Senate approves San Miguel's franchise for Bulacan airport on 2nd reading

After more than six hours of interpellation, the Senate on Monday night approved on second reading a bill granting San Miguel Aerocity Inc., a subsidiary of San Miguel Holdings Corp., a franchise to construct and operate the New Manila International Airport and an adjacent Airport City in Bulacan.

Senator Grace Poe, sponsor of House Bill No. 7507 in the upper chamber, assured her colleagues that the expected foregone government revenues due to the tax incentives that will be given to the developer during the 50-year franchise would be compensated by the projected economic growth in the province.

"At this point, without the airport, there really won't be any income that would be comparable to one if there already is an airport. I don't think there is any foregone income to begin with because there is no airport there yet. We're not losing anything, in fact we are gaining," Poe said.

The developer projects to make a P50-billion profit in ten years following the first ten years of the franchise which would be dedicated for construction, she added.

Once the franchise bill is signed into law, the construction of the P735-billion airport project shall commence within a year, according to Poe.

About 400,000 jobs are expected to be created for the construction of the airport alone, she said.

During the 10-year construction period of the Bulacan airport, the San Miguel Aerocity shall be exempted from all direct and indirect taxes and fees.

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

The bill also states that any amount in excess to the 12% internal rate of return shall be remitted by the grantee to the national government.

After the 50-year lifetime of the franchise, the airport shall be turned over to the government.

Poe said the Bulacan airport is expected to accommodate up to 70 million air passengers annually—double the current capacity of the Ninoy Aquino International Airport in Pasay City.

Displacement of residents, environmental concerns

Poe also expressed confidence that San Miguel Aerocity will ensure the safe relocation of the residents who will be displaced by the development.

"A total of P98 million was given to 364 home owners. SMC gave them P250,000 cash plus additional cash aid of P3,000 to P20,000 and then for concrete houses they were given P100,000," she said.

Some had already been relocated to other areas in Bulacan, Binangonan in Rizal, Nueva Ecija, and Antipolo, among other areas, according to Poe.

She also addressed concerns on the "bird strikes" that may be experienced if the airport is constructed since migratory birds frequent the area.

"I think that the entire Bulacan is subjected to bird migration and SMC has wildlife management plans consistent with the DENR (Department of Environment and Natural Resources) and CAAP (Civil Aviation Authority of the Philippines)," Poe said.

The senator said the company also committed to dredge rivers to solve the problem of flooding.

"With the airport, they even have more interest to make sure that it is safe and it will not be affected by floods," she said.

She also emphasized that the franchise does not exempt the franchisee from securing environmental permits from the DENR.

Last month, the Philippine Institute of Volcanology and Seismology raised flooding and other geohazard concerns on the construction of the Bulacan airport.

In response, San Miguel Corp. president and chief operating officer Ramon Ang said the conglomerate is tapping the three airport construction firms involved in the development of Singapore’s Changi International for the Bulacan airport.

'Hanging issues' with CREATE bill

Senate Ways and Means Committee chairperson Pia Cayetano said that although she supports the measure, she has reservations on the possible implications of the airport franchise to the corporate income tax reform bill since the former carves out specific incentives for the airport developer.

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill seeks to rationalize tax incentives by making them time-bound and performance-based.

"I submit to the wisdom of my colleagues for future bills that will require exemption from the CREATE bill that we intend to pass," Cayetano said.

"If a company will find another agreement with the government that they feel will be beneficial to both the government and that business, then I don't think we should take offense if another agreement is forged without the use of CREATE," Poe said in response. -- By DONA MAGSINO, GMA News