Ayala eyes Indonesia

CONGLOMERATE Ayala Corp. is seeking to gain a foothold in Indonesia—the most populous nation in Southeast Asia—by scouting for potential investments in water, power and real estate sectors.

Ayala group head of strategy and development Paolo Borromeo said it was possible that Ayala could finally establish a footprint in Indonesia this year.

“There’s a lot of relationships historically that we’ve had there, so we’ll look at it for water, power (and) for real estate where we believe we can add value,” Borromeo said, adding that the group had an existing business development team in Indonesia and also in Myanmar.

Elsewhere in the region, the group has existing offshore investments in Vietnam (water) and Malaysia (real estate).

In 2013, Ayala-led Manila Water Co. (MWC) planned to buy out the 51-percent stake held by French-controlled Suez Environment in PAM Lyonnase Jaya (Palyja), one of the two water utility operators in Jakarta, but the plan was foiled as the local government decided not to cede its stake to a foreign investor.

In Vietnam, MWC was contracted in the mid-2000s to plug pipeline leakages and has since found opportunity to invest in a couple of water treatment plants and water distribution. MWC has now invested $100 million in Vietnam, making it the biggest foreign direct investor in that country’s water space.

MWC likewise has a joint project with Mitsubishi Corp. of Japan and the Yangon City Development Council on a nonrevenue reduction program in Myanmar.

Property arm Ayala Land Inc., on the other hand, entered into a partnership with Myanmar’s City Mart Holdings, the leading local retailer there, to gain access to this new frontier market.

“Right now, it’s on hold because government approvals are hard to get,” Borromeo said, also pointing out to political changes in Myanmar.

During last year’s parliamentary elections, democracy icon Aung San Suu Kyi’s party won by a landslide in Myanmar, a country transitioning from over 50 years of military rule. But as the parliament now begins it presidential selection, Suu Kyi has been constitutionally barred from the presidency because she married a British citizen and her sons are British.

The search for investments in Indonesia is opportunistic, Borromeo said. “We want to diversify our portfolio,” he pointed out, adding that the group would enter this new market with a local partner.