Senate approves 50-year franchise for Bulacan International Airport

Published October 13, 2020, 12:34 PM

by Mario Casayuran and Vanne Elaine Terrazola

The Senate unanimously approved on third and final reading in Tuesday’s plenary session House Bill 7597 which grants a 50-year franchise to San Miguel AeroCity, Inc. (SMAI) to construct and operate the proposed Bulacan International Airport. 

(San Miguel Corporation / MANILA BULLETIN)

Senator Richard J. Gordon sees the construction of the proposed Bulacan International Airport as an opportunity to boost the country’s economy and provide jobs for thousands of Filipinos. 

“I am happy to co-sponsor this bill principally because it is a no-brainer in terms of development. It is something we need that will enhance other airports like Clark, Subic, and the New Manila International Airport,” Gordon said. 

Senator Grace Poe said the government stands to lose nothing on the planned construction of the new Manila International Airport (MIA). 

The chairperson of the Senate public services said San Miguel will be spending as much as P1.5 trillion into the Bulacan airport project, ₱734 billion of which will be for the construction of the airport. 

“There are no government guarantees here. What they are promising is, any amount in excess of the 12-percent rate of return will go to the government. If they do not make the 12 percent, they will still be responsible for the airport even if they have to operate at a loss,” Poe, who sponsored the franchise bill, said in a statement. She added that if San Miguel loses money from the Bulacan airport project, the government is not obliged to give it funding. 

“There is no provision here whatsoever that says the government will step in to bail them out,” she said. 

Gordon said he just spoke with business tycoon Ramon Ang, the Vice Chairman, President and COO of San Miguel Corporation (SMC), and discussed the possible investments in Central Luzon. 

“Ramon Ang intends to attract Foxconn, assemblers of Apple products, which means that a lot of jobs during the construction phase and in logistics operations in the manufacturing will be created. If we can attract Foxconn and other investors here, it will definitely be a big boost to our country,” he said. 

The SMC had earlier committed to build the new MIA at no cost to the government. 

No-gambling zone Gordon added that the “nogambling” zone policy in the Aerocity is “a big plus.” 

“The nice part about it is that there will be no gambling activity allowed within the area. That’s a big plus and it can show that we don’t have to rely on gambling to get new investments. We can rely on the genius or talents as a country,” he stated. 

The franchise allows SMC to develop the AeroCity alongside Bulacan airport. 

According to the bill, the corporation will be exempt from all direct and indirect taxes until the Bureau of Internal Revenue (BIR) determines that it has already recovered its investment cost. 

“Incentives are not bad especially if we’re going to see such a huge investment and we support this because within the realm of COVID problems, this will be another solution upon which we can rely on making sure that we can get investments,” said Gordon. 

“It is a great pride and honor that we are able to make our vote here formally and say a big yes. It will show that Filipinos can really compete with the rest and the best of the world,” he added. 

The firm will be required to submit an annual report to Congress. This report will be a prerequisite for any of its applications for permits and certificates from the Civil Aviation Authority of the Philippines. 

Failure to submit the annual report on or before April 30 of every year will be penalized with a fine of P1 million for every working day that it is not submitted. 

Under the franchise, the tax exemptions for the proposed Bulacan airport will take effect until the Bureau of Internal Revenue (BIR) determines that San Miguel Aerocity has recovered its investment in the development.

San Miguel Aerocity will then be subjected to all taxes under the National Internal Revenue Code of 1997 and the amended Customs Modernization and Tariff Act. 

And once investments have been recovered, San Miguel will be allowed to earn an internal rate of return of 12 percent per annum, with anything in excess to be remitted to the national government. 

The internal rate of return shall be computed within three months after the BIR’s determination that the investments have been recouped. 

San Miguel will also be required to sell at least 20 percent of San Miguel Aerocity in the stock market within five years after the BIR’s determination. 

Poe had said that the airport project will provide 450,000 during the construction phase and is expected to create up to a million upon its completion. 

She also said that San Miguel has spent ₱98 million to compensate 364 residents with ₱100,000 each for them to build concrete houses and ₱250,000 in cash plus additional aid of ₱3,000 to ₱20,000.