San Miguel Proposes $10 Billion Airport Off Manila Bay

San Miguel Corp. offered to build a $10 billion airport off Manila Bay that will include portions already reclaimed by Cyber Bay Corp., a property developer. Shares in Cyber Bay jumped.

The Philippines’ largest company will need as much as 1,600 hectares (6.2 square miles) to build an airport with four runways capable of handling 150 million passengers annually, San Miguel President Ramon Ang said yesterday. Cyber Bay has already reclaimed about 157 hectares, he said in a mobile-phone text message.

While Southeast Asia’s fastest-expanding economy last year saw its debt rating raised to investment grade, the government acknowledges the need to improve infrastructure, with President Benigno Aquino seeking more than $8 billion of investments in highways and airports. Travel and tourism’s direct contribution to the economy of the former American colony will rise 3.8 percent this year to 490 billion pesos ($11.2 billion), the World Travel & Tourism Council has said.

“An airport is a window to the Philippines and given the strong economic momentum, we’re expecting tourists and investors to keep on coming,” Astro del Castillo, managing director at brokerage First Grade Holdings Inc., said. “That window to the country must improve. It makes sense for the government to make this airport one of its priority legacy projects.”

Toll Road

Cyber Bay advanced as much as 13 percent to 0.88 peso in Manila trading before closing at 0.82. The stock climbed to a two-year high on May 13 on speculation that the airport San Miguel will propose will be located on its property. San Miguel shares fell 0.4 percent.

The project includes an elevated toll road that would connect the airport to the Makati business district, Ang said. Cyber Bay isn’t part of the proposal, the company told the stock exchange today.

It will take 15 years to recover the project’s costs and San Miguel is open to having a partner, Ang told reporters today.

The Department of Transportation and Communications will invite San Miguel to present its offer, agency spokesman Michael Arthur Sagcal said in a mobile-phone text message. “We are open to the proposal so far but will need more information to study it properly,” Sagcal said.

San Miguel is proposing a so-called build-operate-transfer arrangement under which it will finance and operate the project before eventually turning over ownership to the government, Ang said in a statement to the stock exchange today.

Immediate Need

The airport will address “the immediate need of modernizing the existing facilities in the country and competing with the international gateways of Hong Kong and Singapore,” Ang said in a statement to the stock exchange today.

Ang yesterday said he gave the proposal to Aquino yesterday who was “very happy.”

“The President appreciates the initiatives taken by RSA to help bring about the realization of a truly world class international airport,” Aquino’s Communications Secretary Sonny Coloma said today, using Ang’s initials to refer to him.

The Southeast Asian nation plans to build airports and expand existing infrastructure to help meet its target of 10 million visitors and 56 million domestic tourists by 2016, Transportation Undersecretary Rene Limcaoco said in March.

Other Parties

The proposal will be evaluated by the transportation department and after that will have to go through the process for unsolicited proposals, including allowing other parties to bid on the project, Coloma said.

Manila’s Ninoy Aquino International Airport handled about 30 million passengers in 2013 at its three terminals, which have a combined capacity of 28 million a year, according to data on its website.

Airline passengers in the Philippine capital and nearby provinces will climb to 49.8 million in 2020 and reach 75 million by 2030 from 31.9 million in 2012, the Transportation department has said, citing a Japan International Cooperation Agency study.

(Updates with analyst’s comments in fourth paragraph.)
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