Given the upswing in the property market, Finance Undersecretary John Sevilla said a year ago that the government should privatize the Food Terminal Inc. property in Taguig at a price analogous to a merchandise in upscale Rustan’s as opposed to that hawked in Divisoria or even Greenhills.
Well, the government has succeeded in unlocking great value out of FTI, but the winning price tag of P23.9 billion (based on net present value) from Ayala Land Inc. for a 74-hectare parcel has raised eyebrows, given that the next highest proposal by Robinsons Land was only at a net present value of P14 billion.
ALI’s bid was also thrice the minimum net present value threshold of P8.01 billion.
One analyst report said ALI’s bid appears “overly aggressive”—aimed at winning by an insurmountable margin—but “seems to be very out of character for such a conservative company known for bargain purchases.” This new investment was a “strategic fit” but the “uncharacteristic” price raised concerns over return-on-investment expectations, the report added.
The common market concern is that ALI may have to borrow more or seek help from parent Ayala Corp., and that it may have too much on its plate now (specially as it’s in a tug-of-war with the SM group on another mega-property deal with the Ortigas family).
Joey Roxas, president of Eagle Equities, said there was no doubt that ALI could make money out of this large new landbank, but this also meant that its return could have been P9 billion more if its bid were not significantly higher—say only P1 billion more—than RLC’s bid.
For his part, ALI chief finance officer Jaime Ysmael explained: “Given our vision for the property as another business district, its proximity to Makati and BGC, interconnectivity with C5 and SLEx, and the planned intermodal transport system of the government, which will make the property the gateway to the south, we believe that the bid represents fair value of the property given its potential and opportunities for development. The acquisition price of a little over P32,000 per square meter is at a significant discount to Makati and BGC land values.”—Doris C. Dumlao
Warped interpretation?
The bid to attract foreign investors to local shores seems to have taken another blow with the sad experience of T.C. Pharmaceutical Industries Co. Inc. (TCPI), the Thai manufacturer of Red Bull energy drink, and their local distributor Maryland Distributors Inc. (MDI).
Undersecretary Jose Vicente Salazar of the Department of Justice ordered the Legazpi City prosecutor to file criminal charges against TCPI and MDI in late June for alleged unfair trade competition and conspiracy to commit fraud through misbranding.
This left TCPI’s legal chief, Prasit Somnet, perplexed.
“How can a manufacturer be sued for unfair competition for its very own product when there are no competing products to begin with?” he asked. He also wondered how his firm could be in violation of the law, when it is the owner of the intellectual property right for the Red Bull brand?
As such, TCPI and MDI are protesting the decision of the DoJ official, and are asking Justice Secretary Leila de Lima to overturn her deputy’s ruling.
What’s even more surprising was that the recent DoJ ruling marked a complete turnaround from a resolution issued by the department in May 2010, since the Red Bull products in question were genuine as certified by no less than TCPI itself.
The Thai investors are now scratching their heads and wondering if the DoJ official knew his law when he ruled that TCPI and MDI were liable for violation of the country’s Intellectual Property Code and the Food, Drug and Cosmetics Act. And they are asking: Why did Salazar favor the complainant, Energy Food and Drinks Inc. (EFDI), a disgruntled former distributor of Red Bull? The fact is that TCPI had terminated its contract with EFDI for just cause and appointed MDI as its authorized distributor in the Philippines.
TCPI is among the biggest private sector investors from Thailand in the country with their world-renowned Red Bull energy drink.
In a letter to De Lima, the company said its “good name and reputation is being threatened anew by a groundless criminal allegation that a former distributor lodged against us.” It also pointed out that it has always “attached great importance to business transparency, ethics as well as the practice of corporate social responsibility.”
De Lima may want to take a closer look at what could be a warped interpretation of the law, given its implications on the broader foreign investments picture that could make or break the country’s economic future. Our source said Salazar had even issued the ruling when the justice chief was on leave.—Daxim L. Lucas
Inspired by ‘Binalot’
The story of Binalot Foods Corp.—a fastfood chain founded by entrepreneur Rommel Juan that serves freshly cooked food on banana leaves—has been immortalized in the latest book of popular financial literacy advocate Robert Kiyosaki, the Japanese-American author of the Rich Dad, Poor Dad series, who has a significant following including Oprah Winfrey.
Kiyosaki’s new book “The Sleeping Giant: The Awakening of the Self-Employed Entrepreneur,” featured 20 inspiring entrepreneurs around the world and the Binalot story has carried the lone banner for the Philippines. Binalot’s story is in Chapter 1 and runs for about 10 pages.
The Philippine launch of “The Sleeping Giant” is expected to happen in early September and Kiyosaki may deliver a video message. The book is endorsed by no less than American billionaire Donald Trump.—Doris C. Dumlao
Best foot forward
Taking full advantage of Globe Telecom’s current network upgrade efforts, Smart Communications has implemented a switching campaign to entice subscribers of the former to switch to the latter.
(If you got the chance to watch the Olympic Games over Solar Sports, for example, you’ll know what we mean, given Smart’s barrage of TV ads emphasizing connection troubles at its rival’s network.)
In any case, the switching campaign goes this way: Show any Smart agent a copy of your existing Globe postpaid plan and the swticher will automatically get a 25-percent discount on his or her monthly service fee for the a year.
The switcher will even get to keep the last six digits of his old number.
Globe, of course, is not about to take this sitting down. Abangan.—Daxim L. Lucas
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