Duterte Plans $1 Billion Airport, Rail in Former U.S. Base (1)

(Bloomberg) -- The Philippines plans to award at least $1 billion of contracts to build an airport and a railway to transform a former U.S. military base into a commercial hub as part of President Rodrigo Duterte’s push to distribute wealth outside congested Manila.

The Bases Conversion and Development Authority wants these and other major infrastructure projects for the area to be awarded by the second half of 2017 and for most to be completed as early as 2019, its Chief Executive Officer Vince Dizon said in an interview in Makati City. The authority will decide by the first quarter of next year whether to invite bids to build or operate the infrastructure, or do both, he said.

“We want the investment community to know that this government isn’t just about addressing crime and drugs,” Dizon, 43, said Nov. 11. “We’re also here to build, build and build.”

Duterte, who won the presidential election six months ago, is lifting infrastructure spending to a record and allocating resources away from the capital, Manila, where traffic and transport logjams cost the economy at least 2.4 billion pesos ($49 million) a day. His government is attempting to fast track development of the planned Clark Green City, which was carved out of the former Clark Air Base used by U.S. forces during World War II. It received just one bid last year to develop part of the proposed alternative capital city.

At 9,450 hectares (23,000 acres), Clark Green City would dwarf the main financial district of Makati in metropolitan Manila, home to the nation’s stock exchange and banks’ headquarters.

Building infrastructure outside the capital is key to attracting investment and boosting the country’s growth potential to as much as 9 percent, Rosemarie Edillon, deputy director general at the National Economic and Development Authority, said Thursday. Third-quarter economic growth was 7.1 percent, the fastest in Asia.

Read more: Duterte’s spending plans for next year

The state body will invite bids for a new 15 billion-peso airport terminal in Clark, north of Manila, according to Dizon. It will include a new international terminal that will double Clark airport’s current capacity to 8 million passengers under the first phase of a 30-year plan developed by Aeroports de Paris, he said.

It will also invite bidders for some projects identified during Duterte’s state visit to Beijing in October. These include a cargo rail line costing as much as $700 million, running from Clark to the Subic coastal area northwest of Manila, an industrial park and facilities for telecommunications and utilities.

If the investments materialize, Clark Green City would bring a new lease of life to an area that now comprises a main industrial zone with factories for companies including semiconductor-maker Texas Instruments Inc. and plane-engine manufacturer Rolls-Royce Holdings Plc and an airport with limited international flights. Under the government’s plan, the existing Clark airport would be converted to a VIP terminal when the new aerodome is up.

Dizon said Bases Conversion will continue to bid out rights to develop more plots of land in Clark, a process started under former President Benigno Aquino.

Duterte’s government may choose to fund infrastructure projects through loans obtained at cheaper rates and then offer contracts to companies to run them, Dizon said. Under Aquino, the preference was to let private companies handle the projects at the onset, and such an arrangement remains an option, the executive said.

(Updates with economic official’s comment in sixth paragraph.)

--With assistance from Clarissa Batino To contact the reporters on this story: Siegfrid Alegado in Manila at aalegado1@bloomberg.net, Cecilia Yap in Manila at cyap19@bloomberg.net. To contact the editors responsible for this story: Linus Chua at lchua@bloomberg.net, Lena Lee, Clarissa Batino

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