METRO PACIFIC'S CONTROL ON RP BUSINESS FEARED
Manila, Nov. 6, 1997-Foreign-funded upstarts are challenging the icons of Philippine business, raising fears of major destabilization at the turn of the century. Government officials, normally welcoming of foreign investors, are training wary eyes on the highly-diversified Metro Pacific Corp. which has rapidly encroached these past few years on the most crucial sectors of the economy.
The conglomerate already has substantial stakes in drug distribution and consumer products, packaging, telecommunications, banking, chocolates, and property. Now, Metro Pacific -- through one of its major investors, the Salim Group of Indonesia, has reportedly launched a serious bid to wrest control of giant San Miguel Corp. (SMC).
Metro Pacific is the Philippine flagship of the Hong Kong- based First Pacific Co. Ltd. Filipino Manuel Pangilinan, the managing director of the Hong Kong firm, is one of the highest-paid executives in Asia. The Filipino company started out as the Metro Drug Corp., a leading pharmaceutical distributor in the country that was acquired in 1987 by First Pacific. Since 1993, it has brandished a corporate name befitting the holding company that it has become. That year, Metro Pacific acquired 95.6 percent of the Akerfund and Rausing (Philippines) Inc., now renamed the AR Packaging Corp. It also muscled into the fast-growing telecommunications industry, co-investing 40 percent in Smart Communications, Inc., which has become the country's biggest cellular phone operator. Other investments in 1993 were stacked in property, with 50 percent of the FP Realty Properties Corp., and in banking, with 30 percent of the PDCP Development Corp.
For its 1994 opening salvo, Metro Pacific acquired 69.6 percent of Philippine Cocoa Corp., the manufacturer of the popular Goya, Keans and Hershey's chocolates. In 1995, Metro Pacific, through its affiliate, the Fort Bonifacio Development Corp., won the bidding for the development of the 214-hectare Fort Bonifacio property. The company announced plans to transform the former boot camp into a premier business district, with a skyline to rival New York, Paris, and Washington. While its mammoth bid hogged headlines, it did not earn much respect for Metro Pacific. Market experts warned that the group acquired the property without regard for the all- important viability factor. Metro Pacific offered a mesmerizing P33 billion, nearly P10 billion more than the P24 billion bids tendered separately by the Ayala and Gokongwei groups.
Metro Pacific's P33 billion offer was made simply because it sounded like "money, money, easy money," in Chinese. Such cavalier manner, bannered in a way that strongly suggested a bottomless pit of cash, raised suspicions over Metro Pacific's long-term goal in the country.
Not surprisingly, Metro Pacific's consortium partners in the Fort Bonifacio project soon left, one by one. The most telling blow was the departure of taipan Andrew Gotianun of the FilInvest camp, the most experienced property-developer member of the consortium.
Metro Pacific also bid for other big government properties, including the Metropolitan Waterworks and Sewerage System and the Food Terminal Inc. The company's high-profile incursions has raised speculations about its intentions. Analysts noted that First Pacific's entry into the country came close on the heels of former President Ferdinand Marcos's unceremonious exit in February 1986. The flux and timing coincided so closely that business news circles buzzed with stories of Marcos funds, stashed in Hong Kong, finding their way back through First Pacific and then via Metro Pacific.
For a year now, the market grapevine has centered on Suharto money in First Pacific. The Indonesian strongman is allegedly closely associated with Salim who is interested in buying into San Miguel. While Metro Pacific officials brushed off speculations on the Marcos and Suharto connections, they did not deny the San Miguel foray. The firm has reportedly acquired a six percent stake, coming from shares sold by government financial institutions. Reports indicate that the Indonesian conglomerate is looking at the 20 percent stake of Marcos associate Eduardo Cojuangco Jr., as well as the 24 percent stake of the Coconut Industry Development Fund -- also tainted by charges of serving as conduit for ill-gotten wealth. Metro Pacific's timing has puzzled business watchers here. The group appears to be making pre-emptive steps for the takeover of San Miguel, at a time when the question of sequestered ill-gotten shares in the company is still pending before the Supreme Court. To politicians and businessmen who worked for the outster of the late President Marcos, Metro Pacific's moves seem to betray possession of vital inside information.
In San Miguel, Metro Pacific is playing a high stakes game. If plans do not miscarry, the comany will easily become the biggest Philippine conglomerate, with a whole hand in every slice of the national economic pie.
Reported by: Sol Jose Vanzi
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