THE SALE and development of the land where the Ninoy Aquino International Airport (NAIA) currently stands could generate much-needed revenues for the government, the country’s top business group said.
On the other hand, some analysts warned that disposing state assets is not a long-term solution to address the country’s debt which stood at a record P14.79 trillion as of end-January.
This after Finance Secretary Ralph G. Recto last week floated the idea of selling the 600-hectare land where NAIA is located after the New Manila International Airport (NMIA) in Bulacan is completed, estimating that it could generate as much as P6 trillion.
“I think it is a good plan. In fact, the government might also want to extend the plan to also cover the Port of Manila,” Philippine Chamber of Commerce and Industry (PCCI) President Eunina V. Mangio said in a Viber message.
“Converting NAIA and the Port of Manila into a mixed-use development and putting a new airport in Batangas will also generate investments and employment in the areas,” she added.
Mr. Recto had noted the NAIA property can then be converted into a business district, similar to Bonifacio Global City.
PCCI’s Ms. Mangio said that the proposal to sell the NAIA land could also decongest Metro Manila, improve traffic, generate additional revenues and result in “better use of the area.”
“Developing another airport in the south outside of Metro Manila, Batangas being an option, may be funded from the proceeds of NAIA’s sale,” she said.
Meanwhile, Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said that relying on the proceeds from the privatization of state assets to pay debt is not sustainable.
“Relying on privatization as a strategy to increase revenues is a temporary and lazy solution. The revenues are one-off. We have tried that route before and it did not decisively address the problem of low-tax effort,” he said via Facebook Messenger chat.
Ateneo de Manila economics professor Leonardo A. Lanzona also said this strategy does not address the overall fiscal constraints of the government.
“It needs to be stressed though that this is a short-term solution. While selling assets can provide a quick influx of cash, it might not address the underlying fiscal problems and could exacerbate long-term financial challenges,” he said in an e-mail.
“Selling public assets may result in reduced or compromised public services if the assets being sold are essential for service delivery, such as infrastructure or utilities,” he added.
The government is targeting to generate some P4.3 trillion in revenues this year to fund its priority programs.
As of end-2023, the deficit as a share of gross domestic product (GDP) settled at -6.2%, a tad higher than the -6.1% target set by the government but lower than the -7.3% deficit-to-GDP ratio at end-2022.
This year, the government’s deficit ceiling is capped at P1.39 trillion or 5.1% of GDP. It is aiming to bring this further down to 3% by 2028.
Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said the sale of the NAIA land is “premature” given the government has awarded a 15-year concession agreement to operate, maintain and upgrade the capital’s main gateway.
“Furthermore, it is also contingent on the success of the NMIA in Bulacan as a complete and acceptable replacement to NAIA. This may only be determined upon the start of NMIA operations at a still undetermined time in the future, as construction remains underway,” Mr. Ridon said in an e-mail.
Airport development for the NMIA is set to begin by next year. In November, the Transportation department said that the project has reached a 75% completion rate.
“The sale of state assets only makes sense if it is contingent upon a specific investment strategy to further the creation of national wealth, such as investments into higher-yielding investment instruments,” Mr. Ridon said.
“It does not make sense to sell assets as a strategy to service government debt, as this implies that government revenues are insufficient to cover our regular debt service obligations,” he added.
Mr. Sta. Ana said that in order to sustain revenues and boost tax effort, the government must implement tax policy reforms.
“On the other hand, privatization’s main function pertains to industrial policy, competition policy, and investment promotion. While it is a source of revenues, revenues from privatization are non-recurring,” he added.
Proposals to privatize NAIA and convert it into a mixed-use development have been floated earlier by other government officials, among them former Finance Secretary Carlos G. Dominguez III.
The Finance department is currently fine-tuning tax reform proposals, such as the rationalization of the fiscal mining regime and the Passive Income and Financial Intermediary Taxation Act.
However, Mr. Recto has also said that he does not plan to introduce new taxes yet. — Luisa Maria Jacinta C. Jocson