BIZ BUZZ: A warning to competitors

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Manuel Pangilinan-led Metro Pacific Investments Corp. may have raised eyebrows after the P100-billion infrastructure giant made a P200-million investment in a dairy venture with the Magsaysay family’s Carmen’s Best.

But those who follow the business tycoon’s moves know Pangilinan does not enter an industry intending to stay small. This should also serve as an early warning to agriculture players that competition is heading their way.

It is not the first time a seemingly off-brand investment has been questioned.

During a recent interview, Pangilinan said their hospitals segment, now the largest private sector health-care group in the country, experienced early doubts.

Actually, Pangilinan recalls they more or less “stumbled” into the industry. “It was not a product of management genius,” he admitted.

It started when former PLDT Inc. president Napoleon Nazareno asked him to chair the Makati Medical Center on behalf of a doctor-friend. Pangilinan said he knew nothing about hospitals but he agreed to lead the board in 2006.

“After a while, I learned about the business and it looked like a very interesting opportunity,” he said. In 2007, Metro Pacific invested P600 million in Makati Med.

The hospitals group would later grow to 19 facilities around the Philippines, eventually pulling in investments from industry heavyweights such as US-based KKR and Singaporean sovereign wealth fund GIC.

“Internally, the decision to invest in Makati Med was questioned. Why are we investing in a cottage industry?” he said.

Metro Pacific is pursuing a similar approach with Carmen’s Best, which sells ice cream and dairy products using ingredients sourced from its own farms, especially with the current administration’s thrust to address food security concerns.

“Why are we investing in a cottage industry? Because the answer is, eventually, we can make it into a bigger business. And at the same time, it’s what the country needs,” Pangilinan said.

—Miguel R. Camus

SM’s aggressive minimart foray

It may have opened its first local minimart way back in 2014, but the real push that SM Retail has made in its Alfamart Philippines venture happened during the pandemic.

Over the last two years, the company has opened more than 500 stores around the country, and will roll out more—at an even faster pace—over the near term, Biz Buzz learned.

Exactly how big and how fast? Well, we hear that Alfamart aims to expand its stores to a total of 1,400 by the end of 2022. In fact, the company is now actively looking for sites in transport terminals and residential communities.

And through partnerships with local property owners, Alfamart hopes to open more of its “Super Minimarts” in communities across Luzon.

“Our dream for every Alfamart store is to help the local community through employment and also creating opportunities for the local micro, small and medium enterprises,” Alfamart chief operating officer Harvey Ong said, adding that the public health crisis helped reinforce the company’s role and responsibilities to their communities.

The expansion of the chain — which is directly under SM Markets which, in turn, is a unit of SM Retail — created income opportunities for landlords that owned space and contractors that built the stores. Through these channels, Alfamart’s expansion created over 4,000 jobs over the last two years.

Naturally, it’s not just the SM conglomerate that sees the opportunities in this sector as rivals are aggressively expanding, too. The question is… which group will have the resources, staying power and motivation to stay in the fight and win? Watch this space, folks.

—Daxim L. Lucas

DBM cleanup

As she took over the reins at the Department of Budget and Management, Secretary Amenah Pangandaman pledged to clean up the controversial Procurement Service (PS-DBM), which had been implicated in irregularities when the government scrambled to buy medical supplies at the onset of the COVID-19 pandemic.

Budget Undersecretary and former OIC Tina Rose Marie Canda last July 6 officially passed the baton to Pangandaman, who served as Assistant Secretary and then Undersecretary during the Duterte administration, before moving to the Bangko Sentral ng Pilipinas in 2018 to join ex-Budget Secretary, then BSP governor (and now Finance Secretary) Benjamin Diokno.

“Secretary Mina’s [return] is an answered prayer. She’s not a stranger to us. She used to be a member of our family, and now she came back to be the head of our family,” a DBM statement quoted Canda as saying.

Canda led the DBM after former budget chief Wendel Avisado’s surprise resignation (due to health reasons) at the height of a Senate probe on ex-PS-DBM executive director Lloyd Christopher Lao and allegedly overpriced purchases made on behalf of the Department of Health, which some senators claimed had been awarded to hand-picked suppliers.

“Budget reform is still my top priority. Part of this reform is the evaluation and streamlining of the Procurement Service. This is to ensure proper oversight and stricter controls to safeguard the integrity of the procurement process,” Pangandaman said during the turnover ceremony.

The Senate blue ribbon committee investigation last year revealed the Budget Secretary only had oversight and no direct control over PS-DBM. This will be a challenge to Pangandaman, if she wanted to institute reforms at the now-controversial agency. Senator Imee Marcos last year filed a bill to abolish PS-DBM, so we’ll see if it gets passed and signed into law.

Pangandaman said the DBM under her watch would digitalize the bureaucracy’s public financial management to make it efficient and transparent, auguring well for stemming corruption.

“We’ve made headway with our budget and treasury management system, but there is so much more we can do to further strengthen our integrated financial management information system,” the Budget chief said.

While beset with limited fiscal space amid the prolonged COVID-19 pandemic, Pangandaman said she’s up to the task to maximize meager resources while prioritizing the Marcos Jr. administration’s climate change adaptation and resiliency, food sufficiency, and infrastructure ambitions.

—Ben O. de Vera

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