FIGHT OR FLEE

By Philip M. Lustre Jr.

IF you’re a big entrepreneur and the powers-that-be have taken a fancy on you, you have two choices: fight or flee. The entrepreneurs whom Rodrigo Duterte has picked for a shakedown have chosen to fight in their subtle ways. They did not flee.

There are two rules when an entrepreneur does business in the Philippines. First rule: Don’t get too big. Second rule: If you become big, don’t be conspicuous. Moreover, he could expect certain well-connected parties would covet their businesses the moment they show unexpected strength and profitability.

Those entrepreneurs who comprise big business in the Philippines are advised to establish political connections. Otherwise, they are targets for shakedowns, buyouts, and corporate raids. They could have miserable lives. They have to establish ways to protect themselves.

Several months ago, an erratic Rodrigo Duterte had made the unforgivable mistake of making public his intentions to acquire utilities firms, when he accused them of allegedly reneging their contractual commitments and obligations.

His careless attacks against public utilities firms owned by the Zobel de Ayala family and First Pacific showed the not-so-hidden agenda to acquire them for cronies, including the overextended Davao-City based entrepreneur Dennis Uy. Why Dennis Uy is always the first choice is something that is getting obvious to the public.

The Ayalas chose to fight the clueless Duterte in their own way. Knowing his instability, they took a move forward to preempt any attempt to acquire Manila Water or a part of its equity. They have sold 25 percent of its equity to entrepreneur Enrique Razon Jr., who is not exactly identified with Duterte although he is reputed to be a big-time survivor.

In an announcement, the Ayala-led firm said Razon, through his firm Prime Metroline Holdings Inc., has agreed to infuse ₱10.7 billion in Manila Water, which currently supplies customers in the east zone of Metro Manila.

The acquisition has neutralized veiled attempts of the Duterte camp to acquire without infusing money. It has been known and discussed in business circles Duterte’s tendency to follow examples set by dictator Ferdinand Marcos, who acquired firms he fancied without making any investments. Critics called it “saliva investment.”

It would appear the Ayalas could not stomach the entry of any Duterte crony in the utilities firm. It would not jibe their entry to its corporate philosophy. The Ayala Group has established a reputation for appropriate corporate governance.

Besides, the Ayala Group follows a Code of Corporate Governance, of which the entry of a perceived crony would be a violation of its own rules. It takes a strong stand against crony capitalism. 

The Lopez family, who owns and controls ABS-CBN, a broadcast giant, has followed a different mode to fight back. They simply refuse to negotiate and sell.

They have amply prepared to the May 4, 2020 termination of its franchise. No, they have yet to show panic. In fact, they have never been in a panic mode.

They have chosen to take advantage of the digital platform in its broadcast activity, even as they have refused overtures by several parties to negotiate for a sellout.  Meanwhile, they have chosen to park the ABS-CBN like an unused car, work for its franchise renewal in 2022  when a more mentally stable president gets elected, and reopen only when they have the franchise extension.

The Ayalas and Lopezes have refused to kowtow to the uncouth pretender from the South. In brief, they have no respect for him.