Duterte’s favorite tycoon rings a golden bell

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Dennis Uy (R), founder and chief executive officer of Philippines' Phoenix petroleum company, rings the bell at the Philippine Stock Exchange in the financial district of Makati, suburban Manila on July 11, 2017, on the company's tenth anniversary of its listing. Photo: AFP/Ted Aljibe

Dennis Uy, a Sino-Filipino businessman who helped Rodrigo Duterte win the Philippine presidency, is now fast expanding his commercial empire from his home base of Davao City on the restive island of Mindanao.

While Duterte has taken hard aim at the country’s traditional business family elites as “oligarchs” who have held back economic development and more equitable wealth distribution, the president has appeared to support Uy’s up and up rise to tycoon status.

Uy is among the few Filipino businessmen known to be in Duterte’s inner circle, currently serving as presidential adviser for sports. Duterte openly admits to knowing the businessman, who contributed 30 million pesos (US$594,000) to his presidential campaign, for at least a decade.

On July 11, Duterte visited the Philippine Stock Exchange for the first time as president to preside over the 10th listing anniversary of Phoenix Petroleum Inc, Uy’s flagship energy firm. Analysts noted at the time that Duterte was the first sitting president in recent history to attend the listing anniversary of a publicly listed company.

Duterte recalled at the event that Uy, the company’s president and chief executive, approached him while he was serving as Davao City mayor for help when Phoenix was implicated in a supposed oil smuggling scandal. “He went to me. I said, is this true? Are you involved? He denied,” Duterte said.

Duterte said he then called a customs officer and rudely told him to stop asking for payoffs to drop the charges and instead file a case against Uy. A court of appeals dropped the oil smuggling case against Phoenix in 2014.

“In the fullness of God’s time, it was decided in (Uy’s) favor,” Duterte said in his stock market speech, where he marveled at Phoenix’s rise from a single filling station in Davao to the country’s fastest growing energy company.

Philippine President Rodrigo Duterte gestures while delivering a speech during the 10th listing anniversary of Phoenix Petroleum, inside the Philippine Stock Exchange (PSE) in Makati City, Metro Manila, Philippines July 11, 2017. REUTERS/Romeo Ranoco

Philippine President Rodrigo Duterte gestures while delivering a speech during the 10th listing anniversary of Phoenix Petroleum at the Philippine Stock Exchange in Makati City, Metro Manila, Philippines July 11, 2017. Photo: Reuters/Romeo Ranoco

While Uy has maintained that many of his recent acquisitions and newly started projects were planned well before Duterte decided to seek the country’s highest office, his deal-making has accelerated with Duterte’s rise, sparking certain critical murmurs of hometown cronyism.

Uy, who learned the ins and outs of business at an early age through his entrepreneurial ethnic Chinese family, founded Phoenix in 2005. The homegrown company is now giving the country’s three leading foreign firms – Petron, Shell and Caltex – a competitive and well-connected run for their money.

“I met President Duterte when he was still the mayor of Davao City. As a businessman, I was able to contribute to discussions on the economic potential of Davao and how the business sector could help unlock that,” Uy was quoted as saying by The Philippine Star, a national daily.

From a modest string of filling stations in 2005, then all situated in Mindanao, Phoenix now runs over 500 refueling depots across the island nation. According to Uy, timing, hard work and a thirst for knowledge have driven his business success – not his proximity to political power.

From a modest string of filling stations in 2005, then all situated in Mindanao, Phoenix now runs over 500 refueling depots across the island nation

Whatever the formula, Uy’s list of corporate conquests is fast growing. Phoenix recently sealed a US$124 million acquisition of the local liquefied petroleum gas (LPG) business of Malaysia’s Petronas Dagangan Bhd, marking its first foray into the LPG industry.

Last month Udenna Corporation, Uy’s holding firm, finalized its acquisition of Enderun Colleges Inc, extending his conglomerate’s reach into the lucrative education sector.

In May, the Philippine Amusement and Gaming Corp granted Udenna a permit to develop the US$300 million Lapu-Lapu Leisure Mactan, a 12-hectare integrated resort and casino complex in Cebu, its first such property development outside Metro Manila.

Based on the project’s design, the luxury complex will house iconic modern buildings, infinity pools, a skydiving center on a pier, an exclusive retail complex, convention center, luxury hotels and villas, private residences and condominium suites.

Dennis Uy, chairman and CEO of Philippines' Phoenix petroleum company, delivers his spech at the Philippine Stock Exchange in the financial district of Makati, suburban Manila on July 11, 2017, on the company's tenth anniversary of its listing.  / AFP PHOTO / TED ALJIBE

Dennis Uy, chairman and CEO of the publicly listed Phoenix Petroleum company at the Philippine Stock Exchange on July 11, 2017. Photo: AFP/Ted Aljibe

On July 24, Chelsea Logistics Corp, Udenna’s logistics arm, launched a 5.8 billion peso (US$115 million) initial public offering, a decade after Phoenix was first listed on the Philippine Stock Exchange. Chelsea Logistics began its shipping business in 2006 to support Phoenix’s operations and has since grown apace.

In April, Uy also acquired a stake in the publicly listed 2GO Group Inc, the largest supply chain enterprise and so-called end-to-end solutions provider in the country.

During the 10th anniversary of Phoenix’s stock exchange listing, Uy praised Duterte for reducing bureaucratic red tape and promoting domestic and foreign investment. Duterte has pushed in particular for the development of their mutual hometown of Davao.

“He encourages entrepreneurs by making it easy to do business by removing the bureaucracy,” Uy was quoted as saying by the news agency Rappler. “This is how we were able to build stations in less than three months [in Davao] compared to over six months in other parts of the country.”

Uy has said that Duterte’s strong style of governance, with his professed priorities on anti-corruption and political stability, has produced a business climate conducive for small businesses to thrive. (Duterte’s proponents note he has removed at least one Cabinet Secretary on corruption-related allegations.)

Chinese President Xi Jinping (back-right) and Philippines President Rodrigo Duterte (back-left) attend a signing ceremony after their bilateral meeting during the Belt and Road Forum, at the Great Hall of the People in Beijing, China May 15, 2017. REUTERS/Etienne Oliveau/Pool - RTX35X5M

Chinese President Xi Jinping (back-right) and Philippines President Rodrigo Duterte (back-left) at a signing ceremony after a bilateral meeting at the Belt and Road Forum held in Beijing, China May 15, 2017. Photo: Reuters/Etienne Oliveau

The mutual admiration has sparked market speculation that Phoenix could be poised for another windfall if China and the Philippines, as announced, begin joint exploration and exploitation of oil and gas resources in contested areas of the South China Sea, including the oil-rich Reed Bank region.

On July 24, Duterte said without naming any specific company that a “partner” had already been found to develop oil fields and that joint exploration and exploitation would restart later this year after being suspended due to heightened tensions with China under the previous Benigno Aquino government.

According to Uy, timing, hard work and a thirst for knowledge have driven his business success – not his proximity to political power

While Phoenix is currently mostly a fuel trader, distributor and transporter, some analysts speculate it is well-poised and cash rich to move into more upstream operations in potential partnership with a major Chinese oil company such as China National Offshore Oil Corp (CNOOC).

Phoenix has the largest storage capacity of any local independent oil company, including a new 15-million liter capacity terminal opened in the central coastal city of Cebu in late June.

CNOOC was in talks with local oil and gas firm PXP Energy Corp under the previous Aquino administration, but those discussions fell off in 2014 when Manila pursued international arbitration against China over their territorial disputes.

PXP Energy has reportedly sent feelers to CNOOC to resume negotiations with Duterte’s announcement that joint exploration and exploitation would soon commence in the South China Sea. But as the political winds shift, Uy’s Phoenix seems well-positioned to profit from any energy development deal Duterte brokers with Beijing.

Bong S Sarmiento is a Filipino journalist born and based in Mindanao

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