Biz Buzz: Starting the year right

Starting the year right

The year 2019 will be a big one for publicly listed Philippine Infradev Holdings Inc.—formerly known as IRC Properties Inc.—which, if all goes according to plan, will break ground on the $3.7-billion Makati City subway system in the next few weeks.

Biz Buzz learned that businessman Antonio Tiu is already looking at a specific date for the start of the digging soon after the Chinese New Year on Feb. 5.

We’re not sure if Feng Shui came into play here, but the coming Year of the Pig is known to be a good time for starting ventures in Oriental astrology.

We are sure, however, that the Makati subway consortium still has to get the final nod of the city council whose majority, at present, are hinting at reservations about the project. That’s because all but two are allied with former mayor Junjun Binay, who is politically at odds with his younger sister, the incumbent Mayor Abby Binay.

Are the project proponents worried? Well, not really. We heard that the people behind the subway project expect the opposition in the city council to dissipate once the campaign season for next year’s elections nears.

That’s because every councilor who wants to be reelected will be counting on the support of Makati City’s most influential endorser: former Vice President Jejomar Binay, who has made it clear that he is with his favorite daughter, Abby, in this fight. And we’re not just talking about a verbal endorsement of candidates, but the actual support of the party, which includes campaign resources.

The good news for taxpayers is that the project will involve no cash outlay from the city, which will, instead, allow the land it owns to be used for the subway system as part of the deal. It will connect key points in Makati.

The dual track subway system will have up to 10 air-conditioned, underground stations that can accommodate up to six car trains, with room for more than 200 passengers per car. Over 700,000 passengers a day will be accommodated and served by the proposed mass transport system.

The subway will be inaugurated in phases, with total completion slated by 2025. But for that to happen, it has to start this year. Will the city council cooperate? Abangan. —DAXIM L. LUCAS

Slow infra project approval

With the way things are moving, 2019 might be the year that some unsolicited projects indeed take off.

At least two big-ticket items, the P735-billion Bulacan airport proposal of San Miguel Corp. and the P102-billion offer from Naia Consortium, are expected to start construction within 2019.

A slew of provincial airport projects, such as those in Bohol, Kalibo, Davao and Laguindingan, are also expected to progress.

In all, the PPP Center said it amassed more than 17 unsolicited offers worth P1.4 trillion for 2018. These also include offers to preserve Laguna Bay, provincial bulk water supply projects in Pampanga and a Kalibo slaughterhouse.

Perhaps the question on investors’ minds is: How fast will any of these move?

In a recent press conference, PPP Center officials said they awarded a single project (well, technically two projects) in 2018—the Clark Airport expansion and operations and maintenance components.

The Clark Airport bidding, which was solicited, was indeed relatively fast, but let’s not forget this was based on previously finalized studies.

Some keen on submitting unsolicited offers wonder: Will it take as long as the approval of SMC’s Bulacan Airport offer, which was some two years in the making and still not done?

The previous PPP regime was often criticized for being too slow. However, the current administration’s shift to hybrid structures and unsolicited offers has yet to show a clear and consistent time advantage.

Based on the stories we’re hearing, unsolicited offers are indeed being amassed. The problem is there is still little movement beyond that. The first line of movement—or delay—are the implementing agencies, which often lack the proper manpower or expertise to review the projects.

In some cases, a company— ahem, Metro Pacific—can win original proponent status for a project only for the implementing agency to later say they might go a different direction.

Then there’s the National Economic and Development Authority, which has to make similar hard choices on how to proceed. Our sources say many of the unsolicited projects that come before Neda are out of sync with the government’s own infrastructure agenda.

One seasoned PPP insider from the private sector joked that the projects with the best chances of moving forward in this administration were “solicited unsolicited projects.” That’s obviously an inside game. The question to would-be investors is: Are you inside or out? —MIGUEL R. CAMUS

Competition in gov’t

It seems Eliseo Rio Jr., acting secretary of the Department of Information and Communications Technology, has to fight every step of the way to get badly needed reforms in the telco sector moving.

Through most of the year, it was the third telco selection process and its once contentious rules. With 2018 coming to a close—and with Rio’s departure forthcoming—it has to do with the so-called common tower policy.

The rules, at their core, are important in that they will create a framework to accelerate the construction of cell sites, the lack of which has been blamed for poor mobile services in certain areas.

The rules have yet to be finalized, perhaps because the draft rules released by the office of presidential adviser Ramon Jacinto, who is spearheading the initiative, appear headed straight to court should they be released as such.

The final work week before the Christmas break, the DICT chief apparently got tired of waiting. He signed an agreement to support one of the groups that submitted an offer to become a common tower builder.

Rio told Biz Buzz that he would sign similar deals with any group that would approach the DICT.

In other words, the DICT signaled its openness to proceed with cell tower-sharing even without the rules, which Rio said might be unnecessary.

The caution, from the DICT’s point of view, is understandable given that one of the most important beneficiaries of tower-sharing is the third telco player, which is expected to start rolling out its network next year.

What good are a set of rules if these are buried under court cases that are sure to come?

A day after Rio signed the agreement with tower provider ISOC Infrastructures of businessman Michael Cosiquien, Jacinto’s office said he welcomed the deal but made clear his rules would be out by early 2019 and these would be enforced.

His statement also suggested that the most controversial parts of his policy—keeping the tower providers independent of any telco ownership and barring the incumbents from building new cell sites—would remain.

Moreover, Jacinto said he would limit the tower providers to just two operators for the first four years, despite concerns raised by the Philippine Competition Commission. The reason was business viability but lately, Jacinto said it was also in aid of national security.

In the end, the unfortunate situation leads to a lot of confusion in the industry. Who do they follow? The DICT, which will ultimately implement the policy, or Jacinto’s office, which is drafting the rules?

It’s often said that competition is good. We’re pretty sure this didn’t mean competing interests among government bodies. —MIGUEL R. CAMUS