Monday, September 29, 2008 [ philstar.com ]
Last week we saw that the financial turmoil that struck Wall Street wasn’t focused only in New York City, but this financial debacle reverberated throughout all the major financial capitals of the world. As the old saying goes, “When America sneezes, the whole world catches cold.” This is the first time in US history that a presidential candidate unilaterally stopped campaigning in order to attend to this financial crisis. If you ask me, I take my hat off to Republican bet John McCain, as it is their duty to fix whatever is wrong with the American financial system before they assume office.
Strangely, the Philippines wasn’t really hit badly with the collapse of Lehman Brothers and the near-collapse of AIG. We can only say that this is largely because the Philippines doesn’t really count in the financial world. Whenever we get financial reports from the BBC or CNN about Asia, they always talk about China, Japan, Singapore, Malaysia or Thailand. But the Philippines? We’re not on anyone’s radar screen. So you can say that our insignificance has helped us in this raging financial crisis, which is why we’re not shaken by this problem and spared from the global anxiety.
But the doomsayers out there are saying that the world is headed toward a recession. Perhaps those people have spoken too soon and too often. I would like to believe that whenever there is a crisis, there is also an opportunity. Call us in Cebu lucky that while our national news media were covering the world’s gravest financial crisis, Cebu-based newspapers (despite our being so busy celebrating our 14th Press Freedom Week) were busy headlining two major investments in Cebu, with two more in the offing!
The big news a few days ago was what we already wrote last Friday when Aboitiz Equities Ventures (AEV) sold its shipping subsidiary, the Aboitiz Transport System (ATS), one of the core businesses of the Aboitiz Group of Companies, for P5 billion to KGLI-NM of Kuwait. Earlier it was erroneously reported that Negros Navigation (Nenaco) had bought off ATS. I said it was erroneous because first of all, Nenaco is still in court receivership and therefore, it doesn’t have the financial position to get out of receivership. In truth, KGLI-NM recently purchased the ailing Nenaco.
In buying ATS, KGLI-NM is buying the country’s biggest domestic shipping operator. If you recall a decade ago, the three big shipping companies grouped together into the country’s biggest domestic shipping company. It was called WG&A, which stood for William (of William Lines or the Chiongbian group), Gothong Lines and Aboitiz Lines. Then a few years ago, Aboitiz bought off its two partners, the Chiongbians and the Gothongs, and renamed the company the Aboitiz Transport System, which retains its status as the biggest domestic shipping company in the country.
It just makes you wonder how a Kuwaiti-based company would buy off our largest shipping operator. Well, for starters, the biggest cost or should I say headache of our shipping companies concerns bunker fuel. With Kuwait having all the oil below the ground… fuel cost is the least of their problems. Hence we can expect the Kuwaitis and their partners from the Netherlands to operate ATS and make a profit out of it.
The other big news Cebuanos got last week was that finally after a long wait, Andrew “Bebot” Gotianun Jr. of Filinvest Land Inc. (FLI) finally formalized its offer to Cebu City for some 50 hectares of the South Reclamation Properties (SRP). FLI is offering to buy 10 hectares of SRP for P2 billion, while another proposal is for a joint venture scheme with Cebu City for the development of 40 hectares.
What we can say about this deal is hallelujah to Cebu City! After the SRP was constructed, Cebu City was faced with paying close to P500 million annually for the cost of SRP. This deal means that Cebu City is finally free from the huge financial burden that it was carrying alone for many years and now it is starting to pay off! I’m sure that if you bump into Cebu City Mayor Tomas Osmeña these days, he’s wearing an ear-to-ear grin on his face! That’s because there are still a few hundred hectares of the SRP to sell, which means this will be gravy for Cebu City. I understand that two other major land investors are lining up to finish their deals.
It is really a strange world out there. Investment banks in Wall Street are losing billions of dollars, while Cebu City is still attracting investors. We can only second-guess this to mean that in these uncertain times, when your billions of dollars parked in an investment bank might just dwindle into a few millions, the best and most stable investment is land because whether you like it or not, land would never depreciate and would always be there.
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