Davao’s P4.9-B airport to boost trade and tourism in BIMP-EAGA

The new P4.9-billion Davao International Airport will directly complement the thrust of the BIMP-EAGA nations toward opening more trade and tourism routes in the region, officials said.

BIMP-EAGA, or Brunei Darussalam-Indonesia-Malaysia-the Philippines-East Asean Growth Area, consists of the Palawan and Mindanao regions in the Philippines; Federal States of Labuan, Sabah and Sarawak, Malaysia; the provinces of North Sulawesi, South Sulawesi, Central Sulawesi, Southeast Sulawesi, East Kalimantan, West Kalimantan, Central Kalimantan, South Kalimantan, Irian Jaya, Maluku, North Maluku and Gorontalo, Indonesia; and the entire Sultanate of Brunei Darussalam.

After achieving modest gains in the early years since its formation in 1994, EAGA is further looking at increasing cooperation in resuming suspended air and sea transport services, increasing border security, harmonizing customs, immigration, quarantine and security, and expanding people to people exchange programs including twinning arrangements.

"The opening next month of the new international airport is a step in that direction," Rodolfo Laguna, head of the project central division of the Department of Transportation and Communication (DOTC), said.

The airport’s total project cost came from three principal sources – the Asian Development Bank (ADB) accounted for $41 million, the European Investment Bank (EIB) shelled out 25 million euros, and the balance was shouldered by the Philippine government.

"The DOTC, the private sector-led Mindanao Economic Development Council (MEDCo), and EAGA in general addressed the operational and safety shortfall of the old Davao airport with the new international airport," Laguna said. "Thus it will be improving the economic prospects of Southern Philippines, boost development in EAGA, and enhance access to other nearby markets."

The new airport can accommodate 1.2 million passengers (or nearly twice the present capacity of the old airport), 84,600 tons of cargo per year, seven to 10 aircraft parking positions, eight to 10 landings per hour, 688 car parking base, and 145,140 square meters of land, and 8,763.5 sq mt building floor areas.

Under the lending terms, the ADB imposes a standard soft interest rate loan payable in 25 years while the EIB seeks a 20-year repayment period. Both international lending agencies allows for a five-year grace period.

Laguna said that the modern airport and navigational facilities would invite more flights from domestic and international carriers, which could be translated to more tourist traffic, and more business opportunities.

The local air carriers already plying the Davao facilities are Philippine Airlines and Cebu Pacific Airways, while foreign players include SilkAir and Merpati.

The international airport is a product of a study funded by the Japan International Cooperation Agency (JICA). The Philippines then approached the ADB for a loan. An enhanced study by both the ADB and JICA resulted in the program loan which was co-funded by the EIB.

The enhanced study estimates a 10-percent growth rate in passenger traffic or by 2010, passenger and freight traffic will reach the maximum capacity of the new international airport.

The ADB is also processing a $1-million technical assistance (TA) grant for the full revival of BIMP-EAGA. That is over the $4.5 million already granted over several years by the Manila-based multilateral agency granted to the BIMP-EAGA initiative.

Ayumi Konishi, ADB director for governance, finance and trade division for Southeast Asia department, explained that the TA would be for capacity building of the four-way nation formation, which is in a process of rebuilding and reconstitution.

Among these areas of concerns are: security, lack of confidence towards the EAGA, the ADB’s small and medium enterprises (SME) project, the trans-Borneo power grid interconnection, trade linkages, the establishment of the BIMP-EAGA Housing and Infrastructure Fund, the harmonization of rules and procedures of the Customs, Immigration, Quarantine and Security (CIQS), the BIMP-EAGA human resources development, and the so-called China challenge.