Marcos gets pledges in Davos but investment analysts unimpressed

PHILIPPINE President Ferdinand R. Marcos, Jr. has secured investment commitments from at least two foreign companies during his trip to Switzerland, according to the presidential palace.

But investment analysts were unimpressed, saying these commitments were insignificant and could be had without a foreign trip.

New York-based investment firm Morgan Stanley & Co. LLC would set up an office in Manila to support the government’s development agenda, the Presidential Communications Office (PCO) said in a statement on Thursday.

Gokul Laroia, Morgan Stanley chairman for the Asia-Pacific region, made the commitment during a meeting with Mr. Marcos on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland, it said.

He expressed interest in a still unapproved sovereign wealth fund bill that Mr. Marcos pitched in Davos, noting that it could boost investments in the infrastructure sector, according to the palace.

“Investment pledges are always good, but until we actually see these pledges on the ground and start to get implemented, only then can we realize and reap real benefits,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., said in a Viber message.

Mr. Marcos had also secured a commitment from Emirati logistics company DP World, which is already operating in the Philippines, the palace said. The company seeks to set up an industrial park in Clarkfield, Pampanga province north of the Philippine capital.

“We are committed to investing in the Philippines. We’re committed to expand,” Chairman and Chief Executive Officer Sultan Ahmed bin Sulayem had told the president on the sidelines of the Davos conference, Malacañang said. “We’re interested in the Philippines, in industrial parks.”

Mr. Sulayem said DP World, which moves 10% of the global trade and serves at least 69 countries, could add value to the Philippine supply chain, noting that sea transportation is the cheapest means of moving cargo, according to the palace statement.

Outdated ports continue to be a problem for the archipelagic nation.

Mr. Marcos told Mr. Sulayem the government would decide on possible sites for DP World’s expansion.

“If it’s viable and those areas are actually useful for your operation, then that would be something that we can immediately develop,” Mr. Marcos said, adding that he prefers public-private partnerships for infrastructure development.

The Philippines, he added, had been “slowly improving” the ease of doing business for companies. “I say slow because it’s never fast enough, but at least I think we can already see some progress on that.”

Mr. Laroia had told Mr. Marcos private sector participation “automatically happens” when governance issues are addressed. “There’s a lot to work with in the Philippines, as you said, the supply-side dynamics need to improve,” he told the president.

“We’re seeing some evidence of diversification of supply chains, the need to have the infrastructure benefit from that. So all of these can be a vicious cycle,” he said. “We’re opening an office there, we’re trying to work with both the government (and) the private sector. And we will be supporters and we will continue to be.”

Morgan Stanley has been advising clients on transactions, including mergers, acquisitions, restructuring, initial public offerings, share repurchases, debt offers and derivatives, among other services.

‘INVESTMENT OF OTHERS’

Mr. Marcos, 65, arrived in Switzerland on Sunday for the Davos conference, where he pitched the wealth fund — “one tool among many” in the Philippines’ efforts to diversify its financial portfolio. Philippine institutions are pursuing investment that will generate stable returns, he added.

Terry L. Ridon, a public investment analyst, said the commitment from Morgan Stanley to build a Manila office “does not constitute a commitment to undertake foreign direct investment (FDI) in the Philippines.”

“The investment bank’s primary business involves not FDIs but portfolio investments,” he said in a Facebook Messenger chat.

He added that DP World, the logistics company, is “already well-established in the country, operating ports in Manila and Batangas province.”

Mr. Ridon said the president does not need to go to Davos “if only to convince DP World to expand its operations in the country.”

“In the final analysis, the president’s Davos trip should be judged based on the total cost of funding the delegation against actual investment pledges originating from the WEF itself,” he said.

“It is difficult to put a specific number on the value of raising the president’s and the country’s international prestige through Davos, because this can also be done in other more significant and consequential international meetings and conferences,” he added.

Mr. Ridon said Mr. Marcos’ office should have been “more forthright” in presenting the trip as nothing more than a speaking tour to manage public expectations. “The public can see from the trickle of news out of Davos that the trip has essentially been a speaking engagement for the president to promote the country to the world.”

He said foreign investment commitments should have already been perfected by government negotiators before the Philippine leader’s foreign trips, adding that the trips should only serve as a venue for the formal signing of diplomatic or economic agreements.

“In Davos, there has been little word on whether previous arrangements and commitments had already been made with foreign governments or firms.”

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said “these commitments could be had without going to Davos.”

“Morgan Stanley has offices all over the world including Singapore, Indonesia and Thailand,” he said in a Messenger chat. “It makes money by charging fees on advisory services such as restructuring and mergers and acquisitions. In other words, it makes money not by its forming own investments but from the investment of others.”

The Philippines faces growth risks from elevated inflation, rising borrowing costs and a global recession. The World Bank expects the economy to slow to 5.4% this year from an estimated 7.2% last year.

The government has lowered its growth target this year to 6% to 7% from 6.5%-7.5%. Inflation hit 8.1% in December, the fastest since November 2008. – Kyle Aristophere T. Atienza, Reporter