New investments

With prospects getting better and better for PLDT’s fixed line business and the continuing profitability of its wireless subsidiary Smart Communications, PLDT management is starting to look at possible new investments and reviving old prospects.

PLDT top brass has revealed that the group definitely has revived talks with one of the owners of GMA Broadcasting Corp., particularly the Jimenez family, for a possible acquisition of a majority stake in the country’s second largest television network. The Jimenezes own 35 percent of GMA, with the Duavits and Gozons owning 35 percent and 30 percent, respectively.

But will the Duavits and Gozons sell? Earlier, GMA 7 in a statement issued no doubt by the two families said that they are not selling to PLDT nor to Smart Communications, but their major reason is that both companies are prohibited under the Constitution to engage in the media business, being partly foreign-owned. So if there’s a way out of this legal loophole, will they sell?

PLDT and Smart chairman Manny Pangilinan is said to be very optimistic that that the Duavits and Gozons will agree to sell very soon. Is the price to be offered going to be very difficult to refuse? Looks like it will.

Aside from the broadcasting business, which according to Pangilinan remains very important for the PLDT group, management is also looking at exporting products and services to neighboring companies, mainly those by Smart.

But Pangilinan said the money is not in being able to export these products and services, but in owning part of the company that buys these products and services. Pangilinan seems to be very interested in being able to replicate Smart’s success here in other countries. How he will do it is what is keeping him occupied these days.

Bleak Scenario For Garments

Recently released information from Washington has shown a bleak future facing the local garments industry.

Following a request from the US Trade Representative, the US International Trade Commission looked into the competitiveness of certain foreign suppliers to the US market with the phase-out of quotas on Jan. 1, 2005 as required by the Uruguay Round agreement on textiles and clothing.

According to the US UTC report, the share of US apparel imports from the Philippines is likely to recline, as has already occurred in goods for which quotas were eliminated like babies’ apparel.

It however noted certain key competitive factors favoring the Philippines. These are its English-speaking and skilled labor force and the existence of foreign-trade zones on former US military bases that provide established modern infrastructure. The downside however includes high wage rates, heavy reliance on imported yarn and fabric, and political and social unrest adversely affecting the business climate.

China is expected to become the supplier of choice for most US textile and apparel importers after the expiration of quotas in 2005, mainly because of its ability to make almost any type of textile and apparel at any quality level at a competitive price.

Among the ASEAN members, the only countries considered competitive as major alternate supplier to China or India are Vietnam and to a lesser extent, Indonesia. However, Vietnam will not be eligible for quota elimination until it becomes a WTO member while Indonesia is considered somewhat risky because of its political and social unrest.

Bangladesh or Pakistan are expected to emerge as a major supplier for a narrow range of products, according to the report.

The big question is: are we prepared for free trade on garments come 2005? Highly doubted.

For comments, e-mail at [email protected]