July 3, 2014 12:00 am JST

Domestic dynamism at home gives Philippine companies a fillip abroad

CLIFF VENZON, Nikkei staff writer

ICTSI runs roughly 30 ports in 20 countries, including this container terminal at Mexico's Port of Manzanillo.

MANILA -- The Philippines is becoming a land of opportunity, but that does not mean the country's companies are confining themselves to the domestic market. Buoyed by the amped-up economy at home, conglomerates and other enterprises are expanding their turf abroad.

     International Container Terminal Services, or ICTSI, is one such globally ambitious business. Having started investing overseas in 1994, it has picked up its expansionary pace in the last decade. Of the roughly 30 ports the company runs in 20 countries, more than half were acquired in the past seven years.

     When ICTSI sees a potential deal it likes, it wastes no time going after it. In the first half of this year alone, it secured three port contracts in new territories. In January, it announced it would establish its first terminal in Republic of Congo. In April, it revealed plans to spend $130 million to develop, operate and expand container facilities at the Port of Umm Qasr in Iraq. And in May, it won a contract to build and run a new facility in Melbourne, valued at 550 million Australian dollars ($517 million).

     Controlled by Filipino-Spanish tycoon Enrique Razon, ICTSI's global expansion has been driven by its successful management of the Philippines' main container hub. The Manila International Container Terminal handles around 65% of the foreign container traffic that passes through the capital.

     Since taking over management of the terminal in 1988, ICTSI has more than tripled the facility's annual capacity and volume handled. The company has expanded and upgraded equipment, making the most of information technology.

     As cargo volumes increase, ICTSI uses much of the cash -- and takes on some debt -- to grow overseas.

     Razon is still bent on expanding into other emerging markets. ICTSI is particularly interested in midsize ports, which it knows it can manage effectively.

     Razon's is not the only empire using domestic dynamism to fuel global growth. JG Summit Holdings is also bulking up outside the Philippines. Food and beverage unit Universal Robina already has facilities in Indonesia, Malaysia, Thailand and Vietnam, and it is keen to fortify its position in the Association of Southeast Asian Nations to capitalize on regional integration. Lance Gokongwei, president of JG Summit and CEO of Universal Robina, is not ruling out the possibility of opening plants in Laos and Cambodia.

     Meanwhile, Cebu Pacific, JG Summit's budget airline unit, is expanding beyond its comfort zone over the Philippines and Southeast Asia. It started flying to Dubai in October, and last month, the airline launched long-haul flights to Kuwait and Australia. Cebu Pacific is working to secure permits to fly to Hawaii and Guam, now that the U.S. has upgraded the Philippines' aviation safety rating.

     Other Philippine companies are in expansion mode, too. One is casual apparel maker Suyen, which hopes to make its Bench clothing line a true global brand.

     Bench is already a household name in the Philippines. Suyen has a network of slightly more than 1,000 stores in the country, including other brands.

     As of February, Bench also had 64 stores in China, 17 in the Middle East, three in the U.S. and one in Singapore. Current plans call for 80 more branches in the Philippines and 20 abroad.

     "Years ago, we did not imagine that Asian brands could become powerful," said Bryan Lim, vice president in charge of Bench's business development. But "Uniqlo made headlines when it entered London, and now it is one of the largest."

     With Bench, Suyen wants to make some headlines of its own.

Read more about rising Philippines

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