A united front for Philippine infrastructure
It’s not sogo shosha from Japan or chaebol from South Korea. But Filipino conglomerates are leading the way to transform the Philippines into a modern economy, starting with their keen interest in developing the country’s infrastructure network.
The sogo shosha and chaebol contributed greatly to making Japan and South Korea powerful economies that rivaled those of the United States and Europe.
Japan’s sogo sosha basically started out as trading companies before expanding into conglomerates. They soon found themselves in banking and finance and dominated world trade. The main Japanese sogo shosha are Nissho Iwai Corp., Sumitomo, Marubeni, Mitsubishi, Mitsui, C. Itoh, Nichimen and Kanematsu-Gosho.
These sogo shosha controlled around 10% of world exports and more than 50% of Japan’s overall trade in the late 1990s. They have improved the lives of many Japanese people and greatly increased the standard of living in this North Asian country. . Japan was once the second largest economy in the world.
South Korean chaebol are not exact copies of sogo shosha. Yet they were also responsible for industrializing and expanding the South Korean economy to make it the 12th largest in the world. Korean chaebol or conglomerates include Hyundai, Samsung, LG Group and Ssangyong.
In the Philippines, we may be witnessing the birth of another version of sogo shosha or chaebol, albeit in a somewhat different context. SM Group Sys, Ayalas, Enrique Razon, Gotianuns, Gokongweis, San Miguel Corp., Aboitizes, Metro Pacific Investments Corp. of the Salim Group, Andrew Tan, Consunjis and the Ty Group are major industries and dominate many of the Philippine businesses.
These Taipans have found a common denominator: infrastructure projects. They relate to toll roads, airports, water and electricity distribution, power generation, railways, ports and industrial areas.
They are responding to President Ferdinand Marcos Jr.’s call to join in building 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 vital role in the country’s recovery prospects, starting with its participation in the construction of infrastructure projects. The administration has just approved revisions to the Build-Operate-Transfer Act 2022 Rules and Regulations to attract investors. This revolutionary reform should maintain the momentum of infrastructure spending despite budgetary constraints and generate high multiplier effects in the economy.
I must say that the response from the private sector to build and develop infrastructure projects in the Philippines is very encouraging. DM Consunji Inc. and its joint venture partner Nishimatsu Construction Co. Ltd. (NCC) of Japan have, for their part, obtained an award notice from the Ministry of Transport for the construction of the subway stations and the Quezon Avenue and East Avenue tunnels for the Metro Manila. Metro project.
The metro is one of the game changers in the infrastructure sector. Metro Manila, with a total length of 33 kilometers and 17 stations, will cross eight local government units that will stretch from the city of Valenzuela to FTI-Bicutan in the city of Parañaque. It will have a branch line to NAIA Terminal 3 in Pasay City.
President Marcos himself is proud of this project. He and Transportation Secretary Jaime Bautista recently spearheaded the inauguration of MMSP-Ortigas and Shaw Boulevard Stations and Tunnels Batch 104 contracts worth 20.46 billion pesos.
Equally ambitious but achievable are the PNR South Long-Haul, Subic-Clark Railway and Mindanao Railway projects, which cost 276 billion pesos. The government plans by the first quarter of 2023 to finalize a loan agreement with China to finance these three flagship rail projects initiated by the Duterte administration.
I’m sure our own version of sogo shosha or chaebol will compete to take on these big projects. My Villar Group, through Prime Asset Ventures Inc., also joined the toll road business as part of its contribution to nation building by purchasing 100% of MCX Project Company Inc. from Ayala Corp. . MCXPCI is the special purpose company that holds the concession on the Muntinlupa-Cavite highway project. My company has significant investments in subsidiaries operating in a variety of industries, including electric and water utilities, information technology and telecommunications.
It is certain that the golden age of infrastructure in the Philippines is finally looming on the horizon with President Marcos at the helm. This is reason enough to be more optimistic about the Philippine economy.
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