A United Front for Philippine Infrastructure
They are not the sogo shosha of Japan or the chaebol of South Korea. But Philippine conglomerates are leading the way to transform the Philippines into a modern economy, starting with their strong interest in developing the nation’s infrastructure network.
The sogo shosha and chaebol were greatly instrumental in making Japan and South Korea powerhouse economies that competed with those of the United States and Europe.
Japan’s sogo sosha essentially started as trading companies before they expanded and became conglomerates. They soon found themselves into banking and finance and dominated global trade. Japan’s major sogo shosha include Nissho Iwai Corp., Sumitomo, Marubeni, Mitsubishi, Mitsui, C. Itoh, Nichimen and Kanematsu-Gosho.
These sogo shosha controlled about 10 percent of the world’s exports and over 50 percent of Japan’s overall trade in the late 1990s. They improved the lives of many Japanese and significantly raised the standard of living in the north Asian country. Japan at one time was the world’s second-biggest economy.
South Korea’s chaebol are not exact copies of sogo shosha. Yet, they were also responsible for industrializing and expanding South Korea’s economy to make it the world’s 12th largest. Korea’s chaebol or conglomerates include Hyundai, Samsung, LG Group and Ssangyong.
In the Philippines, we may be seeing the birth of another version of sogo shosha or chaebol, albeit somewhat in a different context. The Sys of the SM Group, the Ayalas, Enrique Razon, Gotianuns, Gokongweis, San Miguel Corp., the Aboitizes, Metro Pacific Investments Corp. of the Salim Group, Andrew Tan, Consunjis and the Ty Group are into major industries and dominate much of Philippine businesses.
These taipans have found one common denominator—infrastructure projects. They are into toll roads, airports, water and electricity distribution, power generation, railways, ports and industrial estates.
They are heeding the call of President Ferdinand Marcos Jr. to join in the construction of major infrastructure projects through the government’s policy of encouraging private sector participation in public-private partnerships.
Finance Secretary Benjamin Diokno has acknowledged that the private sector plays a critical factor in the country’s recovery prospects, starting with its participation in building infrastructure projects. The administration has just approved the revisions to the 2022 implementing rules and regulations of the Build-Operate-Transfer Law to entice investors. This game-changing reform is expected to sustain the momentum in infrastructure spending despite budgetary constraints, and generate high-multiplier effects in the economy.
I must say that the private sector’s response to build and expand Philippine infrastructure projects is very encouraging. D.M. Consunji Inc. and joint venture partner Nishimatsu Construction Co. Ltd. (NCC) of Japan, for one, have obtained a notice of award from the Department of Transportation to build the Quezon Avenue and East Avenue underground stations and tunnels for the Metro Manila Subway Project.
The subway train is one the game-changers in the infrastructure sector. The Metro Manila Subway, with a total of 33-kilometer route length and 17 stations, will cut across eight local government units that will stretch from Valenzuela City to FTI-Bicutan in Parañaque City. It will have a spur line to NAIA Terminal 3 in Pasay City.
President Marcos himself is proud of this project. He and Transportation Secretary Jaime Bautista recently led the ground breaking for Contract Package 104 of the MMSP-Ortigas and Shaw Boulevard Stations and Tunnels amounting to P20.46 billion.
Equally ambitious but doable are the PNR South Long-Haul Project, Subic-Clark Railway and Mindanao Railway Project costing a combined P276 billion. The government expects by the first quarter of 2023 to finalize a loan agreement with China to finance these three flagship railway projects initiated by the Duterte administration.
I am sure our own version of sogo shosha or chaebol will vie to undertake these major projects. My Villar Group, through Prime Asset Ventures Inc., has also joined the toll road business as part of its contribution to nation-building by buying 100 percent of MCX Project Company Inc. from Ayala Corp. MCXPCI is the special purpose corporation that holds the concession over the Muntinlupa-Cavite Expressway Project. My company holds major investments in subsidiaries operating in a variety of industries, including power and water utilities, information technology and telecommunication.
For sure, the golden age of infrastructure in the Philippines is finally dawning on us with President Marcos at the helm. This is enough reason to be more bullish on the Philippine economy.