The top stories we missed

Manila Times
Monday, January 02, 2006
http://www.manilatimes.net/national/2006/jan/02/yehey/
business/20060102bus5.html

VIRTUAL BUSINESS
By Tony Lopez
The top stories we missed

A number of newspapers have had their Top Ten Business Stories of the Year 2005. All of them missed among the three most important stories as regards business and the economy.

These are: 1) Gloria Macapagal Arroyo survived as president of the republic despite the July 8 coup attempt; 2) SM Investments Corp.’s $528 million initial public offering—the largest IPO ever in Asia and of course, in the Philippines; 3) Ford Motor Company’s decision to invest P1.1 billion to produce flexible fuel engines in the Philippines for export to Asia and the rest of the world.

A fourth major business story is the ascension to chief justice job of Senior Associate Justice Artemio Panganiban. Among the justices of the high court, he is the one most friendly to and most knowledgeable business and technological trends. He penned the ponderous decision on mining that in effect allowed foreigners to invest in mining, a reversal of the previous Supreme Court ruling on the issue. Chief Justice Panganiban will be good for business and the economy.

Mining, along with IT and tourism, will be the cash generators of the economy. This is in addition to remittances of OFWs which in 2004 are estimated to reach a record $12 billion.

That GMA remains our president is the defining moment of 2005. It settles the issue of leadership.

Investors and businessmen will now know who to deal with. This explains the unusual strength of the stock market and the equally unusual strength of the peso. Investors have begun to park their money in the Philippines. The peso has reached a 30-mnth high against the US dollar not only because of the huge OFW remittances but because I suspect hidden wealth —both stolen and illegitimately earned—has begun to flow back into the Philippines. How can you explain the fact that the Philippines has been incurring current account surpluses?

Meanwhile, the SMIC IPO is an indication of new life stirring in the formerly moribund Philippine equity market and catapults SM Investments into the ranks of the largest companies in the Philippines in terms of market capitalization.

Macquarie and BDO Capital priced the deal at P250 a share selling 115 million shares raising P28.75 billion (US$528 million). Of the total shares sold, 80 percent went to overseas investors in pre-trading allocation.

SM Investments is a Philippine conglomerate involved in shopping malls, retail, banking, real estate and leisure. Henry Sy’s group is the dominant player in retail, owning 50 percent of the country’s shopping malls and the largest land bank in the Philippines.

Its bank, Banco de Oro, is also one of the fastest growing banks in the Philippines.

On the other hand, Ford Motor Company of the US will invest P1.1 billion or $20 million to put up a flexible fuel engine plant at its sprawling Santa Rosa complex in Laguna.

Ford Philippines will produce 100,000 engines over the next five years valued at about US$100 million. Start-up is due in first quarter this year with full production to begin before the end of 2006.

“We expect that this new investment by Ford will take the Philippine automotive industry to its next level of development by establishing its leadership in the Flexible Fuel technology in the region,” Ford corporate vice president Peter Daniel, the concurrent Ford Asia Pacific and Africa president, said in the statement.

“Flexible Fuel technology is part of Ford’s global vision on innovation, and with this investment Ford intends to build the Philippines as its Asean (Association of Southeast Asian Nations) Center of Excellence in Flexible Fuel Technology,” he added.

Currently, Ford has more than one million ethanol-powered cars and trucks on the road. In North America, four new vehicles are planned for 2006 that will largely run on ethanol, increasing the production of these vehicles in 2006 to as much as 250,000 units.

“Our view of doing business here remains positive, as we continue to grow our existing exports operations and increase capabilities with our new engine manufacturing project,” Daniel said.

“We expect that this new investment by Ford will take the Philippine automotive industry to its next level of development by establishing its leadership in the flexible fuel technology in the region,” said Daniel. “Flexible Fuel technology is part of Ford’s global vision on innovation, and with this investment Ford intends to build the Philippines as its Asean Center of Excellence in Flexible Fuel Technology.”

Last December, Daniel paid a courtesy call on President Macapagal-Arroyo in Malacañang to formally inform her about the investment and express appreciation for the support the government has given to Ford’s operations in the Philippines. His visit is generally seen as an indication of the importance of the Philippines to Ford’s growth strategy in Asia Pacific.

“Our view of doing business here remains positive, as we continue to grow our existing exports operations and increase capabilities with our new engine manufacturing project. We also have confidence in the capability of our Filipino workforce which has significantly contributed to the success of our export operations,” Daniel told the President.
--------------------------------------------------------------------------------

(Email tonylopez@biznewsasia.com)