Global

Our agriculture may be all screwed up and our exports chronically weak. But we have quite a number of Filipino corporations with thriving businesses straddling the globe.

One such corporation is the International Container Terminal Services, Inc. (ICTSI), a true Filipino multinational present in all six continents, operating ports that serve as growth catalysts for the countries that host them. In a highly competitive industry, ICTSI ranks among the top logistics companies in the world.

The Filipino multinational sits comfortably at the top tier of port operators from around the world. The list includes such giants as Hutchison Ports, DP World, China Cosco Shipping, MOL, NYK, PSA International, Evergreen and China Merchant Ports.

ICTSI’s journey to the top began in 1987, when the company realized that ports, important catalysts of growth, are better left in the hands of the private sector. Heretofore, it was always assumed that governments run the ports. Where governments operate the ports, however, the facilities tended to be inefficient, encrusted in bureaucracy and underinvested.

When ports are inefficient, the whole economy is inefficient. We know that from harsh lessons in the recent past when we saw trade choked by congestion.

The Philippines is an archipelagic country. We rely on efficient ports to flourish. There was a time when it was cheaper to trade overseas than to move goods from one rundown domestic port to another.

Inefficient ports impose added costs on consumers. They make not only the movement of goods but also of people more expensive than they should be. They stand in the way of modernizing domestic shipping – which is very important for an archipelagic economy.

Efficient ports require large capital investments in the most modern machinery to move goods efficiently. Not all of our ports, for instance, are equipped with equipment to move containerized cargo – the modern standard for moving goods. Government has always been behind the curve in acquiring modern technology.

ICTSI began from its flagship site at the Manila International Container Terminal and quickly acquired expertise in modern port operations. This expertise found an international market in countries seeking to quickly modernize their port operations. From the Port of Manila, the company began investing in ports across the continents.

Many of the ports the ICTSI invested in and managed are in areas most Filipinos might not have heard of. These include: South Sulawesi in Indonesia, Tanjun Priok in Jakarta, Lae in Papua New Guinea, Yantai in China, Cortes in Honduras, Buenaventura in Colombia, Colima in Mexico, Guayas in Equador, Pernambuco in Brazil, Gdniya in Poland, Umm Qasr in Iraq, Rijeka in Croatia, Batumi in Georgia, Toamasina in Madagascar and Matadi in DR Congo.

In all these areas, improved port services brought about by Filipino managers served as catalysts for the local economy. This is something we all should be proud of.

The company could not have been successful in its investments had it not put effort in keeping up with new technologies relating to port operations. Christian Gonzales, head of global operations for the Filipino port company, says: “Beyond profitability, ICTSI recognizes the complex role ports play in economic development and the prosperity of communities within which our ports operate.”

Indeed, in many of the poor countries where ICTSI invested, more efficient port operations boosted economic development. The company brought not only new port technologies but also better working conditions than before.

Drewry, the leading shipping and logistics research firm, now lists ICTSI among the top ten port operators in the world. It is eighth in terms of cargo volume handled.

Not content with the successes it has achieved, ICTSI has now embarked on a digital transition to make its cargo handling even more efficient. The same standards of efficiency maintained at the Manila Port are also maintained everywhere else, including countries such as the DR Congo and Madagascar.

Here is another Filipino brand we should all be proud of.

Default

The banking community was busy the last weekend.

Last Friday, BDO declared Udenna Corporation in default. This could trigger a wild chain of events including garnishment of the holding company’s assets.

Udenna, controlled by Davao’s Dennis Uy, is said to hold debts amounting to P150 billion. If BDO’s action holds, this will be the largest default event in Philippine corporate history.

Dennis Uy’s company, whose subsidiaries include Phoenix Petroleum and Malampaya, contests BDO’s determination it is in default. The matter will be settled in days.

Meanwhile, there is anxiety over the possible effects of a major default on the entire Philippine banking industry. It could set in motion a race among the banks for Udenna’s assets. Nearly all our banks, through consortium arrangements, have exposure to Udenna’s debts.

Bank analysts have been trying to reassure the public over the last few days that our banking system is strong enough to withstand a major corporate default. Strict regulation by the BSP saw to that.

There have been warnings issued the past few months that Udenna was expanding too quickly and acquiring too much debt to do so. Uy, one of our newest tycoons, has been bold and aggressive in his business ventures.

Everyone hopes Udenna could work out its financial position and recover its standing as a major borrower. The next few days will be extremely challenging for them and difficult for everybody else.

Not only the financial health of our banking system is on the line here. If Udenna fails, it will injure our nation’s economic performance. This is why its corporate practices are now under strictest scrutiny.