A Fatally Flawed Study
(Part III)

       In today’s column, I will continue my comments on the Feasibility Study on the Proposed New Tacloban Market, Bus Terminal and Shopping Complex. This time, I will go into the “market aspects” of the study. This is the part of the study that deals with the “demand” for the project. Essentially, in this portion the questions that must be answered include: (1) Will there be people (or clients) who will need and use these facilities? (2) How many of the facilities (such as stalls and commercial spaces or units) are needed to serve the estimated number of clients? This is important so that the number of stalls, spaces, units, and other sources of income are sufficient to meet the demand.

       What has to be avoided is the construction of facilities in such a number that will exceed the demand because this means that the facilities will not earn the income these are supposed to earn or the city government will be spending for buildings that will not be fully occupied. Consequently, it might not be able to pay for its operating expenses. Moreover, if such income (or revenue) targets are not met then the estimated subsidy for the project (totaling P160 million over 6 years) will increase significantly. The subsidy is the amount that the city government will have to raise or allocate so that it can pay the bonds, outside of the income that it will get from the project. Obviously, such an amount will be taken from the Internal Revenue Allotment (IRA) of the city government and other incomes such as fees from business permits and other transactions.

       To extend the chain reaction – if the subsidy is large (e.g. more than P20 million) this could mean reducing the budget that is normally allocated for development projects such as drainage systems, roads, river control, and building construction and improvement.

       There are many improvements needed in the market aspects of the study. Firstly, there has to be an analysis of past, present and projected demand and supply for the project’s facilities and services. This should include not only the existing main public market but also the smaller markets in several locations. Second, since a public market project involves the provision of organized market outlets for several commodities, an analysis of the types of commodities that will flow through this project must be made.

       The reliance on the interview of existing stallholders and occupants of commercial units in the existing central business district is not sufficient to show demand particularly because the respondents are unaware of the rental rates in the new market. Their responses may therefore, be unreliable in terms of determining projected demand.

       In next week’s column, I will tackle the technical aspects of the project, after that I will go to the financial aspects.

       Again, I’d like to mention the assistance given to me in this analysis by Engr. Ernesto Octaviano and Mr. Manuel Calero both of NEDA Region VIII. Both are experienced project evaluators.

       Our consolidated comments will be forwarded to Mayor Alfredo T. Romualdez and other officials of the city government before the close of office hours today.