The CenSEI Report (Vol. 2, No. 17, April 30-May 6, 2012)

8/2/2019 The CenSEI Report (Vol. 2, No. 17, April 30-May 6, 2012)

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NATION

TECHNOLOGY

WORLD

Strategic Analysis and Research by theCENTER FORSTRATEGY, ENTERPRISE & INTELLIGENCE

Volume 2 - Number 17 April 30 - May 6, 2012

e Executive is prepared to enforce the law and to carry out the instructions of thisdecision. But before we say that we will implement such-and-such by such-and-suchdate, we have to know what we are being tasked to do and that is not yet clear~ President Benigno Aquino III on Supreme Court nal decision to distribute hisfamilys Hacienda Luisita with compensation set at 1989 land valuation

e Cojuangcos should just agree to distribute the land for free since the Cojuangcofamily had already proted several times over from the land since 1958. [President

Aquino] said it was the farm workers turn to benet from the land~ Bayan Muna Representative Teodoro Casio

POINT & CLICK

You can accessonline researchvia the Internetby clicking

phrases in blue

BUSINESS

CONTENTS BUSINESS NATION WORLD TECHNOLOGY

cenSEIT H E

Report

4 The Magic Formula of MVPFrom Indonesian food and Philippine phones, Manuel V. Pangilinan has expanded

First Pacic into power, water, tollways, mining and hospitals. Hes not done yet

The $1.5-million bet: Turning $1.5 million into billions in 30 years

PLDT stocktaking: The High Court ponders the telecom giants ownership

14 Giving ICT Its Own MinistryNearly a dozen years since it was rst proposed to Congress, the Department of

Information and Communications Technology Bill may nally pass. Its about time

The BPO bonanza: Its not enough for balanced development, says the ADB

22 Justice for the Fallen TreesA World Bank report spotlights the daunting and sometimes deadly challenge of

enforcing the law on illegal loggers. One must-do: give communities a stake in

protecting the forest

The Banks prescriptions:What must be done to make lawless loggers pay fortheir greed

Logging and ooding: The U.N. argues against knee-jerk linking of mega-oods to

mowed-down forests

32 Step Aside, GDP Its Time for GNHA United Nations conference in New York spotlights Gross National Happiness as the

proper goal and measure of development. Its not just the economy that counts

Paradise loft:A Himalayan land seeking happiness for all

Whats wrong with GDP?: The Bhutanese Prime Minister explains

Happiness by the numbers: The nine domains and 33 indicators of GNH It does not compute: Not everyone thinks happiness can be calculated

42 The End of the Job Resum?Social networks and search engines are replacing the traditional

resume as primary tools for nding the right people for the job.

Listen up if you want to get hired

Building online proles: Tips on uploading your best foot forward

Facebook Pro: Top social networks for business and career

Search me: The art of online reputation management
http://www.abs-cbnnews.com/-depth/04/29/12/pnoy-vows-implement-sc-decision-luisitahttp://www.abs-cbnnews.com/-depth/04/29/12/pnoy-vows-implement-sc-decision-luisitahttp://www.abs-cbnnews.com/-depth/04/29/12/pnoy-vows-implement-sc-decision-luisitahttp://newsinfo.inquirer.net/182093/luisita-ruling-shows-independence-of-aquinos-3-appointees-in-supreme-court-says-lawmakerhttp://newsinfo.inquirer.net/182093/luisita-ruling-shows-independence-of-aquinos-3-appointees-in-supreme-court-says-lawmakerhttp://newsinfo.inquirer.net/182093/luisita-ruling-shows-independence-of-aquinos-3-appointees-in-supreme-court-says-lawmakerhttp://newsinfo.inquirer.net/182093/luisita-ruling-shows-independence-of-aquinos-3-appointees-in-supreme-court-says-lawmakerhttp://newsinfo.inquirer.net/182093/luisita-ruling-shows-independence-of-aquinos-3-appointees-in-supreme-court-says-lawmakerhttp://newsinfo.inquirer.net/182093/luisita-ruling-shows-independence-of-aquinos-3-appointees-in-supreme-court-says-lawmakerhttp://www.abs-cbnnews.com/-depth/04/29/12/pnoy-vows-implement-sc-decision-luisitahttp://www.abs-cbnnews.com/-depth/04/29/12/pnoy-vows-implement-sc-decision-luisitahttp://www.abs-cbnnews.com/-depth/04/29/12/pnoy-vows-implement-sc-decision-luisita


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When Paradigms Shift, Make Sure to Get Early WarningIt is one essential of strategy: keeping watch on paramount paradigms underpinning ones sector or eld of expertise and

executive responsibility, and gauging when these structures and principles are under strain, facing challenge, or breaking

down and giving way to new foundational frameworks. The price of missing the shifting earth beneath can be stratospheric,

as Kodaks demise, Nokias troubles, and the fall of despots in ages past have shown.

So at the Center for Strategy, Enterprise and Intelligence, weve made a regular habit of agging trends and ideas that mayupstage, upset or upend the established norms and structures, and quickly tell readers ofThe CenSEI Reportabout them.

While some, if not many, of these nascent trends could still disappear into thin air, its always better to be forewarned of

many possible disruptions than be surprised by one of them.

Past installments ofThe CenSEI Reporthave expounded on the rise of Generation C, the Internet-and-cellphone-connected

global community sharing the vast online world; as well as the surge in cure-resistant diseases and lifestyle maladies, and

top technology trends that will change your health. In several issues we plotted the emerging Asian geopolitical landscape,

marked by Chinas economic and military rise and its growing rivalry with America, and the possibilities and opportunities of

renewable energy, which are spawning a plethora of green gadgets and jobs for the future.

On the global front, our New Year world economic forecast highlighted expected shifts in global trade, industry andinvestment well beyond this years initial forecasts for planet-wide slowdown and eurozone crisis. And our two recaps of

the World Economic Forum touched on, among other potential disruptions, the changing fears of movers and shakers

worldwide regarding the leading dangers in the coming decade. It wasnt your usual recession and nancial turmoil, but

basics like food and water. Plus: cyber-threats.

This week, The CenSEI Reports trend-spotting continues, with our articles on Gross National Happiness (GNH) and online

reputation building. Backed by no less than the U.N. General Assembly, GNH is being touted as a better goal and measure

of development than the decades-old gross domestic product. While joy by the numbers isnt going to replace GDP anytime

soon, if and when it does, its good to know now the parameters that could shape government plans and voter preferences.

And if one thinks trend-spotting only matters to macro-planners, our Technology story on online personnel search and itsimpact on the traditional resume offers a paradigm shift story with paycheck implications. Quite simply, if your online prole

doesnt impress, it may cost you your next career move.


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cenSEIT H E

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BUSINESS

little Hong Kong-based trading

company of 30 years ago is now an

empire that controls major companies

providing electricity, food processing,

hospitals, management, mining,

telecommunications, tollways management,

and water service

The secret of Manny Pangilinans success:

Capital expenditures in utilities with steady

cash ow will pave the way to invest in

everything else after that

In April, Manuel V. Pangilinan and

Jaime Augusto Zobel de Ayala inked a

memorandum of agreement to form an

exclusive strategic partnership to jointly

pursue and develop light rail projects in

line with the governments public-private

partnership program.

This venture with a friendly competitor Pangilinans Philippine Long Distance

Telephone has 70% of the local telephone

STRATEGY POINTS

A little Hong Kong-based trading company of30 years ago is now an empire that controlsmajor companies providing electricity, foodprocessing, hospitals, management, mining,telecommunications, tollways management,and water service

The secret of Manny Pangilinans success:Capital expenditures in utilities with steadycash ow will pave the way to invest ineverything else after that

From Small ThingsBig ThingsOne Day Come:The Empire of

First PacicBy John Carlo Gil M. Sadian

A
http://www.abs-cbnnews.com/business/04/24/12/ayala-metro-pacific-team-lrt-projectshttp://www.abs-cbnnews.com/business/04/24/12/ayala-metro-pacific-team-lrt-projectshttp://www.abs-cbnnews.com/business/04/24/12/ayala-metro-pacific-team-lrt-projectshttp://www.abs-cbnnews.com/business/04/24/12/ayala-metro-pacific-team-lrt-projects


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ThecenSEIReport April 30-May 6, 2012

market, with Ayalas Globe Telecomm

picking up the remainder -- marks another

milestone in Pangilinans apparent drive

to build an empire t to compete with the

oldest oligarchs of the country.

It all started way back in 1981 when

Pangilinan founded First Pacic Limited

in a cramped, 50-square-meter ofce with

six people and a little capital from foreign

friends. It was a small company originallyintended to engage in trading business

in Hongkong. Thirty years later, the four

major corporations under its umbrella

would comprise the premier investment

management and holding company in the

region, earning billions of dollars with tens

of thousands of people under its employ.

The past couple of years saw First Pacic

increase its prots by 40% through a

capital management program introduced

by Pangilinan, enabling the company to

pay the highest ever pay-out of dividends

to its stockholders in line with companys

commitment to deliver a minimum of

25% of recurring prot to shareholders.According to Pangilinan, this was made

possible by the strong performances of

the four corporations under its umbrella:

Indonesia-based Indofood and Philippine-

based Metro Pacic Investments

First Pacic: How it all started

The interesting story of First Pacics origins in Indonesia and Hong Kong can be found among thecorporate proles on the Utah-based siteFundingUniverse.com. When Indonesia's war for independence

broke out in 1947, an enterprising Chinese immigrant, Liem Sioe Liong, aided the rebels against the Dutch

colonial forces. During this time, he became acquainted with a young lieutenant colonel named Suharto.

Soon after Indonesia gained independence, this immigrant adopted the Indonesian name Soedono Salim

and, with the help of Suharto, who came to power in 1965, built monopolies in the country's clove, cement,

and our markets. Like many Southeast Asian Chinese tycoons, who belong to small minorities in their

countries but own big portions of economic assets, Salim sought to channel some capital to overseas

investment havens. To help their business expand outside Indonesia, he tasked his son Anthony to tap

outside talent.

Anthony approached Hong Kong-based Filipino investment banker Manuel Pangilinan to set up a

deposit-taking company in Hong Kong that would enable the Salims to expand into consumer products

and nance. With just $1.5 million in startup capital, Pangilinan set up First Pacic Limited in 1981 as a

small trading rm which would eventually grow into one of the most protable investment and holding

companies in the region, reporting a prot (net of exceptional gains) of HK$1.57 billion (US$202 million)

on turnover of HK$54.8 billion (US$7.03 billion) in 1996.

The Salim familys daring move of letting an outsider control a family business was a bit of a risk, but

given that it appears to have been worth it, it seems likely that theyll keep the hands-off approach to First

Pacic and let the man who turned a little trading rm into what is now a multi-billion-dollar enterprise

continue to run the show.

From small things big things one day come: The empire of First Pacic
http://www.firstpacific.com/admin/upload/media/press/ep120320a.pdfhttp://www.firstpacific.com/eng/about/group_message.phphttp://www.fundinguniverse.com/company-histories/First-Pacific-Company-Limited-Company-History.htmlhttp://www.standard.net/topics/business/2010/09/03/14-utah-companies-rank-magazines-top-500http://www.fundinguniverse.com/who.phphttp://www.fundinguniverse.com/who.phphttp://www.standard.net/topics/business/2010/09/03/14-utah-companies-rank-magazines-top-500http://www.fundinguniverse.com/company-histories/First-Pacific-Company-Limited-Company-History.htmlhttp://www.firstpacific.com/eng/about/group_message.phphttp://www.firstpacific.com/admin/upload/media/press/ep120320a.pdf


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6cenSEIT H E

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Corporation (MPIC), Philex Mining

and Philippine Long Distance

Telephone Company (PLDT), shown

in the chart below.

Record growth for Philex. The core

net income ofPhilex, the controlling

interest in which First Pacic acquired

in Dec. 2009, reached a record high5.6

billion, a 34% increase from its previous

record of4.2 billion in 2010. This is due to

higher metal production and unprecedented

market prices for gold, copper and silver.

As the most protable mining company in

the Philippines, Philex delivered a 400%

increase in its contribution to First Pacics

revenues for 2011. Promising results from

exploration activity and search for suitable

acquisitions further drives Philex in its

expansion plans for the next couple

of years.

Lower income but brighter prospects

for PLDT. For the year 2011, PLDT

reported a 7% decline in core net income.

From last years gure of42 billion, lower

service revenues and higher operating costs

brought down net income to 39 billion.

The loss was just partially offset by a higher

equity share in the earnings of Meralco,

which by itself rose on the strength of

higher tariffs and slightly higher sales than

a year earlier.

PLDTs xed line business grew

from 1.8 million subscribers in 2010

to 2.2 million subscribers, with an

addition of 47,000 more PLDT

subscribers and another 296,000

Digitel subscribers. .

The total subscribers of PLDTs cellular

networks as of year-end 2011 stood at

63.7 million.

The PLDT Groups combined postpaid

cellular subscriber base now leads the

THE FOUR PILLARS OF FIRST PACIFICS EMPIREMajor group rms, with FP stakesand New York (NYSE) or Philippine

(PSE) listing codes

Source: Business Structure chart, First Pacic Company Ltd.

*Economic interest as at 3 November 2011#Two Rivers Pacic Holdings Corporation, a Philippines afliate of FirstPacic, holds a additional 15.0% interest in Philex

First Pacic

(HKEX: 00142)

PLDT 25.8%*(PSE: TEL; NYSE:PHI)

MPIC 59.1%*(PSE: MPI)

Indofood 50.1%*(PSE: MPI)

Philex# 31.3%*(PSE: PX)
http://www.philexmining.com.ph/http://philexmining.com.ph/images/stories/Philex/documents/News/dc2012-1662_px.pdfhttp://www.pldt.com/http://www.firstpacific.com/admin/upload/media/press/ep120306.pdfhttp://www.firstpacific.com/eng/about/structure.phphttp://www.firstpacific.com/eng/about/structure.phphttp://www.firstpacific.com/admin/upload/media/press/ep120306.pdfhttp://www.pldt.com/http://philexmining.com.ph/images/stories/Philex/documents/News/dc2012-1662_px.pdfhttp://www.philexmining.com.ph/


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market with 1.9 million, 1.4 million of

whom were with Sun Cellular.

Meanwhile, PLDT Groups totalbroadband

subscriber base increased by 45% to

2.9 million with additional of 356,000

subscribers to SmartBro. Over 1.1 million of

these subscribers use the prepaid service.

PLDT myDSL, on the other hand, increased

by almost 100,000 as it now has 742,000

by year-end 2011. Recently acquired Sun

Cellular also registered an additional

551,000 broadband subscribers.

Seeing 2012 as a year of alignment so it

could go back to better gures, PLDT will

focus on integrating Digitel and closing its

two-year 67 billion capital expenditure

program. Capital expenditures for 2011

amounted to 31.2 billion, which is 8%

higher compared to last year. These were

spent on major improvements in both its

mobile and xed networks, which include

increasing its 3G population coverage to

70%, upgrading wireless transport network

covering up to 82% of Metro Manila sites

and its xed transport network by rolling

out 54,000 km of ber assets.

Despite the bright prospects brought

about by PLDTs acquisition of Digitel, the

possibility of legal battles may upset the

telco giants business strategy for 2012.

After the National Telecommunications

Commission approved the acquisition,

several groups expressed concern that

PLDTs acquisition of Digitel would result

in a virtual monopoly in the cellular

network business as it leaves Globe

Telecom as PLDTs only competitor.

Consumer rights advocate TXTPower fears

that the consumers will eventually suffer

under the merger. TXTPower head Tonyo

Cruz said, We still suffer from bad service,

below par customer service, iron-clad

contracts, interconnection fees, unstableand unreliable calls, even with the merger.

Former President Fidel Ramos also sawthe

anti-trust implications of the acquisition, as

reported in a story posted on theAntitrust

Law Center website, saying that it may

result in a disservice to the public, noting

that the deal is meant to primarily stie

competition in the telecommunications

industry and not to improve service.

Ventures in mass media through

MediaQuest. Meanwhile, over the last

few years, Pangilinan has made major

capital investments in mass media through

MediaQuest Holdings, a PLDT Trust Fund

company. The most important acquisition

to date came in 2009, when MediaQuest

bought Associated Broadcasting Company,

the erstwhile ABC5. In two years time,

Network Total subscribers Additional for 2011

Smart 27.1 million 1.4 million

Talk 'N Text 20.5 million 1.5 million

Red Mobile 1.4 million

Sun 14.7 million 1.9 million

PLDT'S MOBILE SUBSCRIBERS

Source: TCR compilation of gures from First Pacic March 6, 2012 press releaseannouncing PLDT audited nancial and operating results for 2011, p. 4

http://www.firstpacific.com/admin/upload/media/press/ep120306.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120306.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120306.pdfhttp://www.gmanetwork.com/news/story/236680/economy/pldt-secures-ntc-nod-on-digitel-deal-grows-mobile-base-to-62-8mhttp://ph.news.yahoo.com/pldt-digitel-deal-step-forward-antitrust-problem-20110412-051247-329.htmlhttp://antitrustlawcenter.com/index.php?option=com_content&view=article&id=96:lawyers-group-makes-pldt-deal-a-test-case-for-its-anti-trust-law-advocacy-&catid=29:issues&Itemid=95http://antitrustlawcenter.com/index.php?option=com_content&view=category&layout=blog&id=29&Itemid=95http://antitrustlawcenter.com/index.php?option=com_content&view=article&id=89&Itemid=92http://antitrustlawcenter.com/index.php?option=com_content&view=article&id=89&Itemid=92http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=27673100http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=27673100http://antitrustlawcenter.com/index.php?option=com_content&view=article&id=89&Itemid=92http://antitrustlawcenter.com/index.php?option=com_content&view=article&id=89&Itemid=92http://antitrustlawcenter.com/index.php?option=com_content&view=category&layout=blog&id=29&Itemid=95http://antitrustlawcenter.com/index.php?option=com_content&view=article&id=96:lawyers-group-makes-pldt-deal-a-test-case-for-its-anti-trust-law-advocacy-&catid=29:issues&Itemid=95http://ph.news.yahoo.com/pldt-digitel-deal-step-forward-antitrust-problem-20110412-051247-329.htmlhttp://www.gmanetwork.com/news/story/236680/economy/pldt-secures-ntc-nod-on-digitel-deal-grows-mobile-base-to-62-8mhttp://www.firstpacific.com/admin/upload/media/press/ep120306.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120306.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120306.pdf


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TV5 has become a major player, pacing

a close third to perennial competitors

GMA7 and ABS-CBN. For this year, TV5,

which currently holds 15% of the market,

has earmarked 4 billion in capital

expenditures, a huge bulk of which is

So who really controls PLDT?

Another issue hounding PLDT is its compliance with the 40% constitutional cap on foreign ownership

of public utilities. Article XII, Section 11 of the Constitution provides that no franchise, certicate, or any

other form of authorization for the operation of a public utility shall be granted except to citizens of the

Philippines or to corporations or associations organized under the laws of the Philippines at least 60

percent of whose capital is owned by such citizens. PLDT maintains that it does not violate the said

constitutional mandate because foreign ownership only accounts for 13% of the company. PLDT got this

gure by counting preferred shares as part of the capital. But some quarters disagree.

As shown in the table below, independent of the number of shares, the value of PLDTs non-voting

preferred stock (convertible and non-convertible redeemable) is set at over 4.4 billion, while the value of

its voting common stock is just over P1 billion. If one assumes that non-voting preferred stock is owned

mostly, if not entirely, by Filipinos, one could argue that Filipinos own over 80% of the company.

But if one combines that with the common knowledge that control of PLDT resides in the control of

its voting common stock, signicant portions of which are still held by foreign companies such as the

Hong Kong-based First Pacic and Japans Nippon Telephone and Telegraph DoCoMo, then we face a

situation where foreign companies effectively control a public utility supposedly owned by Filipinos.

On June 28, 2011, the Supreme Court ruled that that the term capital in relation to Art. XII Sec 11

should be considered as shares of stock entitled to vote in the election of directors. According to Senior

Associate Justice Antonio Carpio, counting the entire capital stock in determining foreign ownership, as

how PLDT did it, will betray the mandate of Article XII that public utilities must be effectively controlled

by Filipinos. PLDT sought reconsideration of the ruling, and the case is currently pending before the

Supreme Court. The Court heard the oral arguments of PLDT on April 17, while the arguments of the

government will be heard on June 26.

December 31,

2011 2010

Serial Preferred Stock 10% Cumulative Convertible Preferred Stock

A to II 4,059 4,059

Cumulative Non-convertible Redeemable Preferred Stock

Series IV 360 360

4,419 4,419

Common Stock 1.072 947

Note: Preferred stock carries a par value of P10 per share, while common stock carries a par value of 5 per share

PLDT CAPITAL STOCK, 2011 AND 2010

Source: PLDT Annual Report for scal year ended Dec. 30, 2011, assubmitted to U.S. Securities and Exchange Commission, p. 9


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allocated for the completion of its new

state-of-the-art building in Mandaluyong.

Not seem to be satised with the growth of

TV5, Pangilinan admitted that the PLDT

Group have been interested in GMA for 10

years, but there are no discussions going

on, and that Weve talked to them the

rst time in 2002, then maybe ve years

ago. If ever such a deal were to materialize,

the PLDT Group would be on the verge of

owning 60% of the market share, making

ABS-CBN a helpless competitor.

For its part, GMA7 denies that there is

already a done deal between Pangilinan

and the owners of GMA7. According to

GMA7 president Gilberto Duavit Jr., The

network is not for sale, but that is not to say

it will not be sold depending on the offer

price. This afrms that there are indeed

preliminary negotiations taking place,

and that everything would have to depend

on the price Pangilinan is willing to offer to

the Duavit, Jimenez, and Gozon families,who own GMA7.

Based on the value of GMA7 stocks, the

company is valued at around 31 billion. If

one would take into account the customary

premium being paid by buyers for such

major acquisitions, the reasonable asking

price for GMA7 would be around 45 to 51

billion, but the three families are reportedlydemanding 60 billion. That buying price

would be equivalent to a 94% premium that

Pangilinan would be paying for the shares.

This is where the parties fail to agree.

However, the 39% income drop of GMA7

last year could set the stage for a deal

to be sealed.

Note that MediaQuest also owns National

Broadcasting Corporation and Cignal

Digital TV, and has minority shares in the

broadsheetsBusinessWorldandPhilippine

Daily Inquirer. Last year, the PLDT

subsidiarytried to acquire 87.5% ofThe

Philippine Star, but negotiations did not

push through. As of this time, it has a 10%

stake in the Star, and a 10% stake in

the Inquirer.

MPIC: Bringing the basics to higher

ground. In an attempt to answer the

growing demand for vital services,

Pangilinans holding rm Metro Pacic

Investments Corporation, through its

six subsidiaries, offer vital services in

groundwork for basic services which

would pave the way for a strategic

response to the changing times. MPIC has

been trying to answer the countrys growing

demand for clean and potable running

water, efcient distribution of electrical

power, state-of-the-art tollway systems and

world-class medical care.

The performance ofMPIC speaks wellabout how it has indeed answered the

demands stated above. It reported a 32%

increase in core net income from the 2010

gure of3.9 billion to 5.1 billion for

2011. This was primarily due to high tariffs

and sales by Meralco and Maynilad and

the strong performance of its healthcare

operations. Meanwhile, Metro Pacic

Tollways Corp. had little earnings for 2011compared to 2010 due to the expiry of its

income tax holiday.

http://business.inquirer.net/47135/mvp-confirms-interest-in-acquiring-gma-7-stakehttp://entertainment.inquirer.net/38013/networks-shakedown-rocks-industryhttp://mutualfundphilippines.com/2012/04/stock-market-news/pricing-derails-sale-of-gma-tv-to-pangilinan-group/http://entertainment.inquirer.net/38013/networks-shakedown-rocks-industry/http://ph.news.yahoo.com/manny-pangilinan-halts-reported-p4-8b-purchase-philippine-20110127-180400-728.htmlhttp://www.mpic.com.ph/http://www.firstpacific.com/admin/upload/media/press/ep120301.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120301.pdfhttp://www.mpic.com.ph/http://ph.news.yahoo.com/manny-pangilinan-halts-reported-p4-8b-purchase-philippine-20110127-180400-728.htmlhttp://entertainment.inquirer.net/38013/networks-shakedown-rocks-industry/http://mutualfundphilippines.com/2012/04/stock-market-news/pricing-derails-sale-of-gma-tv-to-pangilinan-group/http://entertainment.inquirer.net/38013/networks-shakedown-rocks-industryhttp://business.inquirer.net/47135/mvp-confirms-interest-in-acquiring-gma-7-stake


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Maynilad ushes out indebtedness,

pumps in protability.In 2006, when

the Lopez-owned Benpres Corp. gave up its

concession over Maynilad Water Services

Inc., MPIC entered into a joint venture

that took over the debt-strapped water

concessionaire. A corporate rehabilitation

plan was thus laid out to revive the dying

water utility company. During the process,

MPIC poured in huge capital expenditures

to renew Maynilads water treatment

facilities, lay new pipelines, and upgrade

its systems. This resulted in higher water

pressure, broader coverage of its concession

area with an expanded reach and customer

baseover 150,000 new households

coming into Maynilads revenue stream.

Five years later, Maynilad is a company

of protability and sustainable growth.

Serving more than 9 million people in

the western cities of Metro Manila and

a large part of Cavite province, the new

Maynilad now boasts of a transformational

management that changed the culture

of the company from a public utility to

customer-oriented mindset. The following

gures show how effective Pangilinans

METRO PACIFIC INVESTMENTS CORPORATION STRUCTURE

Source: Corporate Structure, Metro Pacic Investments Corporation website
http://www.newsflash.org/2004/02/be/be003548.htmhttp://www.newsflash.org/2004/02/be/be003548.htmhttp://www.mpic.com.ph/structure.phphttp://www.mpic.com.ph/structure.phphttp://www.newsflash.org/2004/02/be/be003548.htmhttp://www.newsflash.org/2004/02/be/be003548.htm


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5-year, 36-billion capital expenditure

program has been. In 2011, Maynilad

poured in a little over 9 billion in capital

expenditures, which brought in 14.3%

revenue growth, from 12.05 billion in

2010 to 13.77 billion in 2011. This was due

to an 8.3% increase in billed volume and

5.7% average tariff increase. This resulted

in a core net income of6.01 billion, 24.2%

higher than 2010s 4.83 billion.

Lost water due to leakage and theft has also

declined to just 42.2% from the previous

years 51% as the leak repair program

continues to bear positive results. Thisnon-revenue water reduction program

will be pushed further in 2012, as Maynilad

pours in 3.4 billion for diagnostics,

leak repairs and the establishment and

maintenance of district metered areas.

These capital expenditures have

transformed Maynilad from a debt-ridden

water utility company into a protablewater concessionaire that now has more

than a million billed customers, 84% of

which are enjoying 24-hour continuous

water supply. In fact, foreign rms have

already showed interest in Maynilad.

MPIC chief nancial ofcer David Nicol has

conrmed reports that foreign rms have

set eyes in acquiring minority stakes in

Maynilad. Of interest is the fact that

among those who have indeed shown

constant interest in acquiring shares

are some Japanese companies, which

could result to more access to Japanese

ofcial development assistance (ODA)

loans. But given that MPIC has no intention

of reducing its 55%-share in the water

utility, nothing has been signed and

nothing has been done as of this time,

according to Nicol.

Transforming the transport

landscape through Metro Pacic

Tollways. Committed to its vision of

providing high quality public service

through improved expressway systems

which Pangilinan sees as catalysts for

economic development, MPIC has under

its own umbrella the Metro Pacic

Tollways Corporation (MPTC) and the

Tollways Management Corporation

(TMC). These two companies are MPICs

management arms in building a broader

tollway network.

For the year 2011, MPTCs pre-taxincome rose 23% due to the efcient

management of operating and nancing

costs in the North Luzon Expressway

(NLEX). However, due to the expiration

of MPTCs income tax holiday, core net

income only rose by10 million, from 1.47

billion in 2010 to last years 1.48 billion.

Nonetheless, bigger capital investments

would most likely spur growth for thisyear as MPTC continues its massive

infrastructure projects in Luzon.

Just recently, in what has been touted

as the largest infrastructural project in

the country in the last ten years, MPIC

has entered into a partnership with the

Manila North Tollways Corp. in the

massive rehabilitation and expansion

of NLEX and its interconnection with

other major roads in Luzon, most

signicant of which is the Subic Clark

Tarlac Expressway (SCTEX). A revised

agreement between MPTC and the Bases

Conversion and Development Authority

regarding MPTCs takeover of SCTEX had

already been signed and is only awaiting

the approval of President Aquino. Once

approved, MPTC plans to invest 325

million to integrate SCTEX with NLEX to

http://www.firstpacific.com/admin/upload/media/press/ep120301.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120301.pdfhttp://businessmirror.com.ph/home/top-news/25027-exclusive-foreign-firms-eye-mayniladhttp://businessmirror.com.ph/home/top-news/25027-exclusive-foreign-firms-eye-mayniladhttp://www.mpic.com.ph/tollroads.phphttp://www.mpic.com.ph/tollroads.phphttp://www.mpic.com.ph/uploads/2010/others/press_release_98.pdfhttp://www.mpic.com.ph/uploads/2010/others/press_release_98.pdfhttp://www.mpic.com.ph/tollroads.phphttp://www.mpic.com.ph/tollroads.phphttp://www.mpic.com.ph/uploads/2010/others/press_release_98.pdfhttp://www.mpic.com.ph/uploads/2010/others/press_release_98.pdfhttp://www.mpic.com.ph/tollroads.phphttp://www.mpic.com.ph/tollroads.phphttp://businessmirror.com.ph/home/top-news/25027-exclusive-foreign-firms-eye-mayniladhttp://businessmirror.com.ph/home/top-news/25027-exclusive-foreign-firms-eye-mayniladhttp://www.firstpacific.com/admin/upload/media/press/ep120301.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120301.pdf


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facilitate seamless travelbetween these

two major expressways.

MPTC also plans to link NLEX to Manilas

port area through its Harbour Link Project

which will be constructed by fourth

quarter of this year with target completion

by 2014. Not only that, Harbour Link

would also be linked by a 13.5 kilometer

Connector Road to the South Luzon

Expressway at Makatis Gil Puyat Ave.

This will bring together the North and

South toll road systems together for the

rst time, with travel time between the

two major expressways cut to just 20

minutes. MPICs detailed engineering

drawing and design are already completed

in preparation for a Swiss challenger.

The project will be awarded before 2012

ends. For both the Harbour Link and the

Connector Road projects, MPTC will pour

in 32 billion in capital investment.

Empowering Meralco. Since the

publication of the chart

above, which was current as

of the rst quarter of 2010,Pangilinan, through Beacon

Electric, has reportedly

increased Metro Pacics

stake in the Manila Electric

Company(Meralco) from

34.8% to 48.02%. Meralco,

the countrys largest power-

distribution company,

saw 22%growth in itscore net income at 14.89

billion despite a measly

1% increase in electricity

sold to customers. This

is due to an 8.7-billion

capital expenditure

program in 2011, which

was aimed at boosting

new service applications,

improving distribution

facilities and replacing

meters and transformers.

Meralco also managed to

decrease system loss to an

all-time low of 7.35%, as a

result of its loss-reduction

initiatives, which include
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13


stronger pilferage management and

deepening partnerships with

local government.

Meanwhile, it was announced that aside

from its improved electricity distribution

network, Meralco will also enter the power

generation and retail electricity supply

businesses later this year. This will be made

possible by a joint venture with Aboitiz

Power and Taiwan Cogeneration to develop

an aggregate 600MW coal-red base load

plant in Subic, Zambales expected to be

commissioned by 2016.

Investing in health care through

MPICs Hospital Group. After a

series of investments in the last couple

of years, the MPIC Hospital Group now

comprises six full-service tertiary hospitals

with approximately 1,800 beds: Makati

Medical Center in Makati, Cardinal Santos

Medical Center in San Juan, Our Lady of

Lourdes Hospital in Manila, Asian Hospitalin Muntinlupa, Riverside Medical Center in

Bacolod, and Davao Doctors Hospital

in Davao.

The combined core net income of the

Hospital Group for 2011 rose 17% to 560

million despite huge capital investments

made in improving the already MPIC-owned

hospitals and the acquisition of Riverside

and Our Lady of Lourdes. Of signicant

contribution was the growth of the out-

patient departments of Cardinal Santos

and Davao Doctors. Our Lady of Lourdes

also underwent renovation under the new

management and has also invested in new

digital diagnostic machines and a state-of-

the-art eye center.

Late last year, MPIC completed acquisition

of 100% of the shares of Colinas Verdes

Hospital Managers Corporation, operator

of the Cardinal Santos Medical Center in

San Juan. This made Cardinal Santos a

direct wholly-owned hospital of MPIC.

At the same time, MPIC also inked an

agreement to acquire a majority interest in

Asian Hospital.

The over-arching question remains.

The empire that Pangilinan has built -- and

is still building -- has been constructed

with infusions of foreign capital and

management expertise.

So when we consider the extent to

which First Pacic and Metro Pacic,

along with their specially created sub-

subsidiaries, continue to extend their

reach into the Philippine economy, from

telecommunications to other equally

strategic industries, such as electricity,

mass media, mining, roads, and water, thecase of who really owns and controls PLDT,

the nations largest telecommunications

company, while important in its own right,

becomes even more signicant.

The Supreme Court could very well

determine that the Philippine economy

needs capital, and that the foreign capital

that Pangilinan has been able to attract

to local industries is just as good as, if not

better than, local capital, thereby doing

away with restrictions on foreign ownership.

Then again, it could just as easily determine

that strategic industries should remain in

the control of Filipino citizens, which would

continue to test the creativity of First Pacic

and Metro Pacics legal advisers.

http://www.abs-cbnnews.com/business/06/28/11/meralco-sells-notes-invest-aboitiz-firmhttp://www.firstpacific.com/admin/upload/media/press/ep120320a.pdfhttp://www.mpic.com.ph/hospitals.phphttp://www.firstpacific.com/admin/upload/media/press/ep120320a.pdfhttp://www.firstpacific.com/admin/upload/media/press/ep120320a.pdfhttp://www.mpic.com.ph/hospitals.phphttp://www.firstpacific.com/admin/upload/media/press/ep120320a.pdfhttp://www.abs-cbnnews.com/business/06/28/11/meralco-sells-notes-invest-aboitiz-firm


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Its About Time

for the DICTThe Department of Information

and Communications

Technology is a must for the

countrys digital futureBy Marishka Noelle M. Cabrera

STRATEGY POINTS

Congress may soon pass the bill creatingthe Department of Information andCommunications Technology (DICT). Will

President Aquino sign it?

Increasing competition and rapidtechnological change and challengesdemand the focus, clout and know-how of aCabinet department for ICT

Among issues that the future DICT mustaddress: bringing to all Filipinos theknowledge and opportunity to benet from

the ICT revolution

he legislation is at least a dozen years

in the making. Back in 2001, then

President Gloria Arroyo said in her rst

State of the Nation Address: I ask Congress

to enact laws to address internet privacyand security, allow for multi-

media convergence, and create a

department of telecommunications

nd information technology.

Looks like it may nally happen. In February

this year, the Senate unanimously passed

on third and nal reading the bill creating

the Department of Information and

Communications Technology (DICT) through

a reorganization of communications-related

agencies into a separate entity, as reported by

thePhilippine Daily Inquirer.

Senate Bill No. 50, titled the Department

of Information and Communications

Technology Act, aims to ensure the

provision of a reliable, strategic, and cost-

effective ICT infrastructure, foster a policy

environment that will promote a broader,

market-led development of ICT, and

accelerate the convergence of ICT facilities,

among other objectives.

Two months earlier in December, the

House of Representatives had passed its

own DICT measure. House Bill No. 4667,

according to anotherInquirer report,intends the department to develop and

implement policies and government

programs that would boost and improve

the countrys competitiveness in the IT

eld. It is now down to the bicameral

committee to iron out differences and

produce a unied version for congressional

and presidential approval.

If the DICT is nally created, it comes none

too soon. The Philippines successfully built

T
http://www.gov.ph/2001/07/23/gloria-macapagal-arroyo-first-state-of-the-nation-address-july-23-2001/http://www.gov.ph/2001/07/23/gloria-macapagal-arroyo-first-state-of-the-nation-address-july-23-2001/http://technology.inquirer.net/8745/dict-measure-passes-third-and-final-readinghttp://technology.inquirer.net/8745/dict-measure-passes-third-and-final-readinghttp://technology.inquirer.net/8745/dict-measure-passes-third-and-final-readinghttp://www.senate.gov.ph/lisdata/74436018!.pdfhttp://www.congress.gov.ph/download/billtext_15/hbt4667.pdfhttp://business.inquirer.net/35005/house-passes-measure-creating-ict-departmenthttp://business.inquirer.net/35005/house-passes-measure-creating-ict-departmenthttp://business.inquirer.net/35005/house-passes-measure-creating-ict-departmenthttp://business.inquirer.net/35005/house-passes-measure-creating-ict-departmenthttp://www.congress.gov.ph/download/billtext_15/hbt4667.pdfhttp://www.senate.gov.ph/lisdata/74436018!.pdfhttp://technology.inquirer.net/8745/dict-measure-passes-third-and-final-readinghttp://technology.inquirer.net/8745/dict-measure-passes-third-and-final-readinghttp://www.gov.ph/2001/07/23/gloria-macapagal-arroyo-first-state-of-the-nation-address-july-23-2001/http://www.gov.ph/2001/07/23/gloria-macapagal-arroyo-first-state-of-the-nation-address-july-23-2001/


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Investment promotion video on Philippine ICT sector YouTube

15


ICT-enabled services into a P7-billion-plus-

a-year export sector in the Arroyo decade.

But increasing global competition and rapid

technological advances and challenges in

ICT, including cyber-attacks and privacyissues, demand sophisticated new policies

and initiatives.

Senator Edgardo Angara, chair of the

Senate Committee on Science, Technology,

and Engineering, and principal sponsor of

SB 50, says in a GMA News report: ICT

is only getting more embedded into our

everyday lives. This only enhances the

multiplier effects of developing its

sector and all other industries that

are enabled by it. I am convinced that

a DICT will be essential in ensuring

that the benets of ICT become all the

more far-reaching

and transformative.

Plainly, having the clout and focus

of a Cabinet department dedicated

to ICT alone would be far better than

the current sharing between the

Science & Technology (DOST) and the

Transport & Communications (DOTC)

departments. Under the proposed

measures, the DICT will absorb the ICT

Ofce now under the Department of Science

and Technology, the National Computer

Center, Telecommunications Ofce, andall operating units of the Department of

Transportation and Communications that

have to do with communications. Further,

the new department will control the

e-government fund, a special account in the

yearly state budget to spend for government

technology projects.

ICT needs to have its own governing body to

set new directions, Taguigs Second District

Representative and House

ICT committee chair Freddie Tiga said in the

newspaper report. We have to keep pace with

the emergence of new technologies rapidly

changing the worlds economic landscape.

Will the President sign the law? The

Palace may need convincing. Last year

Presidential Communications Operations

Ofce Secretary Herminio Coloma reiterated

that the Aquino administration is not keen

on creating a new department due to the

additional costs involved, as reported by

GMA News.

Then during National ICT Month last June,

President Benigno Aquino III appointed a

new commissioner to join the Commission

on Information and CommunicationsTechnology (CICT), which had just unveiled

its Philippine Digital Strategy 2011-2016.

But days later, Aquino demoted the CICT

to an ofce under the DOST. The CICT

head, who once held Cabinet rank under

Arroyos Executive Order 269 creating the

commission, was replaced by an executive

director under the new set up.

Senator Angara then wondered in his article

in the Manila Bulletin: Time will soon

Its about time for DICT
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tell whether the downgrading of ICT is

one of the short-sighted actions of the

present administration. If the DICT bill

nally lands on President Aquinos desk,

Angara and other proponents will see if

Malacaang now shares their perspective.

Support for the DICT. Various ICT

and business stalwarts certainly do. With

the passing of the bill

forming a separate

DICT, industry

observers are lauding

the move.Manila

Bulletin columnist andIT expert Jerry Liao

says the Philippines

is sending a strong

signal that it is ready

to participate and

compete in the digital

economy. More and

more businesses and

individuals will beinclined to transact

online, Liao says, because they know

that there is a department that will protect

their interests.

Philippine Star columnist and

competitiveness advocate Roberto

Romulo wrote in 2009 that if the country

wants national modernization and

development, the DICT is a must.

The IT is a transformational force in

the world today transforming not only

economies but the way we live, he

continues, By creating a department

dedicated to the sector and the new

technologies, the Philippines has a chance

to be on top of the curve, not behind it.

In her 2007 paper Universal Access in the

Philippines: A Review of Strategies and

Policies for the Communication Policy

Research South conference: Research for

Improving ICT governance in the Asia-

Pacic, Cheryll Ruth R. Soriano found

the countrys universal access policies

and strategies to be technology-centric,

without much focus on the citizens

capabilities and the usability of technology.

Soriano posits that in order to achieve

universal access to ICT, there must be the

participation of government

agencies at the local and

national levels, as well as the

private sector, and the DICT

will have to orchestrate

the whole process.

An article from Telecomasia.

netbelieves the time is ripe

for an ICT department since

telecommunications and ICT

are the most dynamic sectors

in the Philippines. In fact,

the report says, the economy

can support the limitlesspossibilities that a developed

ICT sector would bring.

Even countries with less per-capita

income than the Philippines have their

own ICT departments, like Pakistans

Ministry of Information Technology and

Vietnams Ministry of Information and

Communications. India, the countrys

top competitor in the business process

outsourcing (BPO) and knowledge

process outsourcing (KPO) industries,

has its Ministry of Communications and

Information Technology. On the other

hand, Myanmar, Laos and Cambodia do not

have a separate ICT ministry.

Lagging in the global ICT race. One

concern that the new department would

need to address is the one-notch drop in the

Philippines Networked Readiness Index

By creatinga departmentsolely for the

ICT sectorand new

technologies,the nation

can be on topof the curve,not behind it

~Roberto Romulo
http://www.mb.com.ph/articles/355636/dict-now-its-about-timehttp://www.mb.com.ph/articles/355636/dict-now-its-about-timehttp://www.philstar.com/Article.aspx?articleId=472245&publicationSubCategoryId=66http://www.philstar.com/Article.aspx?articleId=472245&publicationSubCategoryId=66http://www.cprsouth.org/wp-content/uploads/drupal/Cheryll_Soriano.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/Cheryll_Soriano.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/Cheryll_Soriano.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/CPRsouth1%20Agenda%20v2.9_0.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/CPRsouth1%20Agenda%20v2.9_0.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/CPRsouth1%20Agenda%20v2.9_0.pdfhttp://www.telecomasia.net/blog/content/philippines-department-ict-makes-sensehttp://www.telecomasia.net/blog/content/philippines-department-ict-makes-sensehttp://www.moitt.gov.pk/http://english.mic.gov.vn/Trang/default.aspxhttp://english.mic.gov.vn/Trang/default.aspxhttp://www.mit.gov.in/http://www.mit.gov.in/http://www.mit.gov.in/http://www.mit.gov.in/http://english.mic.gov.vn/Trang/default.aspxhttp://english.mic.gov.vn/Trang/default.aspxhttp://www.moitt.gov.pk/http://www.telecomasia.net/blog/content/philippines-department-ict-makes-sensehttp://www.telecomasia.net/blog/content/philippines-department-ict-makes-sensehttp://www.cprsouth.org/wp-content/uploads/drupal/CPRsouth1%20Agenda%20v2.9_0.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/CPRsouth1%20Agenda%20v2.9_0.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/CPRsouth1%20Agenda%20v2.9_0.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/Cheryll_Soriano.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/Cheryll_Soriano.pdfhttp://www.cprsouth.org/wp-content/uploads/drupal/Cheryll_Soriano.pdfhttp://www.philstar.com/Article.aspx?articleId=472245&publicationSubCategoryId=66http://www.philstar.com/Article.aspx?articleId=472245&publicationSubCategoryId=66http://www.mb.com.ph/articles/355636/dict-now-its-about-timehttp://www.mb.com.ph/articles/355636/dict-now-its-about-time


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(NRI) rank in The Global Information

Technology Report 2010-2011 to 86th

from 85th in the 2008-2009 report,

compiled by theWorld Economic Forum

and top European business school INSEAD.

NRI measures the capacity of countries

to fully benet from new technologies in

their competitiveness strategies and their

citizens daily lives.

Sweden takes top spot, followed by

Singapore and Finland. The Philippines

lags other Asian countries like Taiwan

(6th), Korea (10th), Japan (19th), Malaysia

(28th), China (36th), India (48th), andThailand (59th). Pakistan trails the

Philippines at No. 88, while Cambodia is at

111, and Bangladesh is at 115.

The report reminds readers, For

ICT to be used effectively, technology

needs to be matched to the local

context and be sensitive to peoples

needs. The government of Taiwan, forinstance, has placed ICT at the heart

of its competitiveness agenda. The

report continues, Through incentive

programs and massive investment in ICT

infrastructure, the government has been a

catalyst of these positive developments.

Seacoop, an initiative to strengthen the

cooperation in ICT research between

Europe and the Association of Southeast

Asian Nations, released in 2010 its ICT

policies, programmes and research

priorities in the 10 Asean countries. The

report provides an overview of each Asean

countrys ICT policies and programs,

such as Singapores Intelligent Nation

2015 (iN2015), Thailands Second

ICT Master Plan 2009-2013, and the

e-government initiative in Brunei,

to name a few. For its part, the country

unveiled last year the Philippine

Digital Strategy, Transformation 2.0:

Digitally Empowered Nation, with the

following strategic thrusts: transparent

government and efcient services, Internet

opportunities and digital literacy for all,

and ICT industry and business innovation

for national development.

A2004 publication of the United Nations

Development Programme-Asia Pacic

Development Information Programme

(UNDP-APDIP) assessed the different

ICT policies and e-strategies in the

region. It suggests: To take advantage

of ICT developments, individual countrygovernments must not only put their own

internal policies and programmes in

order, but also align these with

trends evolving from an increasingly

interconnected world.

In their paper, Issues on the Philippines

Information and Communications

Technology (ICT) Competitiveness,Glenn Sipin, Jose Lloyd Espiritu, and

Oliver Malabanan of De La Salle University

agree: The ability of a country or a region

to compete in the new global market for

new products and services depends

greatly on how well it can use ICT to

support its products.

ICT is vital for economic growth. The

ICT industry has the potential to contribute

some $50 billion worth of annual direct

revenues to the countrys economy by

2016, according to aBusiness Mirror

report on the ICT Industry Stakeholders

Consultation Workshop organized by the

DOSTs Information and Communications

Technology Ofce (DOST-ICTO).

Alejandro Melchor III, DOST-ICTO

deputy executive director for ICT industry

development, cited government support for

http://www3.weforum.org/docs/WEF_GITR_Report_2011.pdfhttp://www3.weforum.org/docs/WEF_GITR_Report_2011.pdfhttps://members.weforum.org/pdf/gitr/2009/gitr09fullreport.pdfhttp://www.weforum.org/http://www.insead.edu/home/http://seacoop.eu/about-us/project-objectives/http://seacoop.eu/about-us/project-objectives/http://seacoop.eu/files/2010/03/ICT_policies-programmes_priorities_SEA.pdfhttp://seacoop.eu/files/2010/03/ICT_policies-programmes_priorities_SEA.pdfhttp://seacoop.eu/files/2010/03/ICT_policies-programmes_priorities_SEA.pdfhttp://ilearn.gov.ph/PhilippineDigitalStrategy2011-2016.pdfhttp://ilearn.gov.ph/PhilippineDigitalStrategy2011-2016.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://www.dlsu.edu.ph/research/centers/aki/participant/_pdf/_concludedProjects/_volumeI/Sipinetal.pdfhttp://www.dlsu.edu.ph/research/centers/aki/participant/_pdf/_concludedProjects/_volumeI/Sipinetal.pdfhttp://www.dlsu.edu.ph/research/centers/aki/participant/_pdf/_concludedProjects/_volumeI/Sipinetal.pdfhttp://businessmirror.com.ph/home/top-news/24972-ict-industry-sets-50-b-target-contribution-to-economy-by-2016http://businessmirror.com.ph/home/top-news/24972-ict-industry-sets-50-b-target-contribution-to-economy-by-2016http://businessmirror.com.ph/home/top-news/24972-ict-industry-sets-50-b-target-contribution-to-economy-by-2016http://businessmirror.com.ph/home/top-news/24972-ict-industry-sets-50-b-target-contribution-to-economy-by-2016http://www.dlsu.edu.ph/research/centers/aki/participant/_pdf/_concludedProjects/_volumeI/Sipinetal.pdfhttp://www.dlsu.edu.ph/research/centers/aki/participant/_pdf/_concludedProjects/_volumeI/Sipinetal.pdfhttp://www.dlsu.edu.ph/research/centers/aki/participant/_pdf/_concludedProjects/_volumeI/Sipinetal.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://digitalknowledgecentre.in/files/2012/02/ICT-Policies-and-e-Strategiesin-the-Asia-Pacific.pdfhttp://ilearn.gov.ph/PhilippineDigitalStrategy2011-2016.pdfhttp://ilearn.gov.ph/PhilippineDigitalStrategy2011-2016.pdfhttp://seacoop.eu/files/2010/03/ICT_policies-programmes_priorities_SEA.pdfhttp://seacoop.eu/files/2010/03/ICT_policies-programmes_priorities_SEA.pdfhttp://seacoop.eu/files/2010/03/ICT_policies-programmes_priorities_SEA.pdfhttp://seacoop.eu/about-us/project-objectives/http://seacoop.eu/about-us/project-objectives/http://www.insead.edu/home/http://www.weforum.org/https://members.weforum.org/pdf/gitr/2009/gitr09fullreport.pdfhttp://www3.weforum.org/docs/WEF_GITR_Report_2011.pdfhttp://www3.weforum.org/docs/WEF_GITR_Report_2011.pdf


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Employment, thousands and % change

Revenues, $ billion and % change

800

700

600

500

400

300

200

100

0

14

12

10

8

6

4

2

0

2004 2005 2006 2007 2008 2009 2010 2011

2004 2005 2006 2007 2008 2009 2010 2011

80%

70%

60%

50%

40%

30%

20%

10%

0%

80%

70%

60%

50%

40%

30%

20%

10%

0%

100.5

1.52.4

3.24.8

6.17.2

8.9

11

163.3235.6

299.0372.0

442.2

523.0

638.0

Employment level, lhs

Revenues, lhs

YOY growth, rhs

YOY growth, rhs

THE BPO BONANZAThe Philippine Business Process Outsourcing Industry, 2004-2011

Charts from Arangkada Philippines, based on data fromBusiness Process Association of the Philippines

18cenSEIT H E

Report


the industry and added that apart

from the $50 billion in expected capital

inows, the country may also expect

around $150 billion in indirect

investments in the economy, through real

estate, transport and telecommunications,

banking, taxes and others.

In the news report, participants are

calling for state support in key areas,

such as talent development, domestic

ICT development, countryside industry

development, advancement of ICT-enabled

creative industries, ICT marketing and

research, as well as expansion into high-value markets.

And why not? Technological readiness

is regarded as the ninth in the 12 pillars

of competitiveness in The Global

Competiveness Report 2011-2012 of

the World Economic Forum. This pillar,

the report explains, measures the agility

with which an economy adopts existing

technologies to enhance the productivity of

its industries, with specic emphasis

on its capacity to fully leverage information

and communication technologies (ICT) in

daily activities and production processes for

increased efciency and competitiveness.

BPO: still a sunshine sector. One

industry that needs the prioritization of ICT

is BPO. It has been a beacon of hope for theeconomy in recent years. In its Philippines

Quarterly Update: From Stability to

Prosperity for All, the World Bank, noted

that the BPO sector continued to drive
http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdfhttp://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdfhttp://siteresources.worldbank.org/INTPHILIPPINES/Resources/PQUMarch2012FINAL032012.pdfhttp://siteresources.worldbank.org/INTPHILIPPINES/Resources/PQUMarch2012FINAL032012.pdfhttp://siteresources.worldbank.org/INTPHILIPPINES/Resources/PQUMarch2012FINAL032012.pdfhttp://siteresources.worldbank.org/INTPHILIPPINES/Resources/PQUMarch2012FINAL032012.pdfhttp://siteresources.worldbank.org/INTPHILIPPINES/Resources/PQUMarch2012FINAL032012.pdfhttp://siteresources.worldbank.org/INTPHILIPPINES/Resources/PQUMarch2012FINAL032012.pdfhttp://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdfhttp://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf


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19


Is the Philippines toodependent on BPOs?

The business process outsourcing (BPO)

industry has helped buoy the Philippine economy

for the past decade. However, experts warn

against relying too much on the magic of BPOs.

In the Asian Development Banks Transforming

the Philippine Economy: Walking on Two

Legs, senior country economist Norio Usui

warned that while the BPO sector has had

positive contributions to the economy, it is not

the savior. He notes that jobs created in the

industry are a mere 1% of the total labor force

and mostly benets those with a tertiary degree.

Meanwhile, unskilled workers with onlysecondary or primary education are left without

a ghting chance. Usui argues that both

manufacturing and service sectors must be

developed in order to solve the problems of high

unemployment, slow poverty reduction, and

low investment and attain a sustained, more

inclusive growth.

Asian Development Outlook 2012 of the ADB

echoes Usuis insights. Growth has, the reportsays, relied on services, as evidenced by the rise

of BPO, and not so much on the productivity of

industry. Stronger growth is needed to make a

dent in reducing unemployment and poverty.

The World Investment Report 2011 of the United

Nations Conference on Trade and Development

(UNCTAD), meanwhile, cautions the Philippines

and other developing countries against relying

too much on non-equity modes (NEM) of foreigndirect investments.

As explained by economics Prof. Jovi C.

Dacanay of the University of Asia and the Pacic

in an ABS-CBN News report, NEMs are types

of FDI and contractual agreements that may be

business-to-business or government-to-business

that have no high xed assets, and can be in

the form of contract manufacturing, services

outsourcing, contract farming, and franchising,

among others.

The ventures require light, low-cost facilities

which would be easy to move or even

abandoned if and when the skilled labor they

harness in the country are more protably

sourced elsewhere. Thus, argues the UNCTAD

report, NEMs pose risks to developing countries

since employment in contract manufacturing

can be highly cyclical and easily displaced.The ease with which transnational corporations

can transfer production threatens the working

conditions and stability of employment.

The article End of Contract: The BPO Industry

in Crisis, published in the University of the

Philippines The Philippine Collegiannewspaper,

tackles the danger of overdependence on

foreign markets in light of U.S. President Barack

Obamas move to bring jobs back home toAmericans, instead of outsourcing overseas.

As the American leader said, It is time to stop

rewarding businesses that ship jobs overseas,

and start rewarding companies that create

jobs right here in America. The article then

admonishes: Obamas pronouncements serve

both as warning and an opportunity a chance

for the countrys economy to get rid of the

shackles of excessive foreign dependence andvolatile markets. At least, thats the hope.


growth last year, despite the economic

slowdown. The BPO industrys total (i.e.,

direct plus indirect) contribution to growth

through real estate, construction, retail

trade, and telecommunications is estimated

to account for some 11 percent of GDP in

2011, the Bank estimates.

World Bank senior consultant Raja M.

Mitra examines in his paper, BPO Sector
http://www2.adb.org/Documents/Working-Papers/2011/Economics-WP252.pdfhttp://www2.adb.org/Documents/Working-Papers/2011/Economics-WP252.pdfhttp://www2.adb.org/Documents/Working-Papers/2011/Economics-WP252.pdfhttp://www.adb.org/sites/default/files/pub/2012/ado2012.pdfhttp://www.unctad-docs.org/files/UNCTAD-WIR2011-Full-en.pdfhttp://www.abs-cbnnews.com/business/07/27/11/ph-warned-vs-bpo-dependencehttp://www.philippinecollegian.org/end-of-contract-the-bpo-industry-in-crisis/http://www.philippinecollegian.org/end-of-contract-the-bpo-industry-in-crisis/http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www.philippinecollegian.org/end-of-contract-the-bpo-industry-in-crisis/http://www.philippinecollegian.org/end-of-contract-the-bpo-industry-in-crisis/http://www.abs-cbnnews.com/business/07/27/11/ph-warned-vs-bpo-dependencehttp://www.unctad-docs.org/files/UNCTAD-WIR2011-Full-en.pdfhttp://www.adb.org/sites/default/files/pub/2012/ado2012.pdfhttp://www2.adb.org/Documents/Working-Papers/2011/Economics-WP252.pdfhttp://www2.adb.org/Documents/Working-Papers/2011/Economics-WP252.pdfhttp://www2.adb.org/Documents/Working-Papers/2011/Economics-WP252.pdf


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20cenSEIT H E

Report



Growth and Inclusive

Development in

the Philippines,

the possibility

of BPO and

other ICT

development

to be major

catalysts for

economic

growth and

socio-economic

transformation.

Data from the paper

shows that IT-BPOindustry revenue grew from

$1.32 million in 2004 to approximately

$6.3 million in 2008. And according to

data from the Business Process Association

of the Philippines (BPAP), the BPO sector

grossed $11 billion and employed 638,000

Filipinos last year (see charts, page xx).

Hopefully, the passage and signing ofthe DICT bill into law will be done soon

enough, given the benets that a focused

ICT department will bring. Soriano says

in her paper: There is overwhelming

optimism worldwide towards the

opportunities that the information

and communication technology (ICTs)

revolution promise to

bring to the developing

world: more efcient

governments,

productive

businesses,

globally

competitive

knowledge

workers, and

empowered rural

communities.

In a vibrant ICT

environment, industrieswith great potential for growth

can prosper and impact other sectors.

One clear winner is the local property

market, which is accommodating increased

demand from the BPO sector for ofce

and residential spaces, as reported by

international real estate rm Jones Lang

LaSalle Leechiu.

As a catalyst for economic development,

dilly-dallying on the governments ICT

policy is not an option. Rather, clearness

in policy and mindfulness in priorities are

needed to ensure that the Philippines will

be riding the ICT wave instead of being

run aground.
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www.bpap.org/media-room/359-phil-it-bpo-industry-hits-2011-targets-grows-24http://www.bpap.org/media-room/359-phil-it-bpo-industry-hits-2011-targets-grows-24http://summitstrategies.wikispaces.com/file/view/O%26O-v4+Jones+lang+Lasalle.pdfhttp://summitstrategies.wikispaces.com/file/view/O%26O-v4+Jones+lang+Lasalle.pdfhttp://summitstrategies.wikispaces.com/file/view/O%26O-v4+Jones+lang+Lasalle.pdfhttp://summitstrategies.wikispaces.com/file/view/O%26O-v4+Jones+lang+Lasalle.pdfhttp://summitstrategies.wikispaces.com/file/view/O%26O-v4+Jones+lang+Lasalle.pdfhttp://summitstrategies.wikispaces.com/file/view/O%26O-v4+Jones+lang+Lasalle.pdfhttp://www.bpap.org/media-room/359-phil-it-bpo-industry-hits-2011-targets-grows-24http://www.bpap.org/media-room/359-phil-it-bpo-industry-hits-2011-targets-grows-24http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdfhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/22/000333037_20111222002222/Rendered/PDF/660930WP0P122100B0BPO0Sector0Growth.pdf


20/49

NEWS ON THE NET

Business

PHL negotiates

with WTO for graceperiod to rectifyexcise taxes onalcoholic drinks

In accordance with a negotiation

that occurred between the World

Trade Organization (WTO)

and a Philippine delegation,

the Philippines now has until

March 8, 2013 to comply withthe WTO ruling that found

current Philippine excise taxes

on imported liquor in violation

of global trade rules. The

Department of Trade and Industry

(DTI) says that the country needs

to enact a new law to facilitate

compliance. DTI Secretary

Gregory Domingo stated last

Wednesday that the Philippines

was successful in asking for a

longer grace period initially the

U.S. and the European Union

had offered a period of time that

would have set the compliance

deadline four months earlier than

March 2013.

The WTO issue is a timely

one, as excise taxes have

recently become a hot topicin local news. New six tax bill

HB 5727, authored by Cavite

Representative Jun Abaya,

seeks to raise excise taxes on

cigarettes and liquor by as much

as 1000%. London-based British

American Tobacco is supporting

House Bill 5727 and is looking at

a threefold increase in Philippine

sales this year; as compared to

its sales in 2009, when it decidedto pull its brands Dunhill and

Lucky Strike out of the country.

Another development is

the recommendation of the

International Monetary Fund toimpose excise tax on Philippine

telecommunication services, in

order to mitigate sin tax increases

and related adverse effects;

as seen in the report entitled

"Philippines: Technical Assistance

Report on Road Map for a

Pro-Growth and Equitable

Tax System."

MPIC, Ayala Corpteam up for LRTprojects under govtprogram

Two of the Philippines' largest

conglomerates Ayala Corp. and

Metro Pacic Investments Corp.

have joined forces in a strong

push for the infrastructure space.

Last week both Ayala and

Metro Pacic disclosed that

they had signed an agreement

to form an exclusive strategic

partnership in order to undertake

the development of light rail

projects and related real estate

undertakings. In particular, instead

of bidding against each other,the two companies are looking

to bid for LRT projects under

the governments Public Private

Partnership (PPP) program as

one group starting with the LRT

Line 1 to Cavite, currently the

biggest contract up for auction in

the PPP lineup.

This is not the rst time an

alliance like this has been forged;

in 2010, both companies

teamed up with Lopez-run First

Gen Northern Energy Corp.

to bid for the controversial Angat

water project.

Aside from Ayala Corp. and

Metro Pacic, diversifying

conglomerate San Miguel Corp.

has also expressed interest in

bidding for the contracts of LRT

Lines 1 and 2.

Clark Freeport

exports climb upto 143% in 1st twomonths

According to state-run Clark

Development Corp. (CDC), export

products shipped out from the

Clark Freeport Zone in Pampanga

ballooned to 143% in the rst two

months of 2012, as compared to

numbers from last year. The CDC

further noted in a statement that

total exports amounted to over

$594.2 million from $244.3 million;

and that export products were led

by semiconductors and electronics.

The Clark Freeport Zone is a

hotbed for economic opportunity

and activity in the Philippines; it

alone accounts for an estimated

8.1% of the $48.5-billion Philippineexports in 2011.

Another revenue-generating

industry thriving in the Clark

Freeport Zone is domestic travel,

which has grown 96% from 2006

to 2011. Following the footsteps

of low-cost carrier Cebu pacic,

new travel industry player AirAsia

launched its maiden ight last

April 20 from Clark InternationalAirport, boasting of daily ights and

affordable rates.

21

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business/04/22/12/bat-eyes-3-fold-hike-ph-cigarette-saleshttp://www.abs-cbnnews.com/business/04/22/12/bat-eyes-3-fold-hike-ph-cigarette-saleshttp://www.mb.com.ph/articles/356071/excessive-hike-on-sin-tax-to-give-rise-to-unemploymenthttp://www.mb.com.ph/articles/356071/excessive-hike-on-sin-tax-to-give-rise-to-unemploymenthttp://www.philstar.com/Article.aspx?articleId=788658&publicationSubCategoryId=63http://www.gmanetwork.com/news/story/256193/economy/business/phl-convinces-us-eu-on-grace-period-to-rectify-excise-taxes-on-alcoholic-drinkshttp://www.gmanetwork.com/news/story/256193/economy/business/phl-convinces-us-eu-on-grace-period-to-rectify-excise-taxes-on-alcoholic-drinkshttp://www.gmanetwork.com/news/story/256193/economy/business/phl-convinces-us-eu-on-grace-period-to-rectify-excise-taxes-on-alcoholic-drinkshttp://www.gmanetwork.com/news/story/256193/economy/business/phl-convinces-us-eu-on-grace-period-to-rectify-excise-taxes-on-alcoholic-drinkshttp://www.gmanetwork.com/news/story/256193/economy/business/phl-convinces-us-eu-on-grace-period-to-rectify-excise-taxes-on-alcoholic-drinks


21/49

2

cenSEIT H E

Report


NATION

Giving Justice to

the Fallen TreesThe daunting, deadly

challenge of making

illegal loggers pay

for their greedBy Pia Runo

STRATEGY POINTS

The countries can effectively ght illegal logging through criminal justicesystem punishing organized crime and tracing and conscating illegal loggingprots, the World Bank said.

In the Philippines, bills urging for harsher punishmentlife imprisonment and

death penaltyagainst illegal loggers are led in the Congress.

Log ban in all natural forest is declared in the Philippines to curb illegal loggingnegatively a

The CenSEI Report (Vol. 2, No. 17, April 30-May 6, 2012)

Documents

Transcript of The CenSEI Report (Vol. 2, No. 17, April 30-May 6, 2012)