THE Tourism Infrastructure and Enterprise Zone Authority (Tieza), an attached agency of the Department of Tourism (DOT), is seeking private-sector partners to manage several of its assets and properties currently being used for tourism purposes.
The joint venture management contract tack, under Tieza’s Public-Private Cooperation Program, was approved as additional modalities for privatization in the agency’s board meeting last October 8, and included all of its assets and tourism enterprise zone (TEZ) development projects.
“We want to broaden the scope of privatization, as well as provide additional options of modes of contractual arrangements which the local or foreign investors can avail themselves of,” explained Tieza Chief Operating Officer Pocholo Paragas.
This strategy is a significant departure from the scheme proposed by the previous Tieza management where full privatization, i.e., sale of the properties to the private sector, would be pursued.
A government source disclosed full privatization was not considered by Tieza due to President Duterte’s apparent directive not to sell any government assets, as gleaned from the reversal of the Government Service and Insurance System’s approval of a sale of the port area property occupied by the International Container Terminal Services Inc. (ICTSI).
However, a joint venture strategy between the government and the private sector hasn’t been so smooth sailing either, as seen recently in the voiding of the lease contract of gaming firm Landing International with the Nayong Pilipino Foundation for a property to build the former’s planned casino, due to corruption allegations.
Under Tieza’s proposed joint-venture scheme, Tieza will retain control and supervision of its assets, but will be able to tap private-sector expertise for the day-to-day operations of said assets, as well as private- sector funding of necessary improvements of the assets.
Tieza used to be the Philippine Tourism Authority (PTA), also under the DOT.
Asked how profitable would the latter be for the private management firm if it were to manage Tieza’s property, as well as invest in the renovation of the property, Paragas told the BusinessMirror: “The finer details will be contained in the terms of reference for solicited proposals. Initially, we have identified and approved the minimum financial bid parameters for Club Intramuros Golf Course [CIGC] and Balicasag Island Dive Resort [BIDR]. Under this mode, the government is guaranteed inflow of revenues and infusion of capital investments to enhance the marketability of the asset.”
He added, for “the other properties, the private sector can make their unsolicited proposals for consideration of the JV Selection Committee.”
Under a usual management contract or partnership agreement in the private tourism industry, hotel property owners sink in the funds needed to renovate or improve the structure or building, not the hotel management firm.
Paragas said that, with the expertise and capital of the private sector, Tieza hopes to improve these facilities and enhance their operations, which have been incurring losses in the past years. Both properties will be bidded out to the public in the last quarter of the year.
For his part, DOT Undersecretary for Legal and Special Concerns Edwin R. Enrile said several modes of joint-venture agreements may be pursued with the private sector, “not just a management contract. It can be a long-term joint venture with Tieza, where Tieza’s equity is land/existing structure. It can also be a long-term lease.”
Asked if the private sector could bid for several Tieza properties as a group to give these greater value, Enrile said, “bundling properties may be possible.” Enrile sits on the Tieza board, representing the chair, the DOT chief.
In a news statement, Tourism Secretary Bernadette Romulo Puyat said opening Tieza assets to public-private partnerships “will help accelerate tourism investments and development of tourism infrastructure in the country, enhancing revenue streams for the agency with less financial exposure of government.”
CIGC is one of the oldest golf courses in the Philippines. It is located at the heart of Manila and near government offices, universities, hotels, museums, commercial establishments and identified as the site for a cruise port. It also offers the only night golf in Manila.
BIDR is the only resort situated in the entire Balicasag Island, in Panglao, Bohol. The entire island has a total land area of 25 hectares. The resort itself occupies 1.5 hectares of the island. With its marine sanctuary and five diving sites, the island dive resort is a prime ecotourism destination.
Other notable Tieza assets also to be offered for “privatization” include the Banaue Hotel in Ifugao, the Argao Beach Club in Cebu, the Zamboanga Golf Course, and properties in Matabungkay, Batangas; Moalboal, Cebu; and Talisay, Batangas.
Image credits: Tieza web site