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Stock Commentary

San Miguel 'special economic zone' bill vetoed by Marcos

Merkado Barkada
San Miguel 'special economic zone' bill vetoed by Marcos

One of the first things that President Marcos did when he officially became president was veto a bill that granted “special economic zone” and freeport status on San Miguel’s [SMC 107.00 0.83%] [link] proposed Bulacan Airport City. Citing “substantial fiscal risks to the country”, President Marcos also said that the proposed bill was in “conflict with other agencies' mandates and authorities”.

This veto only applies to HB 7575, “An Act Establishing the Bulacan Airport City Special Economic Zone and Freeport, Province of Bulacan and Appropriating Funds Therefor” (don't let Congress name your child), and does not apply to the 50-year franchise that SMC received from Congress to operate the airport. Under the bill that was vetoed, a special Bulacan Ecozone Authority would have been created to manage the airport and the adjacent lands, and it would be operated as a separate customs territory.

MB BOTTOM-LINE

I wish I had access to SMC’s spreadsheet to see how the loss of the SEZ and freeport designations might change the revenue projections of the project through its lifetime. I don’t have any inside knowledge about how important the SEZ and freeport components were to SMC’s overall plan, though the fact that they began planning of the airport as an “Airport City” from the beginning makes me think that the special tax and legal benefits were part of the project’s foundations for the group.

I’m not 100% sold on the President’s seemingly un-ironic reasoning, which boils down to, paraphrased, “tax incentives are taxes that the people don’t collect, and that therefore require the government to borrow money if it wants to spend money on something else”, but it certainly seems within the realm of things that presidents might care about and decide upon. I don’t know what this means for the development timeline of Bulacan Airport City as a whole, or for the airport specifically, but I can’t imagine that it makes things any faster. How does this play into a larger airport policy scheme for the government, with an aging NAIA (that Megawide [MWIDE 4.44 2.42%] wants to redevelop), the troubled zygote that is the Sangley Point International Airport (that House of Investments [HI 3.40 unch] wants to develop), and now this drastically-altered Bulacan Airport City plan? 

 

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

BONGBONG MARCOS

PHILIPPINE STOCK EXCHANGE

SAN MIGUEL CORP.

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