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SMC warns vs higher govt debt

Conglomerate San Miguel Corp. expressed concern over the government’s decision to skip public-private partnership projects in favor of official development assistance loans to finance infrastructure, saying this could result in higher state debt.

San Miguel president and chief operating officer Ramon Ang said in a recent interview the strategy could increase government borrowings and subsequently affect the good fiscal standing of the Philippines.

“We now have a good balance sheet, but we if borrow again for infrastructure, then we will be back in the dark [where debt would be a big burden],” said Ang, whose company is a major investor in build-operate-transfer projects.

Ang said the government, in shunning privatization and public bidding, would need to raise its own fund or tap bilateral loans to implement key projects.

“The thrust of good governance in government is privatization and public bidding, then all of a sudden, [it would turn] about face?” Ang said.

The Duterte administration recently introduced a ‘hybrid’ system in implementing infrastructure projects to ensure the projects are completed within the next six years.

Under the ‘hybrid’ system, the proposed projects would go through ODA funding, given the loan facility’s lower interest rates and long repayment period. Once the project is completed, the government may then bid out the project to the private sector for operation and maintenance contract.

Ang, who earlier expressed interest to bid for all infrastructure projects that the government may bid out, said government-to-government borrowings to finance the administration’s infrastructure buildup would also be prone to corruption and could be more expensive.

San Miguel president and chief operating officer Ramon Ang
Ang cited as example the Subic-Clark-Tarlac Expressway which was funded by Japan’s ODA, which he said, was three times more expensive on per kilometer basis compared with the Tarlac-Pangasinan-La Union Expressway, which was built by a unit of San Miguel.

San Miguel is also the builder of NAIA Expressway, the extension of Skyway to Quezon City and Metro Rail Transit Line 7.  It also proposed to build an international airport in Bulacan province.

The Transportation Department cancelled last week the auction of five regional airports worth P108 billion under the PPP program.

Instead of conducting a public bidding, the government said it would pursue the development of airports “through other modes.”

Meanwhile, Ang who recently acquired a stake in the company that distributes BWM vehicles in the country, expressed concern over the planned excise tax hike on automobiles.

Ang said imposing higher taxes on vehicles could force buyers to go to the grey market. He said instead of imposing higher taxes, the government should consider imposing higher registration fees on vehicles.

“For instance if the government wants to tax a certain vehicle with P5 million excise tax, why not impose a P1 million per year over the next five years [for] registration fee of that vehicle. This way, the government will be able to collect the same amount of tax and buyers will be forced to pay one-time additional tax,” Ang said.

Ang said he was invited by Don Pepito Alvarez to join him as a shareholder and director of the company that distributes BMW in the Philippines  “I was invited by Don Pepito Alvarez to join him in BMW. So now, I’m already in and they will make [me] a director by next month,” Ang said.

Asian Carmakers Corp. was appointed by the BMW Group as both importer and service provider of BMW cars in the country in 1993. It is wholly-owned by Alvarez Group of Companies led by Jose Alvarez.

Topics: Ramon Ang , San Miguel Corp. , Government , Government debt
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