Bernardo M. Villegas
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Strategizing For Maharlika Investment Corporation (Part 3)

 To address the criticism that, as can be gleaned from  the final version of the Maharlika Investment Corporation Law, the goals stated are confused, amorphous and too all-encompassing, I have suggested that through the widespread practice of strategic planning among especially large corporations, there should be a serious effort to focus the investment strategy of the proposed MIC to three sectors that are given the highest priority in the economic agenda of President Ferdinand R. Marcos Jr.:   adequate and efficient infrastructures, cost-effective and clean energy, and food security.  Also because a most serious threat to the Philippine economy today is the very high level of debt incurred during the pandemic period, coupled with the lowest savings to GDP ratio in the East Asian region, the strategy should give the highest priority to attracting Foreign Direct Investments (FDIs) to these three sectors. With this sharper focus on where to invest its funds and the appropriate leadership from its Board of Directors and top management, the MIC can be a very valuable instrument for getting the Philippine GDP to grow at 8 to 10% through higher rates of investment, especially from FDIs.

How do we now operationalize this strategic plan into a short-term plan of two to three years of the MIC?  Obviously, a condition sine qua non is the organization of the board of directors and the appointment of the management team.  As President BBM already pointed out in a recent comment about his willingness to sign the final version to be presented to him by the Philippine Congress, the success of the MIC will critically hinge on the appointment of people of the highest competence and integrity.  Corruption and misgovernance have to be avoided at all costs.  The recent appointment of one of the most qualified Filipino banker-economists to the position of Governor of the Central Bank supports my view that we have no shortage of professionals in the field of financial management and banking who can be considered for positions in the board of directors and top management of the MIC.  In a series of articles I wrote some months ago when debates on the creation of a sovereign wealth fund began, I suggested a list of possible nominees to various top positions of the MIC.  Let me present the list again with some additions to help the President and the Board of Advisors in their task of choosing the right persons.  I know I am sounding presumptuous but over the last fifty years, as a member of the academe, business and management consultant and member of the board of directors of leading domestic and multinational corporations, I have been privileged to interact with a large number of professionals in banking and finance who could fit the shoes of the types of persons described by President BBM.

The following, among others, should be in the list of possible top managers and members of the board of independent directors of the MIC. There is no guarantee that the persons named will accept a position in the MIC.  They may already be fully employed in their respective management positions or they may be involved in a conflict of interest if they join the board of MIC as independent directors.  As I wrote in the previous article, I intentionally excluded some of the most honest and competent candidates who, to my personal knowledge, will never accept a position in the present Administration because they were very strong supporters of former Vice President Leni Robredo in the last presidential elections.  The list, therefore, is necessarily limited. I also excluded equally competent and honest professionals whose health is already failing. I think the following competent and honest professionals should be considered for appointment to the management and board of independent directors of the MIC (listed at random):  Amando Tetangco Jr., Roberto de Ocampo, Peter Favila, Corazon de la Paz Bernardo, Francisco del Rosario Jr., Francis Sebastian, Nina Aguas, Cesar Consing, Flor Tarriela,   Anton Periquet, Robert Panlilio, Omar Cruz, Josephine Gotianun-Yap, Lorenzo Tan, Jerry Kilayko, Raul de Mesa, Jerry Ngo, Michael de Guzman, Rex Mendoza, Melo Bautista, Vaughn Montes, Edwin Bautista, Antonio Itchon, Rabonni Francis Arjonillo, Eugene Acevedo, Emmanuel Herbosa, Fabian Dee, Hans Sicat, and Antonio Mancupa. Since at my age, I am already suffering from slight memory loss, I am sure I missed some names, especially among the equally qualified female top executives in banking and finance.

            Once the board of directors and top management of the MIC are in place, the first order of the day should be to look for other sources of equity funding from international financial  institutions and multilateral agencies that have the same interest in endowing the Philippines with efficient infrastructures, renewable energy sources and large-scale agribusiness ventures that are essential to increasing the productivity of Philippine agriculture.  In this last category, MIC can rely heavily on the “marketing” assistance of President BBM who has acquired a great deal of expert knowledge and key contacts in the agribusiness field because of his tenure as Secretary of  Agriculture.  For the initial funding, the MIC should try to be as little dependent as possible   on the mandated investments from DBP and Land Bank and much less from voluntary investments from SSS and GSIS, which continue to be controversial with some sectors.  I am convinced that the attractiveness of the three sectors I have chosen for the strategic focus of the MIC is enough to attract funds from international financial institutions and multilateral agencies like the Asian Development Bank.  Although the maximization of profit is not the ultimate goal of the MIC, there are enough current market evidences that  investing in selected vital infrastructures, renewable energy projects and agribusiness ventures yield sufficient returns in the long term to attract large infrastructure companies from countries like Spain, Japan, South Korea, Denmark and Norway, among others, as well as a good number of Filipino conglomerates like the Ayalas, Aboitizes, and the Consunjis to invest in renewable energy projects.  It is also a healthy trend that at last, large  conglomerates are beginning to invest in agribusiness ventures, such as the First Pacific group in dairy and coconut, the DMCI group in palm oil and the Benguet group in coconut.  This current trend is in stark contrast with experiences in the recent past when Philippine banks were willing to pay hundreds of millions of pesos in penalty for not  lending money to agricultural projects under the Agri-Agra Law because of the then hopeless condition of the agricultural sector that suffered from decades of neglect and mismanagement from the State.

            The first three years of the operation of the MIC will be crucial to its long-term success.  Fortunately, the market outlook for these three sectors (among the sunrise sectors of the Philippine economy) will be favorable in attracting FDIs as long as the right information is provided to the prospective investors.  Thus, the operational plan for the first three years should necessarily include the MIC getting very much involved in marketing these sectors to prospective foreign investors.  It is fortunate that the MIC can rely on the President himself as the Chief Marketing Officer as evidenced by his untiring effort to travel all over the developed world to highlight to prospective foreign investors that the Philippines can be a profitable destination for their investments.  These efforts of the President remind me of the distinction between marketing and sales that I learned very early in my exposure to business when I worked for a short stint with Procter and Gamble in the late 1950s. Marketing creates awareness and interest.  Sales delivers the bacon.

            The MIC should form part of the “sales department” for Philippines, Inc. by partnering with other marketing groups like the Board of Investments, the Office of Presidential Adviser for Investment and Economic Affairs  headed by Frederick Go, the various Philippine chambers of commerce and the foreign chambers of commerce in conducting road shows all over the developed world to actually “sell” specific projects in infrastructures, renewable energy and agribusiness ventures to prospective foreign investors. In fact, there are individual private investment groups that take it upon themselves to market the Philippines to foreign investors.  A case in point was the recent economic briefing given by Mr. Guillermo Luchangco, Chairman of the Investment and Capital Corporation of the Philippines Group to top corporations in Singapore, inviting them to invest in the Philippines.  There should be a unit  in the MIC that should be responsible for this task.  In this regard they should get advice from the experiences of First Metro Investment Bank whose Vice-Chairman Francis Sebastian has long years of experience organizing road shows all over the world to sell Philippine business projects to foreign direct investors. To be continued.