Fellow stockholders, staffmembers, friends of Benpres Holdings Corporation, Ladies and Gentlemen:
Good Morning and welcome to our Stockholders Meeting. My role today is to set out the broad parameters of our operations, our view of the business environment and the philosophy that underlies the strategy we have chosen. Mr. Jose Xavier Gonzales, our Chief Operating Officer will then make a presentation that will touch on the details.
The Philippine economic environment today remains positive despite short term peace and order problems. The economic fundamentals upon which we have made our investment decisions remain firm and valid. As far as we are concerned, our investments in key utility sectors such as power, water, tollways and telecommunications, basic as they are, are as justified today as they were when we made them a few years ago. A growing population and a growing economy will see to it that demand for our services will continually challenge our ability to deliver within expected world class standards.
More important to our business than short term local conditions is the fast speed of change in the business environment. There are two concepts here that I am sure you have all heard a lot about. One is the "New Economy" and the other is "convergence".
The New Economy has to do with growth of industries that are knowledge-based and thrives on the globally interconnected world of the Internet. In the New Economy, business transactions are net-based and will increasingly cover practically every area of human endeavor.
Convergence, on the other hand, alters the competitive environment in telecommunications, a key sector of our business. This is why we took time to explain what this concept is in our annual report this year. We feel this concept will have short to long term implications for our business.
From our perspective in Benpres, we are looking at convergence possibilities in two areas. First is in our communications group. Our broadcasting, cable and telecommunications companies can come together to create services possible only through joint undertakings. This is why we have initiated the first step in this direction by implementing a functional convergence of BayanTel and SkyCable. We are three months into this exercise and so far, our expectations are being met.
Among local entities, the Lopez Group is the best situated to embark on a full convergence strategy. This is because communications convergence requires a carrier and a content provider. Everyone else attempting the strategy are carriers and it is only our group that has a content provider besides, i.e. ABS-CBN, representing the largest media group in the country today.
We have consolidated all our media and telecommunications companies under the headship of Eugenio "Gabby" Lopez III in what we now refer to as the ComGroup. In turn, ComGroup has assembled what it calls a "convergence group" which I described earlier in this address, to ensure that all our assets, both hardware and software, are organized and networked to take advantage of the opportunities that the "New Economy" will bring.
ABS-CBN is our big advantage over other telecommunications entities attempting the same convergence exercise. ABS-CBN provides content not only in what is now called traditional media of radio and television broadcasting but also for new media such as those that utilize the information superhighway or the Internet. Mr. Gonzales will tell you more about our strategy in the development of these new media that will make us the market leader in the emerging trend for narrowcasting as opposed to the traditional media of broadcasting.
The second but less obvious convergence path is the potential for operational benefits across our various utility and infrastructure companies. Convergence can create operational efficiencies in such key areas as customer service, billing and payment, line installation and customer data base mining. We are also going to exploit the potential of the Internet to implement an internal e-procurement strategy. This will pool the combined purchasing requirements of the Lopez Group to generate savings and efficiencies. It is possible to combine our needs with that of several other larger groups to create the volume that will guarantee our collective success. These are exciting times for the entrepreneurial talents of our country to venture into the regional and international arena of the new economy, in pursuit of our combined e-procurement strategy.
Let me mention some other initiatives being taken by our Group.
Meralco is poised to take advantage of opportunities in the New Economy. As my brother Manolo explained before Meralco's stockholders recently, "a Meralco dot com is what we are looking at very seriously More advanced utilities are dabbling with the use of the Internet to trade all power products including electricity as a commodity" After all, on top of its enviable access to a wide consumer base, Meralco enjoys existing right-of-way permits, installation crews, an installed fiber-optic backbone, and a network of wires and poles with which to deliver services other than electricity.
Another measure of preparation is the recognition that to survive in the new economy, all our businesses must achieve world-class quality and discipline. Four companies under First Holdings now have ISO 9000 certification. It is my objective that in time, all companies under Benpres Holdings will get their ISO certifications of quality management and quality assurance. We have also formulated a rigorous in-house Environmental Safety and Health or ESH program to which all Lopez companies and affiliates must submit, be tested and graded on an annual basis.
Finally, we must prepare our people for the challenge of the New Economy. To complement the excellent training and learning facilities that we have at the Eugenio Lopez Development Center in Antipolo, we are now in the process of developing a learning curriculum that, in the not too distant future, can justifiably earn the tag of "corporate university." In the meantime, 25 of our up-and-coming Group executives have together taken an Executive MBA program developed and taught in collaboration with the Asian Institute of Management.
We will take our cue from India, which worked to develop a good base of skilled manpower through the existence of high-powered schools like the Indian Institute of Technology, such that when the opportunities offered by the New Economy presented themselves, they were able to take them on. Today, they are exporting billions of dollars worth of software services and other products needed by the burgeoning dot com economy. Re-inventing ourselves, as an organization and as individuals, to participate in the New Economy is also the only way we can assure our continuing competitiveness.
Finally, I want to take up internal matters pertaining to Benpres and the Lopez Group. As you all know, I assumed leadership of the Lopez Group, after the passing of my brother Geny almost a year ago. My preoccupation with my major responsibilities as head of the Group, have led me to several conclusions. I would like to share some of these with you, my dear friends and loyal stockholders.
It has become my obsession that this generation of executives of the Lopez of companies are able to build and manage our companies to be strong and financially sound so they may be able to weather all the storms and turbulence that my come our way, not only in our generation but in succeeding generations as well.
This may sound like the proverbial "impossible dream"; yet, it is a matter of historical record that there are companies like Sumitomo, Mutsui and Mitsubishi in Japan; Dupont in the U.S.; and STORA in Sweden, that are still going strong, if not stronger today than when they started their early life ages ago.
Though Benpres Holdings as it stands today is less than ten years old, I think it is time to begin to think of our long term viability and longevity as one of the basic concerns of our company.
Furthermore, there are at least 4 companies within the group that are no longer "spring chicken", you might say. ABS-CBN celebrated its 50 year anniversary a few years ago, although technically the company was in the hands of the dictator Marcos and his gang of thieves during martial law; FPHC was founded in 1961 as Meralco Securities Corporation, which makes it 39 years old; Meralco will celebrate its 100 year anniversary in 2003. But the grandaddy of them all is Maynilad Water Services, Inc. which can trace its origin to the establishment of the Metropolitan Manila water system or District in 1919, but we can go further back to 1875 during the Spanish regime when the city water development began under Francisco Carriedo.
But precisely because we have a diversity of companies that have developed independently of each other and through time acquired values and traditions of their own, there is need to have a common unified vision, purpose and set of core values that can influence and suffuse throughout the entire group of companies and give the group a common sense of identity.
We must consciously promote a culture and sense of community that will inspire our staff members and other stakeholders to work for the survival and success of the entire group as one entity rather than for each individual company. We must also have a system of governance to manage our businesses consistent with our vision and purpose. Now, recognizing these needs is one thing; responding to them requires considerably more thought, planning and skill.
I have therefore, assigned individuals and teams across the Lopez Group to develop solutions to each of these needs. When we meet again next year, I hope to be able to tell you precisely what solutions we will have found and adopted in addition to what we are already doing. It shouldn't be a surprise to anyone that public service, entrepreneurship, nationalism, loyalty, wellness and concern for the individual, values which have always characterized the Lopez businesses since my father and his brother founded the line more than 70 years ago in 1928, will feature prominently in these solutions.
Third, even as we work to ensure shareholders their returns on investment, we are committed to attract the best and the brightest to our organization by making sure our officers and employees are always the best trained, the best paid and the best provided in the country. This is something my father has said many times and to which we remain committed today. This is a daunting challenge in the face of the difficult economic environment and the major business moves we have embarked on. But we want to always be the best employer in the country, bar none, and we will accomplish this objective because we mean it when we say that our employees are our best resource.
Fourth, we must constantly prepare both our businesses and our people for the demands of their operating environment. For now, this means gearing up to compete in the New Economy. For some of our old economy companies, this may mean some amount of needed restructuring. It may happen that in the process of transforming our organizations, there will be some job losses. We will make sure that such losses are minimized through re-training and re-deployment on a Group-wide basis. Also, the New Economy shall mean more employment opportunities than lost jobs and we shall give priority to our employees and their families as we adapt ourselves to the new milieu.
And as I have mentioned several times in the past, we consider it a matter of corporate concern that our staff members maintain the soundness of their bodies to support the limitless potential of their minds.
I would like to close by recalling the words of my father, Don Eugenio Lopez which provide the perspective for the Lopez Group of Companies. In December 1964 he said, "The company must make profits, yes. But a good portion of this must be returned to the public in the form of improvements and better service and our employees should share in these profits. A company cannot be called progressive if it accumulates only profits, with utter disregard to its moral and social obligations to the public and its employees. A company of that kind cannot and should not deserve the support of the public."
So, then as now, we shall always be in the service of the Filipino.
Thank you and a good day to you all.