BIZ BUZZ: All-out war
Two of the largest business groups in the country are set to come to blows—hopefully, just figuratively and not literally—over the next few weeks as both vie for dominance over one specific industry where they are the biggest players.
In fact, both conglomerates are either number one or number two producer in this critical and (often, though not always) lucrative industry.
Depending on the metric used, it’s either Conglomerate S or Conglomerate A who’s on top as the country’s largest. But, on average, the two powerful business houses are responsible for about 20 percent each of this important commodity that is so critical to both retail and industrial users nationwide.
In any case, both groups have traditionally looked at each other as rivals, both in the market place and in the country’s halls of power, despite their owners being friends who move in the same social circles (not uncommon in this country, really).
The thing, however, is that competition has really been heating up, especially in the last couple of months, with a new administration having just taken the helm in Malacañang.
Word on the street is that one conglomerate has marshaled its forces and resources to mount a campaign and swing public opinion against its rival and, naturally, deflect the public criticism against itself.Biz Buzz hears this campaign will be done through proxies, of course, with various third parties (like environmental groups and consumer advocates) taking turns lashing out against the rival camp (since these attacks are never done directly due to some sort of gentleman’s rule).
The common perception is that Conglomerate S, which conducts business in a rather aggressive way, has had things going it’s way for several years now and, with the sudden shift in political winds, it’s now Conglomerate A’s turn to grab some market share (after snaring a few regulatory positions in recent weeks).
“It’s now the turn of Conglomerate A,” said one industry observer, adding that no one should be surprised if the public experiences a barrage of bad news flying back and forth over the near term given what’s at stake: dominance over this growing multibillion-peso industry.
The question, as always, is: who will prevail? And, ultimately, who will win the President’s favor? Abangan!
—Daxim L. Lucas
President Marcos’ economic team has won brownie points for repealing the “antimarket” provisions earlier flagged by economists and business leaders in the 2022 implementing rules and regulations (IRR) of the amended Build-Operate-Transfer (BOT) Law.
The much-ballyhooed framework was put in place just last April, or shortly before the Duterte administration ended.
Heeding the private sector’s pleas, the most problematic provisions have been swiftly addressed by economic managers.
We hear that the revised playbook still has a few items which Corporate Philippines does not relish, but these are minor items they will not wage war over. What is important for them is that the two unpalatable provisions—pertaining to arbitration and Material Adverse Government Action (Maga)—had been stricken off.
Previously, the IRR stated that “acts and decisions of regulators shall not be subject to arbitration.” Having an arbitration clause as a dispute resolution method is a standard feature in contracts. Nobody wants to “fight city hall,” so to speak, but if it’s inevitable, conventional wisdom dictates that arbitration is the most sensible and apolitical route. The parties only need to identify their preferred arbitration venue at the onset. In the absence of a mutually agreed upon venue for arbitration in the contract, default venue is the Philippines.
The other deleted provision was in the definition of Maga. The previous IRR had excluded from its Maga coverage “acts of the agency/local government unit and approving body, as well as acts of the executive branch, made in the exercise of regulatory powers; and acts of the legislative and judicial branches of government.”
That wasn’t acceptable as it would have required the private sector to take on a much bigger risk.
“Reasonable rate of return” will be determined by the Investment Coordination Committee prior to the negotiation and/or call for proposals. For public utilities that are monopolies, the rate of return is determined by existing laws, which in no case must exceed 12 percent.
Overall, the amended IRR no longer treats the private sector as an untrustworthy partner in infrastructure-building. And it is also seen as a win for the administration, which needs to attract more investments to aid postpandemic recovery.
Reviving a gaming play
Tycoon Eusebio “Yosi” Tanco appears to be making a play for listed gaming firm Leisure and Resorts World Corp. (LR). The company chair recently disclosed the significant increase of his ownership in LR, which is also owned by Bacolod politician Alfredo “Albee” Benitez, from 2 percent to about 16.7 percent.
Specifically, companies controlled by Tanco bought another 570 million shares of LR for about P940 million last Aug. 8 via an internally arranged transaction or private placement deal.
Tanco, whose businesses span ports, infrastructure, schools and finance, appears bullish on LR, which has been making inroads in online bingo, a potential growth area.
The group was the first in the country to be awarded a license to operate online bingo games by the state-run Philippine Amusement and Gaming Corp. Tanco is extending his hold over LR as the company seeks to refocus toward the somewhat nebulous description of “innovative technological platforms.” This was coupled with a corporate name change to “DigiPlus Interactive Corp.” and the upsizing of its capital by 40 percent to P7 billion.
—Miguel R. Camus INQ
Email us at [email protected]
Join our Viber community:
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.