Goodyear, NDC row over property lease heats up

The state-run National Development Corp. (NDC) and tire maker Goodyear Philippines are at odds over the latter’s refusal to increase the lease payment on an 18-hectare property in Las Piñas.

Government wants Goodyear to pay lease based on market rates but the tire manufacturer insists on continuing paying a concessional rate for the Las Piñas property which was previously owned by Goodyear but was only ceded to the Philippine government under the Laurel-Langley Law.

Negotiations for the renewal of Goodyear’s lease with NDC have been going on for the past two and a half years. Goodyear, in fact, has been operating without a long-term lease. Goodyear is leasing NDC’s 18-hectare lot which has an attractive 300-meter frontage. At an estimated P20,000 per square meter, the property could command P3.6 billion if it is sold to real estate developers.

Goodyear’s 25-year lease with the NDC has expired and it has been renegotiating a new lease agreement. However, sources said renewing the lease for another 25 years is not expected to bring in as much revenue to the government as an outright sale.

Based on net present value, a 25-year lease would earn less than P1 billion for the government while on the other hand, an outright sale of the property could net P3.6 billion, the sources said.

However, government would not be getting the entire P3.6 billion because the Goodyear property is a 60-40 joint venture between NDC and Goodyear, with NDC owning 60 percent and Goodyear 40 percent.

In December 2005, Goodyear Tire Management Co. (Shanghai) Ltd. Asia-Pacific region president Pierre E. Cohade had said that Goodyear has no plans to leave the Philippines even as the American tire firm continues to negotiate with the NDC for the extension of its lease on the Las Piñas manufacturing site.

Cohade, who visited the Philippines to celebrate Goodyear’s 50th year in the country, had expressed optimism that ongoing negotiations for the renewal of the lease on the Las Piñas property would reach a positive conclusion.

However, he admitted that the prolonged negotiations is "sending a wrong signal to foreign investors" especially at a time when the Philippines needs to attract more foreign investments.

According to Cohade, "it is in the interest of the Philippine government to quickly settle this matter because it is giving the wrong signal to foreign investors."

The Goodyear property already has its own mini-power plant and is ideally located behind Ayala Alabang and the SM mall. It would be ideal for a mixed commercial and residential development.

The NDC, the sources said, may find an outright sale of the property more attractive as government needs the revenue to proceed with several planned infrastructure projects that would help spur economic development.