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.
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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.