Both bills intend to lower power costs by reducing government taxes and royalties on power distribution utilities and power generation companies, respectively. The Enrile initiative is both timely and necessary, for industries and residences alike, especially with the state-owned National Power Corporation (Napocor) again petitioning for a power rate increase.

Rightly or otherwise, the Enrile bills hold that the country’s high electricity rates, to a large part, is traceable to excessive taxes being charged to both power generation and distribution utilities firms, which are mostly passed on to electricity consumers. And by cutting these taxes, rates can be reduced significantly, to benefit residences, businesses, and industries.

His SB 3147 proposes that government goes back to a franchise tax regime where electric utilities are levied only a three percent tax on their gross distribution income, in lieu of all national and local taxes, including the 12% value added tax. Currently, distribution utilities pay VAT, local franchise tax imposed by local government units, and corporate income tax. And this all are passed on to consumers.

But Enrile insists that public services such as transmission and distribution of power should not be a major source of tax revenue for the government since it is actually the function of government to provide for these services.

Meantime, his SB 3148 proposes that government share or royalties in exploration, development, and production of indigenous energy sources like natural gas, coal, and crude oil be reduced to three percent of net proceeds. In turn, additional proceeds can be used for initiatives to lower electricity prices.

Among others, the bill seeks to remove the disparities in the treatment of royalties of indigenous energy sources not covered by the Renewable Energy Act of 2008, particularly natural gas, oil, and coal. Moreover, by paying less royalties and taxes to the government, exploration companies can reduce the commodity price of natural gas and other indigenous energy resource, and this will benefit consumers through lower electricity rates.

Perhaps by lowering electricity prices, as Enrile intends through his two bills, savings to be generated by consumers and businesses may yet be channelled to more productive use, and thus help boost economic activity. At the very least, lower electricity costs can help keep more businesses alive during the downturn, while also provide economic relief to consumers.

In a statement, Ernie Santiago, president of the Semiconductors and Electronics Industry of the Philippines Inc. or Seipi, urged Malacañang to certify the power-reform bills of Enrile as priority bills to ensure their immediate passage.

Citing the Philippines to have one of the most expensive power rates, Santiago added that Seipi has long been asking the government to reduce the royalties in indigenous-energy sources—such as natural gas. This will encourage foreign investors to stay and not transfer their operations to other ASEAN countries that have more competitive power rates, he said.

In a statement, Enrile noted that “a frail and volatile economy, coupled with the high prices of goods and services, remains as a major threat to economic recovery, with exorbitant electricity prices in the country—one of the highest in Asia, being cited as one of the major roadblocks.”

He also said that with his bills, the power costs of businesses and industries could be reduced by P1.34 to P2 per kilowatt-hour, while electric bills of residential consumers will go down by at least P1 per kilowatt-hour.

Enrile said both power-reform bills would serve as an economic stimulus that would not only make industries more competitive, but would also contribute to the purchasing power of the consuming public.

Comments to matort@yahoo.com

Marvin A. Tort is a veteran business journalist. He is a former Managing Editor of BusinessWorld and also a former chairman of the Philippine Press Council. He is presently into various businesses including gaming and IT, and business and communication consulting. He also writes a twice-weekly column for the BusinessMirror.

There are rumors of Mariano’s alleged embezzlement of company funds for personal profit, which is somewhat difficult to believe considering what the brothers had gone through in business together all these years, and of significant business losses from trading in metals and speculative hedging on jet fuel prices.

Obviously, with Mariano handling treasury for the group, he cannot expect to be blameless for financial troubles, if any. But he has been doing finance for Lucio’s businesses in the last 50 years. And for sure, in all those years, his financial management was not always perfect. But why the relationship blow out now?

There is also talk of the 69-yeard-old Mariano going into business for himself, investing in a real estate venture without the permission of his older brother, the 74-year-old Lucio. Some people claim Lucio is particular about loyalty to the family business, and has ordered that all family members working for the group cannot work nor do business externally.

That Lucio and Mariano are not blood brothers, as some pundits point out, does not seem to be an issue. But it remains uncertain whether Lucio is also about to question the loyalty of their brothers Harry and Frank or Chang Wing Kit, and brothers-in-law of Domingo Chua Cheung Chi Ming. The worse that can happen is for the ongoing feud to divide the family further.

Not at a time when business is not doing too well. The cigarette and liquor business are now under threat both from smugglers as well as new taxes; their airline business is adversely affected by rising fuel prices; the merger of their banks is also held back by regulatory issues. There is also the issue of their profitability, with one stockholder reportedly complaining that bank stocks she had bought at P100 apiece were now worth just a little over P23 per share.

It is always sad to read about family, or brothers, fighting over business. And Philippine industry has seen enough of such fights over the years. To the credit of the Gokongwei brothers, for instance, despite the passing of Henry and Johnson Robert, eldest brother John and youngest brother James continue to work well with Henry’s and Johnson’s children.

In the case of the Lucio Tan Group, what started out as a small trading firm in the late 1950s diversified into chemicals, cigarettes and liquor, a piggery, several banks, hotels, airlines, and real estate development. And today, the group has business interests in the Philippines, China and Hong Kong, Papua New Guinea, Guam, Canada, and the United States.

Also, it is easy enough to mistakenly think that the group was founded solely by Lucio Tan. People in the know are quick to point out that the group’s business success can also be credited to three other people. Aside from Lucio, there were Benito Tan and Florencio Santos, now both deceased, and of course, Mariano.

Being a commerce graduate, as opposed to Lucio’s degree in chemical engineering and Florencio Santos’s law degree, it was only fitting that Mariano handled treasury for the group. And this was for almost 50 years, for nearly all the companies in the group, until the publicized falling out between brothers that reportedly started in February.

With only Lucio and Mariano still alive, and with no clear succession rules, perhaps the 74-year-old family patriarch is beginning to feel insecure with his younger brother’s influence in the company. Also, one can speculate the possibility of infighting among Lucio’s aides, especially after their boss’ recent surgery. What happens to them when he goes is anybody’s guess.

Also raised by speculators is Mariano’s supposed loyalty to Lucio Tan’s first family. Coffee shop wags claim that because of their late Tan mother’s insistence on faithfulness, Mariano acknowledges the legitimacy of Lucio’s first wife, Carmen, and thus reportedly recognizes Lucio Tan, Jr. as his father’s rightful heir.

But unfortunately for Lucio Khao Tan, Jr. or Bong, despite his bachelor’s degree in Civil Engineering and his Executive Masters in Business and Administration from Northwestern University and the Hong Kong University of Science and Technology, and the supposed support of his Uncle Mariano, he does not seem to be in his father’s favour.

As for Mariano’s fate, the word is, he has been told to move overseas with the rest of his immediate family. In February, he was already barred from entering the premises of the Allied Bank Building on Ayala Avenue, where he holds office. This prompted him to sue the bank’s security chief, which reportedly even earned him the irritation of his brother.

Talk about 50 years of contribution and dedication to the family businesses suddenly being rendered worthless. Since then, Mariano’s nominations to the various Tan company boards have been withdrawn, including that for Allied Bank and Philippine National Bank, Tanduay Distillers, Philippine Airlines, Eton Properties, and MacroAsia.

History is replete with stories of kings, emperors, or even wealthy and powerful businessmen whose empires were eventually brought to ruins by mismanagement or even family squabbles, or worse, by wedges driven between family members by ambitious and scheming but undeserving underlings. One can only wish Lucio Tan the best of luck in keeping his family and his businesses from falling apart.

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Moreover, providing for better infrastructure to and from Central Luzon and onward to Northern Luzon can actually help broaden San Miguel’s market and improve access to it. In terms of logistics and transportation, having better roads will make it easier for goods and people to go around.

At the rate San Miguel is investing in business other than its core of food and beverage, it is quite likely the Cojuangco-chaired company will soon be truly diversified as a global business conglomerate.

Locally, San Miguel is also into power through distributor Manila Electric Co.; telecommunications via Liberty Telecoms; oil refining and retailing through Petron Corp. It has also reportedly expressed interest in the potable water source development project in Laiban Dam in Tanay, Rizal.

Abroad, San Miguel has been reportedly offered by Goldman Sachs Group Inc. a stake in PT Adaro Energy, an Indonesia-based integrated coal mining and trading company.

Why toll roads? In San Miguel’s case, to sell its consumer goods, it doesn’t necessarily have to own the roads going to its market particularly in North Luzon. But in terms of additional revenue source, a toll road is a massive cash generator daily. And this makes the possible investment in the Tarlac-La Union highway very interesting. If San Miguel is just sitting on cash anyway, then it might as well invest in a toll road.

The Tarlac-La Union Expressway involves the construction of an 88.5-km, four-lane expressway from La Paz, Tarlac, to Rosario, La Union. Construction reportedly started in September and is targeted for completion in 2012. Of the total project cost, 57 percent or P8.59 billion will be financed through loans, and 24 percent or P3.68 billion from equity. The remaining 19 percent, about P2.91 billion, will be provided by the government in the form of a subsidy.

One news report quoted Isidro Consunji, president of DMCI Holdings, as saying that San Miguel was already doing a due diligence on the road project. “I think SMC is interested in getting 49 percent, with an option to go up to 51 percent,” he said. Consunji’s company leads the consortium of local private contractors offering to build the expressway.

An interesting twist in this tale is a possible competition to San Miguel, courtesy of Metro Pacific Investments Corp., which recently completed its purchase of a controlling stake in Manila North Tollways Corp. (MNTC) from the Lopez group for P12.2 billion. Through an older firm, Metro Pacific’s Manny Pangilinan is already associated with the Metro Manila Skyway project. But the latest acquisition from the Lopez group invariably makes his group the undisputed biggest toll roads operator in the country.

MNTC was a gem of a purchase. It was previously granted the contract to build, operate and maintain the 83.7-km North Luzon Expressway (Nlex) and the 8.5-km Subic-Tipo Expressway; and to build and operate the proposed link of C-5 to the Manila Port Area that will cross the Nlex near the Valenzuela interchange.

Also, with the purchase, Metro Pacific gained the right to participate in the operation of the SCTEx segment that directly links Subic Bay Freeport and the Clark Economic Zone; as well as participate in the concession to build the Tarlac-La Union Expressway.

Just recently, San Miguel already won over Pangilinan’s group in bidding for a substantial stake in the Lopezes’ Manila Electric Co. And this might just prompt San Miguel’s way to leave the toll roads business to new toll road king Manny Pangilinan.

The Tarlac-La Union Expressway project may yet be a strategic piece of the Pangilinan initiative. For sure, it will complement Metro Pacific’s control of toll roads in Central and Northern Luzon. Moreover, it will also complement Pangilinan’s reported interest in bidding for the planned $3-billion high-speed rail project that will connect the Diosdado Macapagal International Airport in Clark to the Ninoy Aquino International Airport (Naia) in Parañaque City.

As noted by Victor Jose Luciano, Clark International Airport Corp. president and CEO, Pangilinan’s advantage is his ability to provide the right of way for the proposed high-speed rail from Caloocan City to Magallanes in Makati City. And with this right of way, he says, Naia can finally be connected to Clark. As for the right of way from Caloocan City to Clark, the matter is nearly settled, he adds.

One can only hope that Pangilinan seriously considers building the proposed railway. But in case he changes his mind, maybe San Miguel can consider the same. After all, its benefits to the economy can be tremendous. And a new public-private partnership on a major infrastructure project such as this is also a good way to pump-prime a struggling economy.

Marvin A. Tort is a veteran business journalist. He is a former Managing Editor of BusinessWorld and also a former chairman of the Philippine Press Council. He is presently into various businesses including gaming and IT, as well as advertising, and business and communication consulting. He also writes a twice-weekly column for the BusinessMirror.

It was an enlightening trip, to say the least, which allowed the visiting journalists to get a better understanding of the campaigns of the protagonists—Democrat Senator Barack Obama from Illinois, and Republican Senator John McCain from Arizona. More importantly, it allowed us to get a better feel and sense of how US voters generally feel about the United States’ present economic and political situation.

New York City is still bustling, despite the ups and downs of the US stock market. People are still busy and in a hurry making their way up and down the avenues of Midtown Manhattan, all business as usual. Local and foreign tourists still abound—made obvious by their dressed-down look and casual pace—as opposed to the briskly moving dark suits of Manhattan.

While electronic billboards all over the city regularly report on market downturn and other negative financial news, the feeling of uncertainty and concern does not seem very apparent among big and small traders alike—even among immigrant shop-keepers and members of New York City’s ubiquitous curb-side vending industry.

From my hotel, I regularly walked either to the Viennese Café at the corner of Lexington Avenue and 46th Street or Azure at the corner of 3rd Avenue and 52nd Street. Both food shops continued to do brisk business day, noon and night, patronized by people from all walks of life.

Incidentally, many New Yorkers opt for breakfast on the go, literally. Thus the proliferation of immigrant-owned and -operated food carts selling mostly coffee, breads and hot breakfast. I can only suppose they are doing better business now with their best-value items: $1.50 or P75 for a cup of coffee, and $1 or P50 for a large cinnamon roll.

I cannot say much for the nonfood sector in New York City. But visits to parts of Eastern Pennsylvania, particularly Bucks and Montgomery counties, revealed a similar business-as-usual attitude toward the brewing economic crisis even for big retailers of consumer goods. Wal-Mart, for instance, is even expanding its store on Trooper Avenue near Norristown, converting it into a bigger Supercenter. Even the local grill and steakhouse continues to do well, with long lines of people waiting for a table for dinner on a weekend. And shops at the King of Prussia mall as well as the Philadelphia Premium Outlet continue to enjoy sizable patronage.

The feeling of uncertainty and the insecurity that goes with it, over economic fortunes, is not something that is very evident or commonly manifest. Perhaps it is still too early to see the aftermath of an economic recession. Although some folks that I met, particularly in Bucks County, said that they have opted to put off retirement to a later date after losing pension money in the US stock market meltdown. Moreover, it seems that people are now even more conscious of discounts, promotions, coupons and freebies.

Somehow, it seems that as long as people can keep their jobs or at least ensure a certain level of income in the months ahead, there is generally a feeling of hope—and possibly relief—particularly after the November 4 presidential election. I suppose the timing of an administration change—regardless whether Democrat or Republican—somewhat cushions the impact of the recession and stymies the feeling of despair. With the election, at least people have something to look forward to.

Obviously, the present economic downturn is not the first—and last—economic crisis to hit not only the United States but also the rest of the world, including the Philippines. The US—and the rest of the world—have proved resilient in the past, and will most likely weather this new crisis just as well. Consumers are showing the way, refusing to wallow in misery.

Marvin A. Tort is a veteran business journalist. He is a former Managing Editor of BusinessWorld and also a former chairman of the Philippine Press Council. He is presently into various businesses, including gaming and IT, as well as business and communication consulting. He also writes a twice-weekly column for the BusinessMirror.

Otherwise known as “the Boss,” many, particularly in Central Luzon, were excited by Danding’s decision to run under his own Nationalist People’s Coalition—with not a few, particularly in the business sector, seemingly desperate for a forward-looking economic visionary that could take the Philippines out of the doldrums.

But to win wasn’t Danding’s fate then, for one reason or the other, and now seems a bit too late for a political comeback for the political veteran. Looking back, one can only wonder what could have been had Danding, and not Fidel Valdez Ramos, been elected president in 1992. Would his expertise in business and politics have brought the Philippines to better prospects than the Ramos administration?

Perhaps, the strongest and more recent Asian argument against a big businessman for president is Thailand’s Thaksin Shinawatra. He eventually fell from grace and was ousted, despite leading Thailand to tremendous economic success, because of allegations of corruption and self-dealing. Obviously, that is the risk with businessmen-turned-politicians. However, their advantages seem to outweigh such concerns. Even US businessman Michael Bloomberg enjoyed relative success as the mayor of New York City.

Why not MVP, the country’s present telecommunications king and soon-to-be toll king, for president? As long as civil society and other interest groups remain vigilant, it is unlikely that he can get any wrong doing past them. Even Congress and the political opposition can prove to be effective guardians against abuse and corruption.

MVP’s management credentials are impressive. Since his return to Philippine business about a decade ago after many years as a highly paid executive in Hong Kong, he seems to have had the golden touch given his uncanny ability to invest in the right industry at the right time. He has had vision and foresight for economic opportunity—perhaps traits that should now be required of the next Philippine president.

His business group bought into PLDT just as the telecommunications industry was being liberalized, and his management team has since then raised not just PLDT but also Smart and Piltel to new heights. He also successfully invested in the conversion of the former Fort Bonifacio military base in Taguig to the Bonifacio Global City business district, which is now among the booming top-of-mind real-estate developments in Metro Manila.

And come next month his Metro Pacific Investments Corp. expects to complete its purchase of a controlling stake in Manila North Tollways Corp. from the Lopez group. This latest acquisition invariably makes his group the undisputed biggest toll-roads operator in the country with North Luzon participation in the North Luzon Expressway, as well as its planned extension to La Union from Tarlac; the Subic-Tipo Expressway; the proposed link of C-5 to the Manila Port Area that will cross the Nlex near the Valenzuela interchange; and the Subic-Clark-Tarlac Expressway.

More recent business decisions allowed him to take advantage of emerging opportunities in health care, medical tourism, petroleum, mining, and transportation and logistics. In sum, from cradle to the grave, all Filipinos — one way or the other — rely on products and services provided by Manny Pangilinan’s business group. One cannot exactly say the same of the other Manny.

And despite the anticipated global economic doldrums, MVP continues to plan and boldly invest particularly in productive infrastructure. That’s the kind of leadership that is not only laudable in business, but also essential in politics and governance. Perhaps, it’s time to put this battle-scarred, tried and tested, highly successful businessman in Malacañang.

(Marvin A. Tort is a veteran business journalist. He is a former managing editor of BusinessWorld and also a former chairman of the Philippine Press Council. He is presently into various businesses including gaming and IT, as well as business and communication consulting. He also writes a twice-weekly column for the BusinessMirror.)