Here we go again. After his recent state visit to the US in the early days of May, President Ferdinand R. Marcos, Jr. enthusiastically announced that the Philippines was able to secure $1.3 billion worth of investment pledges which could generate some 6,700 jobs for Filipinos. There are those among these US investors who are planning to expand their existing operations and those who are looking to invest for the first time in the country. The President is optimistic that more investments would materialize if these pledges would “firm up.” That is the $64-dollar question.
How do we translate “pledges” to actual dollars flowing into the country? There is a long way to go before we can see some $20 billion in foreign direct investments (FDIs) flowing in annually under this present Administration. This is a figure already reached in the past by one of our major competitors for FDIs in the Indo-Pacific region, Vietnam.
One suggestion given by some people from the private sector — business firms, chambers of industry, and academe — is to pro-actively follow up these very important exploratory trips of the President and his Cabinet with roadshows that will put the finishing touches to these pledges or commitments through actual business-to-business talks leading to strategic alliances between the foreign investors and their potential Filipino counterparts. Although the recent amendment of the Public Service Act (PSA) allows 100% foreign equity in numerous infrastructure and other capital-intensive projects, foreign investors are prudent enough to always consider having local minority partners who can help them adapt to the peculiar investment climate of the country.
That is what a consortium of private business enterprises, industry associations, and members of the academe did recently to transform pledges to actual inflows of investment capital from an important European country that has much to contribute to our Build Better More program, Spain.
From April 18 to 27, a private consortium led by Francis Sebastian of the First Metro Corp. group, Cesar Averia of EDI-Staffbuilders, and me, representing the University of Asia and the Pacific, led a group of 20 top Philippine businesspeople in a roadshow held in Madrid and Barcelona to meet our counterparts in the Spanish business community. The Philippine delegation was composed of CEOs and top executives of DMCI Holdings; the Aboitiz group; Philippine Alliance Global; Summa Water Resources; First Lucky Holdings; Hijo Resources; Lionheart Farms; Agrinurture, Inc.; Semirara WEnergy Power Philippines; FDC Utilities; Opulentia Capital; Escudero, Marasigan, Valiente and E.H. Villareal Law; EDI-Staff builders International, Inc.; and the Center for Research and Communication.
With the help and advice of the Economic Section of the Spanish embassy in Manila and the Office of the Ambassador to Spain, Philippe Lhuillier, the 10-day event was designed to conduct pre-scheduled or post-scheduled business-to-business (B2B) meetings among the attendees to discuss specific investment projects for possible joint ventures, especially in key infrastructure like airports, railways, subways, skyways, and telecom facilities; construction and real estate; and large-scale agribusiness ventures. The plenary road show session was held on April 18 at the ultra-modern campus of the IESE Business School in Madrid, and on April 24 in the main IESE campus in Barcelona.
In the Plenary session held at IESE Madrid, 31 Spanish companies were represented. Among the companies were renowned Spanish firms such as Acciona (already very active in the Philippine infrastructure scene); TYPSA (looking into the conversion of Taal lake as a source of potable water for Batangas and Cavite); Indra (which has been operating in the Philippines for decades), Abengoa, AENA. ACS, and Elecnor, among others. Two of the top-ranking banks in Spain — Banco Sabadell and BBVA — were also represented.
The session was opened by the Director of the IESE Madrid campus, Professor Luis Suarez. After the brief opening remarks, Yolanda Serra shared vital information on the International Executive Education programs being offered by IESE to executives from all over the world. The Philippine Ambassador to Spain Philippe Jones Lhuillier delivered the keynote speech and then stayed for the whole duration of the event, showing his full support for this initiative of the private sector to help the Philippine Government bring in substantial amounts of FDIs. It must be pointed out here that Ambassador Lhuillier is one of the most knowledgeable diplomats about doing business with Europeans. He has been Ambassador to Italy, Portugal, and now Spain. As a founder of one of the largest pawnshop businesses in the Philippines, his keen entrepreneurial mind has been put to good use in maximizing the benefits of close trade and investment relations between the Philippines and the countries to which he has been sent as Ambassador.
MACROECONOMIC PICTURE OF THE PHILIPPINESWithout sugar coating the situation (this is the advantage of a roadshow managed completely by the private sector), I presented hard data showing the Philippines as one of the most attractive places in which to invest in the Indo-Pacific region (together with Vietnam and Indonesia). I made it a point to refer to reports of independent think tanks and other institutions from different countries all over the world, such as Oxford Economics, The Economist, Goldman Sachs, Hong Kong-Shanghai Bank, the Japan Credit Rating Agency and the World Bank, ADB, and IMF.
I gave a lot of importance to the fact that the Philippine economy is transitioning from a low-middle income economy to one that high-middle income. This is the stage of development when there is a big rise in demand for all types of modern infrastructure which can be provided by the leading companies of Spain. I shared my own personal experience witnessing the stage of Build, Build, Build in Spain in the 1960s and 1970s when then authoritarian leader Francisco Franco, aided by very competent technocrats, endowed Spain with the modern infrastructure that became a strong foundation for the country to transition to a First World economy by the end of the last century. The very same infrastructure companies that transformed Spain from a Third World country to a First World one are the ones that can help the Philippines go through the same stage from Third World to First World in the next two decades or so.
It is very providential that the recently amended Public Service Act will now make it possible for these Spanish infrastructure companies (together with those from South Korea and Japan, among others) to build and own these vital infrastructures.
In a video recording (he was not able to get a visa on time), Guido Delgado — former head of the National Power Corp. during the Administration of Fidel Ramos and now a leading energy executive, provided an overview of the energy market in the Philippines. He emphasized the very timely removal of restrictions in foreign ownership of energy projects, including renewable energy like solar and wind. To dramatize the potential market for energy in the Philippines, he shared a comparison between the power per capita consumption of New Zealand at 8,372 kWh and that of the Philippines at only 863 kWh per capita. He commented that what the Philippines needs in the energy sector are pre-development expenditures, technology, and equity investments. He advised the potential Spanish investors to have either a local partner or to tap a credible business advisor.
(To be continued.)
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.