The government said it will initiate the country’s first-ever underground commercial development by leasing retail spaces around the stations of the planned Metro Manila Subway to generate revenues.
Finance Secretary Carlos Dominguez III said this would help pay off the loan extended by Japan for the multibillion-dollar mass transport project.
Dominguez said the retail concept would be similar to Japan’s underground shopping experience where shops and restaurants thrive around subway stations.
Japan International Cooperation Agency extended a 104.53-billion-yen loan ( P51 billion or $934.75 million) to the Philippines, representing the first tranche of the total loan financing requirement for the construction of the first phase of Metro Manila Subway Project.
Dominguez and Jica chief representative Yoshio Wada signed the loan agreement on March 16.
“Yes, absolutely. In fact, we’re planning to have retail spaces just like in Japan,” Dominguez said in response to a recent media query on the possible commercial development of the area around the subway.
“And definitely, we will be utilizing that so we are going to be putting value to the underground area in Manila. And the revenues will definitely contribute to paying off this loan,” Dominguez said.
“Although I must say the loan is really almost too good to believe because it’s 40 years with a 12-year grace period. Something that, you know, this is very generous package from Jica,” he said.
The loan agreement for the first tranche carries an interest rate of 0.10 percent per annum for non-consulting services (which involves civil works, depot, railroad, electromechanical works, power supply) and 0.01 percent per annum for consulting services, payable in 40 years inclusive of a 12-year grace period under the special terms for economic partnership of JICA.
The Department of Transportation, the project’s chief implementor, said it made a deliberate effort to position subway stations beside or near state property to maximize the investment returns for the government.
DOTr Undersecretary for railways Timothy John Batan said the proposed North Avenue station would be contiguous to the Veterans Memorial Medical Center while the Katipunan station would be built on Camp Aguinaldo property. A station at the Bonfacio Global City would be beside a property of the Bases Conversion and Development Authority while a station would be built near the Air Force field at Villamor Air Base.
“One of the instructions of Secretary Tugade when we were finalizing the location of the subway project is to bring the stations as close as possible, if not on, government property. This is in connection with a strategy that we have been following of trying to capture value from this investment,” Batan said in a news briefing.
Batan said the government would not only be “investing a lot of money on building the project,” but would also be making sure “that investment will create value as a consequence.”
“As much as possible, we’ve selected station locations that would maximize the return of that value to the government coffers,” he said.