Seize this chance
Few companies in the Philippines can claim to be as iconic and as controversial as San Miguel Corp. It is widely recognized overseas as the maker of one of the best beers in the world, and in recent years, as an increasingly aggressive player in the power generation and infrastructure sectors. Even before it embarked on an acquisition spree in recent years—spending some $5.3 billion to buy 25 companies, big and small—the Philippines’ largest conglomerate by asset value was already an essential part of the national economy, with combined revenues accounting for 5 percent of the country’s total economic output. In addition, it is among the Philippines’ biggest taxpayers.
But San Miguel is also weighed down by its history, primarily by the enduring criticism that it received, as a fruit of cronyism, a tremendous boost in the early 1980s from the coconut levy fund that was accumulated by the Coconut Industry Investment Fund from the blood and sweat of coconut farmers with the aid of the state’s powers of taxation.
Since the fall of Ferdinand Marcos’ dictatorship in 1986, San Miguel has been dogged by farmers’ groups and the Presidential Commission on Good Government, casting a dark cloud over it despite its enviable successes on the corporate front. But recent events in its boardroom provide it a rare opportunity to steer its corporate future to a path different from what it has traveled.
Last week, industrialist and San Miguel chair Eduardo “Danding” Cojuangco Jr.—deemed controversial by many outsiders but said to be loved by his employees—sold his stake in the conglomerate to his trusted ally and lieutenant Ramon Ang. The hard-charging Ang is the architect of San Miguel’s transformation from Southeast Asia’s largest food and beverage manufacturer to a diversified group with interests in power, infrastructure, airlines and airports, tollways, real estate and banking, aside from its traditional businesses.
Apart from growing San Miguel’s corporate footprint, Cojuangco’s anointed one has an equally significant task ahead of him that requires the application of, so to speak, soft power.
San Miguel has won all its legal battles where the coconut levy fund, now running into billions of pesos, is concerned. In particular, no less than the Supreme Court has ruled that the shares previously owned by Cojuangco—and now sold to Ang—are private in nature and were not acquired through illegal means, as his critics claim.
And while the state continues to own a substantial stake in the conglomerate, worries on how a theoretically hostile administration can derail corporate plans is now a distant memory, with the government’s decision to convert its holdings into high-yielding, but nonvoting, preferred shares.
Indeed, San Miguel has everything going for it on the corporate front. As it stands, it is already one of the most formidable forces in the local and regional corporate scene. But there is another—and equally important—issue that its new leadership must confront and address: cleaning up its reputation and addressing head-on the issue that its critics shout in protest rallies or whisper in cocktail parties. It can thus be even better than it is now, and the change in command from Cojuangco to Ang presents it with a rare “tabula rasa” situation in which it can rewrite its history. The prospect is not impossible. Even conglomerates like Hong Kong’s Jardine Matheson, which had its roots in the opium trade, managed to retool itself into a respected corporate member of the former British colony’s society.
San Miguel is clearly not blind to this opportunity, given the growing amount of resources it has been allocating to its corporate social responsibility efforts. Its P500-million grant early this year for the victims of Tropical Storm “Sendong” in the cities of Iligan and Cagayan de Oro—said to be the single biggest donation in local corporate history—is a good start. It should continue on this path, and be of benefit to more sectors of the Filipino people through its CSR efforts or the economic development it fosters via its massive infrastructure projects.
It may not be able to change its controversial past, but it now has a once-in-a-corporate-lifetime chance to change how it is viewed even by its harshest critics among the coconut farmers. It should seize this opportunity with the same zeal it goes after megaprojects and corporate acquisitions.
