We badly need a respectable international gateway airport, one that does not embarrass us with foreign visitors. All our major ASEAN partners have modern airports and they are still expanding and building new terminals while we basically stagnate.

But things seem to be changing. We have two unsolicited proposals from the private sector to build such an international gateway airport. But before we start cheering, let us sit back to see if this is for real.

Some weeks ago, I reported in this column a plan of Ramon Ang of San Miguel to present an unsolicited proposal to build that airport in Bulacan. Sources told me they have submitted the proposal to DOTr Sec. Art Tugade.

But over the weekend, a rival proposal was announced by a group led by the Solar Group of the Tieng family to build a $50 billion airport and transport complex in Sangley. The Tiengs were able to persuade the SM Group to participate through Belle Corp.

Now the onus will be on DOTr to quickly, but professionally vet the two proposals. That will be challenging to do because first of all, I don’t think government (and that includes NEDA) has the capability to really pass judgment on these big ticket proposals. We need to go beyond crunching numbers to get the hurdle rate. We will need experienced consultants who have done this elsewhere to lead the evaluation process.

Secondly, the two proposals look like apples and oranges and we must not repeat the mistake made with Terminal 3. The Emerging Dragons Corp., organized by our leading taipans at the suggestion of then president Fidel V. Ramos for the purpose of presenting an unsolicited proposal to build Terminal 3, ended up being unfairly treated by government.

During the Swiss Challenge round, government accepted the proposal of PIATCO which was not the same thing as the proposal of the Emerging Dragons Group. Under the Swiss Challenge rules, PIATCO should have stayed within the parameters of the unsolicited proposal of the Dragons.

The FVR administration effectively compared apples and oranges and awarded the project to the group selling oranges. And when the Dragons tried to sue, they were told to just let things go.

None of the taipans wanted to displease FVR so they let it go. In fact, they may have been relieved. They were not all that hot about working with each other. They were just complying with FVR’s request for them to bid for the flagship project.

If DOTr is not careful, they may repeat the mistake of judging what amounts to a beauty contest of very different proposals. The San Miguel proposal is for an airport. The Tieng proposal seems to be more focused on the reclamation, with the airport and the seaport as an afterthought to justify the reclamation.

The way the news stories over the weekend were written, we were made to believe the Sys or the SM Group will lead this project. Indeed, having the Sys lead this project gives it the respectability it does not have otherwise.

The Sys have the resources and the track record of carrying out big projects successfully. The Tiengs have essentially been block time media buyers specializing in sports programs like the Pacquiao fights. They are not in the big league and have no experience in projects like this. They seem to be just brokers.

I sense the Sys are half hearted about their participation and indeed, when I asked, a source close to them said the involvement of the Sys are nothing more than passive investment. I suspected as much. That’s why they used Belle Corp. instead of SMDC or SM Prime.

While the Sys control Belle, it is not managed by one of the Sy siblings. Belle was also used to invest in the buildings that became the City of Dreams because the Sys do not want to be associated with gambling. If you ask them about it, they will say they are only the landlord through Belle.

For the Tieng family’s All-Asia Resources & Reclamation Corp. (ARRC), proponent of the Philippine Global Gateway Project, it is their second attempt for a major reclamation project in Manila Bay. They tried to undertake a reclamation project near the US Embassy called the Manila Gold Coast Project. It was heavily opposed by concerned citizens on environmental grounds and for potentially blocking the scenic Manila sunset.

That’s why it seems obvious to me that Tieng’s basic interest and business model is reclamation first and then airport and seaport later. They are inviting other parties to come in specially on the airport and seaport developments to make up for their lack of resources. I wouldn’t be surprised if they invite SMC to do the airport project with them.

I suspect Belle’s investment interest is also more for reclamation. The Sys, through SMDC or SM Prime, have their own reclamation project in front of MOA. Maybe they can eventually consolidate. JICA had been recommending a “Golden Gate bridge” from Sangley to MOA if Sangley ends up as the new airport site. The area around MOA is SM territory.

Sources close to the Sys told me they cannot tell for now how far Tieng’s project will go. The way it was put to me, “Belle is just a part of Tieng’s whole project and Tieng’s project is just a part of Belle’s investment portfolio.”

The other major investor is CCCC or China Communications Construction Company’s dredging unit. It signed an agreement to pour in $20 billion for the project during President Duterte’s recent state visit in Beijing.

The Chinese firm also signed a memorandum of understanding with Cavitex Holdings and International Container Terminal Services Incorporated for the transportation and logistics infrastructure at Sangley.

But it will be recalled CCCC and its subsidiaries are banned by the World Bank due to “fraudulent practices under Phase 1 of the Philippines National Roads Improvement and Management Project.” It would be risky for a squeaky clean Duterte administration to deal with a Chinese company of questionable ethical standards.

It is claimed ARRC had already presented to the Duterte administration an unsolicited full feasibility study on locating an airport at Sangley.

ARRC president Wilson Tieng was quoted in news reports claiming President Duterte has already “verbally approved” the massive infrastructure project during his fifth Cabinet meeting in August. If this is true, that will tie the hands of DOTr from doing a proper vetting of the two proposals. Lutong Macao na pala.

The project will be built in phases, starting with the reclamation of some 2,500 hectares of land near Sangley. “We will do the reclamation first and then we will start the airport,” Tieng said.

Tieng said the new airport, estimated to cost $20 billion, would have a capacity of 50 million passengers and is envisioned to accommodate passenger traffic well into the year 2050. ARRC said on its website the proposed new airport would be in place of the existing NAIA.

It is important for DOTr to ascertain the financial capability of the group to undertake such a large project. It will also be important to find out what exactly is the role of the Chinese company.

We ought to learn from the NGCP experience wherein the Chinese partner ended up with 40 percent of equity and control of technical matters. National security concerns had been expressed in the case of NGCP and similar concerns can be validly raised for this Sangley project.

Since the Sangley airport project is secondary to the reclamation under the Tieng proposal, it is not likely we will have a new airport within the Duterte term. Completion deadlines and ways of enforcing such deadlines should be imposed on the winning proponent with stiff penalties for failure.

Absolute transparency of the vetting process should also be assured. Again, we ought to learn from the Piatco Terminal 3 experience. Lack of transparency in that project became very costly for the taxpayers aside from delaying the actual use of the facility.

The vetting of the two rival proposals will test the Tugade leadership at DOTr. Hopefully, it will not take them up to the end of the Duterte term before they decide. We needed a new airport yesterday.

Source: http://www.philstar.com/business/2016/11/04/1640169/two-unsolicited-bids-airport