Ramon See Ang, president and chief executive officer of Top Frontier Investment Holdings Inc., the largest shareholder of San Miguel Corp., doesn’t just dream; he plans. And when he does, he’ll make sure his plan comes to fruition.
In the early 2000s—in our late dinners at the penthouse of Manila Diamond Hotel with my dear friend and mentor, the late Max Soliven (former Philippine Star columnist and Editorial Board Chairman) and sometimes with the late Ambassador and former San Miguel President-Chairman Eduardo ‘Danding’ Cojuangco—Ang, who is also current San Miguel president and chief operating officer, would regale us with his ambitious goal of diversifying the flagship company outside of its core businesses. His dedication and passion for nurturing San Miguel to become a world-class conglomerate was unquestionable. One of his plans was to build an airport worthy of world praise.
Max, who passed away in November 2006, didn’t live long enough to see the fruits of Ang’s vision. Nonetheless, Max proclaimed in one of our sessions that “everything Ramon touches would turn into gold.” True enough, publicly listed San Miguel has been transformed into a multinational corporate behemoth.
It is now the country’s largest corporation in terms of revenue, employing more than 24,000 in over 100 major companies throughout the Asia-Pacific region. In 2008, it began its foray outside of its core businesses: oil refining and marketing (Petron Corp.); infrastructure (Skyway projects); properties (Wedgewoods in Sta. Rosa, Laguna, and Makati Diamond Residences in Metro Manila), and power generation (Ilijan, Sual, San Roque power plants), among many others.
Despite its diversification, San Miguel hasn’t lost its focus on its flagship product. San Miguel Beer is still one of the top-selling brands whose market extends to Hong Kong, China, Indonesia, Vietnam, Thailand, Malaysia, and Australia. Its products are exported to 60 markets around the world.
With Ang’s business pedigree, I have no doubt that his latest airport venture, as Max had predicted, would haul countless golds.
Surviving the government’s exasperating bureaucratic rigmarole, San Miguel finally received the greenlight to start its long-delayed airport project. On October 12, the Senate voted 22-0, to grant San Miguel Aerocity Incorporated a franchise to construct and operate the planned P736-billion New Manila International Airport in Bulacan. It is now up for President Rodrigo Duterte’s signature. Once Duterte signs it—finally turning the act of Congress into law—the 10-year construction immediately commences.
The Bulacan airport will create up to a million jobs with 450,000 workers given livelihoods during its construction alone. Because it will be done under the government’s Public-Private Partnership (PPP) initiative, the government spends nothing. San Miguel puts up the funding, builds the airport, gets paid by operating it for 50 years, and turns over the project to the government.
I’m not sure if this project, which is being undertaken under the PPP scheme, signals the Duterte administration’s change of heart regarding the program that it views with derision. Nonetheless, I believe that it is a step in the right direction.
During its early years, the Duterte administration has scoffed at the protracted execution and lulls in PPP projects. Since the program commenced in the third quarter of 2010 during President Benigno S. Aquino III’s administration, only four of the 56 PPPs that were initiated had been completed as of end-2016. The delays were caused by funding, right-of-way acquisition, and contract changes.
But what really triggered Duterte’s aversion to PPPs is his infatuation with China’s money. In his visit to Beijing, he and Chinese President Xi Jinping agreed to 13 “mutually beneficial deals” involving transportation and infrastructure projects. Since then, the government has shifted to Official Development Assistance for infrastructure projects, and less PPPs. Finance Secretary Carlos Dominguez III reasoned that avoiding the PPP route on certain infrastructure projects would fast-track completion and save on costs.
The BMI Research, a unit of Fitch Ratings, noted then that with the Philippines’ friendlier ties with China, the Duterte administration had taken a “government-centered investment approach,” in blunt contrast to former President Benigno Aquino III’s reliance on PPPs to finance big-ticket infra projects.
But has China delivered? So far, the only visible signs of Chinese money are the Chico River Dam project, which has yet to take off, and the expensive retrofitting of a bridge in Makati City. Instead, what China has given us are multitudes of Mainlanders engaged in Philippine Offshore Gaming Operators, which China itself deems illegal, and the 3rd telco with espionage-related suspicion. Chinese bureaucracy also stifles China’s pledged financial assistance to the Philippines.
With public spending on infrastructure expected to breach the P1-trillion-mark in the years after the pandemic to support the Duterte administration’s ambitious “Build, Build, Build” program, the Philippines could do well in entering into more PPP projects.
The 2,500-hectare Bulacan airport project, which excludes a city complex to be built on a 2,500-hectare site along Manila Bay in Bulakan town, is expected to decongest the Ninoy Aquino International Airport (Naia). With 4 runways, 8 taxiways, and 3 passenger terminals, it is projected to serve some 100 million travellers yearly.
To say that the Philippines urgently needs a state-of-the-art airport is an understatement. The Naia is currently on life-support system, practically on its deathbed. Plans to revive it through the concerted effort of the country’s biggest corporations are still up in the air, even though pre-pandemic traffic at the Naia was already at saturation point.
Just imagine the positive economic impact the San Miguel project can have not only on the province of Bulacan, but most especially the entire country. Airports are a great economic stimulant. We’ve seen how they drive economic development worldwide.
Dr. John Kasarda and Greg Lindsay, who collaborated on their recent book Aerotropolis-The Way We Live Next, are two of the most preeminent scholars, authors and experts on airports, urbanization, and the economic impact of airports.
Kasarda and Lindsay have documented that Class A office space in, and around new airports often exceeds that of comparable space in the metropolitan cities they support, and retail-shopping space returns revenues per square meter of floor space up to six times that of comparable malls in the nearby cities.
Airports produce jobs, inflate the tax base, and excite the economy. The country’s leaders should realize that the times have evolved, and the economy has been altered. The sooner they understand the socio-demographics and effects of urbanization, the better they could respond to the needs of the times.
For comments and suggestions, e-mail me at mvala.v@gmail.com