Preserve investor trust

Money goes where it grows. This is a fundamental tenet among investors, and the move of Manuel V. Pangilinan to look for investment opportunities outside the Philippines hews to it. It’s interesting that the decision of the high-profile businessman and sports patron to lead a high-powered team on a three-day visit to Vietnam last week came at a time when he is experiencing a series of unfortunate events, whether involving business or not, at home.

On the business front, MVP’s latest setback was the breakdown in talks to acquire GMA Network, a P52-billion deal that could have fit well into the convergence strategy of his telecom units PLDT and Smart/Piltel/Sun Cellular. Then there was the matter of the tailings leak from Philex Mining Corp.’s Padcal mine in Benguet, which has finally been plugged. There is likewise the issue on the connector road project to link the North and South Expressways. MVP’s group had submitted an unsolicited proposal to the government to undertake the project, but then came another connector road proposal from his chief rival in business, San Miguel Corp.’s head honcho Ramon S. Ang. To avoid accusations of favoring one over the other, President Aquino instructed all concerned departments to allow the two connector road projects to proceed.

Earlier, MVP suffered a setback in the Supreme Court, which decided that PLDT had exceeded the constitutional limit on foreign ownership. The high court only recently ruled with finality on the matter, rejecting the motion for reconsideration submitted by the MVP group. PLDT now has to issue more voting preferred shares to bring down the ownership of foreigners in the telecom giant to the constitutional limit of 40 percent.

Outside of business, MVP also had a falling out with Ateneo de Manila University, which he had supported financially through the years. In a statement, he cited his differences with his alma mater on two critical issues—the controversial Reproductive Health bill and the equally controversial mining industry.

The Metro Rail Transit 3 project is quite another business issue that has saddened the MVP group. Through Metro Pacific Investments Corp., the MVP group offered more than $1 billion to the government to acquire and expand the mass transport system. After months of studying the matter and saying it wanted transparency in all its undertakings, the Aquino administration instead approved early last month a bidding for the P8.6-billion MRT 3 capacity-expansion project.

Perhaps the biggest issue that posed a big influence on MVP’s desire to look elsewhere for business growth involves the SCTEx. In November 2010, his Manila North Tollways Corp. (MNTC) won the 25-year contract to operate and maintain the 94-kilometer Subic-Clark-Tarlac Expressway, subject to the approval of the Office of the President. But such an approval never came as Mr. Aquino’s economic officials said the government needed to gain more money from the SCTEx project. Subsequent negotiations prompted the MVP group to submit a revised proposal.

Last week, the President said he had not yet signed the SCTEx concession agreement with MNTC because the government was still reviewing the terms. But as he announced this, some of his officials indicated that Malacañang would soon issue an order to rebid the SCTEx contract as the revised MNTC offer was supposedly still insufficient to address the government’s desire to get more out of the Philippines’ longest expressway.

The MVP group, in effect, stands to lose the SCTEx toll project after going through two administrations and two rounds of negotiations. Imagine its disappointment at this changing of the rules. An official from the MVP group had warned that if Malacañang would indeed order a rebidding, the transaction would not sit well with the group’s creditors. A rebidding of SCTEx will also be seen as an opportunity for MVP’s main business rival—San Miguel’s Ang—to snatch the SCTEx contract.

It is certainly the duty of the government to maximize the benefits to the country of any project that it hands over to the private sector. This, however, should not be at the expense of losing the trust and confidence of investors in the regulatory framework of the Philippine economy.