San Miguel gets Senate's final nod to build, operate new airport in Bulacan

Katrina Domingo, ABS-CBN News

Posted at Oct 12 2020 03:30 PM | Updated as of Oct 12 2020 06:01 PM

Exterior design studies for SMC's proposed New Manila International Airport project in Bulakan, Bulacan. Photo: San Miguel Corp/Handout

MANILA (UPDATE) - The Senate on Monday unanimously approved on final reading San Miguel Corp's (SMC) franchise to build and operate a new airport in Bulacan for 50 years, before it turns over the new gateway to the national government.

Under the franchise, SMC will be allowed to develop the San Miguel AeroCity alongside the airport, and will be exempt from all direct and indirect taxes and fees during the 10-year construction period of the P740-billion project.

After the full construction of the development, SMC will still be free from paying income and real estate taxes until authorities determine that it has "fully recovered its investment cost."

"Incentives are not bad," Sen. Richard Gordon said in plenary.

"It is something we need that will enhance other airports like Clark, Subic, and the New Manila International Airport," he said.

Senate Majority Leader Juan Miguel Zubiri backed Gordon's claim, saying the construction of a new airport is "a no brainer."

"We really need this not just today. We needed this yesterday," Zubiri said.

"Neighbors in ASEAN have been investing billions of dollars on their airports... This is a welcome development for our country," he said.

'NO GAMBLING' ZONE

SMC's decision to ban casinos and other gambling activities in the Aerocity "will be a big plus," Gordon said.

"There will be no gambling activity allowed within the area," he said.

"We don’t have to rely on gambling... We can rely on the genius and talents of our country," he said.

The 2,500-hectare development in Bulacan is expected to decongest the Ninoy Aquino International Airport (NAIA), provide thousands of jobs, build more road networks, and improve the real estate value of nearby areas, San Miguel said in an earlier statement.

The terminal will have 4 runways that can be expanded by up to 6, and can cater to 100 million passengers annually, the company said.

The new airport is expected to bring "trillions of dollars" in economic activity, 35 million tourists annually as well as 30 million tourism-related jobs for people in Bulacan and nearby provinces, it said.

'FLOOD-PRONE AREA'

While the new airport will be built in a flood-prone area, Department of Science and Technology Undersecretary Renato Solidum said it was still safe to build the airport in the area provided that SMC would apply "special engineering interventions."

Architects and builders of Singapore's Changi and France's Charles de Gaulle airports were tapped to design the New Manila International Airport in Bulacan, SMC earlier told lawmakers.

"This is our biggest investment in a single project to date, one that will definitely impact the lives of millions of Filipinos and the country in general - all the more reason for us to push for greater sustainability and choose the best people to work with us," SMC president and COO Ramon S. Ang said last year. 

Residents who were displaced due to the construction of the new SMC project have been relocated to other areas, while fishermen who lost their livelihood due to the development will also receive new boats to reestablish their livelihood, Ang had said.

"We want Bulacan to eventually become the seafood capital of the Philippines where seafood is exported to other countries, and tourists come in droves to sample them--similar to what happened to Japan’s Tsukiji for so many years," Ang said.

SMC'S unsolicited proposal to build the airport was unopposed during a 2019 Swiss challenge, required for every public-private partnership projects. 

'17 YEARS' IN THE MAKING

The idea of constructing a new airport near the capital city was first conceived in 2003, Senate President Vicente Sotto III said.

"This was an idea that was born 17 year ago, on November of 2003," he said.

Among those who helped in brainstorming the future mega development were the late SMC chairman Eduardo "Danding" Cojuangco, SMC president Ramon Ang, late actor Fernando Poe Jr. (FPJ), former senators Gregorio Honasan, Eduardo Angara and Tessie-Aquino Oreta, he said.

"Thinking that FPJ would be the next president, we had the idea of building a new airport... we did not know the location yet," said Sotto, who helped in the late actor's presidential bid in 2003.

The Senate President thanked his colleagues for unanimously approving SMC's franchise to build and operate the airport after nearly 2 decades since the idea was hatched.

Bulacan Sen. Joel Villanueva also thanked his colleagues, saying that the project would help his province especially as the country reels from the health and economic impact of COVID-19.

EXEMPTED FROM NEW CORPORATE TAX RATES?

Senate Minority Leader Franklin Drilon said the airport project in Bulacan should not be covered by future laws that may in effect "remove all incentives" given to SMC.

"This becomes a contract between the investor and the State," Drilon said.

"Principles of equity will not permit that after the state granted incentive, it will change it... That is changing the contract between the state and the grantee," he said.

Senate Committee on Public Services Grace Poe agreed with Drilon, saying that the government should honor the contracts signed before the passage of any law rationalizing tax rates and incentives.

"It is really detrimental if you move the goal posts in the middle of the game," she said.

"The terms should not be repealed by a general law or anything after that because the government really needs to honor its contract," she said.

The issue was raised as the Senate is expected to pass this week the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill, which would reduce several incentives given to long-time investors in certain areas in the country.