Freeport

A quarter of a century since we expelled the US bases and recovered the military outposts, Clark and Subic remain areas crying out for development. Occupying large tracts of land, with military grade airport runways and a deep port, the two former bases have not been complemented with the sort of infra investments required to realize their full economic potential.

I was part of the research team commissioned by the Philippine Senate in 1990 to look into the economic conversion of the bases. This was on the eve of that historic Senate vote rejecting extension of the Military Bases Agreement (MBA).

The report we prepared did not anticipate the devastating eruption of Mount Pinatubo. But it did outline the great economic potential of the bases when reused for commercial, industrial and tourism purposes. We recommended joint use of the area then occupied by the US military as part of the transition to civilian use of the facilities.

The termination of the MBA and the destruction wrought by Pinatubo left the facilities idle. The process of reusing the former US bases proceeded at an exceedingly slow pace. At least Clark, more proximate to the Manila area, moved more quickly. It evolved as an air facility for budget airlines and will soon feature a “green city” that will house sunrise industries. It could potentially become our small version of Silicon Valley.

Subic, however, waned. Its airport was once used as the hub of FedEx until the logistics firm moved to a more attractive alternative location. The deep harbor is hardly used, mainly because despite the SCTEX that the Arroyo administration rushed to build, there is no link to the port that will allow speedy movement of cargo.

For many years, Subic became principally a tourist facility. That did not enable the most optimal use of its harbor and airport. In our original design put together a quarter of a century ago, we imagined Subic will rise as an alternative port city to Hong Kong. The return of Hong Kong back to China in 1998 turned out more smoothly than expected and that city continued with its old role as a center of trade.

Since Martin Dino was appointed last September to chair the Subic Bay Metropolitan Authority (SBMA), he and his team worked feverishly to put together a strategic plan to make the facility the trading city and industrial center it was envisioned to be. The law that created the SBMA commanded the authority to develop a “self-sustaining industrial, commercial, financial, investment and academic center.”

As soon as he took over, Dino announced the end of “business as usual” at Subic and looked forward to seeing it develop into a zone for “best business practices.” He wanted major changes in the way the SBMA performed, issuing guidelines for cutting-edge “Smarter SBMA Freeport Operations.” This mean adopting smart business solutions to address issues of operational efficiency, public accountability and transparency while at the same time securing port locators safety by way of a fully automated security system.

Dino and his team drew up a plan for six priority infrastructure projects recently submitted to President Duterte for his approval. The projects appear costly at first glance, but the Dino team is confident they could attract Chinese investments to build them, eventually building up the Freeport as an alternative available to China’s burgeoning industries.

The six priority projects include:

The construction of a 100-km multi-modal arterial road from Subic to Manila with an elevated highway for vehicles and a second-level railway for cargo and commuter train service. At an indicative cost of P100 billion, the new road is expected to decongest the Manila port and help ease traffic gridlock in the metropolitan area.

The expansion of the container port at Subic Bay to a total cargo capacity of  1.2 million TEUs by constructing Terminals 3 and 4 as well as by upgrading the Naval Supply Depot Compound and the Bulk Cargo Wharves. The indicative cost for this is P16 billion.

The construction of a new 17.273-km bypass road directly connecting the port to the SCTEX. This expressway will shorten transport time in and out of the Freeport to nearby processing export zones (presumably those that will be located at Clark). The indicative cost for this is P11 billion.

The construction of a 25-km bypass road from Tipo to connect with the access road at the Redondo Peninsula built by Hanjin.  This will lead to the opening of a new Subic 2, designed as a smart city.

The upgrading and modernization of the Subic Bay International Airport to serve as a regional transshipment and logistics hub as well as entry point for tourists. The indicative cost for this is P2 billion.

The widening of the existing Tipo road starting at the end of the SCTEX to the old SBMA entrance to a fou-lane highway, including a new tunnel and a bridge to accommodate the new lanes. The indicative cost for this project  is P2 billion.

Chairman Dino is seeking the President’s support for the inclusion of these projects in the Philippine-China Development Framework Cooperation. This will allow the SBMA to access financing from the Beijing-led Asian Infrastructure Investment Bank (AIIB).

This is only the “first package” of the Dino team. The proposed infra projects will support investment growth in that area.

The cost for these projects might seem staggering, but the payback will come in the form of a bustling port city contributing much to the national economy. It is a bold vision built on the assumption of potentially massive investment inflows.