Business Columns

MELANDREW T. VELASCO: SMC and government infrastructure projects

Being an archipelago, our country faces many challenges in terms of connectivity—not only digital but also physical through infrastructure and transport. Matching infrastructure is needed to maximize economic growth.

In the past post-EDSA administrations, the infrastructure program has been carried out either through the regular infrastructure program with government allocating budget to finance the infrastructure projects or through public-private partnership. 

Public-private partnership enables private corporations to invest in and build projects which government does not have the financial capability and managerial expertise to undertake. These projects are built without cost to government.

During the term of President Rodrigo Duterte, the government embarked on a massive infrastructure program—Build, Build, Build—with many projects under the PPP. President Ferdinand R. Marcos, Jr. is continuing the program that his predecessor has started. Under his Build, Better, More (BBM) program, more infrastructure projects will be undertaken in partnership with the private sector.  

One of the private entities actively involved in the government infrastructure program through the PPP is San Miguel Corporation led by its visionary President and CEO Ramon S. Ang. 

In February this year, SMC signed a joint venture agreement and toll concession agreement with the provincial government of Cavite to undertake the Cavite-Batangas Expressway (CBEX) Project.

The CBEX Project involves the financing, construction, operation and maintenance of a 27.06 –kilometer toll road. The road will traverse through the municipalities of Silang, Amadeo, City of Tagatay, Indang, Mendez and Alfonso in Cavite, and Nasugbu, Batangas. The project cost is P27 billion. It will be implemented at no cost to the Cavite Provincial Government with a concession period of 35 years.

Cavite is one of the most progressive provinces in the country. It is site of several industrial export processing zones. Batangas also has a vibrant economy. Aside from industrial parks, it hosts an international seaport of entry, one of the largest in the country. The two provinces are also favorite destinations of both local and foreign tourists.

Once completed, the CBEX will improve connectivity between Metro Manila and the provinces that comprise CALABARZON: Cavite, Laguna, Batangas, Rizal, and Quezon and lessen road congestion.

Early this month, another proposal by SMC subsidiary San Miguel Holdings, Corp. was approved by the National Economic and Development Authority (NEDA) board. The proposal involves the extension of the Tarlac-Pangasinan-La Union Expressway. 

It was reported that the entire evaluation and approval process for the TPLEX Extension Project is the fastest approval for a public-private partnership (PPP) proposal as it was submitted to the Investment Coordination Committee on March 17, 2023. 

The TPLEX Extension Project is a four-lane extension highway costing P 23.4 billion. It will connect the Ilocos Region, Central Luzon and Metro Manila. The entire project will be completed by 2028. However, by 2026 the first segment from Rosario to Tubao, La Union is expected to be operational.  It will be implemented through PPP under the Department of Public Works and Highways. 

The unsolicited proposal of SMC would be subject to a Swiss challenge.

Accoding to RSA, SMC through its subsidiaries has undertaken government infrastructure projects under the PPP to help improve the country’s connectivity.  Among these include the completed Skyway Stage 3, and the ongoing MRT 7 and the New Manila International Airport in Bulacan. The latter will decongest the NAIA with its four parallel runways, a world class terminal and interlinked infrastructure network.  The New Manila International Airport project is the largest investment in infrastructure by a Philippine company at Php740-billion. It was also procured through an unsolicited proposal.

Transportation infrastructure is important to increase economic competitiveness. It is an important component in the supply chain. It makes movement of goods from manufacturers to consumers easier. It links farms to markets and urban centers to rural areas.  It also facilitates the movement of people for business transactions, tourism and recreation, and stimulate the development of new growth centers. 

The government recognizes the importance of infrastructure development. According to Socioeconomic Planning Secretary Arsenio Balisacan there are 194 infrastructure flagship projects of which 68 are ongoing; 25 have been approved for implementation; nine are waiting government approval; and, the remaining projects are either in the process of project preparation or pre-project preparation. Some of the projects were started during the incumbency of President Duterte but will be completed under President Marcos, Jr.

Hopefully, more players from the private sector will take up the challenge and follow RSA’s lead of helping improve our country’s connectivity through infrastructure development.