Industrials

Andy Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.

One of the first things Rodrigo Duterte's economics team did in September, three months after the drugs-busting former city mayor became president of the Philippines, was call for bids to upgrade and operate the main Ninoy Aquino International Airport in Manila.

From San Miguel Corp. and Ayala Corp. to Metro Pacific Investments Corp. and Aboitiz Equity Ventures Inc., the $1.5 billion public-private partnership is the kind of big-ticket infrastructure project the country's conglomerates have been waiting for for years. Besides, it's critical for the booming Philippines' economy to get a roomier airport, given IATA's forecast of 140 million passengers by 2035, more than double current levels.

Political Prisoners
With the exception of San Miguel, shares of other large Philippines conglomerates have struggled under President Rodrigo Duterte's administration
Source: Bloomberg

Yet it's unclear if Duterte will actually upgrade Ninoy Aquino, or back San Miguel's plan to build a brand new $14 billion, six-runway facility in Bulacan, to Manila's north. He may even choose to go with rival Henry Sy's SM Group, which has teamed up with the Tieng brothers to construct an air and seaport at Sangley Point, south of Manila.

This last project has the added attraction of having a Chinese company on board. Duterte wants to bury a territorial dispute with its powerful neighbor. Hitching his country to Beijing's One Belt-One Road bandwagon -- as long as China Communications Construction Co. bears a chunk of Sangley Point's $20 billion cost -- isn't a bad option.

With so much riding on Duterte's final decision, investors shouldn't be surprised if the president chooses to do nothing. The Aquino airport upgrade was put on hold in February. And this is what is making billionaires anxious. From airports to energy -- where the country has in the words of one conglomerate gone "hog wild" on renewables -- businesses are waiting for clear policies so they can place their bets accordingly.

Pause Button
Filipino billionaires' wealth machine is refusing to move into higher gear*
Source: Bloomberg
*Data is for five representative tycoons.

Infrastructure in the Philippines is all about one billionaire trying to beat another. A consortium of Ayala and Aboitiz won the right to build and operate an expressway in 2014, but Ramon Ang's San Miguel whined about a typo in its bank guarantee. Former President Benigno Aquino was forced to do a rebid, which San Miguel then lost to Manuel Pangilinan's Metro Pacific. The government earned $300 million more than it would have by sticking with the original winner. Still, the 47-kilometer road won't be ready until 2020 and traffic congestion in Manila exacts a cost on the economy every day.

Other shortages will take even longer to clear. Senator Francis "Chiz" Escudero supports Duterte's decision to build bridges. It fills an obvious need in a nation of more than 7,000 islands, he says. Even so, the politician wonders how long it will take the task to get done when even feasibility studies and firm cost estimates aren't available yet.

Dithering on urgently needed infrastructure has proved very expensive for the Philippines and the longer Duterte delays hard decisions, the more worrisome the situation will get. Not just for jittery billionaires, but also for investors.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andy Mukherjee in Singapore at amukherjee@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net