Big airport projects: Going, going, gone?

One of the biggest casualties in the government’s announced preference for government-funded projects (vis-à-vis public-private partnerships) were airports: smaller ones like those in Bacolod, Davao, Iloilo, Laguindingan, and Bohol; and big ticket items like NAIA, Sangley, Clark and Davao.

Specifically for the main air gateway of the country, the Ninoy Aquino International Airport (NAIA) complex, the current administration’s alternative financing direction had put on hold several substantial bids that were directly related to decongesting the NAIA’s operations.

The biggest proposal was from a group led by San Miguel Corp.’s Ramon Ang. A $10-billion airport plan, submitted in 2014 during the previous administration, was to be built on reclaimed land in Manila Bay, and would complement the existing NAIA facilities.

Since then, the proposal has been modified and presented to the current government. This time, the new airport is planned to be built in Bulacan but still along Manila Bay and will cost about $13.5 billion.

Alternatives

Another project that had been put on hold was the proposed partnership of All-Asia Resources and Reclamation Corp., and the Sy family’s Belle Corp. to redevelop Sangley. The $50-billion project called for an airport and economic zone at Sangley Point.

The Filinvest Group and JG Summit Holdings, Inc. also submitted a $3.7-billion proposal to expand and develop Clark. Similarly, GMR-Megawide Cebu Airport Corp. (GMCAC) also came up with their proposal on Clark.

All the alternative proposals for the development of the Sangley and Clark airport facilities are aimed at shifting the country’s aviation center away from Metro Manila’s NAIA terminals.

With the change in funding policy favoring official development assistance, mostly from China and Japan, and government counterpart funding, big projects like those above are not easy to get off the ground.

Second best solution

Instead, the government has opted for the second best solution: to pour some money to “rehabilitate” the Clark and Sangley airports. This junks the integrated proposals previously submitted, and will instead concentrate on the “doable” terminal facilities upgrading.

The Clark project is now up for bidding, and is expected to cost P12.55 billion. On the other hand, the Sangley airport development project, is estimated to cost around P600 million. Both are radically scaled-down versions of the private sector proposals.

We hope the government will seriously think of continuing the PPP process without prejudice to starting projects that are fully or partially government funded. If this will speed up the pace of new infrastructure projects without compromising on cost and quality, let’s do it.

On SSS contributions

We give way to a letter from Butch Fajardo about my Oct. 3 column on the Social Security System (SSS). He says:

“All I have been reading so far re the SSS’s moves to improve the fund’s actuarial life involves increasing the percentage contribution (from 11 percent to 17 percent) and increasing the monthly salary credit (from P16,000 to P20,000), both of which would put a burden on employers and employees alike.

“Someone must have already mentioned it which I haven’t come across yet, but if none, here is my two cent’s worth. I believe a more fair start is to plug the ‘loopholes’ which will allow others to ‘game’ the system. What I mean here is being able to extract benefits disproportionately larger than what they have actually contributed.

“An example is someone who voluntarily starts becoming a member only at age 50, and only contributes the minimum P104 (monthly salary credit of P1,000) for the next 10 years. At age 60,this person would have contributed 120 x P104 or P12,480 in total, but would now be eligible to get P2,200 per month (previous minimum of P1,200 plus the recent P1,000 increase).  Just six months and he will be ‘ahead’.

“This is such a good deal for those who  avail of the program,  it but it is at the expense of those are burdened to pay for it.

“The rule of using the average of the last 60 months contribution’s salary credit is also open to abuse. One can max the contribution over the last five years to avail of the maximum pension. Although there is a rule that one cannot make big jumps in contribution, this can also be taken advantaged of.

Suggestions before increasing contribution

“To sum up, may I suggest the SSS do the following first before increasing current contributions:

“1. Increase the minimum contribution to P572 monthly (P5,500 monthly salary credit) to maintain membership. One of the rules for pension computation is that it is 40 percent of the monthly salary credit. Forty percent of P5,500 gives the current P2,200 minimum pension. Using the 40 percent formula, those giving the minimum contribution should have been getting only P400 a month as pension.

“2. Increase minimum membership years to qualify for a pension from 10 years to, say, 20 years. This can be done gradually, one year increase per year from now so as not to unfairly change the rules and leave out those who were planning on just paying for 10 years. Again the current 10-year rule is a good deal for those who avail of it, but which give the other members a burden.

“3. Base monthly salary credit on average of last 10 years contribution, rather than the current 60 months (five years).

“I believe that although the above will be rather heavy for the members, it is but fair that they contribute more given their expected bigger benefits. I understand the SSS is not a charitable organization and needs to be self funded, so let us leave the charity work to other government entities.”

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Should you wish to share any insights, write me at Link Edge, 25thFloor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.