Solo: Lito Camacho

One of the rising stars in Gloria Arroyo’s administration is 45-year-old Energy Secretary and incoming Finance Secretary Jose Isidro "Lito" N. Camacho. Unknown to most people, Camacho is a self-made man from a modest middle-class family in Bataan, He recounted to Philippine STAR that he used to take public transport such as buses and jeepneys when he was in grade school, high school and college. His father died when Lito was 19. In public disclosures of wealth, Lito Camacho reported a net worth of P330 million, making him the country’s wealthiest Cabinet official. Trade and Industry Secretary Manuel "Mar" Roxas III, scion of the Araneta landowning clan, was second wealthiest with net worth of P72 million. A father to six kids and a devoted husband, Camacho manages to occasionally relax with his family in his unique five-hectare animal farm in Bay, Laguna near UP Los Baños. He and his wife have a collection of antiques, old ceramic vases, furniture, paintings and other art works from their long stay in different countries. The collection is housed in their animal farm.

A graduate of Don Bosco in Makati, Lito Camacho finished Mathematics (cum laude honors) at De La Salle University and earned his Master’s degree in Business Administration (MBA) with finance concentration at the Harvard Business School. Before joining the government, he was the managing director and chief country officer of Deutsche Bank AG, and previously managing director and head of South Asia Investment Banking for Bankers Trust Company (managing the investment banking business for Singapore, Malaysia, Indonesia, Thailand, the Philippines and India).

The soft-spoken former investment banker Lito Camacho is now busy lobbying for approval of the Power Bill that was once a priority bill of the deposed Estrada administration which President Gloria Macapagal-Arroyo has also embraced as a priority of her administration despite vociferous protests by leftist labor and political groups. The Power Bill seeks to drastically reform the electric power industry, to break up the inefficient National Power Corp. (Napocor) monopoly and to encourage private investments.

During the interview with the Philippine STAR at the Department of Energy building in Fort Bonifacio, the conversation was interrupted by a telephone call by the Power Bill proponent Senator John Osmeña. He was also visited by Shell Companies in the Philippines country chairman Oscar S. Reyes, who describes Camacho as "an extremely competent and professional person, a valued asset in the government."

Excerpts from the interview:

Philipine Star: Leftist labor unions and their allied political groups denounce the government’s rushing to push the Power Bill. Even Senator Blas Ople accused you of being "reckless" and "irresponsible" for warning that if Congress does not approve this bill, massive power blackouts could hit the country by 2005. Senator Juan Ponce Enrile said the bill will only legalize overcharging and other abuses by Meralco against the consumers. What can you say about this?

Lito Camacho: President Gloria Arroyo had already worked for the amendment of the Power Bill in consultations with different sectors of society, thus we have incorporated many of the concerns raised by the different groups. We don’t want to create a sense of fear. We just want to highlight to the public that relying on Napocor to meet the power requirements of the country is no longer a viable, long-term solution. There is enough time to establish the necessary market environment and incentives for the new players to come in, to support the needed investment requirements, so that we can avert a potential power crisis.

Are you optimistic about the sale of the mismanaged and inefficient Napocor to private investors, especially since it has a US$6.7 billion debt and in view of depressed world economic conditions? Will it be privatized as one big giant or can it be broken up into various pieces and sold?

We are optimistic. Privatization won’t happen next month when the bill is passed into law. There is going to be a period when we will have to prepare for privatization. The bidding rules, the privatization plan and other details, there will have to be consultation with the prospective buyers, so that we can incorporate all those factors in the plan that would entice new players. It is going to be a very competitive situation competing for these buyers and investors. I guess we need to put marketing people on the job and present a business case that would compete with the potential investments from all over. It’s going to be a tough job, it’s going to be a marketing job. But it’s a job where I hope we will succeed so that we can maximize the value of our assets and reduce the stranded debt that we hope to avoid passing on to government. We hope to attract the most aggressive buyers who will provide us the best value for the assets we are selling. We may break Napocor up into seven generating companies (gencos), then these will be bidded out. We might probably see local business groups tying up with foreign firms to bid for these assets.

A big controversy in the past was the Aquino administration’s scrapping of the Marcos administration’s nuclear power plant project. Don’t you think that this low-cost alternative source of energy can still be attempted in the Philippines to reduce our dependence on oil imports?

The 1986 Constitution has already closed that option, because it specifies that the Philippines should be a nuclear-free country. We are not inclined to pursue that option.

Why is it that electric power prices in the country are among the highest in Asia, perhaps only Japan is more expensive?

If the status quo in the Philippine electric sector is maintained and if the Power Bill is not approved, this problem of high power rates will not be solved. Napocor dominates the power industry now, having control over electric power generation and transmission. All electric utilities buy power from Napocor. Our power rates therefore pretty much reflect the cost structure of Napocor. With US$6.7 billion in debts and nominally about 90 percent leveraged, Napocor has accumulated losses over the years. Business people know that no company can sustain operations with this kind of debt-to-equity ratio. As a government agency, Napocor is also prone to political pressures, so not all decisions are based on business considerations. We hope to privatize Napocor, so that costs of power will go down. Napocor privatization is part of the reforms of the power sector we envision. We hope to see Napocor split into several companies which will be privatized.

As a former investment banker, now the Energy Secretary, and by July, the Finance Secretary, what is the Lito Camacho management style?

I’ve always believed in the importance of working hard, of being decisive and having to work with other people. Even in government, I intend to maintain a business-like environment, how we conduct our business, how we deal with all sectors and the public as well. Being business-like includes being timely with our responses, being transparent, so that the various sectors and the public will know they are dealing with professionals. You cannot be successful if you think you can do it alone. You have to be able to work with other people. I am fortunate to have a competent staff. I believe in empowerment. If you’ve encouraged someone to do his best, to reach his highest potential, OK na. You’ve maximized the value of that person. You can only realize the person’s potential if you allow him to contribute, allow him to make mistakes. I manage really by instinct. A lot of it is just common sense. I’m not too big on management books. It can be dangerous to follow certain concepts or formula because not everything applies.

Is it true that unlike other government appointees who are political allies of President Gloria M. Arroyo, you were not her close acquaintance?

Yes, that is true. I’m not even sure if President Gloria Arroyo remembered the two times that we met before. The first was in 1997, when she was the guest speaker of the Harvard Business School Alumni Association of which I was then the president. The second meeting was in Singapore, at a luncheon meeting among friends.

What are your impressions of President Gloria Arroyo?

I’m very impressed by her professionalism, her work ethic, her leading by example, her consultative attitude. I am very impressed by her sincere desire to do what’s best for the country. I think among all our past presidents, she is the only one with an economics background. She will deal with the complex issues facing the nation daily by thinking of how these relate to the economy. She is very perceptive; our Cabinet meetings are very productive, very efficient.

The country has Southeast Asia’s highest population growth rate, which seems to be a burden on our economy and a serious threat to the government’s hope to alleviate poverty. Do you agree with this view?

I don’t know what the population policy is, I think it is best if you asked the President directly about this issue.

If I ask your personal opinion, not as a policy statement, what is your stand on this question?

I have my own views on this issue (laughs), I have six children.

I heard you are a devout Catholic, that you even sing in the church choir?

Yes, I am. I used to be more active in the Bukas Loob sa Diyos Catholic group.

You are young, you are now very high-profile due to the urgency of the Power Bill, and you have considerable private wealth. Do you foresee yourself going into politics in the future?

(Laughs) I don’t know. I’m not a politician, I’ve never thought of entering politics.

But you are a talented technocrat who might do well in politics.

(Laughs) I don’t see many technocrats becoming successful in politics.

Your late grandfather was a successful politician in Bataan, is he an inspiration for you?

My late grandfather Teodoro Camacho, Sr. was a four-term Assemblyman during the Commonwealth era. He served as governor during the Japanese military occupation and later on served as judge. He served in all three branches of government–legislative, executive and judicial.

Did you inherit some wealth from your lolo? Most of the wealthy clans in the provinces are heirs of old political leaders of the past.

No, I only inherited my education, good education and a strong set of good moral values from my family. I come from a modest middle-class family. My grandfather died a poor man when I was only 10 or 12 years old, but he was extremely well-respected in our province. He used to travel to Manila by bus, he led a simple life. Up to this day, there are roads, bridges and a barrio named in his memory in our province. He was absolutely honest. During his funeral, I heard from the testimonials all the things he had done for the community. I said that someday I’d like do something for the people, too.

What books do you read and what music do you like most?

Due to the pressures of work, I have not read too many books lately. My wife and I listen to classical and quiet kinds of music, also Broadway music.

Your wife was your classmate in Harvard Business School?

Actually, I was one year ahead of her in Harvard Business School. She is very talented. She has two degrees from Harvard, an economics degree (cum laude honors) and an MBA degree.

John Gokongwei Jr. once told me that bankers are in a great profession due to their prestige, influence and less hectic work schedule they have compared to industrialists. How do you view banking, being a former international banker?

I think Mr. Gokongwei was referring to commercial bankers. I’ve been an investment banker, and that was a hectic job. Investment banking is more hectic and strenuous than commercial banking. It’s very stressful. In fact, it is considered a young person’s job, and I’m too old for that now. You have to travel a lot. One has to sacrifice time with the family. I used to stay up late at night working, just like my schedule now in government service (laughs).

I heard that you love to play golf. How do you rate as a golfer? Who is better at golf, you or President Gloria Arroyo?

(Laughs) No, I do not love golf, but I am a golfer. I don’t have the time to play this game much. In the past when I had more time to play, I had a handicap of 28, that’s not very good.On the President, I have never had the chance to play golf with her, so I cannot rate her game.

I’m sure you’re not too comfortable talking about your being the wealthiest Cabinet official, but how did you accumulate your officially declared P330 million in net worth?

I think I’m fortunate to have worked for two of the world’s biggest financial institutions–Deutsche Bank and Bankers Trust Company–and they paid well. In investment banking, we had a lot of bonuses, the pay is dependent on performance.

If you don’t mind, how much do Cabinet officials earn? What about the President’s salary? Don’t you think the salaries we give government officials should be adjusted upwards, because your job is more important than that of a president of a big bank or a giant corporation? If you don’t give high salaries for high government positions, only the very rich, the very idealistic or crazy people would leave their high-paying corporate jobs to work in government.

I don’t know how much the President earns. In my case, I don’t know, I think I earn P35,000 per month. I agree with you, that’s one of the areas that needs to be reviewed, but right now, the government has a big fiscal deficit problem.

How big is our fiscal deficit?

For this year, the fiscal deficit is estimated to be P145 billion.

As the next Finance Secretary, what can government do to stop this annual deficit?

President Gloria Arroyo has launched an austerity program in government which is effective. We shall continue working to increase government revenues with better collections of taxes, customs duties and raising money through privatization. We have to be efficient and creative.

Recently, the International Institute of Development (IID) reported that the Philippines has again slipped in its rank in terms of global competitiveness after conducting a poll of business leaders. Among 49 nations, the Philippines now ranks No. 40, down from No. 37 in 2000 and No. 31 in 1999. What can the government do to urgently reverse this decline in Philippine competitiveness?

We have to look at the basic infrastractures, including electric power, communications and others which are major concerns of investors. We have to improve tax incentives. We in the Gloria Macapagal-Arroyo administration are also seeking to improve the culture of governance not only in the government, but also in the business sector and in the rest of Philippine society. This will give confidence to investors and help enhance the global competitiveness of the Philippines. On my own, I hope to be able to entice potential investors to come in and look at new opportunities in the Philippines. I think it is important to communicate the new paradigm, the new way of governance by this administration, the culture of professionalism, the culture of transparency, being consultative, being business-like.

What is the secret of your success?

(Laughs) The grace of God. I am where I am because of the grace of God.

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