For frustrated billionaires, the Philippines isn't fun

President Rodrigo Duterte with Vice-President Leni Robredo attend the Philippine National Police Academy graduation ceremony in Camp Castaneda

President Rodrigo Duterte with Vice-President Leni Robredo attend the Philippine National Police Academy graduation ceremony in Camp Castaneda

Published Apr 1, 2017

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One of the first things Rodrigo Duterte's economics team

did in September, three months after the drugs-busting former city mayor became

president of the Philippines, was call for bids to upgrade and operate the main

Ninoy Aquino International Airport in Manila.

From San Miguel and Ayala to Metro Pacific Investments

and Aboitiz Equity Ventures, the $1.5 billion public-private partnership is the

kind of big-ticket infrastructure project the country's conglomerates have been

waiting for for years. Besides, it's critical for the booming Philippines'

economy to get a roomier airport, given IATA's forecast of 140 million

passengers by 2035, more than double current levels.

Yet it's unclear if Duterte will actually upgrade Ninoy

Aquino, or back San Miguel's plan to build a brand new $14 billion, six-runway

facility in Bulacan, to Manila's north. He may even choose to go with rival

Henry Sy's SM Group, which has teamed up with the Tieng brothers to construct

an air and seaport at Sangley Point, south of Manila.

This last project has the added attraction of having a

Chinese company on board. Duterte wants to bury a territorial dispute with its

powerful neighbour. Hitching his country to Beijing's One Belt-One Road

bandwagon - as long as China Communications Construction Co. bears a chunk of

Sangley Point's $20 billion cost - isn't a bad option.

Read also:  Philippine miners seek to block minister's appointment

With so much riding on Duterte's final decision,

investors shouldn't be surprised if the president chooses to do nothing. The

Aquino airport upgrade was put on hold in February. And this is what is making

billionaires anxious. From airports to energy - where the country has in the

words of one conglomerate gone "hog wild" on renewables - businesses

are waiting for clear policies so they can place their bets accordingly.

Infrastructure in the Philippines is all about one

billionaire trying to beat another. A consortium of Ayala and Aboitiz won the

right to build and operate an expressway in 2014, but Ramon Ang's San Miguel

whined about a typo in its bank guarantee. Former President Benigno Aquino was

forced to do a rebid, which San Miguel then lost to Manuel Pangilinan's Metro

Pacific. The government earned $300 million more than it would have by

sticking with the original winner. Still, the 47-kilometer road won't be ready

until 2020 and traffic congestion in Manila extracts a price on the economy

every day.

Other shortages will take even longer to clear. Senator

Francis "Chiz" Escudero supports Duterte's decision to build bridges.

It fills an obvious need in a nation of more than 7 000 islands, he says. Even

so, the politician wonders how long it will take the task to get done when even

feasibility studies and firm cost estimates aren't available yet.

Dithering on urgently needed infrastructure has proved

very expensive for the Philippines and the longer Duterte delays hard

decisions, the more worrisome the situation will get. Not just for jittery

billionaires, but also for investors.

This column does

not necessarily reflect the opinion of Bloomberg LP and its owners.

BLOOMBERG

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