Aerotropolis

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One of the first official acts of BBM as President was the veto of the original Bulacan Airport City Special Economic Zone bill (HB 7575) in July 2022. The official justification cited substantial fiscal risks, among others.

Rep. Joey Salceda was the sponsor of the first bill and the second revised one. Interestingly, Sen. Imee Marcos sponsored the first bill (HB 7575) in the Senate before her brother, the president, vetoed it.

The revised bill lapsed into law in 2024. Allowing the revised version to lapse into law—rather than BBM signing it was a way to allow the creation of the zone while the earlier version remains officially vetoed. That was the convoluted official explanation.

Having the Bulacan Special Economic Zone and Freeport has always been part of what Ramon Ang had in mind for the airport. I remember him explaining to me that the airport by itself is not as valuable without the economic zone.

An airport will earn from landing fees and rentals of food and other concessionaires. That may be profitable enough for ordinary entrepreneurs.

The new airport, he said, would be good for the economy through increased tourism numbers and other businesses that are constrained by the current airport at NAIA. But he wants to do more.

RSA’s bigger dream calls for something like a mini-Silicon Valley adjacent to the airport.

Romeo Encarnacion, an expat Filipino executive, had been writing to me about his thoughts on how our country can catch up in Southeast Asia and in the world. Last week, he sent me an email with his thoughts about the New Manila International Airport (NMIA) in Bulacan.

He wrote: “NMIA risks being evaluated as a standalone investment. That would be a missed opportunity. Seen correctly, NMIA is not primarily an aviation project. It is a conversion engine.

“Infrastructure like NMIA generates enormous economic energy—capital inflows, construction activity, jobs and connectivity. But energy alone does not compound. Without deliberate conversion mechanisms, infrastructure produces throughput without transformation.

“NMIA’s role is not demand stimulation but conversion: reducing time, uncertainty and friction so that firms, suppliers and exporters can coordinate more productively. Its success should be judged less by volume and more by what kinds of economic behavior it makes possible.”

Encarnacion said the NMIA industrial zone is not peripheral; it is essential.

“Proximity between factories, suppliers, logistics providers and testing facilities determines whether firms learn, upgrade and reinvest locally. NMIA shortens external distance.

“Electronics manufacturing illustrates this well. Speed?to?market, just?in?time inventory and rapid customization favor ecosystems over isolated plants. The same logic applies to agribusiness, livestock and aquaculture exports, where cold chains, quality control and delivery windows determine competitiveness.

“NMIA’s value compounds only when these assets move together. The Philippines does not need another airport merely to move more passengers. It needs a mechanism to turn global connectivity into domestic capability — reliably, repeatedly and at scale.

“The challenge is not whether NMIA will operate, but whether its operation will convert activity into compounding economic value.”

That’s right about what RSA had been thinking when he conceived of the NMIA.

NMIA is designed as an Aerotropolis, a 2,500-hectare metropolis anchored on a city airport.  The development aims to attract high-tech manufacturers, such as semiconductors and electric vehicle makers, enabling companies to transport goods directly through the airport or a linked seaport. The goal is to enhance export revenues.

As RSA explained to me and to a group of fellow journalists some years back, the industrial zone is not just adjacent but central to the development plan, which includes residential areas, a government center, a seaport and a “university town” with research facilities to support these industries.

Through RA 11999 (Bulacan Special Economic Zone and Freeport Act), the area will operate as a self-sustaining hub, which allows for business incentives, such as tax perks, to attract foreign direct investment (FDI).

The zone is designed to connect directly with the airport’s four to six parallel runways, new expressways and a rail system (connecting to MRT-7). This infrastructure enables rapid cargo movement, crucial for industries like electronics.

To address the dual challenges of high electricity costs and unreliability, the Bulacan Aerotropolis is designed as a self-sustaining energy hub. By operating as an independent special economic zone under RA 11999, it bypasses many of the traditional grid limitations that plague other industrial areas.

The zone has the power to manage its own utilities. By generating and storing its own power, it bypasses the “universal charges” and transmission losses that typically drive-up electricity bills in the Philippines.

As a self-reliant hub, it can contract power directly or operate its own facilities, allowing it to negotiate “bulk” rates for locators that are typically much cheaper than retail rates in Metro Manila. The zone has the authority to maintain its own internal power distribution network, ensuring that maintenance and upgrades aren’t delayed by outside utility providers.

The goal is to create a “zero-outage” environment. It has the micro-grid advantage by combining local generation (solar/wind) with massive storage (batteries) and autonomous regulation. The aerotropolis aims to offer the world-class standards of reliability that high-value sectors like semiconductor and aerospace manufacturing require.

The other week, RSA told us that an aircraft engine manufacturer expressed interest in putting up a service facility. Pharmaceutical companies are also being invited.

I am thinking of Pax Silica without the extraterritoriality issue. As a private sector project, it will also happen sooner.

As Encarnacion puts it, “NMIA can either amplify future vulnerability by feeding imports and congestion—or absorbing shocks by supporting domestic production, export reliability and learning.

“The test is whether today’s infrastructure decisions leave the economy less sensitive to the next shock rather than more dependent on emergency measures.”

It is embarrassing that in our tiger economy neighborhood, we keep on getting left behind. Hopefully, we finally start behaving like a tiger economy too.

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco