The competition never learned

CTALK - Cito Beltran - The Philippine Star

Eleven years after the fact, “the competition” has not learned their lesson well. Corporate big boys are still playing the Philippine government for fools and offering them crumbs for vital projects that serve public interest, and every time they lose, their PR and media operators play the “intrigue and discredit game.”

Last week, news rolled out that San Miguel Corporation with South Korea’s Incheon International Airport Corp. was the initial frontrunner among bidders for the operation and modernization of the Ninoy Aquino International Airport. SMC/Incheon International achieved this by using the same “tactic” or strategy used by Ramon Ang when SMC made their offer to build the NAIA Expressway 11 years ago.

For that particular project in 2013, RSA decided to do what was considered unthinkable and unprofitable: SMC submitted a bid of P11 billion versus the P305 million bid of their lone rival. That was 33 times more than “the competition.” I remember him saying that it was about time that big business gave the government a fair deal and paid the real value for projects.

 Immediately after the bids were read, critics began to question the financial logic of such a bid, some even declared that the P11-billion bid for the NAIA-X could never be recovered, while others made suggestions that such a bid was reckless for shareholders. What “the competition” did not realize was that RSA was using their own strategy to beat them. Knowing the competition would come in low and cheap, SMC came in high and fair. No amount of bashing and black ops works against facts and figures, especially when advantageous to government. 

Not only did they win the bid, but SMC also got the attention of government and the media on how undervalued government projects were. The competition also failed to realize that Ramon Ang was willing to play the long game of traditional Chinese business of small profit – long-term income – good daily cash flow = a reliable business.  

 Eleven years after the fact, the traffic volume on NAIA-X continues to increase and the roadway has become so vital to the efficiency of air travel and access to the NAIA, as well as tourist destinations and casinos. In fact, the volume of traffic is so high and constant it has probably passed the projected volume of 11 years ago.

 Once again, San Miguel Corporation joined the recent DOTr bidding for the rehabilitation and operation of the NAIA, once again RSA applied the same approach as he did with NAIA-X. They offered to give the Philippine government 82.16 percent of revenues generated. In comparison, the competition, GMR, offered 33.30 percent and the NAIA consortium offered only 25.91 percent of generated revenues amounting to an average of 29.60 percent of revenue.

That’s a 52.56 percent difference that the government would not be getting. No matter how you slice it, the difference and disadvantage to government is so obvious and proves the fact that up to now, the government is being nickeled and dimed by other bidders hoping to cash in on the clueless or desperate departments under the Executive.

So far some of the critics are once again sowing intrigues, prophesying failure to deliver, calling for “independent investigations,” etc. Others are saying SMC should not be allowed to “own” or operate so many airports in the country or challenging the corporate set up between SMC-Incheon Airport International. Even local politicians have time and again howled against SMC projects, not because of errors or defects, but simply to know: what’s in it for me?

Look at the track record of San Miguel Corporation in terms of project acquisition: they have always offered above and beyond the closest bidders. In terms of accomplishing projects, the Skyway, mass transit – SMC advanced payments for right of way, undertook alternative or corrective design and engineering in order to stay close to plan and schedules of completion and the final result is major benefits to the Filipino people.

During the period when RSA-SMC rehabilitated Philippine Airlines, the company fared well. SMC even invested money on overhauling the air conditioning system at Terminal 2 for PAL. Over a short period of time, PAL was considered profitable enough for Lucio Tan to insist on buying it back from SMC. The Caticlan Airport is not only a success story, it is a major economic driver for tourism in the region that continues to be developed and upgraded.

 Even the San Miguel Bulacan Airport has been subjected to personal, political and government obstruction without any of those people or parties spending one centavo on the project. The work continues because everything was done legally and in order, because San Miguel Corporation is a professional conglomerate led by the best in their respective fields. The dredging of the Pasig River cost SMC P2 billion but to this date, there has been no official recognition of such a major corporate social responsibility action or a simple “Thank You” to RSA and SMC. 

 The fact is no one likes to lose, especially at a game you have controlled or dominated for decades. It is also more painful when your “corporate greed” or selfishness is the very reason you keep losing at the game. The competition is still holding on to their political-economic chess board, moving their pawns and puppets around. In the meantime, SMC and RSA have rewritten the game altogether.

There is a verse in the Bible that the competition should read: “One person gives freely, yet gains even more; another withholds unduly, but comes to poverty.” Proverbs 11:24  

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