Highlights Of the Meeting - Davao Sasa Port Development

Mindanao Development Corridors – South Central Mindanao Corridor (MDC-SCMC) Infra TWG Meeting / Gateways Forum 21 May 2015, MinDA Office, Davao City HIGHLIGHTS OF THE MEETING

1. MinDA Executive Director Janet Lopoz informed that the objective of the activity is to convene an infra and logistics Mindanao Development Corridor1 Technical Working Group meeting as agreed in the previous TWG in April.

2. She explained MinDA’s role to coordinate Mindanao-wide programs and initiatives and its mandate to harmonize programs, plans, and projects in Mindanao. She also briefly presented the Mindanao 2020 Framework and the Corridors Program zeroing in on the strategic role of the South Central Mindanao Development Corridor. She stressed the importance of rationalizing the development of the Corridor gateways to provide adequate and efficient logistics and connectivity support.

3. The various agencies reported on their ongoing and upcoming projects on the South Central Mindanao gateways. DPWH XII informed about the agency’s ongoing projects leading to ports and airports. These include the General Santos City Circumferential Road which also leads to the airport (Apopong side). The bridges are almost completed and the road is being paved and should be open by next year. The road connecting the GSC Airport to the fishport is also ongoing. The GSC-Cotabato City national road is also being widened to shorten the travel time from GSC to the Awang Airport. There are also widening and asphalt overlay works on the road from Simuay going to Polloc Port. However, there is still no road connecting Polloc Port to Timaco Port. USec. Lopoz asked that this be explored by the TWG. Action to be Taken: Infra SCM TWG to look into the connectivity of the Polloc Port and Timaco Port 4. DPWH XI reported about the widening of a 6km section of the Daang Maharlika road from J.P. Laurel, Davao City to Tagum City. The project is at 69% and will be completed within the year.

USec. Lopoz commented that even with the widening project, the road section leading to Sasa Port is still congested. DPWH XI also reported on the status of the Davao City By-pass Road.

The project is 45 km connecting Toril to Lasang and there is a two-lane, substandard local road (Malagamot) connecting the Bypass to the Sasa Port. However, DPWH informed that the road will only be improved after the Bypass is completed. The project is part of the NEDA-ICC TWG on May 25, 2015. Construction is targeted to start in 2018 to be completed in 2022.

5. PPA PMO Davao explained that the choke point is right outside of the Sasa Port. Even with the six-lane road, trucks going in and out of the port will still clog the road because the turning point is difficult. DPWH XI informed that there is no funding in the pipeline for the 1

The Mindanao Development Corridors Program is a spatial strategy for inclusive and accelerated growth in Mindanao. There are three identified development corridors: Western Mindanao Development Corridor, Northern Mindanao Development Corridor and the South Central Mindanao Development Corridor.

improvement of the Sasa stretch of the road. USec. Lopoz recommended bringing to the attention of the DPWH the critical need to address the congestion in the Sasa Port. USec. Lopoz also requested DPWH XI to provide the traffic data for the road stretch passing thru Sasa Port.

Actions to be Taken: 1. DPWH XI to provide traffic data on the road passing thru Sasa Port 2. DPWH XI to look into the critical need to address the road traffic congestion at the Sasa Port 6. CAAP reported on the ongoing expansion of the arrival area (2014 funds) and passenger terminal building (2015 funds) of the General Santos City Airport. USec. Timmy Limcaoco added that DOTC has allocated about Php1 Billion in the 2015 budget to expand the capacity of the General Santos City Airport. DOTC also reported on the upcoming improvement of the DIA thru a PPP arrangement. The proposed project will be done in phases for a total cost of about Php 40 Billion.

7. PPA reported that there is no immediate project to expand the GSC port considering that the current capacity is already 650,000 TEUs while current volume is only about 160,000 TEUs per year. There is, however, an on-going rehabilitation of a section of the dilapidated RC deck of the wharf. PPA has also engaged a consultant to determine the viability of constructing a crane rail. For the Zamboanga Port, there are also plans to construct a similar crane rail. USec. Lopoz recommended a sub-discussion on how to harmonize the plans for the development of the ecozones alongside the airport and ports of the GSC. Action to be Taken: Infra SCM TWG to discuss how to harmonize plans for the development of the ecozones vis’ the airport and port development plans in General Santos City 8. DOTC presented the plans for the Davao Port Modernization Project. Ms. Arie Bernardo described the phased development of the Port throughout the 30 year concession period. The project is in the procurement stage and the Instructions to Prospective Bidders have been published. The submission of bids is scheduled in June 2015 and awarding is targeted by December 2015. Construction is estimated to start in the first quarter of 2017.

9. Mr. John Gaisano of the Davao City Chamber of Commerce and Industry made a comparison of the investment cost per TEU incurred by the Sasa Port, the Davao International Container Terminal (DICT), and the Hijo International Port Services (HIPS). He said that the DICT costs about Php6,250 per TEU and HIPS costs about Php3,800. The Sasa Port, however, costs Php 22,600 per TEU considering the amount to be invested versus the target expanded capacity.

Mr. Gaisano also said it is not fair for private port operators such as DICT and HIPS to be issued only 4-year permits to operate considering their substantial investments to provide port services. Also, Mr. Gaisano asked if the project will involve a viability gap fund which is a form of government subsidy to the port concessionaire. He likewise asked about plans to increase

the port fees in Sasa by 80% on the first year and the scheduled 15% regular increase over the concession period. He said that this constitutes a guarantee in which the government is using the people’s money to ensure that the private port operator of Sasa earns money. Mr. Gaisano stressed that these concerns should be adequately addressed because the Sasa Port is not just an infrastructure facility, it affects the economy and livelihood of the people in the Davao Region.

10. In response, USec. Limcaoco said that the Sasa Port project is intended to make the Davao region more competitive. He said the project does not necessarily cost Php17 Billion and this is not a required amount because the winning bidder will still do his own design which could entail a lower cost. He said that the bottom-line is for the port to be able to handle larger vessels and accommodate enough ground slots for the volume of containerized cargo projected to go thru the port. He also clarified that the government is not spending any money on the project because it will be a purely private sector investment to develop the port. He added that DOTC fully agrees with ensuring a level playing field in port operations. This means same specifications, same terms, and same concessions. The only competition should be in the level of service and amount of investment. He informed that DOTC is working with World Bank on the concern over high shipping rates and one of the causes is the cabotage law which restricts inter-island shipping purely to Philippine vessels and inhibits competition. USec. Limcaoco stressed that the government is not providing any form of guarantee of profit. The 80% is a ceiling tariff which should not be exceeded by any of the port operators. What DOTC wants to see is open competition among the ports. For example, if the Sasa Port operator decides to charge up to that 80% ceiling and DICT or HIPS charge lower and provide better services, then shippers can choose where to go.

11. Mr. Alexander Valoria, President of the ANFLOCOR Group of Companies, presented a video clip of the DICT and the facilities and services available at the port. He informed that the Tagum Agricultural Development Co. Inc. (TADECO) and the DICT are member companies under the ANFLOCOR Group. In the 90s, all of TADECO’s bananas were exported thru the DICT which was then called the San Vicente Terminal and Brokerage Services Inc. (SVTBSI). With the transition of majority of ocean cargo from break bulk to container shipments, by 2008 less than half of the bananas were being exported from the SVTBSI and the rest were shipped thru other ports that could handle containers albeit inefficiently which affected product quality and cost.

12. Mr. Valoria said that this prompted DICT to invest about Php 2.7 Billion in port development that can efficiently handle container shipments and large container vessels which contributed to the competitiveness of Mindanao’s products. The DICT is currently the most modern container port in the Philippines with its high level of integration and interface. In 2014, the port handled 228,000 TEUs and in 2015, it is expected to exceed 250,000 TEUs. DICT’s annual capacity is conservatively 300,000 TEUs while the rated capacity is more than 400,000 TEUs. He also informed about the ANFLOCOR Industrial Estate which is being developed about 300 meters from the port.

13. Mr. Valoria reported that shipping companies are eager for DICT to expand and, as such, the company is rehabilitating one of its existing berths to handle containers as well as break bulk.

This will bring the port’s total annual capacity to 600,000 TEUs and rated capacity to 850,000

TEUs for a total investment of Php4 Billion. He compared this with the expected capacity of the Sasa Port which will cost Php17 Billion.

14. Mr. Valoria commented that the proposed Sasa Port project is neither needed nor necessary because the private sector has already answered the need for port services catering to international trade. He mentioned the DICT, TEFASCO, Pacinter Port, Unifrutti, and SUMIFRU. He also said that the Hijo Resources Corp. is partnering with the ICTSI to develop and operate an international port in Tagum City which has a target annual capacity of 2,000,000 TEUs. He said that the Sasa area is already congested and the proposed project will only worsen the congestion. It will also lead to the displacement of many people and businesses. He cautioned that the political and economic fallout will be staggering.

15. Mr. Valoria said that government’s role should be to open investment opportunities for the private sector. It should not be competing with existing private sector interests because not only will this be redundant and a waste of valuable resources, it also seriously discourages future private sector investments. He recommended for government to consider other options for the Sasa Port considering the valuable water front property which, when properly planned, can benefit not only the people living and working in the area but the whole of Davao City as well.

16. Mr. Gaisano said that overcapacity is not such a bad thing because it will provide more choices for users and will encourage better prices and services. However, competition should be fair and as such, the government cannot be both port regulator and operator. This has to be changed because PPA can choose to make it difficult for the competing ports. He also mentioned about news of government’s plans to provide subsidy to the Sasa operations. Mr. Ferdinand Maranon of PhilExport Davao requested that this should be clarified because businessmen in Davao are wary about rumours on subsidies.

17. Mr. Jacobo Mantecon, Vice President for Industrial Services of the Hijo Resources Corp. requested for clarification on whether HIPS can now apply for a longer 30 years permit to operate and not wait for their current permit to expire. He said that, as a start, this will show the government’s sincerity to provide a level playing field for competition. Mr. Mantecon also asked for clarification on the bid parameters. He said that, although USec. Limcaoco clarified that the winning company can build the port for 4 or 6 Billion, the documents that were published show that it cannot be built for these amounts. He inquired if, for instance the highest bidder bids for Php12 Billion or Php5 Billion short of the Php17 Billion required, will the government shoulder the Php5Billion as a viability gap fund.

18. USec. Limcaoco responded that the Php 17 Billion is only an estimated cost and not the bid amount. The consultant prepared a design of the port to have the required capacity and it was estimated to cost Php17 Billion. However, the DOTC is not requiring the bidders to follow the design and they are not required to invest Php17 Billion. If the bidders can provide the same capacity at a lesser investment due to better engineering, DOTC will be happy. The bid parameter is not how much the bidders will invest and in fact, the lesser the investment for the same throughput, the better. The bid parameter is the highest concession fee for the right to operate the port.

19. Mr. Valoria countered that ANFLOCOR understands this and reiterated his point that the project is unnecessary at this point. Mr. Mantecon thanked USec. Limcaoco for the clarification on the bid parameter but said that HIPS shares ANFLOCOR’s view that the port is not needed at this time and this will only replicate the problem that is happening in Manila and Cebu. He said that there are issues on congestion, the height of the cranes considering the proximity to the airport, and the property value but commented that these may be better discussed by other groups.

20. Dr. Henry Basilio of the USAID-COMPETE Program and MinDA Consultant on the Mindanao Corridors – South Central Mindanao Gateways study, requested clarification because the Php17 Billion is supposed to be grounded on a Minimum Performance Specification Standard (MPSS). He said that he is sceptical because the Php17 Billion was supposed to be grounded on the MPSS and so any bid that is low like Php 5 Billion may not be able to correspond to what government wants for the port to be. He asked how DOTC will evaluate the bids if the bidders are submitting various designs for the port. Mr. Chug Torres of the Mindanao Business Council also asked if DOTC will be considering use of new technology and innovations in evaluating the bids. Mr. de la Cruz of the DCCI said that the published agency budget is Php17 Billion so it is presumed that this is the basis for the specifications. He inquired as to which specs will be followed if the bidders provide their own designs. He also pointed out that, although DOTC claims this is going to be a purely private venture, the reality is that the project is a PublicPrivate Partnership so it is understood that the government has a stake on it also.

21. USec. Limcaoco responded that the way the bidding works is that there will be an MPSS which all bids must pass in order to qualify. Bidders are required to submit a design which should clearly show that it is able to achieve the MPSS. The DOTC will not look into the amount of investment but will instead look at the design and see if it meets the MPSS. The DOTC is protechnology but will not mandate which technology to use. He also clarified that the Php17 Billion is not the ABC, it is called the estimated project cost approved by the government for the concept design but he again stressed that the bidders do not have to follow the concept design and thus, do not have to invest Php17 Billion. He said that the government is banking on the expertise and innovation of the private sector to drive down costs and improve services and the logistics chain for Davao.

22. Dr. Basilio asked what is ultimately the bid parameter to be used and whether there will be a premium attached to the bid. For example, if one bidder invests Php17 Billion and offers a premium of Php1 Billion while another bidder invests Php14 Billion and offers a premium of Php2 Billion. USec. Limcaoco said that the latter will win the bid.

23. On the concerns earlier raised, USec. Limcaoco stressed that the project is not a joint venture.

PPA will still own the port but whoever offers the highest lease or premium gets to operate the port. He also reported that the project was approved by the President and the NEDA Board with a Viability Gap Fund but DOTC is not going to use it so the project will be bid out without a VGF. He also said that there will be no subsidies to be given by the government. He also confirmed the DOTC’s commitment to ensure a level playing field by providing longer term permits to private commercial ports. He said that DOTC is working with PPA to pursue the

policy of a level playing field in all aspects. This means regulations, specifications, and concessions that are applicable to all.

24. Mr. Raul Santos, Assistant General Manager of the Philippine Ports Authority (PPA) said that the present policy already provides for 25-year permits for private ports but the DICT and HIPS only got temporary commercial permits because the policy is still being discussed. USec. Limcaoco said that DOTC recognizes the need for certainty of the private sector to secure their investments and this cannot be addressed with the 4-year permits. He said that DOTC will consult with the private port operators on how the level and transparent playing field can be achieved. USec. Lopoz committed to follow-up and report on developments related to this.

Action to be Taken: Private commercial port operators, together with MinDA, to draw up recommendations on levelling the playing field for port operations in the Davao region 25. Dr. Basilio asked how rate increases will come to play because if bidders are investing in the port development and offering premiums for operating the port they will have to recover these. He asked about an evaluation criteria or a cap on the rates. USec. Limcaoco responded that there will be a cap applicable to all ports. Mr. Valoria clarified that the rates will be the ceiling and DICT can go lower. He said that DICT is now offering lower rates than the published fees. USec. Limcaoco confirmed that the rates are the ceiling and government will be happy if the private commercial ports offer lower prices.

26. Atty. Nathaniel Dalumpines, Chief of Staff of the Davao City Mayor’s Office said that the City Government will work closely with the project implementers as long as the peace and order is secured and the people benefit from economic activities. Mr. Toto Flores, the Barangay Chairman of Brgy. Sasa said that the community is happy that the Sasa Port is going to be improved considering its deteriorated state. However, he also agrees with the concern of the Davao City Chamber about the high cost of the project compared with the DICT and the HIPS. He also recommended that the problem on the congestion be considered.

27. The representative of the Tagum City Mayor’s Office reported that the City Government supports a Davao integrated port complex and likewise supports the HIPS. He said that, together with the DPWH and the DOT, the road leading to the port has already been widened.

The LGU has also purchased a 12 ha. lot to support the needs for a container yard for HIPS. 28. Ms. Eden David, City Tourism Operation Officer from DOT XI, inquired about opportunities for providing cruise tourism facilities at the Sasa Port. Ms. David said that the DOT was able to entertain small ships at the berthing facility in Sasa with about 90 foreigners who were touring Davao in February this year. She informed that DOT is working with USAID-COMPETE on evaluating the different ports for cruise tourism. USec. Limcaoco responded that it is unlikely to provide a cruise terminal at the Sasa Port because it would be difficult to mix tourism with container facilities but DOTC is working with DOT in identifying areas in the Philippines where the cruise terminals will be located. He could not specifically remember where it would be in Davao but the DOTC is fully supportive of the DOT’s cruise initiative. Mr. Valoria said that the

ANFLOCOR is also very interested in cruise facilities because the company is also into tourism services. However, he said that the draft in Sta. Ana is too shallow and the cruise ships require deep draft.

29. PPA informed that the cruise facilities is just a secondary concern for cruise operators because their primary concern is cruise destinations. When there are good areas to be visited, the cruise ships will go there with or without the facilities. He cited the Kalanggaman Island where a cruise ship anchored and boats ferried the tourists. The requirement for cruise vessels is a lot different from container vessels so they will have to be segregated. Among the criteria is that the facility should be able to accommodate the tender boats of the cruise ships who will anchor in the area, and it should be proximate to the sites to be visited.

30. Ms. David informed that there is no question on Davao’s readiness as a cruise destination as DOT has already entertained several visitors. She stressed that there is really a need to set up cruise tourism facilities in Davao, if not in Sasa, then in another area. Mr. Mantecon said that DOTC and PPA should seriously consider looking at Sasa as the place for the cruise terminal because it is right in the heart of the city and Davao and Mindanao has a lot to offer. He said that a large cruise ship is already looking at the Philippines as a destination. USec. Limcaoco responded that the DOTC is already looking for a cruise port whether it is Sta. Ana or some other place in Davao. PPA informed that recently a team of consultants from Australia contracted by the DOT is studying potential areas for cruise tourism facilities. He said that PPA will wait for the recommendation from the consultant and will support the plans of the DOT. Action to be Taken: DOTC/PPA to provide feedback on the provision of cruise tourism facility for Davao City.

31. USec. Lopoz relayed a message from Mr. Gaisano requesting confirmation that there will be no rate increase and asking for a copy of the Terms of Reference for the project. Dr. Basilio clarified Mr. Gaisano’s question citing that in the bid there is a schedule of rate increases. If this is approved but the government later decides not to implement rate increases, who is going to pay the increase? USec. Limcaoco responded that there is a ceiling on rates and the port operators can make any increase as long as it does not go over. Mr. Valoria followed up that, based on indicated increases thru the concession period what happens under a scenario where the market forces dictate that rates stay low thereby impacting on the viability of the project, will the government answer for the difference? USec. Limcaoco said no and that the private investor will have to price to market.

32. ASec. Dimas Soguilon of the DPWH reported that the agency’s direction is really to pave all national roads but in Mindanao there is an additional requirement under the logistics study to provide roads leading to ports which require accessibility. He said that in the case of the Sasa Port, the DPWH can always provide a road but the problem is the right-of-way. The DPWH has funds but there is also a problem with limited contractors. He asked for recommendations on what to do in the Sasa area because, as it is, the existing ROW is not enough. The bypass road is the long term plan for development but then even the detailed engineering cannot be done until 2016. The Bypass is planned to decongest the city proper and not to decongest the Sasa

Port. Mr. Valoria reiterated that there will be more serious congestion and recognized the DPWH’s dilemma that there really is no medium term solution to the problem. Mr. de la Cruz said that the government can choose to expropriate the properties within the ROW but this will be too expensive. ASec. Soguilon explained that expropriation takes years and is very difficult.

33. The Tagum LGU explained that this is why they have already started the horizontal developments to support the port. ASec. Soguilon added that they have already developed a bypass road in Panabo to support the port operations there. The representative from the Provincial Governors Office of Davao del Norte informed that the LGU has been working way before to provide the needed infrastructure support in the Province. There is an existing road improvement going to the port in Panabo and there are also fly-over projects in Panabo and Tagum to decongest the national highway. The LGU is providing this support in anticipation of the full operation of the ports. She mentioned that in a previous RDC XI meeting, PPA reported that 90% of the cargo handled by Sasa is actually bananas so Gov. Del Rosario was asking why not ship the cargo thru Panabo or Tagum considering that 70% of these bananas are from Davao del Norte and Compostela Valley. ASec. Dimas also added that DPWH is also improving the road from Kapalong to Talaingod for transporting products from Bukidnon. He said that the agency will be able to pave all national roads by 2016 and will work on decongesting and providing access to major gateways as mandated by the DPWH Secretary.

34. Mr. Edwin Sotto of PhilExport Davao said that the statement of DPWH reinforces their concern on the viability of the Sasa Port considering the absence of an assurance that the complementary road access will be ready. He stressed that it will be very problematic to have a rehabilitated port without adequate road access. If the bypass project could not even be guaranteed then the Sasa Port is very unviable just reckoning on the absence of adequate road access.

35. ASec. Soguilon said that acquiring ROW in highly urbanized cities like Davao may be so much more expensive than looking at expanding in port operations in other areas. He said that government should be more practical. The Sasa Port can be rehabilitated considering its current condition but it should not expand in terms of volume and look at Davao del Norte instead to provide the additional capacity. Ms. David of DOT XI added that it will be difficult to push through with the project without adequate road access. On the other hand, with cruise tourism, the area can still be maximized. Mr. de la Cruz said the DCCI has a position paper on the matter. He agreed with the statement of ASec. Soguilon that ROW will be very expensive especially with the new zonal valuation of the BIR. The Tagum LGU representative reported that they had a hard time discussing the project in the RDC. The RDC’s position thru its chair Gov. del Rosario, is recommending to have a Davao Region integrated port complex to ensure complementation and not putting too much pressure on the Sasa Port.

Action to be Taken: DOTC/MinDA to look into the viability of the Sasa Port in consideration of the concerns regarding increased road congestion.

36. USec. Lopoz asked that, if the ports are all intending to handle containerized international cargo, which port is going to handle domestic and break bulk cargo. The DOTC responded that Sasa Port is still going to handle domestic cargo. PhilExport added that with the Cabotage Law which has passed third reading, any port can handle domestic cargo.

37. Mr. Maranon said that he travels every day from Panacan to the Davao City proper and everyday is a struggle with the heavy traffic. He reiterated that there is a need to acquire first the road providing adequate access to Sasa Port before even considering expanding the port.

ASec. Soguilon that Davao should look at the problem with the Manila Port right now and anticipate that this is going to be the same problem that will happen in Davao. He cautioned that it could even be worse in Davao. He mentioned that DPWH has already invested in providing roads in Davao del Norte in anticipation of port operations there.

38. USec. Lopoz asked the project consultants if the study considered the scenario of increasing traffic congestion in the Sasa area vis’ increased volume going thru the Sasa Port. She also asked if the study has looked at the option to utilize the other ports to decongest the area. The DOTC responded that the problem of congestion was looked into even during discussions at the cabinet level between DOTC and the DPWH and the NEDA Board. There was a recognition of a need for coordination because the Davao Airport is also going to be improved but this is a necessary trade off for development and something that people will have to live with. She said that the bypass road and the connecting local road is going to help ease the traffic problem but DOTC does not think that this is an immediate issue and the ongoing widening can already manage the traffic. They are also requiring the port operator to put in systems that will allow them to manage the traffic flow in the port area. She said that the DOTC recognizes the concern and believes that this has been adequately looked at and that the Sasa Port is still viable. She added that if the investors that the DOTC is trying to attract to Sasa does not feel that it helps their investments, then the project will fail because ultimately it will be the private sector who will put in the money, look at all the risks, and assess whether the project will be viable or not. Mr. Valoria countered that the issue is prevailing right now and the consensus is that this significant piece is being missed. Mr. de la Cruz said it is not acceptable that this problem is not being considered right now in the Sasa Port project. Mr. Mantecon confirmed that it is faster for him to travel from the Davao airport to HIPS in Tagum than to get from the airport to the Davao City proper because of the traffic. The Sasa Port volume is already down by 50% and yet the traffic is still heavy. He said that to say that the people of Davao should just grin and bear it is the wrong attitude especially when there is a solution based on studies done by experts showing it is more feasible to ship thru Panabo or Tagum.

39. USec. Limcaoco said the problem on congestion is being considered. In any growing city there is always congestion because commodities have to enter the city. Even if you put the port away from the city, the imports will still have to be transported into the city. Building the port away will not solve the traffic. The best way is still to put a port near the city which will provide the requirements for consumer goods and then if there is a port that is proximate to the production areas for exports then that should handle this cargo. For example, the DICT can handle the bananas for export so that these do not have to go into the Sasa Port. There is going to be a natural distribution of commodities which should disperse traffic although there is still a need to widen the road. The PLGU of Davao del Norte highlighted that, if 90% of the

cargo in Sasa Port is bananas and 70% comes from the North, then why is there a need to expand the Sasa Port. USec. Limcaoco responded that there is still a need to improve the port for cargoes other than bananas. He said that the port has to be expanded to serve the imports going into Davao City. Mr. Maranon informed that basically between 40% to 50% are imports because of the banana industry and these are imports that should basically stay in the north. If these cargos come to Sasa Port, the DPWH concern is very real. USec. Limcaoco said that they expect that naturally all banana imports and exports will be shipped nearer where they are which is up in the north. He said that whoever gets to operate Sasa could decide that he would not expand it that much. The market will decide and the shippers should decide whether they go to Sasa, DICT or HIPS. The DOTC will not dictate where the shippers will go but will only support with necessary infrastructure.

40. Mr. Valoria said that in fact the market has already decided to go to the north. As such, there should be better use for the Sasa Port to benefit Davao City better. He also reminded that based on earlier discussions the bidders will look at the MPSS and it is not necessarily based on what we see as the potential of the port. USec. Limcaoco said that it will be the bidders’ commercial decision. For example, if the prospective investors realize that traffic will go to the north they might decide not to bid and government will have to downscale the project. Mr. Valoria asked if the DICT can be allowed to expand in the future. USec. Limcaoco responded yes reiterating that it is going to be a level playing field. Mr. Maranon said that it would be crazy for an investor to bid on the Sasa Port but San Miguel already was reported to have bought bid documents. He said that the requirement is that whoever bids should have run at least two ports with a capacity of over 500,000 TEUs and yet San Miguel was never into port operations. He said that DOTC or NEDA should not be scared to scrap the project as there are better and more valuable uses for the Sasa Port. USec. Limcaoco responded that if there is no market demand then there is no market for the port.

41. The meeting adjourned at 12:30pm.

Prepared By:

MA. VILMA N. BELCHES TA, PPPDO

Attested By:

USEC. JANET M. LOPOZ, CESO I Executive Director

Mindanao Development Corridors – South Central Mindanao Corridor (MDC-SCMC) Infra TWG Meeting / Gateways Forum 21 May 2015, MinDA Office, Davao City

List of Matters Arising Actions to be Taken Responsible Agency 1. Look into the connectivity MDC-SMDC Infra TWG of the Polloc Port and Timaco Port 2. Provide traffic data on the DPWH XI road passing thru Sasa Port 3. Look into the critical need DPWH XI to address the road traffic congestion at the Sasa Port

4. Discuss how to harmonize plans for the development of the ecozones vis’ the airport and port development plans in General Santos City 5. Draw up recommendations on levelling the playing field for port operations in the Davao region 6. Provide feedback on the provision of cruise tourism facility for Davao City

MDC-SMDC Infra TWG

7. Look into the viability of the Sasa Port in consideration of the concerns regarding increased road congestion

DOTC/MinDA

Status Will be proposed for consideration in the USAIDassisted Southern Mindanao Gateways Study For follow-up

MinDA, PPA PMO-Davao, and DPWH XI are scheduled to meet to discuss proposals for resolving the traffic congestion at the port For discussion in the next MDC-TWG meeting

MinDA/DICT/HIPS/Other Private Port Operators

Under review

DOTC/PPA

For follow-up. Initially, PPA PMO-Davao informed about a proposed tourism port facility in Sta. Cruz and Kaputian, IGACOS Under review