Biz Buzz: Corporate Philippines takes on Opus Dei luminary
The upper echelons of Corporate Philippines are up in arms over a proposal which, if affirmed by the Securities and Exchange Commission, may result in the boards of hundreds (maybe thousands) of local companies being crippled by the loss of key directors.
We’re talking about a proposal put forward by the influential Institute of Corporate Directors (ICD), which calls for strict limits on the terms of so-called independent directors on the boards of some of the country’s most economically indispensable companies. The term limit? Five years, to be exact. The idea is that “overstaying” independent directors become too cozy with their fellow owner-appointed directors and stop looking after the interests of minority shareholders who are their primary constituency.
This rule was adopted by the SEC in 2011 and, under a memorandum issued that year, mandated that the last year an incumbent independent director may be reappointed or re-elected to a company board be this year, 2015.
That means that, if the rule is affirmed, Philippine companies will have to find a new set of independent directors (two or three for each firm, on the average) by next year. But where does one find a new set of directors in a local talent pool that only has a limited number of officials who would qualify as a true independent director? Local boards may end up a chaotic mess, say the opponents of this proposal.
It’s no surprise then that some Corporate Philippines luminaries are eyeing ICD rather suspiciously nowadays.
ICD is, of course, run by former Finance Secretary Jesus Estanislao, who also happens to be a respected economist as well as a key member of the influential Catholic organization Opus Dei.
To his credit, ICD was founded in 1999 by Estanislao to promote the principles of good corporate governance before it became a fashionable corporate buzz phrase. It had little traction at first among local corporations whose boardrooms were more like exclusive clubs catering only to the interests of the largest shareholders. But ICD scored a coup when it got the central bank and the SEC to require all companies under their regulatory ambit to make their directors undergo a certification process under ICD (and later a few other accredited licensors).
As the opponents of this ICD proposal love to point out, the organization earns nice fees from its accreditation process for corporate directors, independent or otherwise. So the higher the turnover, the better for ICD’s bottom line, they point out.
Incidentally, some of the corporate and legal luminaries who have lent their weight to the campaign to oppose this ICD dictum include Philippine Stock Exchange president Hans Sicat, PSE chair Jose Pardo, Veterans Bank chair Roberto de Ocampo, former Chief Justice Artemio Panganiban, former Prime Minister Cesar Virata and former PSE chair Jose Vitug. (Incidentally, Pardo and De Ocampo are former secretaries of finance of the Republic of the Philippines as well.)
So the question now is: Whose voice of reason will SEC Chair Teresita Herbosa listen to in deciding whether to affirm this rule or relax or reverse it? ICD’s or that of Corporate Philippines? Abangan.–Daxim L. Lucas
Inside track in BIR?
Having problems with the Bureau of Internal Revenue?
An enterprising individual is going around town claiming to have the key to BIR Commissioner Kim Henares’ forgiving heart.
Several businessmen being hounded by the BIR have reportedly touched based with this enterprising individual hoping he will make their tax problems disappear, including a businesswoman who is having trouble explaining how she became a billionaire in less than one presidential term.
This enterprising individual built his reputation by hanging around celebrities, athletes and politicians and using these connections to get his way around government and social regulations just to make his clients’ wishes come true.
Will this enterprising individual deliver on his boast? Will he find a way as he claims he always does? As we say in this column, abangan.–Gil Cabacungan
Connected by 2017
It’s a pain in the neck now while it’s under construction but the connector road project of the San Miguel-Citra group—the 14.82-kilometer elevated tollway that will connect the Skyway in southern metropolis to the North Luzon Expressway—would be completed by the first quarter of 2017.
That means that it will be the next president who will inaugurate it.
The SMC-Citra infrastructure arm working on the project, Citra Central Expressway Corp., recently signed up EEI Corp. to construct a portion of the tollroad.
By tapping both EEI and DMCI to work on certain segments of the project at the same time, the group expects to finish it as soon as possible.
The elevated expressway will have eight strategic interchanges and speed up travel time from one end of the metropolis to the other from an hour and a half to only 15 minutes–starting in about two years, that is.–Doris C. Dumlao
Billion-dollar air talks
A lot is riding on the upcoming air talks between Qatar and the Philippines and we’re not only referring to potential tourism prospects between both countries.
Qatar is apparently keen on investing more in the Philippines and this would involve a “trade mission” should air talks, set on May 27-28, prove a success.
Qatar, which transformed from a pearl-hunting center into a global energy player with the discovery of massive oil and natural gas deposits beneath its sands, is keen on investing in various sectors, including infrastructure and agriculture, in the Philippines.
Just how much? We hear that Qatar, now among the world’s wealthiest economies, is willing to put up at least $1 billion—and this was in 2012, before the Philippines obtained various credit-rating upgrades and shed its long-running image as the proverbial sick man of Asia.
We hear BSGM Worldwide’s Ramon J.A. Cruz and Antonio Manahan Jr. were already tapped to organize such a mission, which will involve key Filipino businessmen and the relevant government agencies.
Qatar is seeking some concessions of its own as it wants more frequencies to serve the Manila-Doha route three times a day.
That’s to cater to about 300,000 Filipinos in Qatar as well as tourists from other parts of the world seeking to visit the Philippines, according to Qatar Airways’ group CEO Akbar Al Baker.
That figure, which grows by about 12 percent annually, could pick up in the coming years with an ongoing construction boom in Qatar ahead of its hosting of the World Cup tournament in 2022, according to a letter from its Civil Aviation Authority that Biz Buzz managed to obtain.
No Philippine carrier serves the route, although Cebu Pacific is planning to launch a twice-weekly service this June. It seems the Qatar government also considered the heavy congestion in Manila’s main airport—it’s seeking slots for non-peak hours between 10 p.m. and 4 a.m.
Qatar’s aviation interest in the country is apparent as it seeks to build Doha into a major international hub, as some of its neighbors are doing for their respective gateways.
But it’s a challenging time, too, for Gulf carriers. They face heavy criticism, mainly from United States and European airlines, over how they operate at an unfair advantage due to alleged subsidies from their home governments/shareholders.
We should know more by the end of the month what our local regulators decide. —Miguel R. Camus
What’s in a name?
Businessman Manuel V. Pangilinan-led Metro Pacific Investments Corp. (MPIC) has no qualms if the government were to rename the North Luzon Expressway (NLEx) the President Corazon C. Aquino Expressway (CAEx), as suggested by a new bill recently filed in Congress.
Since MPIC is just the concessionaire of the toll road, which is still owned by the state, top officials say the government can rename it as they wish.
But wait, it will have an impact on the NLEx Road Warriors basketball franchise in the Philippine Basketball Association, Metro Pacific Tollways Corp. (MPTC) chief finance officer Chris Lizo pointed out in jest.
Indeed, will the franchise also be renamed Corazon Aquino Road Warriors?
On a more serious business side, MPTC has seen an 8-percent year-on-year growth in average daily traffic in the first three months: 11 percent in NLEx and 9 percent in Cavite Expressway. Note that average growth in the last three years was only 5-6 percent.
Part of the growth could of course be attributed to the slump in global oil prices, which had benefited motorists in terms of lower pump prices, thereby encouraging more road trips. At the same time, car sales in the country have been robust, adding to overall traffic. The opening of TPLEx (Tarlac-Pangasinan-La Union Expressway) likewise helped in boosting traffic volume.
Another extraordinary factor cited by officials is the ongoing repair of some national roads that diverted traffic to the tollroads.
For the full year, the group is assuming an average growth in traffic volume of 6-8 percent. The low end of the range would factor in a potential turnaround in pump prices and the completion of construction of some of the national roads. This means that those trying to save on fuel costs would again choose to use roads that are free of charge.–Doris Dumlao-Abadilla
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