Bulacan airport franchise gets final Senate nod

MANILA, Philippines — The Senate on Monday approved on third and final reading a bill granting a 50-year franchise to a subsidiary of San Miguel Corp. (SMC) to build an airport in Bulacan.

With 22 affirmative votes and no negative votes, senators passed House Bill No. 7507, which grants a franchise to San Miguel Aerocity Inc. to “construct, develop, establish, operate and maintain a domestic and international airport” in Bulakan, Bulacan.

Under the bill, the franchisee will also have “the right to construct, acquire, lease, operate or manage such properties as are convenient or essential to efficiently carry out objectives of this Act, such as toll roads, railroads, mass transport systems, hotels, warehouses, hangars, aircraft service stations and other facilities, as well as to develop the areas adjacent to the airport into one integral and comprehensive development, hereinafter collectively referred to as the Airport City.”

“All airport properties and facilities owned, maintained, operated, or managed by the grantee, its successors or assignees, shall be operated and maintained at all times in the best, cautious, and diligent manner and in accordance with the standards, practices, and procedures required by the Manual of Standards-Aerodromes,” the bill said.

The firm must secure from the Civil Aviation Authority of the Philippines (CAAP) appropriate certification, permit or license for the construction, installation, and operation of the airport, the bill said.

The franchisee is also required to submit to Congress an annual report on its compliance with the terms and conditions of the franchise and on its operations. This report will be a prerequisite for any of its applications for permits and certificates from the CAAP.

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

This franchise will take effect for a period of 50 years after the proposed law is passed. The term of the franchise includes the airport’s 10-year construction period.

After the franchise expires, the grantee should turn-over the ownership of the airport to the Department of Transportation, according to the bill.

Tax perks

The franchise bill also exempts San Miguel Aerocity Inc. from all direct and indirect taxes and fees during its construction period. These tax perks include the exemption from permit fees collected by local and national government entities.

After the construction period and during its franchise’s remaining term, it shall be exempt only from income and property taxes until it has recouped its investments. After this, it shall be subjected to all taxes from thereon.

Aside from taxes post-recovery of investment, the government also stands to share in its revenues more than its profit margin of 12 percent, the bill added.

Senator Grace Poe, who sponsored the franchise bill on the floor, said that 450,000 jobs will be created during the construction of the airport alone.

“And then after that, upwards of a million people will be able to benefit from the undertaking; not to mention the hundreds of thousands of passengers who will fly in and out of the country every day,” she said.