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DoTr taps San Miguel to build ₱734B Bulacan International Airport project

) Allan Tripon |

The Department of Transportation (DoTr), in a department resolution passed last August 14 2019, has tapped Ramon Ang’s San Miguel Holdings Corp.(SMHC) to construct — and eventually operate and maintain — the proposed ₱734 billion ($15 billion) Bulacan International Airport (also known as the New Manila International Airport). The project, which is slated to be completed before the end of 2025, is expected to significantly boost the government’s efforts to develop the provinces around the Metro and decongest the country’s National Capital Region.

The New Manila International Airport
San Miguel’s president and Chief Operating Officer Ramon Ang envisions the proposed New Manila International Airport to be a “sustainable and world class Philippine gateway with enough runways and facilities to meet current and future needs (SEE: San Miguel officially awarded P 734 billion Bulacan airport project, Business World).” The airport will have four to six parallel runways, spanning over 2,500 hectares of land and having an annual capacity of 100 million passengers annually. For comparison, the Ninoy Aquino International Airport (NAIA) — the country’s flagship airport — only has two runways and was built to accommodate only around 31 million passengers per year.

The entire project is expected to cost roughly ₱734 billion ($15 billion). The entire amount will be shouldered fully by San Miguel HC, as the sole bidder for the project. In order to fund this large capital outlay, SMHC is looking to raise ₱10 billion through the issuance of five year bonds by October of this year. On top of the bond issuance, San Miguel also has several bank loans in the pipeline — the proceeds of which will be utilized for the construction (SEE: SMC plans P 10 B bond issuance, The Business World). The rest will be financed through San Miguel’s internally generated funds.

Currently, the airport project is still in the documentation phase. San Miguel is required to submit a performance bond and letters of bank credit to the Department of Transportation's Special Bids and Awards Committee by September 3 — exactly 20 days after the award of the bid.

Concurrently, San Miguel is already tapping various world renowned companies in order to work on the design  of the Bulacan airport. Some of these notable companies include Groupe ADPi, Meindhart Group, and Jacobs — all of which have designed various world class airports around the world. These three groups boast an impressive portfolio of international projects such as Singapore’s Chiangi Airport (designed by Groupe ADPi), France’s Charles de Gaulle Airport (designed by Meindhart Group), and Jackson Atlanta International Airport (designed by Jacobs) (SEE: SMC names three global firms to design, build P734 B Bulacan Airport, The Philippine Daily Inquirer).

Barring any unforeseen delays, the Department of Transportation executives claim that the project’s construction will commence in the fourth quarter of 2019 and is  expected to last between four to six years. The New Manila International Airport is slated to be fully operational before the end of 2025.

Decongestion of the National Capital Region
The completion of the New Manila International Airport in 2025 will provide a significant boost to the government’s recent efforts to decongest Metro Manila. The airport has the potential to be (1) a world-class alternative to the Ninoy Aquino International Airport (NAIA) and (2) a key catalyst for the development of the provinces around the congested National Capital Region (NCR).

A world-class alternative to the Ninoy Aquino International Airport (NAIA)
The Ninoy Aquino International Airport (NAIA) is currently the official airport which serves the Manila area. Spanning just 7.5 hectares right at the heart of the Metro, NAIA only has two runways in its three terminals — with an annual capacity of 30 million passengers.

As of 2018, the port serves over 46 million passengers annually — a figure which has grown at a compounded annual growth rate of 6% annually. At this blistering rate, NAIA would be operating at more than 200% of its capacity (around 65 million passengers per year in 2025) by the time that the New Manila International Airport is scheduled to be finished.

The New Manila International Airport, with an annual capacity of 100 million passengers, can easily absorb the overcapacity from NAIA. Even after absorbing the estimated 35 million excess capacity from its neighboring airport, the New Manila airport would still just be at 35% capacity. Combined, the NAIA and the New Manila airport would be able to cater to 130 million passengers every year.

A key catalyst for the development of the provinces around the congested National Capital Region (NCR)
Aside from helping decongest Metro Manila, building the new airport in Central Luzon can also help stimulate economic development in Regions 3 and 4. A research conducted by Jeffrey Cohen, a professor at the University of Connecticut (UCONN) School of Business supports this idea. According to his paper entitled “Does Airport Access Affect Prices of Various Commercial Properties Differently? A Nonparametric Approach to a Natural Experiment”, the presence of an international airport has a significant effect on the level of commercial activity within the airport’s vicinity. This phenomenon is due to the fact that the airport acts as a gateway which allows local businesses to extend their markets to the outside and which allows foreign businesses to penetrate the local markets.

With this research in mind, it is easy to see why the government chose Batangas to be the home of the country’s newest and largest international airport. The government is trying to get both foreign and local companies to invest in and to establish their businesses in the freeport and economic zones found in Central Luzon such as Clark Pampanga (SEE: Clark: The Next Metro, PropertyAccess). They believe that one of the best ways to entice these investments is by opening up an international airport which would serve as a gateway to the international market.

Overall, Ramon Ang estimates that the New Manila International Airport will directly and indirectly generate over one million new jobs in the region.

(Cover photo from ABS CBN News)