COLUMN: FIXING THE ECONOMY
MANILA, January 4, 2006 (STAR) HIDDEN AGENDA By Mary Ann Ll. Reyes - Unless we make a damn serious effort to privatize the monstrosity known as the National Power Corp. (NPC), the problems that spring out from it will perennially threaten to plunge the country into crisis and steal the future away from millions of Filipinos.
Not just a few agree that a key part of fixing the economy is to push forward relentlessly with power reforms. Privatization of NPC is the most important element to making those reforms work.
The point being made is that grossly inefficient – some even say graft-ridden- government owned and controlled corporations like NPC are among the biggest causes of our country’s massive deficit. In fact, this office is the single biggest cause of that deficit! Let’s not also forget that it is the reason why government had to resort to the EVAT.
No doubt much of the huge tax burden dumped on millions of Filipinos will never be spent on education, health and infrastructure. Those tax revenues will increasingly be spent on keeping state-owned behemoths like NPC afloat along with all the corruption games and inefficiencies that go on in there.
Government is supposed to move out of the power sector yet we still seem to see a nefarious attempt by shadowy forces from within to extend their stay and expand their stranglehold on the industry by taking over private utilities like Meralco. Though EPIRA has legislated that NPC should disintegrate, it’s obvious that the NPC mafia is now enlisting government support for a takeover that will ensure they have a new milking cow.
The NPC mafia continues to deceive the public into thinking they’re more efficient and cheaper at providing a basic service like power. They have probably forgotten that they look cheap because of the net losses and cash deficits they’ve racked up at the taxpayers expense year after year. Do they conveniently forget that they have tax advantages and exemptions all the other private power companies do not enjoy?
NPC’s leadership brags they may break-even this year – but they’ve intentionally left out the fact that the National Government just recently absorbed P200 billion of NPC’s debt artificially bringing his costs down by transferring his debts to the poor, already overburdened Filipino taxpayer. Despite all that, they’re again threatening the economy with further intentions to borrow another $700 million (P37 to 38 billion).
All over the world, state-owned companies often prove in practice to be highly inefficient, inflexible, poorly performing "employment agencies" that are more often than not politically pressured to do the wrong thing.
Decisions of these state-owned companies forever run the risk of becoming political, driven not by the interests of the firm and the consuming public but by the desires of politicians in power. Because of graft, inefficiency or just to drive up popularity, government-run companies the world over pile up huge losses which they solve by perennially turning to taxpayers and the so called "bottomless public purse".
NPC’s leaders parade themselves as being more capable of providing cheaper services. And the fiction is perpetuated by a purposely uneven playing field in favor of the state-owned firm.
Huge tax exemptions and hidden subsidies hide some pretty ugly realities of waste, graft and inefficiency making it impossible to compare the real costs of services from government firms versus that from private companies.
In life, however, there are no free lunches and a day of reckoning always arrives. When the pied piper eventually presents his bill it’s liable to be bigger and more costly than if we had entrusted affairs to more responsible stewards.
Sun Life makes move
What’s this we hear that the insurance industry’s "silent giant" (I didn’t use the word "sleeping" for the company’s performance is far from being in a state of slumber) Sun Life Financial (Philippines) is slowly but surely gaining ground in its game of catch up with the industry leader? Some close friends from the industry told me during the holidays that the company has overtaken most of its counterparts, including its principal rival, especially in the area of pre-need sales. At a time when industry sales are down, with even the number one local insurer lagging behind its own pre-need sales target, SLF reportedly outsold everyone and even managed to generate sales that is over six times its own performance for the first half of the year. What Sun Life accomplished in one month starting October reportedly covered its entire pre-need production in the entire first semester!
So what could have been the main differentiating factor for Sun Life during this period, as against other industry players? An effective marketing and promotions plan that usually worked only for credit card and airline companies did the trick, I was told. As most other pre-need firms quietly waited for the bad news on other players to simmer down, SLF took a contrarian’s stance and started to barrage the market with its aggressive sales strategy. The midnight attack obviously worked, realizing fresh sales in the hundred millions in just a little more than two months and is now poised to hoist the company from its number five spot among pre-need firms to a place in the top three. I’d say that’s really a very impressive move up in a six-month span!
More than the effective promotions strategy that was unheard of in the insurance business until this "phenomenal" development, I would say this happening is the fulfillment of a prediction I made just about six months ago. Philippine National Bank’s "miracle man" Lorenzo Tan then quit his job as president and CEO of the national bank and decided to ink a deal with Sun Life. I knew right away that his joining the insurance foray would make competition in the industry really interesting given that the person heading the industry leader is a fellow former banker, Jose Cuisia. It truly seems Lorenzo is once again weaving his magic and is giving Sun Life headway in its drive to be numero uno.
Aside from launching the promo that reversed SLF’s pre-need performance from over negative 10 versus year ago sales in June 2005 to more than positive 110 percent by December 2005, Tan is said to have significantly grown SLF’s life and mutual funds businesses in his six-month stint. SLF’s mutual funds portfolio is said to have grown by more than 70 percent above 2004 with its new president and CEO at the helm. I’m glad that these figures seem to indicate that Lorenzo is working very well with SLF chair Esther Tan and the rest of the company’s management whose support obviously translated to this remarkable feat.
A leader of leaders, I also heard that Tan was able to successfully recruit Genju Lapez, the former president and CEO of Coca-Cola Philippines to join Sun Life. Now this is really an interesting development. What is the guy credited for the introduction of the San Mig light and the other flavored variants of Royal doing in an insurance firm? Hmmmm, wonder what this will translate to.
As competition in the insurance industry becomes tighter, I’d sure want to keep an observer’s role, seeing who’s gaining or losing ground. We might be seeing another ABS-CBN versus GMA or even a Nora Aunor-Vilma Santos rivalry in the offing, this time in the financial services industry. Good luck, players!
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Chief News Editor: Sol Jose Vanzi
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