SBMA Transition Woes?

I am of course referring to the latest headline of the Philippine Daily Inquirer—“Transition woes for Subic locators.” This is certainly an exaggeration from “a bit of apprehension” which was the actual statement I made. But, this is what newspapers do anyway. They need to have eye-grabbing headlines to sell papers. All is well and understood.

Not reading newspapers lately? Let me give the skinny.

Last week, I was asked by the Inquirer, “How is the SBFCC preparing for the imminent transition of the SBMA leadership? And what are the big ticket items that are foremost in the minds of the locators during this time.”

And my answer:

The Subic Bay Freeport Chamber of Commerce, while still having a bit of apprehension, feels that there will be a lot smoother transition this time around than in the past. We were informed that SBMA Administrator Armand Arreza will be staying until the end of May at the request of incoming Administrator Rafael Reyes to assist in the transition. This is an excellent sign! It instills confidence to investors.

There are still some concerns that the SBFCC have. First and foremost is the number of pending matters, almost half a year’s worth, that are still to be tackled by the recently appointed SBMA Board of Directors. The SBMA Board has been working intensely to resolve this, though, and the SBFCC really appreciates it.

Another major concern is the huge debt servicing that SBMA is currently facing for loans from the developments of the Subic Bay International Airport (SBIA) and the New Container Terminals 1 & 2. We hope SBMA’s request for debt payment restructuring will be approved. Otherwise, only very limited options are left remaining: work feverishly to encourage more investments, further streamline SBMA (they already closed FSC), or come up with other ways of generating additional income from existing locators. We obviously cannot agree with the latter.

All things considered, the SBFCC is expecting and is optimistic on the continuing growth of the Subic Bay Freeport.

When asked about the debt, I mentioned that the SBMA currently has to pay about P800 million a year. Also, that the reason why the debt ballooned was because the expected income from the airport and container terminals became very slow to materialize because of the global financial crisis. Further,

Its current income and operational expenses will not support full payment of the debt servicing. There are still a lot of benefits that the national government is getting, though, since there had been an increase in the income of Bureau of Customs and Bureau of Internal Revenue. None of these goes to the SBMA.

So there. Now, what should we expect from SBMA? I am actually encouraged that the transition will be this smooth. While it usually takes at least six months before a new leader of a large organization gets his bearing, a few things is expected to shortened the transition: 1) Rafael Reyes should be somewhat familiar with the workings of SBMA since he was a former deputy administrator of corporate planning during the early days of SBMA; 2) Roberto Garcia had a couple of months head start since he was previously appointed as a SBMA Board Director last February; 3) Rafael Reyes requested that Armand Arreza stay a few weeks more to further smoothen the transition.

But should we expect attempts by SBMA to generate additional income from existing locators? Frankly, I think this is a given. In fact, there were a few of these already: the Certificate of Ownership of Leasehold Rights registration and business license plates are good examples. As long as the costs to us locators are within reason and there are benefits derived therein, acceptability will not be a huge problem.

In the meantime, we are working hard with SBMA to try to encourage more investments. We are also lobbying with the national government—the ASEAN-India Free Trade Agreement is a good example—to expand the businesses of existing locators, primarily our manufacturers.

The SBFCC does hope to continue our close collaboration with SBMA and with its incoming leaders.

Transition woes? Not really. A bit of apprehension? Understandably so.