Biz Buzz: PH Air Asia’s constitutional ownership issue is back

Things are sizzling in the cutthroat airline industry.

It looks like Philippines Air Asia, on an aggressive growth path and apparently a turnaround story, is getting attention again because of foreign ownership.

Recall this is an issue that was raised against the airline way back in 2012, before it secured the required five-year certificate of public conveyance and necessity. Philippines Air Asia was able to prove then that it was only an associate, being 40 percent owned by Malaysia’s Air Asia Berhad, and it got its five-year CPCN.

Time indeed flies and the company, which has received plenty of equity support from the parent through the years before turning operations around, has its CPCN up for renewal this August.

The catch, some industry insiders are pointing out, is that the parent’s ownership has apparently gone higher through the years.

An end-March 2017 filing showed that Philippines Air Asia is effectively 49-percent controlled by the group, via local unit Air Asia Inc. (Air Asia maintains it has complied with the law).

But more interesting is the wording in the same filing, which suggested the Malaysian parent had such a degree of control over the Philippine unit that it was considered a subsidiary, despite Air Asia Bhd. owning less than a majority stake.

It’s a compelling situation, to be sure, but not all that usual in the Philippine context and certainly many readers here can name a few instances when a local company does take direction from its foreign shareholders.

To be fair, it’s a situation that Air Asia Group CEO Tony Fernandes is familiar with, especially now that units like Philippines Air Asia are seeing momentum in their business.

He has gone out publicly to say that Air Asia was lobbying Asean leaders to consider citizens from the region as local citizens. Think of it like the easing of the foreign ownership cap, except limited to members of this region.

The conclusion ultimately depends on what the government here decides. Like always, abangan! —MIGUEL R. CAMUS

Of MPOs and buybacks

In line with the decision of the Securities and Exchange Commission (SEC) to double the minimum public ownership (MPO) that publicly listed firms must maintain to 20 percent by 2020, some participants have requested corporate regulators to consider share buybacks in the equation.

As opportunities to pick up undervalued shares from the stock market are not something that companies can easily predict, there have been suggestions to include a provision to cover such a possibility, SEC Director Vicente Felizmenio Jr. said.

If, for instance, one company suddenly finds the need to buy back shares but this will result in a deficiency in the MPO, will there be a curing period allowed or will it be delisted right away?

SEC Chair Teresita Herbosa said the key would be for corporations, especially those that are serious in attracting high-quality investors, to always maintain an MPO buffer so that there will be room for it to buy back shares whenever the opportunities arise or whenever needed. Having said that, Herbosa said such buybacks would be something that the SEC would consider.

Meanwhile, a representative from the Philippine Stock Exchange (PSE) noted that some companies planning to list this year were concerned about the timing of the implementation of the MPO increase. While companies that are already listed will be given three years to comply with the requirement, starting July 1, all companies applying to list must bring to public hands 20 percent of their shares. But some of the companies which have been working on a prospective initial public offering (IPO) for months may not have factored in the 20-percent MPO requirement. —DORIS DUMLAO-ABADILLA

Microsoft protects GovCloud

The good news is that the government wants to make its services more convenient for more Filipinos through the use of technology. This includes using the so-called “cloud” facilities to transform transactions with government agencies into fast and efficient digital services that can be accessed from anywhere. No more long lines.

The bad news is that cybersecurity threats are now more sophisticated than ever. The more government services are internet-based, the more vulnerable they are.

These elements are, of course, more important now that the government has launched its GovCloud service in partnership with the Vibal Group (yes, that publishing house that used to specialize in school textbooks).

And since Vibal is a relatively new player in the digital space, it needs an even stronger partner to protect the GovCloud system from the growing threats of hackers who specialize in cybercrime and other sophisticated attacks like ransomware.

Enter Microsoft. Biz Buzz learned that the US-based technology giant has recently been tapped to protect the government’s GovCloud service from external threats. This is important because the Philippines perennially ranks among the top 10 nations where cybercrime is rampant.

Why Microsoft? Even though it’s known more for its Windows operating system, the company touts itself as a “cloud first” establishment, providing clients with secure, trusted cloud services.

A trusted cloud that helps protect data and has the most comprehensive compliance cover all over the world, including solutions for compliance with the Data Privacy Act of the Philippines. It will also hopefully help protect the government’s IT systems with disaster recovery services once hackers inevitably strike.

Of course, the proof of the pudding is in the eating, so it remains to be seen whether this partnership will pay off. Let’s wait and see. —DAXIM L. LUCAS