Midas touch misses Manila

To all intents and purposes, the dynamism at the heart of Manila’s main port lies with International Container Terminal Services (ICTSI). ICTSI is best known for its management of Manila International Container Terminal (MICT).

But for this year at least, looking at its home base may not necessarily reveal the full potential of the company in terms of investment.

Domestic volumes for ICTSI at its Manila terminal and several of its smaller terminals spread across the archipelago, dropped due to a faltering national economy. In the first quarter, the figure fell 6% to 292,748 teu.

But ICTSI chairman and chief executive Enrique Razon was still smiling at a recent interview despite the disappointing figures.

“Contributions from our international facilities have more than offset the performance at home, ” he said.

And there is still hope that performance at the Manila facility will pick up as the year progresses. ICTSI is holding to its forecast of 4% growth over the year as a whole. With the extension of rubber-tyred gantry crane runways adding 8% in capacity to the container yard and the updating of construction plans for the sixth berth, the company may be able to claw back the loss.

News that the company is reviewing security needs at the Manila terminal is welcome. New inspection systems at the gate complex, together with cameras and radiation portal monitors installed at the quayside will go a long way to protect Manila from the threat of radioactive materials and weapons of mass destruction. The Philippines government has made a number of efforts to upgrade security at all of its ports including Manila. But while sea marshals have been appointed to inspect ships before and during their passage, the Philippines Coast Guard is undermanned and under resourced.

While there have been a number of notable successes under the new regime, the continuing existence of endemic corruption means that there is an abiding fear that officials will be open to bribes and casually turn a blind eye in return. In 2005, a Manila district manager was dismissed for corruption in connection with the awarding of the port’s security services contract. It has subsequently been reported that a number of officials and employees at MITC were involved in smuggling syndicates connected to the highest office in the land.

It is with this in mind that investors may take comfort for ICTSI’s continuing success with its investments overseas. In the last four years, ICTSI has built or acquired five terminals in Japan, Madagascar, Brazil, Poland and Indonesia. In the last couple of months the operator has put in a bid for a $200m container terminal in Surabaya. The company is in competition with DP World for the facility at Teluk Lamong Port but the latter does not appear to be in the Indonesian authority’s good books after Indonesia’s minister for transport said that the government wanted to buy back DP World’s stake in the terminal at Tanjung Perak for failing to turn it into a hub port.

ICTSI is also gaining at another operator’s expense in India. The Mumbai engineering firm Larsen & Toubro announced in June that it would be replacing Hutchison Port Holdings (HPH) with ICTSI in the consortium it had formed to bid for container terminals at a number of India’s main and smaller ports. This is due to concerns expressed by the government that HPH is an arm of the Chinese government.

And to end on a high, well-respected journal Asiamoney recently issued a survey examining Philippines businesses in 2005 and ranked ICTSI second for its improved financial management, clear corporate strategy and the quality of its annual report. While its home operations may be faltering, hope is that the Midas touch ICTSI has honed outside of the Philippines will soon return to its home turf, bringing Manila on track.