Ang Bayan
June 21, 2019

Who will benefit from the privatization of Clark Airport?

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Big bourgeois compradors and bureaucrat capitalists are currently pocketing billions of funds and kickbacks by implementing the US-Duterte regime’s grandiose infrastructure projects. Among these is the Clark International Airport Expansion Project in the province of Pampanga, one of Duterte’s big ticket infrastructure projects under his Build, Build, Build program.

Pro-capitalist project

Duterte is using the congestion and growing demand at the Ninoy Aquino International Airport (NAIA) in the national capital to push for the construction of a new 82,000-hectare terminal in Clark with an additional handling capacity of 8 million passengers per year.

To purportedly resolve the problem, the regime awarded in December 2017 the P9.36-billion public contract for the expansion of the Clark Airport to the Megawide Construction Corporation (MGC) and its Indian corporate partner, GMR Infrastructure Ltd. This was implemented under the hybrid public-private-partnership (PPP) modality which means that the people will directly shoulder the costs for the said project that will only be used as a milking cow by local and foreign capitalists afterwards.

Utilizing the budget of the Bases Conversion and Development Authority (BCDA), the consortium is currently constructing the said infrastructure. The government recently reported that the new terminal is 59% complete and will be operational by 2020.

MGC is owned by capitalist Edgar Saavedra, the 35th richest individual in the country who declared a net worth of $245 million in 2018. He manages the company with Michael Cosiquien, the 36th richest with a net worth of $240 million.

The grandiose infrastructure program of the regime is further lining the pockets of these two capitalists. In sum, the MGC is currently profiteering from its simultaneous delivery of five PPP projects. In 2010, the GMR-MGC consortium was also awarded a P17.52-billion contract by the Arroyo regime for a similar project at the Mactan-Cebu International Airport.

Railroaded privatization

After pouring in billions of funds for the expansion of the airport and even though its construction is yet to be completed, Duterte railroaded the public bidding of a contract for the operations and maintenance of the entire airport to further guarantee the profits of private corporations. This is in compliance with the recommendations of the International Finance Corporation (IFC), the private investment arm of the World Bank, which drafted the concession agreement for the privatization of the airport.

Last December, the government awarded the contract to Luzon International Premiere Airport Development Corp. (LIPAD), a consortium led by bourgeois comprador relatives Josephine Gotianun-Yap of Filinvest and Lance Gokongwei of JG Summit. The private consortium is set to take over the management of airport operations on July 21.

Filinvest, the lead member of the consortium with a 42.5% share, is headed by Josephine Gotianun-Yap. She is a daughter of Mercedes Gotianun, the 17th richest individual in the country who declared a net worth of $1.15 billion last year. The Gotianuns own Filinvest, a real estate company which is notorious for converting agricultural lands into subdivisions.

JG Summit on ther other hand, which has the second highest share in the consortium (33%), is currently headed by Lance Gokongwei. He is a son of John Gokongwei Jr., the 3rd richest individual in the country with a net worth of $4.4 billion. The Gokongweis own Robinsons and Universal Robina Corporation which are notorious for unfair labor practices.

The said privatization contract will surely fatten the pockets of these capitalists. Through this, they will be able to accumulate profits through the imposition of high service charges such as terminal and parking fees that passengers commonly pay.

If the consortium will impose a P300-terminal fee/passenger, it can collect up to P2.4 billion/year in the new terminal alone. This excludes the value of revenues that can be collected from the payment of aircraft parking and landing fees by airlines, and rental fees by business establishments leasing commercial spaces at the airport.

On top of this, the concessionaire will also enjoy fiscal incentives under the Build-Operate-Transfer Law, including a four- to six-year tax exemption.

With all that it will able to gain, the concessionaire is only obligated to pay P1 billion per year to the BCDA for ten years as payment to the government.

Meanwhile, the privatization concession is a bane to airport employees. Despite provisions in the concession agreement which state that regular employees will be given a separation incentive package and will be rehired, they are still uncertain of what their employment status will be upon the take over of the new operator. Even the National Conciliation and Mediation Board declined to comment to the inquiry of the employees if the new operator will absorb them as stated in the contract. In addition, the “separation incentive package” which affected employees are supposed to have received by now is yet to be approved by Duterte.

AB (2019-06-21): Who will benefit from the privatization of Clark Airport?