RP awards development contract for Tokyo property to Urban Corp of Japan

After over a year of indecision, the Arroyo administration is expected to finally award the development contract for the government’s controversial Tokyo property to the Japanese developer Urban Corp.

The bidding and awards committee was scheduled to recommend the award of the contract which would have to be approved by Finance Secretary Cesar V. Purisima as the cabinet member in charge of the privatization of government assets.

According to Finance Undersecretary Gabriel "Jay" Singson, the committee was wrapping up the recommendations for the final awarding of the contract to the winning bidder.

"We’re already awarded the development contracts for the two Kobe properties and this will be the last of the three that was bid out," Singson said.

All three properties were bid out in February 2004 for a total of Y¥1.78 billion under a hybrid form of build-operate-transfer (BOT) scheme.

The Tokyo property in the Nampedai Disctrict involved one four-storey building space with a total floor area of 2,489 square meters. The Kobe properties, on the other hand, involved two lots of 3,014 square meters and 764 square meters.

The Arroyo administration has finally awarded the development contract for its two properties in Kobe but the awarding of the contract for the controversial Nampedai property took longer to sort out.

The development contracts for the property in the Naniwacho and Obanoyama districts in Kobe were both won by Berg Corp., a Japanese firm.

The Kobe contracts gave Berg one year to pay for the contract but the National Government wanted to be paid within six months.

The property in Naniwacho, Kobe was last valued at ¥478 million in 2004 and the Obanoyama was valued at ¥268.3 million.

Following the massive earthquake in Kobe, prices in the area have plummeted since the development contracts were bid out when the properties were estimated to be worth ¥4.5 billion.

The bids for the much-coveted Japan properties have been extended at least four times since they were made available for development in 2003.

The Japan properties were originally bid out in November 2003 but the Arroyo administration did not award the development contract amid protests from legislators who thought the properties are actually sold.

Sources said the bidders willingly extended their bids, indicating their continued interest in the property.

The transaction became controversial when legislators led by Sen. Aquilino Pimentel opposed what they thought was the sale of the properties.

All three properties were to be leased for 50 years under a variation of the BOT scheme. The first term would be for 25 years with the option to extend for another 25 years.

The 50-year tenure is a stretch of Philippine laws but sources said the properties had to be packaged for that long in order to get the maximum price. "If it wasn’t done this way, prices would have been drastically lower," sources said.

According to the source, the proceeds of the bidding could be used to pay off some of the country’s yen-denominated obligations. "We don’t have to convert it to dollars because we have maturities in yen anyway," said the source.

The country’s remaining properties in Japan, however, have been subject to controversies, with the Senate asking the executive department to make a commitment not to sell.

The sale of the Japan assets are expected to draw flack from both houses of Congress even if the transaction did not include the most controversial property of them all; specifically the Tokyo property where the Philippine embassy and the Ambassador’s Residence are located.

Sources said these properties were the most coveted of all the country’s remaining assets in Japan but the sale and disposition were being aggressively opposed by former foreign affairs secretary Domingo Siason who is now Phillippine ambassador to Japan.