Mark E Williams, CEO, KGL Investment Company Asia, on the progress of the Philippines’ next economic hub

PH17_Trade&Investment_Mark Williams.jpgHow will the Global Gateway Clark (GGC) help position Central Luzon as a decongestion area for Metro Manila?

WILLIAMS: Region 3 has some unique characteristics that set it apart from other regions across the country: it is very affluent; it is highly populated; it boasts the second-highest concentration of higher education institutions outside of the National Capital Region; it is at the centre of Luzon Island; it is well connected by new tollways; and hosts major investment areas like the 4400-ha Clark Freeport Zone (CFZ). Within the CFZ, the Clark International Airport (CRK) also serves as a critical gateway, allowing for the seamless movement of people and goods in and out of the region and further boosting the attractiveness of the area. Given that the land available for lease within the CFZ has declined to less than 50 ha, further development is needed to catalyse the growth potential of the region.

It is within this context that the GGC, a 177-ha master-planned, mixed-use commercial complex aims to unlock value by developing office, retail, residential, logistics and health infrastructure. The scale of the project is significant, as it will create 5.8m sq metres of floor space and generate 500,000 jobs upon completion. The project’s location puts it within 10 minutes from the 1.5m people of Mabalacat and Angeles City, and one hour from another 10m people. Moreover, the relocation of investors into the GGC will drive a higher utilisation of CRK. The GGC master plan consists of four development zones: a logistics park; a town centre which includes residential, commercial, institutional and leisure components; an aeropark with predominantly open spaces, geared to host office space for the business process outsourcing (BPO) industry; and a business park, which would serve as the central business district.

In what ways is GGC raising its standards of environmental sustainability and disaster preparedness?

WILLIAMS: The outsourcing industry is routinely upgrading the quality standards of office space all over the country by pushing for higher scores in areas that benefit employees – an essential consideration for BPO locators. Leadership in Energy and Environmental Design is favoured as a green building certification, given its higher recognition internationally. Increasingly though, the standards are rising in order to meet new demands by tenants, as they are even more discerning about the quality of buildings. Major factors currently being considered to enhance overall quality include proximity to where employees live, the amount of surrounding green space, the amount of natural lighting in addition to other criteria that make a project more appealing to tenants. Rental prices on average represent less than 10% of operating costs for BPOs, whereas their employee costs can easily surpass 80% of total cost. This is because of high turnover rates, often caused by undesirable working conditions and lengthy commuting times. To offset this, BPO locators often prefer to pay higher rent for a quality building that is more conducive to a desirable workplace. If a developer is able to deliver this type of building, it can more effectively attract the BPO segment and nurture its decentralisation from the metropolis.

Disaster resilience and environmental sustainability in buildings are tackled on multiple fronts. Reliability of power at the GGC is supported by the use of prime generators that run for thousands of hours before needing a maintenance overhaul, as opposed to the typical standby generators that only run for 300 hours before they need a complete maintenance overhaul. Similarly, future water supply is guaranteed through developed onsite reservoirs. In most cases, earthquakes are a much higher concern to BPOs and international locators than typhoons and floods, due the level of disruption that they can cause. As a result, earthquake resilience is a major consideration for new investments. In any case, Central Luzon is ideally situated, as it is far removed from any existing fault lines, making it a desirable site for a disaster recovery area, and its location inland makes it far less susceptible to typhoons than the greater Manila area.

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