Government by default?

Last month, a top Ayala executive boasted to The Business Times of Singapore that Ayala had become a de facto government essentially because of government’s lack of an urban planning or development agency. This was how Thomas Mirasol, president of Ayala Land, international sales, was quoted by the Singaporean paper:

“The fact that there is nobody in the Philippines who regulates urban planning has been great for Ayala Land, because we are probably the only company there that has the scale financially to take on large plots of land…

“By developing big tracts of land, we become the government; we control and manage everything. We are the mayors and the governors of the communities that we develop and we do not relinquish this responsibility to the government. (I wonder what the Binays have to say about this seeming failure of their local government).

“But because we develop all the roads, water and sewer systems, and provide infrastructure for power, we manage security, we do garbage collection, we paint every pedestrian crossing and change every light bulb in the streets – the effect of that is how property prices have moved.”

There you have it loud and clear. Government default has effectively ceded urban planning and management to a private company. The Singaporean paper reports: “Not having to adhere to a regulatory body’s land use blueprint has enabled it to acquire large plots of land and develop them according to its own plan and design.

“And as long as the developer is paying its property taxes, building financial districts to attract multinational corporations and foreign investment, and providing infrastructure and services that benefit the city, the government has no complaints.”

Of course you and I know all these to be true. But as Filipinos, we should be horrified to admit, at least I am, that my government has defaulted on its obligation to regulate land use so as to allow the country’s biggest developer to do as it pleases.

Lucky for us, Ayala has done a respectable job of it. Some people dispute that assertion but I think that in general, Ayala has delivered. Now, if they can only synchronize the traffic lights in Bonifacio, I could say that with more conviction.

Imagine if the late Col. Joseph McMicking didn’t start Ayala’s Makati developments or if his successors didn’t follow through as well as they did, we wouldn’t have this patch of sanity and modernity today. Metro Manila will be one big sea of haphazard urbanization typical of dysfunctional Third World cities.

So the Ayala story continues and this “Ayala is government” idea has taken a new spin. We all know how close Ayala is with the current administration. Indeed, the whispers among business people today is how Ayala seems to be enjoying a string of good luck in winning the most number of PPP projects.

Ayala can say it was not luck at all and I want to believe that too. They can claim they have made the best offers, but its competitors will dispute that vigorously.

The seeming special relationship started to get obvious to me ever since DPWH ordered PNCC to stop working on that connector road project to the SLEX so it could be offered as a PPP project which Ayala won. When serious problems required major changes in the specifications and the cost, a new bidding was not called but DPWH allowed Ayala to just proceed.

The awarding of the Automated Fare Collection System (AFCS) Project to a consortium led by Ayala also raised eyebrows. DOTC said Ayala submitted the highest bid, but this was contested by SM Prime Holdings Inc. president Hans Sy.

Sy claims the SM Consortium submitted the superior bid, which was an unconditional offer to pay the government the full bid amount of P1.008 billion upfront.

Ayala’s bid which was P100,000 higher than SM’s was a conditional bid: an initial payment of P279 million, with the balance of P800 million to be paid in transaction fees when ridership volume reaches 750 million transactions per quarter. DOTC estimates this volume can be reached on the ninth or 10th year.

“Under the terms of the AF Consortium bid, 72 percent of the total amount will only be paid to the government in 2024 or 2025, and only if the conditional volume is met. Otherwise, the government will not be able to collect anything at all,” Sy pointed out.

Because of this, Sy maintains Ayala’s bid violates DOTC-BAC’s requirement for an unconditional and unqualified bid, he said, adding that the SM Consortium raised the matter in two letters to DOTC on Jan. 22 and Jan. 29, to no avail.

Then there is the matter of the common station for which SM paid over six years ago the amount of P200 million so it would be located near the SM City side. DOTC reneged on the deal after getting SM’s money and would now locate the station in Ayala’s Trinoma area. I covered this issue in a previous column and need not cite details here.

The latest controversy is the CALAX bidding which Ayala won even if its bid is some P9 billion less than what San Miguel offered. The disqualification of San Miguel, based on a typographical error that was explained before the bids were opened, is troublesome.

Indeed, it may be difficult for P-Noy to justify giving up P9 billion and open himself up to plunder charges after he leaves office. Rules are indeed rules, but common sense in this case should have also been applied.

As for the boastful Ayala executive, he needs to learn discretion. What he told the Singaporean paper are all true, but should he have bragged that way abroad at the expense of his own government? We can expose the stupidity of our government at home but abroad, we are all Filipinos.

Now that Ayala has claimed to be government in the areas they manage, we now know who to complain to when traffic lights are badly programmed, when traffic jams are unattended and when it seems public areas are being sacrificed to build more spaces to sell. A hotline number is called for.

As for now, suspicions of favoritism are growing and that reduces the credibility of government’s PPP program. How government treats Ayala in the remainder of P-Noy’s watch will be closely watched.

But hey… Ayala’s just doing what a good business organization should be doing. Exploiting the deficiencies of government is part of the game. But like an illicit affair, they should be careful of what people may think that’s going on behind the scenes, more so if it’s all platonic and nothing is happening at all. 

Clark and NAIA

 A friend of mine whose career was in the planning and design of airports in the United States reacted to recent reports advocating the use of Clark as a replacement to NAIA. Here is his comment:

Hello Boo:

I am sorry but I have to differ. Clark may seem the best alternative on paper but would not work in reality. It may be an alternative perhaps to a small segment of the population from the NAIA catchment area, but to subject the entire traveling public using the current NAIA is just not viable.

Every effort should be made to make Clark sustain its growth and evolve into a world-class regional hub and serve as another international gateway.

But to suggest as a matter of policy the closure of NAIA and designating Clark as its replacement would not be a good investment approach. This is almost akin to the suggestion of closing San Francisco International and moving its entire operation to San Jose which is less than 50 kilometers away, or closing Haneda and moving everything to Narita, a distance of close to 55 Kilometers.

Just look at Haneda today. It is one of the most active domestic and international airports in the world. Thanks in great measure to forward thinking politicians in Tokyo who woke up in time to realize the true value of Haneda, beyond its real estate value.

 And just look into the history of Mirabel in Montreal. It was a new airport approximately 60 kilometers from Downtown Montreal originally envisioned to replace Dorval. Today it is operating as a cargo complex while Dorval is thriving.

I agree with him. Clark is 100 kilometers away if you live in the Alabang/Sta. Rosa area or from the factories in Calabarzon that use the airport daily. Modernizing NAIA, including building that additional runway, is still the best and most cost effective short term measure. Developing a new airport in Cavite is called for in the long term.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco