HEADLINE-ECONOMICS: MANILA- Marcos Jr. vetoes bill creating SMC’s Bulacan Airport City economic zone, freeport

MANILA, Philippines (Updated 5:12 p.m.) — On his first day in office, President Ferdinand Marcos Jr. vetoed a house bill which creates a special economic zone and freeport in conglomerate San Miguel Corp.’s (SMC) Bulacan Airport City, over the project’s fiscal risks.

The measure was earlier passed by both chambers of Congress on May 31.

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The veto of the measure, known as House Bill No. 7575, is among the first official acts of Marcos Jr., who earlier took his oath of office.

The bill would have created a Bulacan ecozone authority with a corporate life of 50 years. The economic zone would have covered San Miguel Corp.’s P740-billion New Manila International Airport, which can serve up to 100 million passengers per year and is expected to decongest the Philippines’ main gateway, Ninoy Aquino International Airport.

Marcos said Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act already allows eligible enterprises to apply for and avail of tax incentives outside economic zones by providing a favorable incentive package without the need for creating new special economic zones. He noted that tax incentives may be availed of by qualified enterprises and would be enjoyed longer if investments are located in less-developed areas, subject to the review and approval of the Fiscal Incentives Review Board (FIRB).

“At the foreground, fiscal prudence must be exercised particularly at times when resources are scarce and needs are abundant,” Marcos Jr. said of the enrolled bill in a July 1 letter addressed to the Senate president and senators.

“While this administration recognizes the objective of the proposed measure to accelerate economic growth in its locality, I cannot support the bill considering the provisions that pose subtantial fiscal risks to the country and its infringement on or conflict with other agencies’ mandates and authorities,” he added.

For him, the bill will “significantly narrow” the country’s tax base which is not aligned with the government’s objective to develop a tax system with a broad base and low rates.

“The Government would be forced to seek new sources of revenue through additional taxes or borrowings in the future. In the end, it is the taxpayers who will ultimately bear the brunt of the burden,” he said.

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Marcos Jr. explained that the proposed measure lacks coherence with existing laws since it was not able to provide audit provisions for the Commission on Audit, procedures for expropriation of lands and a master plan for the economic zone.

He pointed out that the enrolled bill gives authority to the economic zone to make rules on environmental protection— one which is not found in the charters of similar zones.

“It is also granted blanket powers to handle technical airport operations in contravention of existing aeronautical laws,” he said.

Marcos Jr. added that the proposed economic zone is located near the Clark Special Economic Zone, which goes against the state’s policy on creating special economic zones in strategic locations.

He emphasized that eligible enterprises outside of economic zones can already apply and avail of tax incentives, according to the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE.

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The Bulacan economic zone and freeport is set to include the areas covering the “domestic and international airport (New Manila International Airport), the Airport City to be developed adjacent to the airport, and lands adjacent to the Airport City”, according to the bill’s version approved on third reading by the Senate.

In June 2021, San Miguel Aerocity Inc., a wholly-owned unit of the infrastructure arm of SMC, secured an environmental compliance certificate from the Environment department for its planned international airport in Bulacan.

The certificate is needed for the project to proceed.

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READ: SMC vows to complete Bulacan airport project

Environmental groups and experts have warned that SMC’s proposed P740-billion airport will pose harm to Manila Bay’s ecosystem and communities. — Angelica Y. Yang with a report from Gaea Katreena Cabico and Alexis Romero