STATE-RUN Bases Conversion and Development Authority (BCDA) expects P1.5 trillion in yearly revenues from the 9,450-hectare Clark Green City (CGC) development once it is fully completed in about 30 to 40 years’ time.
BCDA President Arnel Paciano Casanova said this forecast is based on the scale of the project and the business and economic activities that would arise, as more and more locators and investors flock to CGC.
Casanova said BCDA is expecting to sign a formal joint venture with the Japan Overseas Infrastructure Investment Corp. (JOIN) in February to form a company that will support potential investments of Japanese firms into the Clark Green City.
BCDA is the agency tasked to convert the country’s former military bases into economic and business centers and communities.
“We expect this city to generate P1.5 trillion [in revenues]annually at full development,” Casanova said.
Clark Green City is a flagship project of the BCDA. Phase 1 of the project involves the first 20 years of development. The master plan includes access and inter-city roads, a railway system, a mixed-use residential and commercial block, business district, industrial estates, schools and centers, government offices, and other facilities that would make up a major city.
At full development, the city is estimated to accommodate some 1.12 million residents and 800,000 workers.
It is expected to contribute a gross output of approximately $34 billion a year to the national economy, or roughly four percent of the country’s gross domestic product (GDP).
Casanova said the BCDA opened 2016 by jumpstarting the development of CDC with a ground breaking.
To date, he said there are already “about P20 billion” committed investments in Clark Green City, including P12.05 billion from three investing parties, P6 billion from BCDA alone, and more than P1 billion for the access roads pledged by the Department of Public Works and Highways (DPWH).
The P20 billion figure does not yet include the newly signed 55-45 joint venture with the Filinvest Group and the investment commitment of two schools that will build campuses in the city, namely the University of the Philippines (UP) and the Technical University of the Philippines (TUP).
Last month, the BCDA issued a notice of award to the Filinvest Group for the development of a 288-hectare property within Clark Green City under a 50-year lease agreement, expandable for another 50 years. The project will develop two components — an industrial zone and a mixed-use residential, commercial and institutional block.
Casanova said the BCDA has also been receiving proposals from local and foreign players to develop some components of CGC.
“There are proposals; definitely some Japanese investors for industrial estates. For the utilities, there are local players who have already submitted proposals for power and water distribution. For railway, there is also a foreign player who is also interested,” Casanova said.
He said future developments would mostly be in joint ventures to allow the state agency to monitor and consolidate the development of CGC.
Wooing Japanese investments
“Currently, we are finalizing our joint venture agreement with the Japan Overseas Infrastructure Investment Corp,” said Casanova. “This is the single enterprise in Japan that will serve as a platform for Japanese businesses to come in.”
In August last year, the BCDA and JOIN signed a memorandum of understanding to reserve the rights of a partnership.
But now, Casanova said the two parties are looking at finalizing the deal within this month, with the joint venture firm held 55-percent by JOIN and 45 percent by BCDA.
The BCDA president said the joint venture firm would encourage and aid potential Japanese investors to locate, expand, or put up their facilities in Clark Green City.
Much-needed investments from the Japanese firms are in the infrastructure and industrial estates segment, Casanova said.
“[The Japanese investors] are looking at infrastructure-related investments, but we are looking at Japanese partners, who will be involved in industrial estate management and development,” Casanova said, adding that some Japanese firms are looking at the Philippines for expansion.
“The Japanese, they come in as a group; so, we want first to forge a partnership with a stable enterprise that is capable of funding 3.3 trillion yen in global investments,” he further noted.
According to the BCDA chief, putting up a “government-to-government holdings company” is “an innovative way of attracting investments into the Philippines.”
This, he said, would be the same strategy BCDA would use in attracting investors and locators from other markets like Europe.
“Our strategy is to nurture them, to create an opportunity for them to come in,” explained Casanova. “And because we are part of the joint venture, they will be assured and confident enough that there is a full support of the government and Philippine business.”
Casanova said some Japanese firms have already proposed to develop industrial zones in Clark Green City, ahead of the formal signing of the BCDA-JOIN joint venture.
Casanova said another foreign player, aside from the Japanese firms, is interested in operating and developing the city’s railway system, while utility projects for power and water distribution in the city are attracting local companies.
“The problem with Manila is that there are gated communities which also create congestion. The government is the only one who could provide infrastructure from the get-go, create an efficient mass transport system, and allocate the right of way for that.
Private developers don’t allocate the right of way,” Casanova added. “Here in Clark, it is different because BCDA will immediately lay the common areas and the right of way for all roads and mass transport systems.”
Income from MNTC payment
BCDA has also announced that its revenues in 2015 surged 51 percent year-on-year to P10.7 billion mainly due to the P3.5-billion upfront cash payment from the Manny Pangilinan-led toll road developer Manila North Tollways Corp. (MNTC).
MNTC is BCDA’s partner for the operation and maintenance of the 94-kilometer Subic-Clark-Tarlac Expressway (SCTEX), following Malacanang’s approval of the supplemental toll operations agreement (STOA) in October last year which grants MNTC the concession to manage, operate, and maintain the toll road.
The agency also said it collected P1.5 billion in partial proceeds from the Fort Bonifacio Development Corp.’s sale of North Central Business District (NCBD) parcels in Bonifacio Global City in Taguig.
Casanova said the BCDA is also setting aside more than P1 billion in capital expenditures (capex) for 2016, 80 percent to 85 percent of which will be used in initial developments in Clark Green City.
Clark Green City is envisioned to be the first smart, green and disaster-resilient metropolis in the Philippines, which will adjoin the Clark Freeport Zone, Clark International Airport and some of the major access roads to Manila.