Rise of the digital economy and Belt and Road Initiative are positive disruptors for leading ASEAN businessman
(MA XUEJING / CHINA DAILY)
Manuel Velez Pangilinan is better known to many as ‘MVP’. More than just an abbreviation of his full name, the moniker recognizes Pangilinan as both a top businessman and a devoted sports patron.
As managing director and CEO of First Pacific, Pangilinan is the company’s ‘most valuable player’. Under his leadership, the Hong Kong-listed company that he cofounded in 1981 has grown into one of Southeast Asia’s biggest investment holding firms.
First Pacific controls some of the biggest companies in the region, including telecommunications giant PLDT, formerly known as the Philippine Long Distance Telephone Company, and Jakarta-based Indofood Sukses Makmur, the world’s biggest manufacturer of instant noodles. First Pacific also has interests in the transport, food, utility and energy sectors in Thailand, Singapore, Vietnam and Australia.
Pangilinan is also "most valuable patron" — acknowledged as the No 1 patron — of Philippine sports. His foundation bankrolls the national men’s basketball team and amateur sports associations.
More than just another philanthropic venture, sports is Pangilinan’s passion. Despite frequent business travel and 16-hour work days, Pangilinan will always squeeze in badminton sessions three times a week.
“When you’re playing, you know that you have to concentrate. If you don’t concentrate, you will play a very bad game,” Pangilinan told China Daily Asia Weekly.
Pangilinan said such focus is key to making decisions at work. In the midst of a badminton match, he can let go of any problems, clear his mind and be reenergized to cope with challenges.
Playing any type of sports will also impart valuable life lessons, he said.
“(Playing sports hones) your ability to compete, your ability to be gracious in defeat (and) your ability to be equally gracious in victory. You learn about fair play, discipline, hard work, dedication (and) focus.”
Pangilinan only got into sports in his 30s. But he has long cherished the values of hard work, discipline and dedication, as these are the values that propelled his rise as one of the top businessmen in the Association of Southeast Asian Nations (ASEAN) region.
The son of a banker and a homemaker, Pangilinan was a gifted student who got into some of Manila’s top schools as a merit-based scholar.
Shortly after his college graduation, Pangilinan won a scholarship from Procter & Gamble. He went to the United States to study at the Wharton School of Finance and Commerce, University of Pennsylvania.
The new Wharton MBA graduate returned to Manila in 1968 and worked for several years as an executive assistant to the president of Phinma Group, a Philippine investment management consultancy group.
Pangilinan moved to Hong Kong in 1976 to work at the international office of the Philippine investment bank Bancom. He was later assigned to Bancom’s joint-venture bank with American Express (Amex).
It was while working in Amex that Pangilinan would meet Sudono Salim, the late founder of Indonesian conglomerate Salim Group. Pangilinan, even back then, was a stellar dealmaker, impressing Sudono and his son Anthoni. The regular client calls would later lead to discussions on forming an investment company.
Pangilinan left Amex in 1981 to set up First Pacific. With the support of the Salims, Pangilinan headed a six-man team in Hong Kong and went on a buying spree. In the next few years, First Pacific would buy and sell several companies including Hibernia Bank in San Francisco, Hong Kong telco Pacific Link, and software distributor Imagineering Australia.
These successful deals would later make First Pacific one of the blue-chip stocks in Hong Kong’s Hang Seng Index.
First Pacific made its biggest purchase in 1998, paying US$750 million for a controlling stake in PLDT. And after living overseas for over two decades, Pangilinan finally went home to serve as PLDT’s CEO.
“When you are away for such a long period of time, you get to unfamiliarize yourself with your own background,” he recalled.
Pangilinan said that although he was not comfortable with change, he knew he had to deal with it.
Navigating through change is now top of mind for Pangilinan as First Pacific faces two key disruptors. In ASEAN, the rise of the digital economy and the China-led Belt and Road Initiative are transforming businesses and the economy in general.
Pangilinan said First Pacific is in the midst of a “painful but extensive transformation”. This will help the company to take advantage of opportunities presented by these disruptors.
ASEAN’s internet economy is forecast to hit US$200 billion by 2025, according to a study released by Google and Singapore state-owned investment company Temasek Holdings. The report said the region has the third largest number of internet users in the world and they spend an average 3.6 hours on the mobile internet every day.
The rising numbers of digital-savvy Southeast Asians are crucial to First Pacific as its telco business contributes 30 percent to the company’s bottom line.
“PLDT is at the forefront of this transformation journey. It’s in the middle of this painful but extensive transformation,” Pangilinan said.
PLDT has earmarked 50 billion pesos (US$940 million) for this year alone to overhaul its fixed and wireless network infrastructure as well as its information technology systems. PLDT also partnered with Huawei Technologies, based in Shenzhen in South China’s Guangdong province, to improve its wireless service delivery platforms.
Pangilinan also sees opportunities from the Belt and Road Initiative, the massive infrastructure plan that is boosting China’s connectivity with Asia, Europe and Africa.
Citing the economic corridors that China plans to establish in ASEAN via the Belt and Road, Pangilinan believes the initiative will improve the transport system in the region.
“They’re all interconnected. This will speed up the movement of goods and make transport costs cheaper,” he said.
Pangilinan was alluding to the China-Indochina Peninsula Economic Corridor and the Bangladesh-China-India-Myanmar Economic Corridor — two of the six economic corridors under the Belt and Road Initiative.
Nomura Holdings said the Belt and Road “offers a plethora of opportunities” to ASEAN economies as they will benefit from China’s infrastructure expertise and financial assistance.
In a report in April, the Japanese investment bank said the Belt and Road Initiative promotes regional integration which can bring in more trade and investment to ASEAN.
Pangilinan believes First Pacific, which invested in several infrastructure projects in ASEAN, can gain from the opportunities being opened up by the Belt and Road.
“We are present in certain infrastructure projects in ASEAN and we are spreading our roots into the region. That’s how we can participate in the Belt and Road,” he said.
First Pacific, through its subsidiary Metro Pacific Investments Corp (MPIC), has stakes in several tollways in the Philippines, Indonesia, Thailand and Vietnam. MPIC is also bidding for a tollway project in Malaysia and plans to build a pan-ASEAN tollway network.
Pangilinan said the Philippines stands to benefit from the Belt and Road’s infrastructure financing. He said this on June 28 during a panel discussion at the Belt and Road Summit in Hong Kong.
He said Philippine President Rodrigo Duterte’s diplomatic pivot to China has warmed up bilateral relations. He added that improved relations have also encouraged China to pledge loans for Duterte’s flagship ‘Build, Build, Build’ infrastructure program.
One of these key Philippine projects is the South Long Haul railway. China loaned US$3.4 billion to finance the 610-kilometer line that will connect several provinces in the Philippine island of Luzon.