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The year in perspective (part two)

“All told, 2010 was a very good year for the Philippines. Despite many saying that the elections would result in chaos and massive fraud, Filipinos were successful in holding their first automated elections and we elected a president whose integrity has inspired all of us to work together to make this country a better place to live in. I’ve often said that the best achievement that this new administration has to boast is that it has brought about a new spirit of community among Filipinos and a renewed sense of optimism and confidence about what’s possible for us as a nation. As a result, the equity markets are riding high and investment is again starting to pour in both from here and abroad.

“I’m particularly encouraged that government recognizes the need to move further down the road to public-private sector partnerships and is really focused on infrastructure investment. Once these projects get off the ground, we expect to see a multiplier effect that will be felt in all sectors of the economy.

“San Miguel is already an active participant in this sector and we hope to be able to do more in 2011. Quite apart from the general attractiveness of this sector, we really do see the potential to make a deep and lasting impact on the Philippine economy through our businesses. Our vision is to

create jobs for Filipinos and contribute to a strong Philippines in the best way we know how.” – Ramon Ang, president and CEO, San Miguel Corp.

“The domestic aviation sector recorded modest growth, after experiencing the tail-end of a slump in demand, lingering effects of the US recession and the continuing increase in fuel prices.

“Sadly, it was not all rosy at Philippine Airlines. The sudden resignation of some pilots in August and the subsequent labor conflicts with our ground crew and cabin crew unions stifled PAL’s prospect of growth had we been able to implement the survival plan. Other challenges that PAL faced were unstable fuel prices, cut-throat competition from local and foreign low-cost carriers, and the migration of our skilled pilots to foreign airlines.

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“For 2011, we expect the same tough industry environment characterized mainly by stiff competition especially from low-cost carriers such as Tiger Air, Sea Air, Cebu Pacific. We expect Cebu Pacific to remain an aggressive and our top competitor in the domestic and regional markets.

“An important challenge for 2011 is overcoming the lingering effects on our expansion capability by the Category 2 downgrade by the USFAA and the European Union ban on Philippine carriers. There is also the continuously rising oil prices compounded by poaching of our highly skilled pilots.

“PAL shall be ready to face these challenges by becoming a lean and mean organization. We need to pursue reorganizational plans including the spin-off of non-core units in order to become more efficient and productive. PAL  will

continue to strictly implement cost controls at various levels of the organization even if the industry expects modest traffic growth for 2011.” – Jaime Bautista, president and CEO, Philippine Airlines

“2010 was a very good and robust year for Eton Properties and the property industry as demand has been strong in all levels of the residential market. We are on track to doubling our net income to P700 million this year from P297 million in 2009.

“We expect higher growth next year with the launch of our new projects and higher realized revenues with the scheduled turnover of over 3,600 residential units. We project hitting a net income of P1 billion in 2011.” – Danilo Ignacio, president, Eton Properties

“As per PPA and Marina, the whole port and shipping industry grew by 15 to 20 percent this 2010.

“Harbour Centre Port Terminal experienced a 20 percent growth this year or from 4.6 million tons of cargo handled last 2009 to 5.5 million tons. The growth in the economy, the added importation of agricultural and construction products, were the reasons behind our robust and tremendous growth. Manila North Harbor or Northport added 14 million tons of cargoes every year making the total cargo-handling operations of the HC group to 20 million tons a year. The strategic partnership between the Harbour Group and San Miguel/Petron group would surely be a growth mechanism for the port in the future.

“The economy I think would be more robust in 2011, usually after the stock market rallies in 2010, which brought to the Philippines the international fund managers. Foreign infrastructure and development funds would usually follow suit. PNoy’s level playing field would likewise boost foreign investors confidence thus making the country a safe haven of foreign direct investments. 

“The Harbour Group would try to sustain the momentum it had in 2010. Growth through strategic tie-ups domestically and internationally would surely take place.  Harbour would try to vie for two domestic outports and two foreign ports in the Asian region. A public offering would likewise be done by the group under HarbourOne Terminals, Inc. either in the Philippines or in the Hongkong stock market. The best is yet to come for the group.” – Dr. Michael Romero, president, Harbour Centre Port Terminal Inc.

“2010 definitely was a great year for those who believed in the Philippines but the perennial pessimist of course did not benefit as they did not invest in property, stocks and converted their money to dollars. Our peso hit a high of 42.30, our stock market hit a historic high and property prices continue to increase. The election of PNoy has brought renewed confidence due to his simplicity and transparency. This is in a way all what was needed as the basic fundamentals have been laid out on our economy in the past years. Our company RFM has gone up from 30 cents to a high of 2.25 in the stockmarket. We have benefitted from the high consumer spending as our Selecta ice cream among other food businesses have done quite well. 2011 is definitely going to be another good year. The macro environment of low interest rates stable peso and strong remittances will continue. Our dollar reserves will continue to build up and pull away, widening the gap in favor of reserves versus our dollar debt. Because of PPP (public-private partnership) we should see stronger investment flow this 2011.”

Joey Concepcion, chairman and CEO, RFM Corporation

A disheartening story

Recently, a complaint was filed against key officers of Samsung Electronics Philippines Corp. (SEPCO) and SD Human Tech (SDHT) at the Department of Justice (DOJ). The complainant is a company called Temps and Staffers Inc (TSI) which is owned by a certain Vivian Anastacio-Guerrero and alleges that SEPCO and SDHT committed acts of “Illegal recruitment leading to economic sabotage”.

SEPCO, better known by its brand name Samsung, is a Korean electronics multinational which is the business of selling various consumer durables ranging from cellphones to household appliances. Like many multinational companies, Samsung engages third-party manpower agencies to hire and manage local people like in their case, promo-merchandisers (promodisers) – the department store ladies and gents who help you when buying a Samsung product.

TSI absorbed 250 employees from Samsung’s previous manpower service provider and enjoyed being the sole manpower supplier of SEPCO for nearly two years from 2005 to 2007. From October 2007, four other manpower service providers were contracted to meet SEPCO’s growing business requirements.

Sources say that in May 2010, SEPCO met with TSI to work on their contract renewal but for some reason, Guerrero reacted negatively to the proposal. After this meeting where no agreements were reached, SEPCO officers persuaded their management to just renew the contract without any qualifications. Attempts were made to relay this information to TSI to no avail.

Several days later, SEPCO received a letter from TSI stating their decision not to renew the contract and even terminating another existing contract for office-based personnel. TSI also claimed that it was Samsung who had no intention of renewing its contracts after its expiration at the end of June 2010. SEPCO’s continued efforts to reach out to Mr. Guerrero, the husband of Vivian, to clarify matters but to no avail.

On June 10, SEPCO received another letter from TSI demanding a meeting with SEPCO management but clearly specified that TSI was not open to any discussion with regard to contract renewal but rather to discuss a transition process.  In the meantime, since TSI did not want to renew its contract, SEPCO had no choice but to engage two other manpower service agencies to fill in the void left by TSI.

Insiders say SEPCO was surprised that TSI would just throw away good business that they have been enjoying since 2005. It was a bigger surprise to SEPCO when TSI lawyers filed a complaint with the DOJ for “illegal recruitment leading to economic sabotage” and further filed a hold departure order against two SEPCO key officials who are Korean nationals.  They further placed 12 SEPCO employees on a watchlist.

It’s disheartening that stories such as this one undermine the efforts of our government to attract foreign investors and multinationals to invest in our country.

Many do not see where TSI lawyers are taking this case. The complaint of “Illegal recruitment leading to economic sabotage” seems too far-fetched. After all, SEPCO was never in the business of recruitment but rather engages third-party manpower companies to supply them with their manpower requirements. SDHT, on the other hand, is a legitimate duly-registered manpower service company.

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