China SOEs Bid On Philippines Clark International Airport Development

December 14, 2017 Posted by ASEAN Briefing Reading Time: 4 minutes

Four of the seven bidders on the design and development contract for the Clark Airforce base in the Philippines are Chinese State Owned Enterprises, according to the Philippines Bases Conversion and Development Authority (BCDA). The China State Construction Engineering Corp Ltd, China Harbour Engineering Co Ltd and Sinohydro Corp Ltd have all submitted tenders.

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Clark International Airport is north of Manila and previously served as an American Airforce base until the facility was closed in 1991. The Airport serves the Clark Freeport Zone, an important tax and duty incentivized area that aims to encourage investment in airport-driven urban facilities, targeting high-end IT, aviation and logistics related enterprises, tourism and other sectors. The area is connected to Manila by the Subic-Clark-Tarlac Expressway, which is in turn connected to the North Luzon Expressway, some 43km from Manila.

Chinese SOEs have been prominent in bidding on development contracts aligned with China’s Belt & Road Initiative, and has special encouragement to do so with the Philippines and ASEAN nations as China has both a Free Trade Agreement with ASEAN and a Double Tax Treaty with the Philippines, providing tax savings on the provision of certain products, services and manpower.

“It will be interesting to note, should a Chinese bid win, whether this will include Chinese labor” says Chris Devonshire-Ellis of Dezan Shira & Associates. “It is important that Philippines labor is deployed in development contracts in the Philippines”.

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The contract is worth about US$250 million, meaning that opportunities will arise for subcontractors and materials suppliers familiar with airport and related constructions. The plan is to finish the Clark International Airport New Terminal Building by 2020, increasing Clark’s annual capacity from four million to twelve million passengers. This will give airlines an alternative to Ninoy Aquino International Airport (NAIA), which at the moment is the main international gateway to the Philippines, but suffers from congestion problems.

Dezan Shira & Associates maintain an office in Manila and service foreign investment into the country. We are able to advise on available tax incentives and establishment options for project offices. Please contact us at philippines@dezshira.com

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