentrated in thenational State. The tension between the idealof local autonomy and the centralism tendencyruns through the country's political history. Butsomehow, centralism has always gained theupper hand and local autonomy remains acontinuing ideal but otherwise an emptyrhetoric. For example, the President still exer­cises supervision over local officials with powerto remove them from office for certain specificoffenses. The most effective vehicle the na­tional state uses to control local authorities isthe budget. With very limited revenue raisingpowers, most local governments run on bud­gets heavily subsidized by the national govern­ment and are therefore often unable to under­take significant projects of their own. Statehousing programs are likewise in the hands ofthe national government. Even local land useplans and zoning ordinances are prepared bythe national government agencies and areimplemented by officers 'deputized' by thenational government.

According to Laquian (1966, 25-43) cen­tralism has enabled the colonizing powers toweld, as it were, thousands of disparate tribesand independent settlements into one nation.Similarly, a centralist government under astrong President was able to hold the nationtogether during the early years of indepen­dence. Once the fact of nationhood has be­come so firmly established that it could betaken for granted, the clamor for less centra­lism and more local autonomy can only beexpected as the logical path to true politicaldevelopment.

If the present (1987) Constitution were anyindication, it would seem that the advocates oflocal autonomy have really grown quite stronglately. As to whether this represents the dawn­ing of the age of real local politics in thePhilippines is too early to tell.

In summary, we have seen the outlines inbroad strokes the operation of the urban landnexus theory in the urban development ofMetropolitan Manila. In some important detailshowever, the theory is flawed because it fails tocome to grips with the reality that: 1) there are

32

not only twobut possibly four contending socialclasses in the Philippines; 2) the Philippinenational State is not subservient to privatecapital but rather dominates it; and 3) the localstate which is supposed to be directly con­cerned with the urban land nexus is virtuallypowerless and that urban planning did notemerge as a response by the local state to thedislocations in the urban land nexus but as anextension of the power of the national State.

CONCLUSION

We close this study with no more newground broken and no more firm foundationsestablished than is necessary to launch us intomore explorations. This concluding part there­fore, raises more questions and identifies moreproblems for further investigations.

We have seen the indeterminate characterof the economic system of the Philippine whichspawns a complex social structure and rela­tionships. We have also seen how inadequatethe urban land nexus theory is as an expla­natory analytical model for such a complicatedsocial reality. Perhaps, there are useful insightsfrom other theories which could shed light onsome of the phenomena that Scott's theoryfailed to apprehend.

For example, Castells' observations thatthe production space is structured at the supra­urban level seems to find support in thePhilippines (Cooke, 1983). The location of ma­nufacturing industries, at least the large formalones, is more of a regional problem thanurban. The locational behavior of these largefirms within the metropolis can also be partlyexplained in terms of the neoclassical theory ofcost minimization and profit maximization.

Regarding the locational behavior of smallindustries and service firms, Santos (1979)observes that the upper circuit (formal sector)is linked to the wider regional economy, hencethe transport orientation of their location. Heobserves further, that the lower circuit (informalsector) caters only to the local economy hence,they are interspersed with residential areaswhence their clientele come.

It would seem, too, that Harvey's conceptof circuits of capital (1985) is valuable in

analyzing urban expansion in MetropolitanManila. In Luna's study (1964) for instance, hefound out that many of the firms that moved tothe suburbs had their original location in thecentral city of Manila. But then, Luna's studywas done before the advent of multinationalcorporations (MNC) which started to come infollowing the enactment of the InvestmentIncentives Act of 1967. This infiow of foreigninvestments reached its peak during the martiallaw years when there was general peace andorder and the government launched anaggressive drive to invite foreign investors(Espiritu, 1978, 2-3). One difficulty in usingHarvey's concept is that since the decision toinvest is made by the multinational corpora­tions in the center of world capital, profits arefirst repatriated to the center and mayor maynot be plowed back. The production of the builtenvironment of the city is therefore, left in thehands of individual households, private deve­lopers, and the State which has little controlover the accumulation of international capital.Short of funds, the State is forced to borrowcapital from abroad rather than from the locallyaccumulated capital. In such a case, the Statebecomes subservient to international capitaland actually loses its autonomy to act as socialengineer in its own turf. In a recent article,however, Harvey (in Gregory, D. and J. Urry,1985, 153-157) developed the concept of'spatial fix' in which capital and labor surplusescan be switched to other regions and to othercountries. When this happens, the homecountry creates new dependent forms ofdevelopment on the recipient region or country.

Future research problems

Considering the above premises, there isclearly a need to develop a new model that willhelp in understanding the complex process ofThird World urban development. Toward thisend, the holistic approach of the historicalmaterialists may be adopted as a starting point,but consideration must be taken of the peculiarcharacteristics of Third World societies.

The historical materialist perspective basi­cally assumes that the social structure is afunction of the prevailing economic system andthat the social and economic relationships areexpressed in the way urban space is occupiedand utilized, with the intervention of the State.Adopting this basic assumption, we can identify

33

Urban Land Nexus Theory

the major elements of our tentative modelwhich include the prevailing economic system,the social formation, the structure of the urbanspace, and the role of the State. The followingare some considerations in setting up themodel:

1) On the economic system. The prevailingeconomic system will undoubtedly exhibitcharacteristics typical of delayed depen­dent capitalism rather than those ofmature advanced capitalism. This will ne­cessarily take account of the relationshipof Third World economies with the inter­national economic system. Special noteshall be taken of Santos' claim that not allsectors of the Third World urban economyare linked to the wider economy. In theparticular case of the Philippines, what is afair characterization of the Philippine eco­nomy, given the existence of rent capi­talism? Initial expositions on the subject byMcLennan and Fegan, for example, sug­gest that the rent capitalist himself islinked to the external economy but that thedependent petty entrepreneurs or com­modity producers are not (McLennan andFegan in McCoy and De Jesus, eds.,1982; Fegan, 1981). If this is so, does theRC gain linkages to the external economyon his own or indirectly through connec­tions with the productive capitalism? Justhow are the two capitalisms related? Arethey, in fact, two distinct systems or havethey amalgamated into one system? Howare the two capitalisms related, concep­tually and practically, to Santos' two cir­cuits of the urban economy?

2) On the social formation. Alternative analy­sis of social classes based not only onproduction but also on distribution andconsumption relations, as suggested bySantos, may be tried. Similarly, the socialstructure in the Philippines needs to bedescribed in greater detail. What, forexample, is the social formation under rentcapitalism? Under productive capitalism?Or under a combination of the two?

3) On the structuring of urban space. This willtake cognizance of the fact that two typesof land use pattems occur in Third Worldcities. One type exhibits patterns typical ofthe West and the other is characterized by

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

mixed uses. The land use patterns inMetro Manila are typical of the Third Worldexperience. To what extent is this a re­flection of the social formation under thetwo capitalisms? How are the patterns ofclustering, differentiation and mixing ofland uses related to the spatial distributionof the different social classes? What ten­sions and conflicts arise from the juxtapo­sition of planned, zoned land uses withspontaneous, mixed land uses?

4) On the role of the State. The State in ThirdWorld societies generally takes the lead inmost aspects of the national life. But this isgenerally true with the national State. Lo­cal states are often weak and powerlessand yet it is at the latter level where urbantensions and conflicts are found. How dothe local governments generally deal withurban conflicts? In the Philippines, how dopolicies in all levels affect the two capita­!isms? To what extent, conversely, arethese policies a reflection of the social for­mation under the two capitalisms? Whatare the existing urban policies of thePhilippine govemment? Are these policiesquantitatively adequate as a response toparticular urban problems? Is the imple­mentation of these policies effective? Towhat extent are the inadequacies in theimplementation of policies a reflection ofthe social formation under the two capita­(isms?

For each of the elements of the model adetailed research design will have to beprepared. But let us leave that to the biggerproject.

REFERENCES

Arce, W.F. and R.G. Abad (1986) 'The SocialSituation: Chapter 3 in Crisis in thePhilippines. the Marcos Era and Beyond.Edited by Bresnan. Princeton, NJ:Princeton University Press.

Bobek, H. (1962) 'The Main Stages in Socio­Economic Evolution from a GeographicPoint of View' in Readings in CulturalGeography. Edited by Wagner, P. andM. Mikesell. Chicago: University ofChicago Press.

34

Castells, M. (1983) The Urban Question, aMarxist Approach. London: EdwardArnold.

Cooke, P. (1983) Theories of Planning andSpatial Development. London: Hutchinson.

Dear, M. and A.J. Scott (1981) Urbanizationand Urban Planning in Capitalist Society.London: Methuen and Co. Ltd.

Dickens, P. (1988) One Nation? Social Changeand the Politics of Locality. London: PlutoPress.

Doherty, J.F. (n.d.) A Preliminary Study of theInterlocking Directories among Financial.Commercial, Manufacturing. and ServiceEnterprises in the Philippines. n.p.

Espiritu, A.C. (1978) 'A Filipino Looks atMultinational Corporations' in PhilippinePerspectives on Multinational Corporations.Quezon City: U.P. Law Center,Universityof the Philippines.

Espiritu, A.C. (1979) Central Planning and theExpansion of Public Enterprise. PhilippineConstitution Association and the U.P. LawCenter.

Fegan, B. (1981) 'Rent Capitalism in thePhilippines: The Philippines in the ThirdWorld Series No. 25. University of thePhilippines Third World Studies Center.(Mimeographed)

Fegan, B. (1982) 'The Social History of aCentral Luzon Barrio' in Philippine SocialHistory. Global Trade and LocalTransformations. Edited by McCoy, A.w.and E.C. De Jesus. Quezon City: Ateneode Manila University Press.

Harvey D. (1985) 'The Geopolitics ofCapitalism' in Social Relations andSpatial Structures. Edited by Gregory, D.and J. Urry. London: Macmillan.

Laquian, A.A. (1966) The City in Nation­Building. Manila: Local GovernmentCenter, School of Public Administration,University of the Philippines.

Laquian, AA (1968) Slums Are For People.Quezon City: Bustamante Press.

Luna, T.W. Jr. (1964) 'Manufacturing inGreater Manila' in Philippine GeographicalJournal Vol. 8 Nos. 3 & 4 (July-December1964).

McLennan, M.S. (1982) 'Changing HumanEcology on the Central Luzon Plain:Nueva Ecija, 1705-1939' in PhilippineSocial History, Global Trade andLocal Transformations. Edited by McCoy,A.W. and E.C. De Jesus. Quezon City:Ateneo de Manila University Press.

Pernia, E.M. et al. (1983) The Spatial andUrban Dimension of Development in thePhilippines. Philippine Institute for Deve­lopment Studies.

Reed, R.R. (1972) 'The Primate City in South­east Asia: Conceptual Definitions andColonial Origins,' Asian Studies Vol. X No.3 (December 1972).

Roweis C.T. and AJ. Scott (1981) 'The UrbanLand Question' in Urbanization and Urban

35

Urban Land Nexus Theory

Planning in Capitalist Society. Edited byDear, M. and AJ. Scott. London: Methuen.

Santos M. (1979) The Shared Space. London:Methuen and Co., Ltd.

Scott, AJ. (1980) The Urban Land Nexus andthe State. London: Pion, Ltd.

Snow, R.T. (1983) 'The Bourgeois Oppositionto Export-Oriented Industrialization in thePhilippines.' The Philippines in the ThirdWorld Series No. 39. University of thePhilippines Third World Studies Center.(Mimegraphed)

Uichanco, L.B. (1971) 'Should Laguna de Bayand Pasig River be Left to Their Doom?'Philippine Geographical Journal Vol. 15NO.3 (July-September 1971).

Villegas, B. (1986) 'The Economic Crisis'Chapter 6 in Crisis in the Philippines, TheMarcos Era and Beyond. Edited byBresnan. Princeton, NJ: Princeton UniversityPress.

SLUM AND SQUATTER PROBLEMS IN METROPOLITAN MANILA:AN UPDATE 1

Asteya M. Santiago

BACKGROUND

The Philippines, a thousand-islandarchipelago with a land area of 300,000 squarekilometers, is home to 60 million Filipinos.Although considered predominantly agricultu­ral, 42.9 per cent of its population live in urbanareas (HUDCC, 1991). Compared to its South­east Asian neighbors, it emerges third in theproportion of people located in urban areas,after Singapore and Brunei whose populationsare 100 per cent and 76 per cent urban,respectively (Jimenez, 1986).

In the past two decades, urban pcpulationin the Philippines has grown at an average rateof 4.13 per cent annually. From a total urbanpopulation of 11,677,820 in 1970, it rose to17,943,897 ten years later. By 1990, urbanpopulation had reached 26,245,568 (NSO,1991).

On the other hand, rural population hasbeen increasing at a much lower average rateof 1.73 per cent annually. Two decades ago,between 1970-1975, the average rate of in­crease in rural population was higher at 2.30per cent: from 25,056,666 to 28,024,138.Between 1975-1980, the increase was1.89 per cent which, in absolute numbers,meant a total of 30,154,563 rural dwellers.In the past decade however, rural populationgrew from 20,154,563 in 1980 to 35,234,612 in1990. Broken down into two five-year periods,this reflected a 1.83 per cent increase between1980-1985 and a 1.73 per cent increasebetween 1985-1990 (NSO, 1991).

The urbanization pattern in the countryhas been characterized by an escalating po­pulation movement towards urban cen-

ters, highlighted by the primacy of MetropolitanManila. Also known as the National CapitalRegion or NCR, Metro Manila has, since 1980,exhibited a 100 per cent urbanization level. Indescending order, the other regions with thenext highest levels of urbanization as of 1990are Region III (Central Luzon) at 51.8 per cent;Region IV (Southern Tagalog) at 42.8 per cent;Region VII (Central Visayas) at 36.8 per cent;and, Region IX (Western Mindanao) at 38 percent (NSO, 1991).

While the slum and squatter problem -­which is caused, among others, by unre­gulated urbanization - is a national malady, itis magnified several times over in MetropolitanManila. The squatter population of thePhilippines is reported to be the largest amongthe ASEAN countries. In the Metropolis, it isestimated to be about 33 per cent or 2.4million of its 7.3 million inhabitants. In 1986,Metropolitan Manila had 1.7 million slum dwel­lers and squatters with 45 slum colonies occu­pying 695.5 hectares, 60 per cent of which isgovernment property. The 1990 update of theNational Housing Authority shows that 26 percent of the 1.6 million households of MetroManila, or about 430,000 families live in squat­ter settlements (Jimenez, 1986).

The slum and squatter situation is just oneof the visible manifestations of the seriousnessof the housing problem in the country. Thehousing problem is, in turn, caused by theconfluence of several factors such as poverty,high rate of population increase, absence ofa comprehensive approach to urban develop­ment, land access problems, inefficient finan­cing system, poor organizational structureand weak local governments. This under­scores the complexity of the conflicts and

1 This was the background paper to a Country Report dealing with a case study on slum and squatting.

36

aberrations brought about by the slum andsquatter problem and the difficulty of findingboth short term and, more or less, long termsolutions.

Simplistically put, the required solutions willbe in the areas of improving the people's socio­economic conditions, reducing population in­crease and urban migration rates to levelsconducive- to national development and in­creasing the options in accessing land forhousing purposes. Other equally important im­provements will involve streamlining the insti­tutional machinery particularly in the financingaspect, and strengthening the capability oflocal governments for substantial involvementin housing. Each of these reform mea­sures, however, has its own complex sub­problems that also demand serious remedialmeasures.

METROPOLITAN MANILA ACCORDINGTO THE 1990 NCR PLAN

The following update on MetropolitanManila highlights the relevant portions of the1990 Medium Term NCR Development Plan,hereinafter simply referred to as the NCR Plan.

The National Capital Region continues tobe the dominant urban region in the country.Consisting of four cities and thirteen municipa­lities, it is the seat of government and thecenter of financial, industrial, socio-cultural andeducational activities. The Metropolis produces30 per cent of the country's total output andaccounts for about 38 per cent of its invest­ments. Its ports handle about 55 per cent of thecountry's exports. Approximately 80 per cent ofthe nation's non-agricultural labor work forcereside in this prime urban region.

Growing at the rate of about 2.8 per centannually in the past 10 years. MetropolitanManila had, in 1990, an estimated 7.8 millionpeople in approximately 1.6 million house­holds. The average size of a household was5.0. This population constitutes 13 per cent ofthe nation's populace. congregating in an areaof 638 square kilometers or 0.5 per cent of thecountry's land area.

While the average annual income of NCRfamilies has improved by about 9.0 per cent

37

Slum And Squatter Problems

(1985 prices) from P57,193.00 in 1985 toP62,323.00 in 1988 ($US 1.00 is equivalent toP21.00), the distribution of wealth has beenuneven. The income of the poorest 40 per centof households in Metro Manila has remainedstatic at about 16.0 per cent of total incomefrom 1985 to 1988. The income of the middleso" to 60th percentile groups has, however,increased by 6 per cent (from 14.0 per cent to20.0 per cent of total income) during the sameperiod. In 1988, the poverty threshold or themonthly income required to satisfy 100 percent of the nutritional requirements and otherneeds of a family of six was estimated atP4,037.00.

The 1990 NCR Plan projects that up toand until 1994, Metro Manila will continue toexperience this unique phenomenon: an infill­ing of its main urban area and a simultaneousoutward expansion in all directions. Largelyattributable to private sector initiated develop­ment, infilling will, among others, reduce idleland and open spaces in the core and causethe intensification of and/or change in land usepatterns.

Notwithstanding the planning efforts of acentral metropolitan body (the MetropolitanManila Commission from 1974 to 1986; recent­ly replaced in January 1990 by the Metro­politan Manila Authority), Metro Manila suffersfrom a chaotic and inefficient land use patternwhich is unwittingly reinforced by its 1981Metro Zoning Ordinance. This land use confi­guration is characterized by an increase in thenumber and density of squatter housing areas,particularly in the inner city and transportcorridors; and the development of middle andupper class residential subdivisions in theurban periphery where land is cheaper. Therehas also been a boom of townhouses and highrise condominiums in the main urban areas forthe middle and upper income markets; and, thereprehensible practice of premature conversionof agricultural and fishpond areas to residentialand/ or commercial uses.

The NCR Plan reports that this situation inresidential development has similarities with in­dustrial and commercial land uses. These lasttwo sectors are characterized by high intensitycommercial activities along major transportroutes and the emergence of intensifying sub­urban commercial modes at intersections of

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 OCtober 1992

major transport routes, These have been inresponse to the increasing number of residen­tial subdivisions in the suburbs, and the loca­tion of new and relocation of existing industriesto cheaper sites along major transport routes inthe North, East and South of Metro Manila.

The other aspect of urban managementwhich is adversely affected by the unregulatedtempo of urbanizatlon is the provision of basicservices and utilities in Metro Manila. The effi­cient and effective delivery of basic urban ser­vices, such as housing, water, energy, trans­portation and communication, environmentalmanagement, and peace and order is ham­pered by a complex of interrelated factorsidentified in the NCR Plan. Foremost amongthese is the weak inter- and intra-sectoralcoordination of the responsible agencies whichaffects the performance of the above men­tioned functions. The other factors are systeminefficiency, outdated laws and lack of appro­priate policies.

The task of urban management inMetropolitan Manila was recently vested in theMetropolitan Manila Authority (MMA) whichwas created through Executive Order No. 392signed by President Corazon Aquino. Itsgoverning body is the Metropolitan ManilaCouncil consisting of the mayors of the mem­ber cities and municipalities, the Secretaries ofthe Department of Budget and Managementand the two infrastructure departments, namelythe Department of Transportation and Commu­nication and the Department of Public Worksand Highways. The mayors take turns servingas chairman, with each term lasting sixmonths. MMA's main concern is the perfor­mance of its Constitutionaily- mandated func­tion (Section 11, Article X) of coordinating thebasic services in the Metropolis.

There is much that MMA can learn from itspredecessor, the Metropolitan Manila Commis­sion. Its experience showed that an integratedplanning and development framework by itselfdoes not guarantee the orderly and successfuldevelopment of the premier urban region.Effective metropolitan governance demandsthe sustained commitment of the governmentagencies at all levels and the LGUs cons­tituting the metropolis. It also needs the sup­port of the private sector and the NGOs toimplement the Metro Development Plan. Good

38

governance also requires effective planning,financial management, and monitoring evalua­tion. (MMC Medium Term NCR DevelopmentPlan, 1990) Without these, there is little reasonfor optimism about the future of Metro Manila.

THE NATIONAL HOUSING SITUATION:AN OVERVIEW

The comprehensive overview of the na­tional housing program inclUding the attendantproblems thereto, presented in the most recentMedium Term Philippine Development Plan for1987-1992 of the National Economic and De­velopment Authority, provides an appropriatebackdrop to the discussion of the housingsituation in Metro Manila and its slum andsquatter problems. The Plan characterizes thecountry's housing problem as a twin problem ofquantity and quality. The former arises from theneed to build more houses to meet thedemands of an increasing population. Thelatter, on the other hand, is concerned with theneed to improve the existing stock of sub­standard housing of makeshift and light ma­terials.

From a traditionally fragmented approachto the various components of the housing prob­lem, the government has adopted a totalsystems approach involving housing produc­tion, finance and regulation, which it opera­tionalized at the start of the 1980s. Thisapproach has been reinforced during PresidentAquino's administration. This consists primarilyof rationalizing and synchronizing the operationof a network of housing agencies with thespecialized functions. These are housingproduction with focus on social housing by theNational Housing Authority (NHA); fundsgeneration by the Home Development MutualFund (HDMF); mortgage purchase by theNational Home Mortgage Finance Corporation(NHMFC); mortgage guarantee by the HomeInsurance and Guarantee Corporation (HIGC);and,regulation by the Housing and Land UseRegulatory Board (HLURB).

A basic component of this total approachis a new housing finance system called UnifiedHome Lending Program (UHLP) which waslaunched in 1987 and which was in full opera­tion by 1988. The Program integrated savings,secondary mortgage, trading and credit insu-

ranee functions. As of November 1990, some32,840 beneficiaries had availed of UHLPfunds, translated into 276,700 units of assis­tance from 1987-1989. The average UHLPloan extended for the same period wasP116,OOO, an amount affordable to 39 per centof the total population and to 54.3 per cent ofthe NCR region population based on the 1988Family Income and Expenditures SurveyorFIES (NEDA, 1992).

The government's housing production acti­vities aside from direct housing constructioninclude the development of new sites andservices and resettlement areas for the relo­cation of squatters in key urban centers, andjoint ventures with the private sector and thelocal government units. The focus of the pro­duction program has been on in-city resettle­ments to prevent the return of previouslyresettled families to their old dwellings (NEDA1990-1992).

In 1988, NHA accounted for 21,230 unitscomprising almost half (40.85 per cent) of thetotal 51,971 housing units constructed by thegovernment. The NHMFC accounted for10,173 units (19.57 per cent) while the restwere provided by the following agencies:HIGC, 9,442 units; HDMF, 1,540 units; SSS,7,474 units; and, GSIS, 2,112 units (PhilippineYearbook, 1989).

To its traditional housing involvement, thegovernment has added the implementation ofthe Urban Land Reform Program. Introduced in1978 by Presidential Decree 1517. Its imple­mentation consisted of the planned develop­ment of blighted and depressed areas declaredby the President as Areas of Priority Develop­ment (APDs) and Urban Land Reform Zones(ULRZ), and the improvement of security ofland tenure of legitimate tenants. A recentcount showed that there are 271 such areas,almost all of them, located in Metro Manila.

A significant milestone during this periodwas the enactment in 1982 of a special hous­ing legislation (Batas Pambansa or BP 220) forsocialized or low-income housing. This legalissuance made housing more accessible to thelower income earners by exempting economicand socialized housing from the strict appli­cation of the standards and technical require­ments of the Subdivision Code, the Building

39

Slum And Squatter Problems

Code, and the Fire Code. The BP also autho­rized the promulgation of more realistic stan­dards for this type of housing, thus loweringhousing cost. These standards may vary ineach region, province or city, depending on theavailability of indigenous materials for buildingconstruction and other relevant factors.

The NEDA Philippine Development Plan of1987-1992 also took special notice of theactive involvement of organized private sectorgroups of realtors and developers in varioushousing activities, from planning to production,land development, finance and brokerage. ThePlan reports that the growth of the housingindustry in the period 1981-1985 is reflected inthe growth of private construction, 60 per centof which was in residential construction. Whileprivate construction decelerated in 1984 andsuffered a 14.7 per cent decline due to theeconomic crisis experienced by the country,this reduction still constituted the smallest dec­line among the industry sub-sectors.

Affordability has, and will remain to be aformidable aspect of the housing problem sinceall statistics point to a common conclusion thathousing remains out of reach for a sizeableportion of the population. The average monthlyincome in the countryside in 1985 ranged fromP753 to P11,600 whereas, for the urban areas,the average monthly family income wasP2,465. The amount available for housing wasestimated on the basis of the current expen­ditures for housing, rental paid or its equiva­lent, plus amount saved. This amount availablefor housing averaged P575 monthly or 23 percent of the monthly income. This is affordableonly for households belonging to the top 50 percent of families in the income ladder (NEDA,1987-1992).

Home ownership and security of tenure isanother intractable aspect of housing. Owner­ship of dwelling units is high in rural areas (90per cent) while in urban areas, only 64 per centof the households own their dwelling units. Ofthis, a little more than 50 per cent (63 per cent)also own the land on which their dwelling unitsare built. The rest are either renters or squat­ters. The problem of home ownership is moreserious in Metro Manila where 58 per cent ofthe households do not own the house they livein, and 22 per cent of households do not have

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 OCtober 1992

tenure over the land on which their houses arebuilt (NEDA, 1987-1992).

The 1980 Census of Housing reported that65 per cent of the total houses built during theperiod 1976-1980 were made of light materials,27 per cent were made of strong materials, andaround 7.6 per cent were of makeshift mate­rials. Most houses made of strong materials(59 per cent) were found in the urban areas,while light material housing (81.7 per cent) andmakeshift housing (69.7 per cent) were foundprimarily in the rural areas. Although a highpercentage (71.3 per cent as compared to thenational average of 37.4 per cent) of house­holds in urban areas have electricity, only a lowpercentage of these households have water(49.6 per cent) and toilet facilities (44 per cent)(NEDA,1987-1992).

In brief, the NEDA Plan (1987-1992) hasidentified the various aspects of housing pro­vision that are in dire need of change and/orreform. These are:

1. The priority and thrust of the private formalsector which is focused on the "guaran­teed" markets of a more affluent clien­tele rather than on the lower incomegroups;

2. Capability of the target groups, namely thelower income clientele who previouslyeither rented or squatted, to meet the fi­nancial requirements of, and their willing­ness to make the cultural adjustmentscalled for by their new status as home­owners;

3. Ability of the government to sustain andimprove the application of its sites and ser­vices strategy, which favors the lowerincome buyers, and the capability of the lotawardees to put together the financial andother resources necessary to constructtheir own shelters;

4. The effort at community organization andthe monitoring of urban construction toprevent and/or remove unsafe structuresand arrest the deterioration of the neigh­borhood into a slum or squatter colony;and,

40

5. Effective coordination and synchronizationof the housing program with other govern­ment and private sector projects in pro­viding basic services such as water anddrainage access, road construction, elec­tricity supply, etc.

THE SLUM AND SQUATTER PROBLEMIN METROPOLITAN MANILA

The Housing Scenario

The slum and squatter problem in MetroManila can be better understood when placedwithin the broad housing scenario in theMetropolis. In a recent study, the housing si­tuation in Metro Manila was broadly describedas follows: (Isberto, 1991)

1. The low income housing industry in theMetropolis is an endangered industry be­cause there is hardly any land left for lowcost housing in the area. If any, they arevery expensive or are used for com­mercial purposes. Furthermore, infla­tion has raised the cost of constructionmaterials by 20 per cent and increasedinterest rates further, thus undermining theviability of the low cost housing industry.

2. Government has financial difficulties inpursuing its mass housing program sincelow cost housing is considered one of thegovernment's lowest priorities.

3. International funding institutions are mov­ing towards openly supporting the activi­ties of non-government organizationswhich have proven their efficiency in deli­vering services to the people.

4. There are more NGOs that are now in­volved in low-income housing. The bigbacklog in the housing industry hasopened the field to NGOs who see thehousing problem as part of the social illsplaguing society. They have taken this onas part of their responsibilities to theirmembers and staff.

The extensive destruction brought aboutby World War II is the root cause of thehousing shortage that Metro Manila and other

urban centers in the country experienced in the1950s. More than half of the 80 per cent war­damaged buildings in the City of Manila werehouses, leaving thousands of Manilenos home­less and/or fending for themselves in doubled­or tripled-up housing accommodations (Refor­ma and Briones, 1983). The postwar periodsaw Manila and other cities invaded by thou­sands of migrants from the rural areas whowanted to escape the unrest, the depressedconditions, unemployment and scarcity of eco­nomic opportunities therein.

In the two decades after the war (1948­1968), the squatter population in Metro Manilamultiplied 33 times, mushrooming from 23,000to 767,000 persons (Poethig, 1965). Demogra­phic statistics in the 1980s revealed that therewere about 1.6 million squatters or slumdwellers in the metropolis constituting 26per cent of its total population (The Share andCare Apostolate for Poor Settlers, 1983). By1990, the estimate was that the proportion ofsquatters to the total NCR population rose toone third.

The seriousness of the squatter problem inMetro Manila may be gleaned from the fact thatamong all the regions, Metropolitan Manilacontains the largest number of squatters andslum dwellers. Statistics from the NationalHousing Authority in 1985 showed that thepercentage of slum dwellers in the urbancenters in the country ranged from a low 3.07per cent of a population of 149,456 (MandaueCity in Region VII) to a high of 66.98 per centof a population of 63,976 (Jolo in Region XII).In these urban sites, total slum areas alsovaried from a low of three slum areas inTuguegarao (population 8,027) to thirty-oneslum areas in Cebu City (population 562,391)(Karaos, 1989).

Focusing on Metro Manila, the slum popu­lation in 1985 ranged from a low of 7,933 out ofa total population of 142,444 (Municipality ofSan Juan with seven slum colonies) to a highof 600,409 out of a population of 1,765,908 inthe City of Manila (with 83 slum colonies).Insofar as the percentage of squatters to totalpopulation is concerned, the statistics fromMetro Manila present a range of 6 per cent of apopulation of 142,444 (San Juan) to 33 percent of a population of 1,377,926 in QuezonCity. Overall, in 1985, slum population in MetroManila reached 1,943,817 out of a total popu-

41

Slum And Squatter Problems

lation of 6,942,202 found in 415 slum colonies(Karaos, 1989).

Insofar as squatters are concerned, MetroManila held the negative distinction of housing28 per cent of this disadvantaged sector. In thenumber of slum colonies, the cities/municipa­lities with the highest number of squatters in1985 were: Quezon City, 142 colonies; Manila,83; Pasay City, 36; Makati, 19; and, Marikina,Muntinlupa and Pasig, 17. Insofar as the per­centage of squatters to total population wasconcerned, the top five cities/municipalitieswere: Quezon City, 33 per cent of 1,377,926;Manila, 31 per cent of 1,765,908; Navotas, 30per cent of 147,362; Pateros, 28 per cent of48,347; and, Pasay City, 28 per cent of331,861 (Karaos, 1989).

Of immediate concern to the govemmentis the fact that a large number of squatters/slum dwellers reside in the so-called dangerzones that pose risk to their life and safety.These are the flood-prone banks of waterways,the vicinity of railroad tracks that are still in use,rights-of-way of infrastructure projects, andareas beneath bridges and overpasses. Thesefamilies have, therefore, been prioritized forrelocation under the Metro Manila SquatterPrevention and Resettlement Program (SIR) ofthe National Housing Authority. As of May1987, 76,295 families have qualified for relo­cation under the said program (Ranjo, 1990).

Approaches to Slums and Squatting

The slum and squatter situation in MetroManila is one urban development problem ofthe country that has continued to elude satis­factory solutions. This continuing struggle bEl~­

ween the government and the squatters andslum dwellers presents an interesting casestudy in the dynamic interaction between par­ties with ostensibly conflicting interests. Thisacquires national significance for the simplereason that the squatters and slum dwellersconstitute an increasing percentage of thecountry's population and threaten to dominatethe urban scene.

Relocation

In the early postwar years of their exis­tence, the squatters and slum dwellers of theMetropolis were generally regarded as flagrant

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 OCtober 1992

violators, devoid of any respect for the propertylaws of the land. While the government ex­pressed sympathy for their seeming helpless­ness, the more influential factor in policydecision was the fact that these urban settlerswere "invaders", "lawless elements" andwere generally regarded as "eyesores· thathad to be controlled. They were labeled as anuisance to society that had to be removedfrom prime urban lands to find homes wherethey could inflict the least harm or damage."Harm" was conceived in terms of the social,economic, and environmental degradation thatresulted from their congested, blighted andunsanitary conditions. Crimes and myriadforms of social and health problems were alsotraced to these communities. Damage wasviewed solely as their impact on the communityand its law-abiding citizens, without equalconsideration of the impact of this degradedenvironment in which their residents aretrapped. Consequently, the resultant govern­ment policy was the rejection, ejection andrelocationof the squatters.

This approach reflected an over-simplisticand limited perception of the real nature andmagnitude of the problem. Completely ignoredwere the various aspects of the situation thatwere not legal in character. This was parti­cularly true with squatting, where the law (P.O.772) defines a squatter as "Any person whowith the use of force, intimidation or threat, ortaking advantage of the absence or toleranceof the landowner, succeeds in occupying orpossessing the property of the latter against hiswill for residential, commercial or any otherpurposes." (Sec. 1) On the other hand, whilenot legally prohibited (although laws andordinances on health and sanitation could beused to hold these residents liable for theconditions of their homes and environs), slumwas considered as a social condition which,like squatting, is a consequenceof poverty. It isthis notion of poverty that links the two terms ­the congestion, dilapidated buildings, unsani­tary surroundings. and poor basic services(Jimenez, 1986).

This early experience of the governmentwith slum dwellers and squatters later broughthome some useful lessons reSUlting in a morecomprehensive and humane approach. Thus.decision-makers shifted gears to view theproblem also from the perspective of these

42

urban dwellers and the community at large.The government concluded that these slumdwellers and squatters were drawn by the lureof the city, which promised their rescue frompoverty through employment opportunities, thepossibility of free land, and eventual ownershipof the land and homes they occupied (Keyes.1980). With this, however, came an acknow­ledgement that while squatting provided theaffected settlers an opportunity for a better life,it was regarded as a problem by the govern­ment and the general community. Ironically,these latter sectors have not been completelyblameless.

There was. also, at this time, a growingrecognition that the phenomenon of squattingwas a by-product of the "economic imbalancebetween the city and the countryside and bet­ween urban wages and housing costs. It was aresult of national development strategies thathave virtually ignored the need for an adequatehousing stock, an uncontrolled and highly spe­culative land market, confusion of land titles,coupled with the delay in settling disputes, andlastly, the vote coddling practices of localpoliticians who have exploited the situation"(Keyes, 1980).

With this new perspective, the govern­ment understandably began to explore morepractical, humane and realistic solutions thanthe mere geographicaltransfer of the "problem"to locations where the urban dwellers would,most likely, replicate the condition of the sitesfrom which they were displaced. From anattitude that vacillated from indifference totolerance coupled with neglect, to grudgingacceptance, the government assumed a moreenlightened view. It rose to the call of sharedresponsibility for the squatters and slumdwellers' conditions because of its lack of acomprehensive approach to housing and ina­bility to solve some of the more serious socio­economic problems resulting in poverty andeconomicdespondency.

Resettlement

Initially, slum clearance and relocation asan approach underwent some improvementfrom being undertaken on a piecemeal basis tolarge scale eviction which allowed the transferof the urban poor to resettlement sites in amore organized manner. The first of these

mass evictions displaced some 15,000 squat­ter families from downtown Manila, most ofwhom were residents of the historic inner cityof Intramuros. About a third were resettled inSapang Palay, an area within Bulacan,40 kilo­meters north of Manila. Additional relocationsites were later opened from 1968 to 1974 inthe south of Manila, namely San Pedro inlaguna, and Carmona and Dasmariiias inCavite. By the end of 1981, it was reported thatat least 46,186 families had been relocated tothese four resettlementsites (Jimenez, 1986).

Compared with the first three resettlementsites, the relocation sites in Dasmariiias,Cavite were better planned. They had provi­sions for wide roads, a hospital, electricity andadequate water. This approach came to beknown as the "new town strategy" whichunderscored the government's responsibility toprovide a more livable environment not only forthe law-abiding sector of society, but also forthose who may not be operating within theambit of the law. Complementing this approachwas the establishment by the NationalHousing Authority of a network of secondaryor emergency resettlement areas dispersedaround the cities and considered for "emer­gency" purposes and therefore temporary innature (Keyes, 1980).

Much earlier, the government experiment­ed with on-site low income housing to meet theurban squatter problem. Such attempts weremade as early as 1934 and again in 1955.Tenement housing was undertaken in a moreextensive mannerdUring President Macapagal'sterm of office from 1961 to 1965. This ap­proach has been severely criticized for its highsocial and economic costs that went beyondconstruction expenditures and subsidies. Add­ed costs were maintenance expenses, delin­quency in rent payments, and social servicesneeded to facilitate the tenant's adjustment totheir new environment. For the tenant, the costinvolved was psychological, involving basicallyreorienting his lifestyle to the new form ofliving. Many of these tenements also ultimatelyended up in the hands of those to whomoriginal rights were sold, or worse, to illegaloccupants (poethig, 1965).

Another experiment undertaken by thegovernment in Metro Manila was the commu-

43

Slum And Squatter Problems

nity development strategy. Premised on thefact that squatters were primarily rural peopleliving in cohesive urban communities, it wasbelieved that they would respond to thisapproach. The community development stra­tegy involved the organization of collectiveefforts to improve the urban poor's own com­munity. This approach did not meet with muchsuccess because it was not able to solve thesquatters' insecurity of tenure. To the targetbeneficiaries, community improvement wasonly secondary to their main concern - landacquisition(Poethig, 1965).

Sites and Services Approach

As alternative strategies for dealing withslums, squatter areas and other blighted com­munities, the government adopted the slumimprovement program and the upgrading ofsites and services. Adopted in the late 1970s,this involved the introduction of roads, commu­nity facilities and services, and a comple­mentary socio-economic program for the em­ployment of resident families. The legal autho­rity for this approach (Letters of Instruction 555and 557 issued by President Marcos) autho­rized relocation and resettlement only to com­plement a slum improvement program in thelocality and where the squatter families were inareas that were dangerous to public safety orwere needed for government infrastructureprograms.

The same legal issuances provided theprerequisites for relocation such as accessi­bility of the site to the work places of affectedfamilies and the provision of economic acti­vities in case the resettlementsites are far fromthe urban core. Those areas were required tobe pre-developed, complete with basic commu­nity facilities and services. The Tondo Fore­shore Dagat-Dagatan Development Projectwas the government's first attempt at compre­hensive slum sites and services upgrading.

Urban Land Reform Act

In 1978, another supposedly "bold steil"taken to improve the housing situationwas theenactment of Presidential Decree 1517 knownas the Urban Land Reform Act. This lawacknowledged that land access was a keyfactor in finding solutions to the housing prob-

PHILIPPINE PLANNING JOURNAL Vol. XXIV No. 1 OCtober 1992

(em. It recognized that this problem was morethan just an offshoot of poverty and uncon­trolled urbanization and its consequences ofinefficient delivery of basic services and utilitiesand environmental degradation. It advocated asynchronized approach to the problem ofhomelessness among the urban poor through,among others, creative devices for land acqui­sition such as land exchange or swapping, landassembly, and land banking.

The Urban Land Reform Act was pre­maturely hailed as the much-awaited solutionto the problem of slum dwelling and squattingbecause its targeted areas for planned deve­lopment were generally the abode of squattersand slum dwellers. Only after the law had beenin operation for Quite some time was it realizedthat it brought more promises than fulfillment.The Act had many deficiencies which pre­vented it from meeting head-on the intractableproblems of the urban poor.

Prior to the passing of this law, it becameobvious that the targeted beneficiaries werenot necessarily those who were homeless anddesperate but those who had no security oftenure in the homes and lots that theyoccupied. Thus, it provided that within the de­clared Areas for Priority Development (APDs)or Urban land Reform Zones (UlRZs). thelegitimate tenants who had resided in the landfor ten or more years and have built theirhomes on the lands, and residents who hadlegally occupied the lands by contract for tenyears continuously shall not be dispossessedof their land. Furthermore, they are to be giventhe right of first refusal to purchase the lot theyare occupying. This provision was beneficialonly insofar as it provided security of tenurebecause it prohibited dispossession of theoccupants. but it did not solve the issue ofgranting home ownership. This was becausethe right of first refusal could only be exercisedif and when the owner decides to sell the land.Thus, it required a prior act on the part of theowner before the government could come in toassist the tenant in purchasing t"e property.

One other constraint in the implemen­tation of the law was that even if the ownershad decided to sell their lands and theiroccupants had decided to exercise their firstoption. the government may not actually beable to provide the needed financial assistance

44

to the tenants. This led to the formulation ofvarious proposals for amendatory legislation tothe Urban Land Reform Act to make it theexact counterpart of the Agrarian Reform Law.The Agrarian Law authorized transter to thetenants the title of the lands that they tilled.However, there are basic differences betweenthe Urban Land Reform Law and the AgrarianLand Reform which would put in Question suchproposals. Most of these proposed remedialbills are now pending consideration by Con­gress. There appears, however to be very slimchance for these bills to pass into laws.

Community Mortgage Program (CMP)

In the late 1980s, President Aquino'sadministration introduced an innovative con­cept of low-income home financing to increasethe access to housing·of the lowest sector ofsociety. Launched in 1988, the CommunityMortgage Program (CMP) involved the deve­lopment of undivided tracts of land occupied bylow-income groups by Qualified communityassociations or cooperatives. These landswere made the subject of loans under theUnited Home Lending Program. The CMP hasthree stages: the acqUisition by the communityof the land they occupy; the provision offinancing for the horizontal development of theacquired property and the individual's titling ofthe lands; and, the introduction of homeimprovement or home construction.

There is optimism on the CMP's successbecause of the reported wide acceptance bytheir beneficiaries and the involvement of boththe public and private sectors. NEDA's docu­ment shows that CMP has exhibited satisfac­tory performance with a total of 7,208 units ofassistance or an accomplishment rate of 117.7per cent of targets for 1989. The program hasalso drawn the interest of government orga­nizations and a number of local governmentunits, community-based organizations. andnon-governmental organizations (NGOs), indi­cating a future funding requirement for anadditional 50,000 beneficiaries (NEDA, 1990­1992).

Both the CMP and the Unified HomeLending Program have highlighted the urgencyto focus on existing programs and projects toupgrade the conditions of the urban poor com-

munity in an orderly manner and to providethem with economic stability. A few years later,the Pro-Poor Program for the urban poor fami­lies was launched in 1990, integrating pro­grams that address the priority concerns of theurban poor living in depressed areas. Theseinclude land tenure, livelihood, basic services,shelter and social services. Pilot projects havealso been initiated in Metro Manila, Cebu andDavao prior to its nationwide implementation(NEDA, 1990-1992).

Complementing the UHLP are provisionsof the amended Batas Pambansa 220 whichprescribe the minimum standards acceptablefor each of the loan package categories of theUHLP. The significance of Batas Pambansa220 lies in that it recognizes that the highstandards of the existing Codes in the countryshould not be enforced in low-cost housing,and that the need is really for standards whichwould provide acceptable levels of safety,health and ecological protection. Design stan­dards formulated under BP 220 are concernedwith the safety of life, property, and the generalpublic welfare and the provision of the basicneeds of human settlements namely: water,movement and circulation, storm drainage,solid and liquid waste disposal, power, park,and playground. The provision of these basicneeds is to be based on the actual setting ofthe project site. Other parameters are theaffordability level and location of target mar­kets. The special standards designed for thosecommunities covered under UHLP furtherbroaden the base of the urban poor who couldavail of low-cost housing.

Another projected activity of the govern­ment is the development of a comprehensiveprogram for squatter settlements. Basically,this will involve providing squatters with landtenure through the intensification of slum up­grading and the development of sites andservices projects. The CMP will be expandedthrough community-based initiatives and theassistance of NGOs and local governmentunits. This will ensure the effective delivery ofhousing finance under the National ShelterProgram (NSP) and increase the accessibilityof homeownership to the lowest sector ofsociety. In addition, the development of in-cityresettlement sites for squatters occupyingpriority infrastructure project sites and dangerareas will be undertaken.

45

Slum And Squatter Problems

Changes in the Aquino Administration

Slums and squatting in Metro Manila re­main to be some of the toughest problems ofthe Aquino administration. In the years sincethe EDSA Revolution of 1986, these assumedvery distinct features. These may be attributedto the radically changed political, social andeconomic environment under the new dispen­sation. This is characterized by, among others,more conscious awareness of social justiceand human rights (Article XIII, Philippine Con­stitution) and zealous efforts in the observanceof the social function of property prescribed bythe Philippine Constitution. This is combinedwith a keen awareness of the severe economicconstraints of the poor, which discourages anyfurther reduction of housing stock, no matterhow substandard it may be.

"People Power" likewise influenced thedevelopments in the slum and squatting situa­tion in the country. One disturbing manifes­tation of people power was the large scaleinvasion of unutilized public property whichgave birth to the government's policy of "TigilTayuan, Tigil Gibaan" (Stop New Constructionand Halt Demolition). Under this policy, squat­ters occupying the same areas they did beforethe EDSA Revolution in 1986 were protectedagainst unjust demolition by police and themilitary. The only exceptions were the squat­ters residing in endangered sites, sites forurgent government infrastructure projects, orthose impeding public access like sidewalks,thus jeopardizing the public good. The problemwith this policy was that it was difficult todetermine which of these squatters hadactually been on the sites prior to the criticalcut-off date of February 25, 1986.

Parallel to this, President Aquino adopteda tough stance against professional squatters,particularly those who took advantage of theunsettled conditions after EDSA and "invaded"public and private lands. Among the first areasinvaded were Pasig, Quezon City, Manila,Caloocan, Las Pinas, Mandaluyong, Navotas,and Malabon. (New Day, 1986) The occupationof most of these properties appeared to bespontaneous rather than an organized effort.The President ordered the expulsion of thesesquatters from private properties in response toa resolution made by the city and municipalofficers which called for the strengthening of

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 OCtober 1992

the implementation of the Anti-Squatting Law(New Day, 1986).

This position however. was tempered byAquino's leniency toward squatters who hadbeen in their places before February 1986 "forhumanitarian reasons" (New Day, 1986). Thus.one of the first tasks of the then MetropolitanManila Authority (MMA) was to determine whothe pre-EDSA squatters were. The PresidentialCommission for the Urban Poor (PCUP), whichwas created in December 1986, also providedvaluable assistance to the government in thiseffort.

Soon after the installation of the Aquinoadministration, an incisive diagnosis of thesquatter problem in Metro Manila was made bythe Multisectoral Alliance on Shelter (MAS), anumbrella organization of various shelter-relatedassociations. It identified as one of the primarycauses of the squatter problem the absence ofappropriate financial infrastructure and regu­latory policies which rendered home owner­ship to the urban poor virtually inaccessible(Business Day, May 1986).

The MAS Report cited that low-cost hou­sing projects were difficult to establish becauseland development and housing constructionstandards imposed first class subdivision re­quirements on all housing projects regardlessof intended beneficiaries. Even Batas Pamban­sa 220, which set liberalized developmentalstandards for socialized housing projects wasfound inadequate for lack of appropriate imple­menting guidelines.

The traditional home financing sourceswere aiso found inaccessible because theurban poor were not members of either theinsurance system or the provident plans ofsome of the progressive companies (BusinessDay, May 1986). The MAS Report concludedthat "even if the urban poor wanted to acquirehomes, none were available" and even if therewere, the lack of home financing assistanceput housing out of their reach. As a result,squatting has proliferated, being the mostconvenient altemative.

The MAS Report likewise noted that whilehousing was accorded by the Marcos admi­nistration the status of a major national con-

46

cern, a program attuned to the needs of thecountry's poor has never been integrated intothe overall national development scheme.

The Private Sector Low Income HousingAssociation (PRISLlHA), an organization con­cerned with urban poor issues, also releasedits own position paper which sought the ratio­nalization of the government housing program.The Paper recommended, among others, theopening of other government financial insti­tutions such as the Social Security System(SSS) and the Government Service InsuranceSystem (GSIS) to housing development byallotting a larger investment from their port­folios to housing loans.

The PRISLIHA Paper also suggested agradual movement from direct loans to appli­cants to purchase of housing mortgages tostrengthen the secondary mortgage market.The easing of existing stringent standards andprocedures, especially with regard to non­acceptance of core houses and inequitably lowcollateral values by these institutions, was alsorecommended (Business Day, April 1986). Itfurther proposed the allocation of all govern­ment funds for shelter to the medium and low­income families, leaving the commercial finan­cial mechanism to the higher income groups.

Many of the indicated solutions and reformmeasures in these two private sector reportshave influenced and guided the programs andprojects of the Aquino administration, particu­larly those affecting the slum and squatterproblem.

EMERGING CONSENSUS

Recent studies and a review of govern­ment and private sector activities affecting theslum and squatter problem in Metro Manilareveal the following emerging consensus andpolicy thrusts:

1. The slum and squatter problem is inex­tricably bound to population growth in, andhigh migration to urban centers and there­fore requires regulation of both, througha more effective package of incentives anddisincentives. The maintenance of naturalgrowth of population and migration levels

conducive to national development shouldalso be pursued aggressively.

2. The problem is too serious and has toofar-reaching effects and implications to bemade the exclusive concern of the metro­politan government of Manila and itsconstituent units. It should be resolvedwithin the framework of national develop­ment efforts and a comprehensive urbanmanagement strategy.

3. The nature, size and complexity of theslum and squatter problem calls for deci­sive and firm policies for the effective con­trol of the further increase in, and growthof these urban poor communities throughpro-poor livelihood and related programs.This should be compatible with upholdingthe dignity and human rights of the dis­advantaged sector and strengthening theirresolve to help themselves. The problemalso demands a more aggressive, mea­ningful and sustained cooperation amongthe govemment, private and informalsectors.

4. The intrinsic value of the adoption of thehousing program as a priority concern ofthe national, metropolitan and local go­vernments should not be underestimated.This Program should be translated intoresponsive projects and activities, and acommitment to political, administrative andfinancial support by the government.

5. There is need to adopt an inter-sectoralapproach to the delivery of basic servicesto synchronize housing projects with therelevant sectors encompassed within thephysical and infrastructure support facili­ties. Preferably, this should involve com­mon or at least shared priorities andtimetables.

6. Existing policies and laws affecting squat­ting should be reviewed to determine theamendments they need, to reconcile themwith the new housing approach and stra­tegies of the government.

The slum and squatter problem of MetroManila is a common concern of a multi-level

47

Slum And Squatter Problems

government which, at present, has varyingresponsibilities and capabilities. There appearsto be enough experience acquired in the pastfive decades to ensure more realistic andworkable solutions that balance the social,economic and cultural factors with the legaland political concerns. including respect forhuman and property rights. While admittedly,the problem does not have immediate andpermanent solutions, Metro Manila officialsshould now feel more confident to confront theissues in a more decisive manner. However.for the program to attain a reasonable degreeof success, lessons born out of experienceneed to be matched by a strong will from boththe government and private sectors and by thesustained efforts of all those concerned.

REFERENCES

Business Day, April 3. 1986. 11.

Business Day, May 1. 1986.

Housing and Urban Development CoordinatingCouncil Policy Studies and Review Group(1991) The Case for Urban Development:Major Issues and Proposals. (Makati,Philippines) Unpublished.

Isberto, Ester Ceniza (1991) StrateavFormulation for Freedom to Build. i-iii.

Jimenez, Pilar Ramos, et al. (1986) PhilippineUrban Situation Analysis. Manila: UNICEF.3,10-11.50.

Karaos. Ana Marie (1989) A Preface to Urbanland Reform. Intersect, Vol. 1 No.2, 3.

Keyes, William J. (1980) Case Study MetroManila Philippines in Policies TowardsUrban Slums. Netherlands: UNESCO.

Metropolitan Manila Commission (1990)Medium Term National Capital Region(NCR) Development Plan 1990-1994.Makati.

National Economic and Development Authority.Medium Term Philippine DevelopmentPlan (1987-1992), 240-243.

PHILIPPINE PLANNING JOURNAL Vol. XXIV NO.1 October 1992

National Economic and Development Authority(1992) Updates on the Medium TermPhilippine Development Plan 1990­1992. Makati, 128-129,132.

National Statistics Office (1991) quoted fromHUDCC's The Case for Urban Development:MajorIssuesand Proposals, Appendix 1.

New Day,.ApriI27, 1986.

1987 Philippine Constitution.

Philippine Year Book 1989. (1990) Manila:National Statistics Office, 626.

Poethig, Richard. (1969) "An Urban SquatterPolicy for Metropolitan Manila" in Solidarity,Vol. 4, Nov., 20-32.

48

Presidential Decree 772 (1974) PenalizingSquatting and other Similar Acts (Aug. 20,1975).

Ranjo, Mary Grace B. (1990) Slums andSquatter Areas in Metro Manila: ASituationer. Makati: November 21.(Unpublished Report).

Reforma, Mila and Leonor Briones. (1983)Housing Services in Metro Manila. Manila:U.P. College of Public Administration, 5.

The Share and Care Apostolate for Poor Settlers.(1983) Reason to Hope: A Study for FiveUrban Poor Communities in Metro Manila.Manila, 2.

49

ABOUT THE CONTRIBUTORS

Sophremiano B. Antipolo holds a Bachelor ofScience degree in Agricultural Economics fromthe School of Economics of the University of thePhilippines (UP), and a Master of Science degreein Human Settlements Planning and Develop­ment from the Asian Institute of Technologyin Bangkok, Thailand.

He was Chief of the Plan Formulation Division ofthe National Economic and DevelopmentAuthority (NEDA) Region XI in Davao Cityand was formerly Chief of the Social PoliciesDivision of the Policy Coordination Staff of theNEDA Central Office.

Ernesto M. Serote is an Assistant Professor atthe UP School of Urban and Regional Planningand concurrently serves as the Director ofTraining.

He acquired his Master of Arts degree in Urbanand Regional Studies at the University of Sussex,United Kingdom in 1989. He also possesses aMaster of Arts in Urban and Regional Planningfrom the University of the Philippines.

Asteya M. Santiago is a Professor and formerDean of the School of Urban and RegionalPlanning. She was the immediate pastExecutive Director of the Legislative-ExecutiveBases Council and was the President of the UPPlanning and Development ResearchFoundation, Inc. (PLANADES).

She acquired her Bachelor of Laws from theUniversity of the Philippines (cum laude) and herMaster in Town and Country Planning at SydneyUniversity in Australia. She also has a Certificatein Government Management from the UPCollege of Public Administration.

Administration

BENJAMIN v. CARINO, B.A. (Public Administration), M.A. (Political Science), Ph.D. (Political Science)Dean

DOLORES A. ENDRIGA, A.B. (Psychology),M.A. (Sociology),M.R.P.Secretary

ARTURO G. CORPUZ, B.S. (Architecture), M. (Regional Planning), Ph.D. (URP)Directorof Graduate Studies

CANDIDO A. CABRIDO, JR., B.S. (Medical Technology/Biology), M.S. (Biology),Diploma& M.S. (EnVironmental Engineering), Ph,D. (EnvironmentalScience)

Director of Research and Publications

ERNESTO M. SEROTE, A,B, (English), Diploma in Integrated Surveys, M.U.R.P" Master in Urban StudiesDirector of Training

NICOLAS R. CUEVO, B S. (Commerce), Ll.B.Administrative Officer

ALEX RAMON Q. CABANILLA, A.B.Science), Diploma in IntegratedM.U.R.P., AsSistant Professor

Faculty

(Political ZENAIDA A. MANALO, A.B. (Economics), CertificateSurveys, in Special Program in Urban and Regional

Studies (SPURS), M.A. (URP), Ph,D. (URP),Associate Professor

CANDIDO A. CABRIDO, JR., B.S. (MedicalTechnology/Biology), M.S. (Biology), Diploma &M.S, (Environmental Engineering), Ph,D.(EnVironmental Science), AsSistantProfessor

PRIMITIVO C. CAL, B.S.C.E., M. Eng. (TransportationEngineering), Ph.D. (Transportation Planning),Ll.B., Professor

GERARDO S. CALABIA, B.S.(Agriculture), M.A.(Community and RegionalPlanning), Professor

BENJAMIN V. CARINO, B.A. (P.A.) M.A. (PoliticalScience), Ph.D. (Political Science), Professor

ARTURO G. CORPUZ, B.S. (Architecture), M.(Regional Planning), PhD. (URP), AsSistantProfessor

DOLORES A. ENDRIGA, A.B. (Psychology), M.A.(Sociology),M.R.P., Associate Professor

ROSARIO D. JIMENEZ, A.B. (History), Diploma inComprehensive Regional Development Planning,M.A. (URP), Associate Prof9ssor

ROQUE A. MAGNO, B.S. (G.E.), M,T.C,P.,Associate Professor

JAIME U. NIERRAS, B.S. (Architecture), M.S. (UrbanPlanning), M.S. (Transportion Planning),Associate Professor

ASTEYA M. SANTIAGO, Ll.B. (cum laude), M.T.C.P.,Certificate in Government Management, Professor

ERNESTO M. SEROTE, A.B. (English), Diploma inIntegrated Surveys, M.U.R.P., Master in UrbanStudies, Assistant Professor

FEDERICO B. SILAO, A.B. (Political Science), M.P.A.,Professor

CYNTHIA O. TURINGAN, B.A. (P.A.), Diploma inComprehensive Regional Development Planning,Associate Professor

UTA S. VELMONTE, B.S. (Social Work), Diploma inUrban Studies, Associate Professor

LEANDRO A. VILORIA, A.B. (Political Science),M.P.A., M.A. (Community and RegionalPlanning),D.PA, Professor

Research Staff

DELIA R. ALCALDE, A.B. (Sociology), UniversityResearcher II

ANTONIETA V. CENAL. A.B. (Social Work),University Research Associate /

CARMELITA R.E.U, UWAG, A.B, (Political Science),M.A. (URP), University Researcher I

EMILY M. MATEO, B.S. (Foreign Service), M.A.(URP), University Researcher {

HONOR10 T. PALARCA, B.S. (Architecture),University Research Associate {

DICKTON SINGH RYE, B.S. (Architecture),University Research Associate I

Training Staff

ATHENA F. AZARCON, B.S. (Business Adminitration), M.U.R.P., University ExtenSion Specialist