Senate set to OK Bulacan airport franchise

MANILA, Philippines — The Senate is expected to approve this week the franchise application of San Miguel Aerocity Inc. to construct a domestic and international airport in Bulacan that senators said would not only decongest airports but help boost the economy.

Sen. Grace Poe, chair of the Senate committee on public services, sponsored on Tuesday the franchise application under Committee Report 128, which seeks to allow San Miguel Aerocity to construct and operate the airport and maintain an adjacent “airport city.”

The franchise is expected to be approved on second reading tomorrow and passed on third and final reading on Thursday.

The P735-billion project will be put up on a 2,500-hectare land in the municipality of Bulakan.

“This project will be at no cost to the government, so every day we delay this, the longer the public, and the economy, will have to wait to benefit from it,” Senate President Vicente Sotto III told radio dwIZ yesterday when asked about the swift action of the chamber in approving the measure.

Poe said the project “is not just about the future” but also “an obligation past due,” given the serious congestion at Manila’s Ninoy Aquino International Airport (NAIA).

“Like the public transport crawling on its congested streets, Manila’s airport is now full and overloaded. Walled in by homes, factories and offices, the NAIA has no room for expansion. It has been likened to an aircraft carrier stuck on dry land and nowhere to go,” she said.

If approved, construction will begin within a year and completed in 12 years at no cost to the government. After the 50-year lifetime of the franchise, the airport will be turned over to the government. The franchise bill exempts the airport developer from all direct and indirect taxes and fees during its 10-year construction period.

After the construction period and during the remaining 40 years of its franchise, it shall be exempt only from income and property taxes until it has recouped its investments. After which, it shall be subjected to all taxes from thereon.

Sen. Bong Go, who co-sponsored the franchise bill, reiterated the need for a new airport to help decongest Metro Manila’s traffic and provide employment to Filipinos, especially now with the pandemic.

“This project is a prime example of how the public and private sectors can work hand in hand in building a better future for our people,” Go said in co-sponsoring the measure.

He emphasized that the construction of the new airport will also complement the Balik Probinsya, Bagong Pag-asa program, which aims to encourage Metro Manila residents to explore better economic opportunities and start anew in their home provinces.

Sen. Richard Gordon also said the airport project would allow the country to attract investments going out of China.

“This idea is something that has to be undertaken real, real fast because after COVID there would be a mad rush for investments and we have to make our country look very, very good. This is really a game-changer. Central Luzon will be a game-changer. We can now make a tremendous leap-frog into the world of competitiveness,” he said.

However, a group consisting of former government officials, economists and transport experts called on the Senate to strike down the tax exemption provision in measure.

Rene Santiago, a transport expert who has been a consultant for the Japan International Cooperation Agency (JICA) in their transportation studies in the Philippines, warned that based on current supply and demand conditions, there is no need for San Miguel to develop the New Manila International Airport in Bulacan unless the NAIA were to be closed.

Former tourism secretary Alberto Lim explained that while he views the proposed airport as a positive project, it “should not be given incentives, because it’s an unsolicited bid.”

Filomeno Sta. Ana III, coordinator of think tank Action for Economic Reforms, said giving incentives should not be anchored on the amount of investments, but rather on whether a project’s social benefits will outweigh its private gains.

He said San Miguel is making an investment which will continue even without fiscal incentives, rendering these incentives redundant.

“Because supply is already adequate, the role of this airport is more of being a private good than a public good. Let them compete, but such competition should not be anchored on government incentives,” he said.

Sta. Ana also warned the tax exemption provisions undermine the goal of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Bill, which is currently undergoing interpellation in the Senate.