Fight or flight

ANOTHER COUNTRY—this time in Europe—has decided that the cigarette stamp scheme of the Swiss company Sicpa Products Security S.A. was just too costly.

As everybody knows, here in the Philippines, Sicpa is still trying to push for its $400-million “system” to put so-called security stamps on liquor and tobacco products.

Well, the company first tried, but failed, to sell the scheme to the cute administration of Gloriaetta.

Word has it that, under the Aquino (Part II) administration, Sicpa is again intensifying its campaign, supposedly because the company now has a “backer” closely connected with the Palace.

Some 10,000 kilometers away in Albania, anyway, which is a small country in Europe with an area roughly a third of Mindanao, the government recently threw out the Sicpa scheme.

In fact, the president of that country vetoed a bill that was already passed by the Albanian parliament, in effect putting the management of tax stamps into private hands, which were those of Sicpa of course.

To begin with, the Albanian government reportedly found the Sicpa system to be against international agreements on ways to combat illegal trade in tobacco. Besides, they discovered that the Sicpa system actually has no track record in reducing smuggling in other countries that bought its system.

Reports also quoted the Albanian president, Bamir Topi, as saying, “this bill not only raises the costs of production of the local industry, but also could bring about negative effects for its employees, who could eventually lose their jobs.”

In the Philippines, Sicpa’s $400-million scheme got a beating in the House of Representatives as being too expensive and yet without certainty of return for the government. Sicpa has been claiming it could raise an additional P120 billion in taxes by using its system, which was criticized by the NTRC, or the National Tax Research Center, as being too fantastic a sum.

Under the Aquino (Part II) administration, the feisty Justice Secretary Leila de Lima also found violations of the BOT law in the unsolicited proposal submitted by Sicpa to the Bureau of Internal Revenue. From what I hear, anyway, Sicpa is renewing its campaign for the $400 million scheme. Well and good.

To me, it is a good chance for the House to put the issue to rest by reopening its investigation into the reported deal being hatched by Sicpa with the Aquino (Part II) administration.

* * *

That P74-billion deal between PLDT and the Gokongwei group, involving the latter’s telecom firm Sun-Digitel, was huge indeed. Well, it hit all the business news shows in Asia.

No wonder then, word has it that some groups in Malacañang are egging Congress to call for an investigation of the deal—of course with an eye toward, ahh, er, “level playing field.”

Such a line seems to be an echo of the, ahh, er, “concern” aired by Globe Telecoms to the National Telecommunications Commission that the deal could eventually stifle competition. Hmmm.

Well, Globe Telecoms belongs to the Ayala group. You and I know that some former Ayala executives are now big shots in the Aquino (Part II) administration. Not that they have absolute influence over the affairs in Malacañang. It is just that the bellyaching of Globe Telecoms, while getting the sympathetic ears of the Palace, may sound too coincidental for public comfort.

Again, the gigantic deal did not mean that PLDT-Smart would kill competition coming from Sun-Digitel. The PLDT group simply bought majority of Sun-Digitel from the Gokongwei group, which in turn would get shares in PLDT.

Believe me, competition in the telecom business is still heating up, and just like in other countries, here it is likely going to shift to other services like wireless broadband.

Now, Senate President Juan Ponce Enrile may be older than all of my neighbor’s aunts combined, but when he talks, everybody sits up to listen. And JPE recently commented on the deal: No need for government to investigate.

He noted that the anti-trust law is nothing but a dead law.

The question thus is this: What was the crime in the PLDT-Digitel deal? Let me see, maybe it is because the PLDT group and the Gokongwei group were only watching out for the interests of their stockholders. I thought such an act was even commendable.

Anyway, in other business acquisitions in the past, a huge company would buy an emerging competitor and, without much ado, thank you, would simply close it down pronto. That was bad—okay!

With the deal with the Gokongwei group, —without question—the most dominant telecom company in the country, grabbing 70 percent of the mobile phone market.
Globe Telecom, in comparison, only has 25 percent of the market.

Now, will the PLDT-Digitel combine eventually kill Globe Telecom? Of course the PLDT group would want that. It is called “competition.” You know—kill the enemy without mercy.

And so the real question is whether or not Globe Telecom is up to the challenge. The public eye, particularly those analysts in the stock market, is really on it now. How will Globe Telecoms respond to the sensational deal between PLDT and Gokongwei?

Really, the issue is not the PLDT group. Look, this one just wrapped up a share value-boosting deal.