Building Momentum
In a bold bid to remake the Philippines, billionaire beer baron Ramon Ang of San Miguel Corporation has set his sights beyond the traditional food and beverage sector. Transitioning from a legacy business into a true infrastructure colossus, the company plans to pivot its strategy towards bolstering the nation’s infrastructure. Over the next five years, Ang has orchestrated a massive outlay of approximately 1.4 trillion pesos, with 86% (roughly 1.2 trillion pesos) earmarked specifically for expanding the company’s infrastructure footprint.
This strategic shift not only aims to expand the company’s top-line but also addresses the pressing infrastructure gaps that pose a challenge to the Philippines‘ economic vitality. By investing in everything from roads to utilities, San Miguel is positioning itself as the bedrock upon which the future prosperity of the country can be built. This investment is expected to make the Philippines an attractive destination for both overseas investors and tourists, potentially boosting consumer spending and, by extension, strengthening the broader economy.
Having worked closely with infrastructure projects in Asia, I’ve witnessed first-hand how transformative such large-scale endeavors can be. San Miguel‘s approach, under Ang‘s leadership, reflects a deep understanding of the multifaceted benefits that strategic infrastructure development can bring to a nation. By fostering a more prosperous environment, both Filipinos and businesses stand to benefit, ultimately reinforcing San Miguel‘s position not just as a giant in food and beverages, but as a pivotal player in the nation’s economic and social landscape.
With the Philippines as a backdrop and San Miguel, a brewery founded in 1890 when the nation was still a Spanish colony, standing synonymous with the country’s top conglomerates, the journey of this iconic beer brand through the centuries is a tale of ambition and precision. Initially a modest brewery, San Miguel expanded beyond beer into food and packaging throughout the last century, evolving into a staple not only in every local bar but also across the most far-flung distribution system, reaching the remotest corners of the archipelago. In 1998, Ramon Ang joined the company as vice chairman and, following the late former chairman Eduardo Cojuangco Jr., orchestrated an aggressive expansion. This move propelled San Miguel into a conglomerate that ventured into over a dozen new businesses like oil refining, power generation, mass rail, and cement.
By 2009, San Miguel had embarked on ambitious toll road and power plant projects, and acquired a majority stake in Petron, the country’s biggest oil refiner. This expansion wasn’t just about diversification but about addressing the basic national needs—from reasonably priced electricity to better roads, modern airports, and commuter trains. Under Ang’s leadership, San Miguel’s annual revenue grew eightfold to 1.4 trillion pesos by 2023, with total assets up nearly sixfold to 2.5 trillion pesos. This strategic diversification not only built cash flow but also bolstered the foundation from which San Miguel could undertake other capital-intensive, long-gestation projects, which were essential for the progress of the Philippines.
John Gatmaytan, chairman of Manila-based Luna Securities, comments on Ang’s leadership: “He has done an excellent job using and leveraging the company’s core competencies to go into other businesses.” The last 30 to 40 years have seen San Miguel’s investments in key industries, though slow, play a crucial role in setting the pace at which the Philippines could catch up with its lagging peers in Southeast Asia.
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Take electricity
Amid the U.S. tech giants like Amazon, Google, and Microsoft pouring billions of dollars into data centers across Indonesia, Malaysia, Singapore, Thailand, and the Philippines, one crucial piece is often missing: affordable and reliable electricity. The expensive cost of power, as highlighted by Euben Paracuelles, a senior economist at the Japanese brokerage, Nomura in Singapore, underscores a significant challenge. With household electricity in the Philippines costing around $0.17 per kilowatt hour, the highest in the region according to Statista, there’s an urgent need to boost the supply of cheaper, cleaner energy.
San Miguel Corporation is stepping up, modernizing its existing power plants and significantly expanding its installed capacity. From a current base of 6,595 megawatts, a new LNG joint venture announced last March aims to add another 2,500 megawatts. This will propel the country‘s total installed capacity to nearly 28,000 megawatts. Moreover, Ramon Ang, the head of San Miguel, explains that this move is designed to ensure not just reliability but also cost-efficient power for many Filipinos.
Drawing from my personal expertise in renewable energy, I can attest to the transformative potential of such ventures. Not only do they address immediate infrastructural needs, but they also lay the groundwork for sustainable economic growth, which is crucial for countries like the Philippines, where energy demand continues to surge alongside technological investments.
Disclaimer:
This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.
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