First Pacific plans Asean expansion

HONG KONG—Businessman Manuel V. Pangilinan plans to expand the infrastructure investments of regional conglomerate First Pacific Co. Ltd. to other Southeast Asian countries, drawing on the group’s experience in telecommunications, water and electricity distribution in the Philippines.

In the Earth’s Resources Conference of Standard Chartered Bank, the Filipino chief executive of First Pacific said he would personally want to invest in the telecom space in Thailand and look at opportunities in telecom, water and power distribution in Vietnam and Myanmar.

First Pacific, which used to invest in “First World” countries like the Netherlands, the United States and Australia, has invested in just two emerging markets—with about 70 percent of its assets in the Philippines and the rest in Indonesia.

At this time, Pangilinan said First Pacific would still like to invest in emerging markets and that part of the group’s strategy was to look at prospective investments in other Southeast Asian markets.

Pangilinan noted that Vietnam, for instance, was a “country of opportunity.” He noted that his group had participated in the bidding for a bulk water supply system in Vietnam but lost to the Ayala group. He said it was an “instructive lesson” for his group because compared to the Ayalas, he noted that his group was less familiar with Vietnam’s governance, disclosure and accounting practices, which he described as very different from the Philippine system.

Myanmar was described by Pangilinan as the “new frontier” but noted that the legal framework and financial systems in that country—which was only recently opening up its markets—would still have to be set up.

In a briefing paper for the conference, Pangilinan noted that the group might open a representative office in Rangoon (in Myanmar) “because some areas of needed investment play to our strengths like water and electricity distribution.” The briefing paper noted that First Pacific was likewise looking at potential projects in Malaysia and other countries.

Pangilinan’s group believes that the opportunities were really in emerging markets.

“Emerging markets are familiar to us. They are home,” he said.

The businessman said China, for instance, was able to grow 10 percent a year for the past several years precisely because it started at such a low base.

“A big, wealthy economy is very unlikely to match that. For us, it’s simply that the opportunities in emerging markets are so much greater than in mature markets,” Pangilinan said. “And we’ve been there for many years.”

In the Philippines, First Pacific is the controlling stockholders of dominant telecom provider Philippine Long Distance Telephone Co., infrastructure holding firm Metro Pacific Investments Corp. and Philex Mining Corp.

Asked during the forum why the group was so keen on infrastructure, Pangilinan explained that this business was very attractive from an Ebitda [earnings before interest, taxes, depreciation and amortization] perspective.