Non-compete ‘claws,’ not clause

When the news broke that President BBM had vetoed House Bill 7575, a proposed bill creating an economic zone inside the New Manila International Airport of the SMC-Bulacan airport, a number of businessmen were initially confused and very concerned. It seems that because of the wording and “Breaking News” status given to the veto, a number of businessmen failed to differentiate between the San Miguel Airport versus the proposed eco-zone inside the airport. Some people were temporarily in a panic thinking that the airport construction was being “vetoed” or stopped by BBM. The other point of confusion was why BBM vetoed a proposed law filed during the term of former president Duterte. Historically, a proposed bill can only be vetoed by the sitting President and if it is not vetoed then it lapses into law. HB7575 was filed during the last Congress.

One of those who called me was a businessman located in Clark who was very worried that “one of the first acts of Bongbong Marcos was anti-business.” After going through the various news items related to the BBM veto, I explained to the businessman that BBM had vetoed HB7575 related to the eco-zone and not the airport construction. As expected, this led to a discussion of why and who gave the recommendation to BBM.

As our readers may have noticed, I did a play on words regarding industry practice where employers would require their early retirees or experts to sign a “Non-Compete Clause” that will prevent them from being pirated or transferring to competitors anywhere from six months to two years, depending on the level of expertise and commensurate to their separation package. But as for the veto of House bill 7575 I called it the “Non-Compete Claws” or a reverse version where outgoing officials of the Duterte administration managed to secure a “Non-Compete” restriction that prevents the creation of an economic zone in the province of Bulacan or anywhere in the region that could seriously compete against the Clark Economic Zone. The veto clearly shows the power and influence of Duterte administration officials looming strong and large even in the early days of the BBM presidency.

Ever since San Miguel Corporation announced their intention to build the NMIA/Bulacan airport, different Duterte Cabinet members have ridiculed, dismissed, opposed, challenged or blocked the idea of building a bigger and better world-class international airport. The primary reason was because it would compete with the Clark Airport. But that was just on the surface. The government people knew that San Miguel Corporation always builds bigger and better and ultimately the conglomerate would expand its interests to industrial developments, business centers and communities and could be in direct competition with the Clark Development Corporation.

“The Clark Boys Club” has always publicized Clark as an eco-zone or industrial center but judging from what has been rising in the former US air base, we might as well call Clark as “Pinas Vegas” based on all the humongous casinos and hotels that have been built. I think it would be safe to say that there are more casinos than real export factories inside Clark. That is not necessarily a bad thing since Clark could essentially be dedicated to tourism and gambling, much like Macau and other gambling destinations all over the world. In fact, it would not be the first time since it has been done in other economic zones such as in Cagayan province. In addition, there are already many established Korean communities inside and outside Clark and the place would be perfect for secured full-service retirement homes for foreigners from Japan, the US etc.

In the meantime, the BBM administration should consider the multi-level benefits of supporting an eco-zone inside the San Miguel Airport for the province of Bulacan, which has suffered the “middle child” syndrome of being ignored or not getting their fair share of development opportunities. They’re almost part of Metro Manila but remains a comparatively under-developed province, while their neighbor Pampanga has had all the opportunities in the past and present but never fully catapulted into a better version of Metro Manila during and after the American presence. HB7575 was a solution crafted by legislators and provincial representatives of Bulacan as a complimentary development project in order to attract airline and aircraft related companies to set up shop in the future “Aero City” alongside other job generating industries and investments that in turn would create thousands of jobs, new communities and commercial centers.

Economists and technical advisers seem to have convinced BBM that the creation of an economic zone in Bulacan “will significantly narrow our tax base” or lessen potential tax collection because of all the tax breaks and incentives that are given to locators inside eco-zones. BBM is too smart to be using that argument. The potential investors that might locate inside an eco-zone at the San Miguel Airport will be doing so due to the proximity of the airport in relation to their production or business. The airport is the magnet, the tax breaks are meant to attract the investors and in return, those companies will be creating jobs, transferring know how and technology and promoting the status and reputation of the Philippines under BBM as an investor friendly destination.

As for the claim that the eco-zone would compete with Clark and financially drain the government, sorry but that’s just simply ridiculous. The NMIA is a privately funded development, the eco-zone can be designed or structured as an industrial park where locators pay for everything from offices, warehouses, factories, etc. Why protect Clark at the expense of the province of Bulacan, Navotas and Malabon whose citizens stand to profit economically? That is not what a level playing field is, that is not being investor friendly and it would be a rejection of cost-free, hassle free Public-Private Partnership.