Wednesday, June 02, 2010

A big gamble in Subic

After so much wrangling and fault-finding, the long-overdue plan to modernize the Subic Bay port and make it at par with international standards is about to take a leap from blueprint to implementation stage.

Since the Americans left the former naval facility in Zambales with the expiration of the bases treaty in 1992, government planners have envisioned the Subic port to be a highly competitive international service and logistics center in Southeast Asia providing efficient movement of travelers, products and services.

To translate this goal into a reality, the Harbour Centre Port Terminal Inc. (HCPT) submitted an unsolicited proposal to the Subic Bay Metropolitan Authority to develop and manage parts of the former naval supply depot in the freeport.

With the HCPT’s offer, hopes have been rekindled to arrest the decline of the Subic port for the past two decades due to the failure of locators and cargo handlers to improve port facilities. They fell short of the commitment to make Subic a magnet for progress and development in Central Luzon. As a consequence of their neglect, five of Subic’s existing ports where they operate are in a state of disarray.

Before the SBMA could consider HCPT’s proposal, industry players were given the opportunity to match the company’s offer through a

“Swiss challenge” in conformity with bidding practices. SBMA Administrator Armand Arreza urged interested bidders to submit their counter-proposals not later than April 22 but no new offer was received by the Authority upon the lapse of the deadline. That means the SBMA was free to give due course to HCPT’s offer. If it has not done so yet, it is because of the existing ban on the awarding of government contracts during the election period.

Under the terms of its unsolicited proposal, the HCPT will handle port operations and invest about P6 billion for improvements and acquisition of new equipment to enhance the Subic port’s global competitiveness. This will encourage more foreign investors to come in.

The Harbour Centre commits itself to remit to SBMA a guaranteed income of $32 million over 25 years, or $1.2 million to $1.3 million a year.

The SBMA would likewise have a share of 15 to 20 percent of total revenues each year for 25 years. Part of the HCPT’s proposal is to substantially increase the volume of goods that will be traded in the Subic port which will generate bigger revenues for the SBMA. These favorable terms are a far cry from what the SBMA earns under current cargo handling operations—less than P20 million a year plus a revenue share of 10-15 percent.

Detractors have criticized the proposed agreement between SBMA by raising the specter of a monopoly of cargo handling operations in the premier port at the expense of existing companies engaged in similar services. Perhaps a more relevant question is whether it is wise and judicious to put an end to the domination of locators and cargo handlers whose neglect of the modernization needs of the Subic port has caused its stagnation.

If the existing operators find themselves being eased out, they have nobody to blame but themselves. They have not even bothered to undertake a comprehensive plan to upgrade facilities. The cargo handlers at the Boton, Rivera, Alava and Bravo ports did not feel obliged to invest part of their income for the upgrading program and transform these ports into big players in the economy. Perhaps, they have the illusion that they have a franchise to the privilege and even proprietary right in running their business at Subic. As Administrator Arreza succinctly put it: “The existing cargo operators have no exclusive rights to operate at the Subic port. If they want exclusive right, then they should submit their bids.” But as events have shown, they themselves forfeited this right by not submitting any counter-bid that would be more advantageous to the government than what the HCPT has offered.


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