Philippines attempts to Take Over Pakistan Port, victory of portion; leadership

The structure of the PICT board of directors has undergone a significant change in the last board meeting, held on October 19, 2012. 4 out of the 7 members of the board now belong to ICTSIML. ICTSI – Philippines the parent company of ICTSIML – currently owns 24 marine terminals and port projects in 17 countries with $3 billion market Capitalization.

Philippines operator fails to get more than 35% stake in PICT

KARACHI: In corporate democracy, every vote counts. In all possibility, even small shareholders can thwart strategic decisions taken in corporate boardrooms.

This is precisely what appears to have happened in the recent acquisition of a majority stake in Pakistan International Container Terminal (PICT) by Philippines-based International Container Terminal Services Inc Mauritius Limited (ICTSIML).

Established by the Marine Group of Companies, PICT is a dedicated container cargo terminal located at the Karachi port with a maximum handling capacity of 750,000 twenty-foot equivalent units.

Besides attempting to acquire up to a 35% stake in PICT under its definitive Share Purchase Agreement (SPA) with major shareholders, ICTSIML had initially also set out to buy up to 20% shares from the stock market through a tender offer, which remained effective from August 10 to October 10.

However, ICTSIML could only manage to acquire between 5-6% shares through the tender offer, PICT Company Secretary Arsalan I Khan told The Express Tribune in an interview.

PICT's free-floating shares – which are owned by mutual funds, institutional investors and small shareholders – originally consisted of roughly 32% of the company's total shares. After the conclusion of ICTSIML's offer to purchase ordinary shares at a price of Rs150 per share, approximately 26% shares of the company still remain on the stock market.

The Marine Group owned 47% shares in PICT before it signed the SPA with ICTSIML. Subsequently, its stake in the company has fallen and now stands at 32%.The Jahangir Siddiqui Group is another major shareholder in PICT. It sold almost two-thirds of its stake under the SPA. Its post-SPA shareholding in PICT is 7%.

Although the terms agreed upon in the SPA allowed ICTSIML to buy up to 35% shares from major stakeholders, the Philippines-based company settled on acquiring only 29% of the company's shares. After the purchase of up to 6% shares under the tender offer from the stock market, ICTSIML's present stake in PICT is around 35%, which makes it the company's single largest shareholder.

The structure of the PICT board of directors has undergone a significant change in the last board meeting, held on October 19. Four out of the seven members of the board now belong to ICTSIML. Two directors from the Marine Group and one from the JS Group complete the count.

Profitable holding

PICT's profit-after-tax increased to Rs390.8 million (₱167.8 Million PHP) in the quarter that ended on September 30, compared to Rs318.1 million earned in the corresponding quarter in 2011, showing an increase of 22.8%.

"PICT is a mature company with solid cash flows and improving earnings. Therefore, the small investor is holding onto his shares. He is apparently looking forward to either dividends or share price appreciation," PICT Director Aasim A Siddiqui said while speaking to The Express Tribune.

With a market capitalization of over $3 billion, ICTSI – the parent company of ICTSIML – currently owns 24 marine terminals and port projects in 17 countries. PICT is the third biggest port terminal that the ICTSI partially owns, in terms of annual volume turnover.

"This proves that it's a major investment for our foreign partner. Small shareholders know that ICTSI has the ability to attract global shipping companies," Siddiqui said.

The Express Tribune

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Philippines Struggling to control the impact of Boosting Economy

The Philippines was one of the wealthiest and most powerful nations in Asia next to Japan in the 1950s before it lost its way to become heavily reliant in recent years on debt as other economies in Asia jumped ahead.

Philippines grapples with cost of economic success

The Philippines was one of the wealthiest and most powerful nations in Asia next to Japan in the 1950s before it lost its way to become heavily reliant in recent years on debt as other economies in Asia jumped ahead.

Reforms pushed through by President Benigno Aquino have put the Philippines back on the map for international investors but authorities are struggling to control an inflow of capital that has pushed up the currency and threatens asset price bubbles.

The central bank cut interest rates last week to deter hot money but economists say inflows will remain a problem, especially with the U.S. Federal Reserve pumping money into its struggling economy, some of which will spill into attractive emerging markets.

Other Asian countries are trying to control capital inflows too as they provide an oasis of resilience at a time when the European debt crisis is dragging heavily on the global economy.

Singapore and Hong Kong, major destinations for foreign investors, have introduced property curbs to prevent their real estate sectors from overheating. By some measures, the Philippines has more reason to be worried though, as investors show an enthusiastic response to the president's attempts to turn around an economy long considered the "sick man" of Asia.

The peso is the strongest emerging market currency in Asia this year as foreign direct investment has more than doubled. The country's main stock index is up nearly 25 percent this year, a standout performance against other emerging markets, and in dollar terms it is the strongest in Asia.

On Tuesday, Amando Tetangco, the governor of the central bank, Bangko Sentral ng Pilipinas (BSP), said the monetary authorities needed to be more "creative" in managing inflows of capital and could not rely on interest rate differentials alone.

Few expect that to mean any move towards capital controls, especially when the Philippines is an active issuer of sovereign debt in global markets.

Instead, the central bank could simply be signaling a pause in monetary loosening after cuts totaling 1 percentage point brought the policy rate to a record low of 3.5 percent this year.

"The BSP will be looking at using a suite of tools in combination rather than one tool, given the multitude of risks and the complexity of managing it," said Vishnu Varathan, an economist at Mizuho Corporate Bank in Singapore.

He said the central bank could impose different reserve requirements for assets in foreign and local currencies, for example, and it might allow the peso to appreciate further to dampen the value of Philippine assets in dollar terms.

However, it will have to tread carefully: a rise in the currency makes Philippine exports expensive and reduces the local value of the remittances from overseas Filipinos -- a tenth of the population -- that millions of people rely on back home and which underpin domestic consumption.

Jose Mario Cuyegkeng, an economist at ING Bank in Manila, said the BSP might want tighter limits on banks' real estate loans or higher capital adequacy ratios to reduce speculative activity, but he did not rule out further interest rate cuts.

With inflation expected to remain on target through 2014, the central bank can be flexible with monetary policy, analysts said.

MEASURES

In August, the central bank said it would tighten rules on banks' real estate exposure to address the financial system's vulnerability to asset bubbles. Housing loans surged to their highest in four years at the end of June.

The central bank has said it was considering new liquidity ratio requirements for banks under international Basel III rules. It has already set a capital adequacy ratio for banks at 10 percent, above a requirement of 8 percent under Basel II.

Radhika Rao, an economist at Forecast PTE, said the BSP may further ease rates on its short-term special deposit account (SDA) window that had attracted record inflows of nearly 2 trillion pesos ($48 billion) as of October.

The facility offers rates higher than short-term Treasury bills, with the seven-day term paying 3.53125 percent against just 0.3 percent for the 91-day bill in the secondary market.

In July, the BSP started lowering rates on SDAs after tightening access to the facility to ensure it remained closed to foreign investors.

Analysts generally rule out capital controls because such drastic measures could push investors elsewhere.

"It will dampen the interest of investors coming in and it will also cut capital inflows, especially for much-needed projects that the government has for infrastructure," Roland Avante, head of the Philippine Business Bank, told local TV.

SUCCESS

The economy's improvement has also been recognized by ratings agencies. On Monday, Moody's Investors Service raised its credit rating for the Philippines to match that of rivals Standard & Poor's and Fitch Ratings.

They all now rate the country just one notch below investment grade, a level that would attract further inflows from funds mandated to invest in top-rated assets only.

The Philippines was one of the wealthiest nations in Asia in the 1950s before it lost its way to become heavily reliant in recent years on debt as other economies in Asia jumped ahead.

The ratings moves are an endorsement of Aquino's efforts to narrow the budget deficit and deal with other perennial problems; corruption and tax dodging, weak infrastructure and a lack of investment in social services in a country where a third of the population live below the poverty line.

His reforms have underpinned a rise of 6 percent in the peso this year. The stock market .PSI has risen by nearly a quarter, a big gain compared with a 9 percent increase in the MSCI emerging markets index .MSCIEF.

Foreign direct investment nearly doubled in the first seven months of the year to $1.03 billion, well on track to eclipse the 2011 total of $1.3 billion. Much of the success has come from business process outsourcing firms attracted by low costs.

When Aquino assumed power in 2010, net portfolio inflows into the Philippines surged more than three times and were the highest in Southeast Asia after Thailand. The flow slowed in 2011 because of global uncertainties but have shown signs of recovery in the third quarter of this year.

Reuters 

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Philippines modeled the “People power” to the world in 1986: copied by Arab Spring; Mindanao “peace pact” could be the next Model?

Mindanao Peace pact. Photo credit: Rappler.com 

War In Philippines Looks Set To End

More or less at opposite ends of the world, two very long wars are coming to a negotiated end, with no victors and no vanquished. In the Philippines, President Benigno Aquino signed a peace agreement with the leaders of the Moro Islamic Liberation Front (MILF) on 16 October after more than 40 years of war. In Norway the next day, Colombia's government began talks with the FARC rebels to end a war that has lasted for over 50 years.

Neither deal is yet complete, and in both wars there have been several previous peace deals that failed. But the omens are better this time, mainly because there is a lot more realism about what is possible and what is not.

"You can't just ask the FARC to kneel down, surrender and give us the arms," said the Colombian president, Juan Manuel Santos, as the talks in Oslo began. "They will not do that, so there has to be some way out, and this way out has to be that you are able to participate in the political arena. This is the way any conflict is settled, not only the Colombian conflict."

There are two reasons why there is more hope for this peace initiative than for its predecessors. The first is that FARC can no longer hope for an eventual victory, although it will be a crippling nuisance for another generation if it is not brought back into the political system. The other is that the two sides are not trying to solve all the country's problems in these talks; they are just trying to end the fighting.

The talks, which will move to Cuba for the next round, deal with only five topics: rural development, FARC's participation in democratic politics, an end to the fighting, an end to the drug trafficking, and justice for the many civilian victims of the war. Colombia has dozens of other issues that demand attention, but if you put them all on the table there will never be agreement.

Those other issues can and should be settled by the normal political process, in which FARC will play a legitimate part once the war is over.

There will have to be an amnesty even for grave violations of human rights. Nor will the fighting stop during the negotiations: that is what provides the pressure for a deal. But this time, in the end, there will probably be a deal.

Meanwhile, in the Philippines, the long war between the central government and the Muslim minority on the big island of Mindanao is also heading for a peaceful resolution.

It has been clear for some time that MILF could never achieve its goal of an independent Muslim state in western Mindanao – and it is also clear that MILF could go on fighting for another generation unless there is a deal.

So you might as well make a deal, and the only plausible one is that the Moros (Filipino Muslims) get a broad degree of self-government in the areas where they are the majority.

There will be a referendum in 2015 to settle the size and shape of the new "Bangsamoro" region, but it will remain part of the Philippines, and Manila will retain control of defense, foreign policy, and the broad outlines of economic policy.

So two wars down (probably), and how many more to go? No more than a dozen or so of comparable scale, most of them in Africa and the Middle East.

And whether they are internal wars like Colombia and the Philippines or wars between local nationalists and foreign occupiers, they tend to end the same way.

There are exceptions, of course, like the Sri Lankan government's recent victory over the Tamil Tigers, but in most cases the wars get closed down when both sides recognize that a decisive victory is impossible. Or rather, they get shut down when the participants finally recognize what has already been plain to most outsiders for decades.

The extra time is required because the people directly involved have already paid such a price for that elusive victory that they just cannot bear to admit to themselves that their sacrifices were wasted. Does this have any relevance to the horrors that are now unfolding in Syria? A great deal, I'm sorry to say

The Star 

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