SBMA move against Ocean Adventure will have irrevocable damage to Subic tourism

Subic Freeport, Philippines --- The Subic Bay Metropolitan Authority's (SBMA) decision to preterminate the lease of Subic Bay Marine Exploratorium Inc. (SBMEI), operator of Ocean Adventure and other tourist attractions here, came out of nowhere and could lead to major damage to the local tourism industry aside from its negative impact to the company itself. 

Robert Gonzaga, President and Chief Executive Officer of SBMEI, said that " We strenuously object to SBMA's decision to preterminate our lease and its press statements that the agency will repossess SBMEI facilities as if it were already a done deal. In fact, we were surprised and greatly disappointed that the SBMA took this step since it is so obviously designed to inflict harm on SBMEI. We were negotiating with them in good faith, but they decided to apply undue pressure instead. ' 

On Friday, SBMA Chairman and Administrator Wilma T. Eisma simultaneously sent out a pretermination notice to SBMEI and a media statement about the impending closure of the theme park. All this happened right in the middle of on-going negotiations between the parties to reach a universal settlement of all pending matters. 

In a statement sent by the agency to the media, Eisma said that SBMA “wanted [Ocean Adventure] to stay, of course, but there was not much concrete action from their side. So after months of negotiation and attempts to help SBMEI keep its lease, there is no longer any other recourse but to apply the law and pre-terminate the company’s lease agreement.” 

Under the pre-termination order, the SBMA will repossess all of the SBMEI’s 493.16 hectares of undeveloped property upon the lapse of the 30-day reckoning period. Then it will give the SBMEI 24 months to slow down its activities at the 11.6-hectare developed area that includes the Ocean Adventure Park, the Camayan Beach, and the newly opened Adventure Water Park. 

In direct contradiction to SBMA's official action, Eisma also said in the statement that the agency has not yet closed the door to renegotiation. 

Together with Ocean Adventure theme park, SBMEI is also the operator of Camayan Beach Resort Hotel and the Adventure Beach Waterpark. These SBMEI brands attract hundreds of thousands of guests and tourists alike to the Subic Bay Freeport every year, and the company is one of the main pillars of the tourism sector here. Other establishments in the sector also benefit from the phenomenal traffic generated by SBMEI on a regular basis. 

Currently, SBMEI employs more than 500 workers from Olongapo, Zambales, and Bataan, as well as presents livelihood opportunities for suppliers and entrepreneurs in these respective areas. 

Gonzaga said that the media statements issued by the SBMA have " already had an immediate and negative impact on the company, prompting concerned calls from tour operators, suppliers, guests and other stakeholders. But we'd like to assure everyone that the SBMEI board is actively engaged, along with the top management of SBMEI, in addressing these issues. We are dealing with the fallout of SBMA's move. Rest assured that there will be no disruption to our business operations as a result of this. " 

Gonzaga stressed that SBMA's sudden decision to unilaterally preterminate its lease is uncalled for and premature and that " By employing this tactic, the SBMA has decided to adopt an extremely unfair position to the point of recklessness. I hope that the SBMA board is being advised well and informed accurately by members of SBMA management on this matter. It could potentially lead to tying up SBMEI property in litigation for many years to come, not to mention the chilling effect it will have on potential investors to the SBFZ, loss of hundreds of jobs, and a blemish to the agency's reputation. How this turns out is going to be part of this current administration's legacy. " 

The current lease agreement of SBMEI was signed in 2007 under the administration of former Administrator Armand Arrezza and the late SBMA Chairman Feliciano Salonga. 

MASTERPLAN 

Gonzaga said that the masterplan of the SBMEI property was approved by the SBMA in 2010 but that a dispute immediately arose between the parties about permits when SBMEI attempted to begin development, which was settled in 2013 thru a summary of agreements under the administration of former Chairman Roberto Garcia. 

Then, it took the SBMA two years to pass four board resolutions that resulted in a draft lease amendment, which was sent to SBMEI in 2015. 

But the lease amendment draft '' was inconsistent with the summary of agreements, and riddled with significant typos, with respect to the lease rate. Furthermore, the SBMA wanted us to sign this document without any inputs from our side. " 

SBMEI refused, and under the current administration, Eisma referred it to the Leisure Committee in 2017 where it sat for more than 18 months, without any movement. 

" All throughout this process, we were asked to give more and more concessions, which we responded to positively. We have offered them major concessions since last year. We are doing so precisely to avoid a clash with SBMA because we'd rather cooperate than engage in conflict. We invested in the Subic Freeport to do business, and we'd rather do that than waste time in bureaucratic limbo. " He said. 

RESPONSE TO SUPPOSED VIOLATIONS 

Gonzaga explained that SBMEI was only made aware of the shortfall to the gross revenue share payments to the SBMA last year, after an audit was conducted by the agency late in 2018 " and we immediately offered a payment scheme, which we have been paying down religiously since, even if the SBMA has not approved that to this day. They then used this as one of their reasons to preterminate. " 

He also said that the illegal reclamation and construction that the SBMA was referring to was not done by SBMEI but a contractor of an SBMEI sublessor in Building 1463 '' whose application remains pending since 2018, despite payment of a 3M fine, and appeals to the SBMA to approve the sublease of this locator. The contractor, Jamjle, assured our sublessor that he is responsible for the permits for the foreshore stabilization work. We merely gave our sublessor verbal approval to proceed with the SBMA accredited contractor on those terms. " 

As for the unauthorized closure of public roads, Gonzaga said that this refers to a gate to a residential area within SBMEI property '' which was approved by previous SBMA administrations. It's a chain-linked gate meant to keep residents secure. Last year, a business tycoon was gunned down in a very public place in the Subic Freeport. This gate is the least residents here could do to protect themselves. " 

" Do all these supposed violations rise to the level of pretermination? It's the equivalent to issuing the death penalty for jaywalking. Ever since I took over as CEO in December,2017, I have tried to build a bridge to SBMA but now it seems they are trying their best to burn it. " Gonzaga said. 

Eisma also said in the SBMA press statement that a group of locators expressing their views to the media on the lack of implementation of the Ease of Doing Business law here only served as a "further irritant between the parties", since the SBMA has already put in place various measures to further ease of business in the Freeport, including putting up a one-stop shop for permits and extending the validity of the Certificate of Registration and Tax Exemption (CRTE) from one to three years. 

Gonzaga said that it was apparent that Eisma and some SBMA officials " resented the fact that we spoke out. But President Duterte himself has said so many times that everyone should speak out and speak up about gross inefficiencies of government and questionable actions of officials within his administration. It seems we are being penalized for that also. " 

He added that SBMEI was heartened by shows of support from the community and other locators who declined to be named '' for fear of attracting the ire of SBMA. " 

Gonzaga said that he, along with other locators, decided to speak out about the Ease of Doing Business law because '' we were already at the breaking point. Our investments have been held hostage, and we were no longer able to process permits and push through with any kind of development in our property. " 

Gonzaga pointed out that " One-stop shops represent minimum compliance of the law. Issuance of a CRTE is meaningless if a locator can't process his permits. But if an impartial body took a survey of Subic Freeport locators, a plethora of problems will be discovered with respect to the processing of permits, approval of projects, inexplicable bureaucratic roadblocks and various policies inimical to locators here. We're not alone in this situation, most locators are just reluctant to speak, especially now that this is happening to us. But we're not asking the SBMA to relax their rules. We're asking them to respect the rules, and comply with the true spirit and intent of the Ease of Doing business law as intended by President Duterte himself.