MVP: INVESTING IN CHANGE

The Philippine Star
08/28/09

There are a handful of businessmen who have successfully transcended their roles as plain and simple entrepreneurs to being captains of industry, and more importantly to being a positive force in spurring economic and national growth. I should like to think that MVP, or Manny Pangilinan, is one of them.

Well, strictly speaking, Pangilinan did not start off as an entrepreneur. He was an investment banker with a Wharton degree based in Hong Kong when Anthony Salim, son of the founder of Indonesia ’s powerful Salim Group, approached him to set up a company that would enable the Salims to expand in consumer products and finance.

In 1981, Pangilinan set up First Pacific in Hong Kong with a $1.5 million startup capital from the Salims. All the hard work paid off when, in 1996, First Pacific joined the Hong Kong Hang Seng Index’s roster of blue chip companies, a testament to MVP’s entrepreneurship and professional capability.

Filipino at heart

Pangilinan first turned an eye to investing in the Philippines in the middle of the 1980s, at a time when there was political turmoil in the country as a result of the assassination of Ninoy Aquino. While there was a business case to buying profitable companies spooked by the perceived instability, it was also the Filipino heart in MVP that pushed him to bringing First Pacific to the country.

With Metro Pacific as the flagship of First Pacific’s Manila operations, the company acquired sizable shares in Smart Communications, gaining a strong foothold in the country’s budding telecommunications industry. (Smart later became a subsidiary of PLDT, which is owned by First Pacific.)

In 1998, First Pacific under Pangilinan gained majority control of PLDT. This, together with the established success of Smart Communications as the country’s dominant mobile services business, put MVP in the position as an undisputed captain of industry.

Value of business in nation building

But running a business (or businesses) to simply earn profits was no longer just enough for Pangilinan. As First Pacific’s investments grew in strength in the country, MVP also learned more about the economy and how it was being managed. This ringside view allowed him to reflect on the value of business in nation building.

Known for his daring business style, Manny had once told me that business should focus on the big ticket items that would make a greater impact on the economy. He, of course, had formed a pretty good picture of what ailed the Philippine economy, and how business could help.

Investing in infrastructure

In 2006, he reorganized Metro Pacific into an investment company (Metro Pacific Investments Corp.) with a bias on the infrastructure sectors. Manny strongly believed that investments in infrastructure were needed to boost the country’s productivity.

Last year, Metro Pacific Investments announced its intention to buy into Manila North Tollways, the concession holder of the North Luzon Expressway. The operation of an efficient road system is also viewed by MVP as a precursor to boosting economic growth.

Earlier, the company had announced its intention to put up a new toll road from NLEx to Letre in Malabon, complementing a bid made by Metro Pacific together with Harbor Centre two years ago to modernize and operate the Manila North Harbor Port. (The Philippine Port Authority just recently awarded the contract to Metro Pacific and Harbor Centre.)

Aside from the promise of reducing port rates by as much as 15 percent, the planned investments in roads on the northern side of the metropolis is expected to bring down transportation costs of exporters for produce landing at the North Harbor and shipped out via Clark .

This column shares the expectation by Philippine business that MVP and Metro Pacific’s foray into the port businesses would lead to a substantial improvement not just in the quality of service but also a contribution to reducing overall costs of many of our export products.

Metro Pacific’s acquisition of Meralco shares last year is also seen as a complementary move towards strengthening the former’s objective of being a dominant business force in the country’s infrastructure sector.

Investing in basic services

Pangilinan next turned his attention to investments to upgrade the delivery of two vital services – the supply of water and health and hospital services.

With DMCI, Metro Pacific Investments bid – and won – the right to operate the burdened Maynilad concession covering the West Zone of Metro Manila and a large part of Cavite province. The move has brought hope to over nine million people in the service area that had struggled for years with an inefficient water delivery system.

Pangilinan ventured into hospital services management by acquiring Makati Medical, then Davao Doctors, and finally clinching the management contract to operate Cardinal Santos.

Investing in the medical sector demands massive fresh capital for modernization, all aimed at bringing the standard of the hospitals to world-class levels and competing in what is turning out to be a lucrative business in Asia .

Raising expectations

MVP’s entry and investments in communications, infrastructure, power, water and health services are raising expectations for more professional and efficient operations in these areas which would lead to consumer benefits in terms of not only cost efficiencies but also higher quality standards.

For instance, many are hoping that Pangilinan’s presence at Meralco will bring synergies and management and operations efficiencies that will eventually lead to lower power rates, something that businesses in the Philippines have been complaining of and which is seen as a major reason for high production costs.

Making investments is risk taking, more so in times we now face when the global economy is at its most fragile. We certainly hope that Pangilinan will be able to deliver, not just for the sake of his direct shareholders, but also for our country.

Champions League ABS-CBN Partnership Forged

The annual search for the national collegiate champion recently got a big boost with the tie up of Philippine Collegiate Champions League (PCCL) and ABS-CBN. Both parties signed the Memorandum of Agreement (MOA) that will usher in a five year partnership that will bring the Philippine Collegiate Championship Games to Filipino television viewers nationwide and in countries serviced by ABS-CBN network.

Signing in behalf of ABS-CBN were Ma. Rosario N. Santos-Concio, president and COO, Rolando P. Valdueza, chief finance officer, and Peter A. Musngi, managing director, Manila Radio and Sports, and witnessed by Gabby Lopez, chairman of ABS-CBN. I signed the agreement as chairman of PCCL with Oscar Reyes, vice chairman of PCCL as witness. Also attending from PCCL were Atty. Pablo “Boy” de Borja, corporate secretary and Anette de Ocampo, marketing assistant.

Peter Musngi of ABS-CBN Sports stated that the tie-up with PCCL is another step being taken by ABS-CBN to help promote and develop collegiate basketball nationwide. “We hope to duplicate the success we achieved in covering the UAAP and NCAA games. The media exposure of provincial champion teams, hopefully, will provide motivation for upgrading their competitiveness,” Peter added.

Manny Pangilinan, president of Samahang Basketball ng Pilipinas (SBP) and chairman of PLDT and Smart, has given his full support to this annual search for the national collegiate champion being conducted by PCCL. It is one of the programs submitted to FIBA and the nationwide multi-level competition involving over 200 collegiate teams has the full support and sponsorship of PLDT and Smart Communications.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, SalcedoVillage, 1227 MakatiCity. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.