Unlocking the Philippines’ urbanization potential

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Fostering Livable Cities
The Philippines is one of the fastest urbanizing countries in East Asia and the Pacific. This can bring many opportunities for growth and poverty reduction. Cities become engines of growth if well planned and well managed.

Rapid urbanization in the Philippines has brought new jobs, educational opportunities, and better living conditions for some. However, it has also brought challenges, which you’ll see when you move around the streets of Metro Manila. It’s a large sprawling metropolitan area of over 12 million, with congestion that is estimated to cost US$70 million (₱3.5 billion) a day. When it rains, streets and homes are quickly flooded because many drains are clogged or non-existent. Because of lack of affordable housing, an estimated 11 percent of the city’s population live in slums. With 17 cities and municipalities in the metropolitan area, trying to tackle these challenges becomes stuck in deep complexities of urban governance and management. While other cities in the Philippines don’t face the scale of these challenges, they tackle similar issues.

Why are things so complex? There are a number of underlying structural issues affecting urbanization in the Philippines, such as the country’s archipelagic geography which creates divisions in connectivity both within the country and to external markets; a stagnating manufacturing sector that has not resulted in high quality jobs and, in turn, has negatively affected urban-led growth; and the country’s high exposure to natural hazards, particularly flooding and earthquake risks, all of which exacerbate urban management challenges.

Beyond these key structural issues are two binding constraints which, unlike the structural issues, can be addressed through a bold reform agenda. These include fragmented institutional arrangements for urban development and metropolitan governance, and major shortcomings in land administration and management. The resulting impacts of these issues, coupled with rapid urbanization, have greatly hampered city competitiveness, job creation, poverty reduction and livability.  

That said, there are reasons for optimism. One only has to look at the vibrant private sector and development of urban areas such as Bonifacio Global City in Metro Manila, the Iloilo Business Park in the Visayas island, and a number of other successful programs in towns and cities to know what is possible.

The recently completed report Philippines Urbanization Review, Fostering a System of Competitive, Sustainable and Inclusive Cities, sets forth priorities for a bold reform agenda in i) addressing the binding constraints of weak institutions to improve the delivery of necessary infrastructure, services and sustainable urban planning, and ii) improving land administration management to open up land markets for city competitiveness. Other key priorities call for investments in infrastructure, particularly more affordable mass transport such as metro rail transit and bus rapid transit systems, simplification of licensing requirements to attract more investment, a focus on affordable housing and the delivery of basic services, and encouraging poor children to finish secondary education for better job opportunities.

If key stakeholders in the Philippines, namely government, the private sector, and civil society -working in partnership - can take on these challenges with a needed urgency for action starting with top priorities, there is so much that is possible. Cities can indeed become engines for competitive, sustainable and inclusive growth, giving residents new opportunities with the potential for lasting impact.  


Judy Baker

Lead Economist, Urban, Disaster Risk Management, Resilience & Land Global Practice

Makiko Watanabe

Senior Urban Specialist, Social, Urban, Rural, and Resilience Global Practice

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