HAGÅTÑA Guam and MAKATI Manila — While many companies from the Philippines take advantage of economic opportunities in Guam one island company is taking its wares to the Philippines.
Administrative Services Corp. a retirement planning and 401(k) consultancy opened doors in Manila in the first days of 2006. David J. John president of ASC left to open the ASC Philippines office on Jan. 3.
The expansion moves will also mean more jobs locally at the Guam-based small business.
ASC is no stranger to international business with 10 000 participants in plans in Indonesia the Philippines Sri Lanka Myanmar and Bangladesh.
However for the first time ASC will be administering a local currency plan — with a peso-based arrangement for Philippine nationals. Its first client is a nationwide association of 600 schools. John told the Journal “The money will stay in the country. We are going to try and develop it over the years.”
He anticipated that the plan would be operational by February.
ASC will partner from January with The Metropolitan Bank & Trust Co. of the Philippines. ASC will be setting up its first branch in the Philippines in the same building GT Tower along Ayala Ave. Makati where Metrobank’s trust department holds office.
Josephine G. Cervero vice president of the Metrobank Trust Department said its arrangement with ASC Trust Co. would allow its clients to have more individualized specific services in terms of "ledger maintenance."
She said while the bank as fund manager can issue reports once a year on the status of the client’s funds ASC because of its sophisticated computer software system will allow the client to see how his money is earning at a click of his computer mouse.
"This is basically a referral program where we refer to (ASC) our clients with more sophisticated needs like online services and more regular reports (on fund status) " Cervero said.
John said while pension and 401(k) plans are not new to the Philippines ASC will bring updated industry standards to the country. “We’re looking to automate the process and provide online access for the participants.”
This would mean readily available statements for members who would also benefit from more participation in their retirement plans.
Present information by the time employees in the Philippines receive it John said “Is quite old. The reconciliation process is quarterly at best and not online. Employees don’t have control over their funds; all money is lumped together. What we want to do is move it to a 401(k) environment.”
John told the Journal interested potential members of retirement plans in the Philippines are staff at high-end larger businesses with a middle class workforce.
“The industry has been around for a while but when it comes to defined contribution plans it’s really in its infancy. There’s a lot of potential for growth.”
Cervero sees Metrobank’s growing base of multinational companies with employee retirement funds as those that will probably tap ASC’s services.
The tie-up is an "exclusive arrangement and probably the first of its kind in the Philippines " she said. “It is a two-year contract but we are looking at a long-term relationship if things work out. I have a good feeling it will " she said.
As to jobs John said the project would offer employment in Manila with administrative work performed in Guam and also providing additional employment opportunities. Of ASCs present workforce of 20 about eight were hired for work outside of Guam. “Obviously eight jobs is not going to change our unemployment rate but the ASC model if emulated is one that could help the economy.”
John said company policy was to hire locally and grow employees into management at the company. “We’re hiring at the University of Guam paying for tuition giving the employees time to go to school and then bringing them into our management team. There are not many companies doing that.”
John said while ASC had industry expertise it decided early on to look for an appropriate and strong company to join with.
“Is it better to go in and develop a stand-alone project or should we get a partner? It became clear early on that it was better to have a partner.”
Cervero said the bank had to look outside the country for such services because there were no Philippine firms that could handle the complex job. The Philippines has been marketing itself as a business process outsourcing site where it takes care of backroom operations communications accounting and other financial processes of foreign companies.
"(Ledger maintenance) is a tedious process. You compute for the profits of the fund pro-rata (for all the fund members) and issue reports regularly. (ASC) has a more advanced computer system. No local entity has that kind of capability yet " she said.
A typical retirement fund has about 100 members. But those being managed by Metrobank are usually funds with over 1 000 members she said.
Metrobank would be acting as master trustee John said while ASC would act as the record keeper-administrator. Other banks which have different relationships with the schools association would also participate as trustees.
"We refer our clients to ASC and they sign a separate contract with (it). They also pay (ASC) a different fee (separate from ours) " Cervero said. The fee depends on the size of the fund in terms of membership but she said that it is "reasonably-priced flat fee."
Metrobank is the industry leader in trust banking. In 2004 it had 148 billion pesos ($2.74 billion) assets under management up 38% from the previous year. It corners about 20% of trust banking business in the Philippines. It has branches across the globe including Guam.
ASC has been in business for 15 years. John was a speaker at the recent U.S. (401)k conference and is a frequent speaker at Pacific Region Investment Conferences of which the company was a gold sponsor in 2005. The 6th Pacific Region Investment Conference will be held in November in Manila. MBJ
