"F stands for fairness."
In his inaugural speech yesterday as the 71st president of the Management Association of the Philippines (MAP), topnotch ACCRA lawyer Francis Lim painted a markedly different scenario of the Philippine investment environment.
Foreign direct investments (FDI) are down dramatically. Why? Warned Lim in his 15-minute speech: “Unless we in the Philippines shape up, foreign investors will continue to view us as an unworthy investment destination and they might rather put their money in our ASEAN neighbors. Events of the recent past have exacerbated this perception.”
To be sure, FDI had been stagnant at the $5.5-billion level before Rodrigo Duterte began his presidency in July 2016. Following the euphoria about a populist but apparently business-friendly presidency, FDI hit a new high of $10.6 billion in 2017, the first full year of the Duterte presidency.
That is almost double the $5.3 billion average per year of 2015 and 2016 under the do-nothing President BS Aquino. Duterte’s economic team mesmerized investors with his Build, Build, Build infra program costing P8 trillion in six years or $157 billion for 75 projects.
Then Duterte started quarreling with Big Business. “I hate oligarchs,” he declared in various speeches. He accused the Ayala family in Manila Water and tycoon Manuel V. Pangilinan of Maynilad Water of economic sabotage, serial plunder, syndicated estafa, tax evasion, among other crimes, for imposing so-called onerous pricing for their water in the East Zone and West Zone water concessions, respectively. He threatened to slap them in public, if he encountered them in a hotel lobby.
He also stopped Congress from renewing the franchise of the Lopez family in ABS-CBN which ends in March 2020. Lopez had gotten Duterte’s goat when ABS-CBN failed to run the former Davao mayor’s ad for president during the May 2016 elections, after collecting P2 million and apparently not returning it to the president.
On Dec, 30, while addressing farmer victims of earthquake, Duterte added a fourth enemy oligarch, Isidro Consunji, chair, president and CEO of DMCI Holdings, which owns 25 percent of Maynilad Water. The President noted that one of DMCI’s Ecoland condominium buildings in Davao had collapsed. He demanded payment for the condo tenants. Learning of the speech, Consunji agreed to pay 150 percent of the cost of their units, meaning the residents will get 1.5 times what they paid for their condos.
Duterte promised to spend the last two years of his presidency, hounding the oligarchs.
Ayala and Pangilinan have already offered not to pursue collecting the P7 billion in back rate increases given them by a Singapore arbitral court. Under their contracts, Manila and Maynilad can sue the government if it refuses to grant rate increases. The government refused and so the two companies sued—in Singapore which happily approved their rate hikes. This incensed Duterte. He rescinded the 25-year contract extension to 2037 from 2022 given by the Arroyo administration to Manila and Maynilad and told them to agree to a new draft contract.
Duterte’s anti-business stance has not escaped notice from foreign investors. Hence, they are holding back their money.
Said Francis Lim at MAP: “Data are staring us in the face. For the past three years, foreign direct investments have consistently gone down from $10.3 billion in 2017 to $9.8 billion in 2018 and projected to fall further to $6.9 billion in 2019, or 33 percent decrease from the 2017 level. Our $6.9-billion 2019 FDIs will only be about 1/3 of Vietnam’s $20.4 billion and nearly 1/4 less than Indonesia’s $24-billion foreign investments in 2019.”
So MAP, under Lim, has a dilemma.
“These challenges cannot scare us into retreating from MAP’s tradition of leadership in progressive management thinking,” said Lim.
“On the contrary, he said, “this must inspire and urge us to step up and be leaders for change.” The signs are good.
“We have government officials like (DTI Secretary Ramon) Lopez, who not only their have hearts in the right places but who are hard at work day and night in attracting investments into the country. Our most recent performance under the World-Bank Ease of Doing Report and the bold initiatives being undertaken by the Administration of President Duterte are, indeed, very admirable and encouraging.”
For 2020, MAP President Lim’s battlecry then is “L-E-A-D for a Competitive Tomorrow."
MAP is in many ways a unique organization, Lim pointed out. It has 1,034 members representing 40 of the top 100 corporations in the Philippines. Around 74 percent of MAP members are either the chairman, CEO, president, managing director/partner and country heads. Seventy-two member companies have combined capitalization is P9.3 trillion, 60 percent of the total market value of listed stocks.
LEAD stands for:
1. “Level up by enhancing Ease of Doing Business.”
2. “Embracing Environmental, Social Responsibility and Governance (ESG) for sustainability.
3. “Accelerate best management practices.”
4. “Deepen the bench for future business leaders.”
“The fourth thrust of our theme is, quite frankly, closest to my heart as a father, teacher, and mentor,” said Lim.
“In my almost 40 years of practicing law and business that includes my stint as president of the Philippine Stock Exchange, one of the greatest life lessons I have is the strengthening of foundations by the infusion of young blood and fresh perspectives,” the MAP president shared.
If you ask me, Francis Lim’s LEAD should be LEAF—with the D changed to F. F for fairness—by government in dealing with business.