For Sangley Airport, Cavite bats for tax breaks similar to SMC’s
The Cavite government will explore tax breaks and a franchise from Congress for a planned P500-billion international airport that is being positioned to eventually replace the aging Ninoy Aquino International Airport (Naia) in Manila.
Jesse Grepo, secretary of the local government’s Public Private Partnership selection committee, said on Thursday they remained open to this prospect after a similar bill for San Miguel Corp.’s (SMC) P735-billion “Airport City” in Bulacan advanced this week.
“If possible, why not?” Grepo said in a text message.
He said the Cavite government was waiting for its joint venture partner to submit its final postqualification requirements for the initial phase of the Sangley Point International Airport project.
The partner, the consortium of billionaire Lucio Tan’s MacroAsia Corp. and state-run China Communications Construction Company Ltd. (CCCC), has until Sept. 9 this year to comply.
Citing the COVID-19 pandemic, the consortium has sought several extensions after bagging the project last February.
Further complications emerged this week after the US government placed 24 Chinese companies and individuals on a sanction list for their role in building artificial islands on disputed waters in the West Philippine Sea. The list includes subsidiaries of CCCC.
“[We are] still awaiting for formal pronouncement from the Philippine government with regard to that,” Grepo said.
MacroAsia-CCCC was the lone bidder in the Sangley Airport project, which will rise on reclaimed land on Manila Bay.
Starting with a single runway and a passenger capacity of 25 million per year, the project will eventually become a four-runway airport complex with an annual capacity of 130 million passengers.
On the other hand, San Miguel’s Airport City will rise in Bulakan, Bulacan province, some 40 kilometers northwest of Manila.
On Wednesday, a House Committee approved a rare franchise allowing SMC to build and operate an international airport in Bulacan.
With a term of 50 years, the bill also granted SMC a host of tax breaks, which the Department of Finance said it would oppose.
These include exemptions from all direct and indirect taxes during a 10-year construction period.
SMC would be exempt from income and real property taxes for the duration of the concession until a “competent authority” determines the food, drinks and infrastructure conglomerate had fully recovered costs and expenses.
Issues such as burdensome taxes were among the factors that caused the collapse of Naia Consortium, the private sector group that sought to modernize and operate Naia.
The government is also entitled to earnings beyond the 12-percent internal rate of return after SMC has recovered costs.
Under the bill, the government takes half of income in excess of 12 percent and 100 percent in excess of 14 percent. The government’s share will be calculated and remitted at the end of the concession period.
SMC president Ramon S. Ang earlier said the airport project would begin construction in October this year.
Projects such as SMC’s Airport City and the Cavite government’s Sangley Airport came before the COVID-19 pandemic, when worsening congestion in Naia was weighing on the Philippine economy.
