AS EASY AS ABC By Atty. Alex B. Cabrera (The Philippine Star) | Updated September 24, 2017 – 12:00am
Receive the smallest share of foreign investment inflows in the fastest-growing region in the globe. Retain, even, foreign equity limitations. Live with the reality of inadequate physical and digital infrastructure. Bear the difficulties in doing business, and then bear the worst of road traffic jams. And what do you get? The second fastest-growing economy in East Asia. Top 10 in the list of the fastest-growing economies in the world.
The Philippine economy’s noticeable growth story has spanned beyond two presidencies now, and continues. No one is exempt from the jitters of political noise, terrorism, and natural disasters. But our growth story has shown to be sustainable. That historical data is enough to sustain the confidence of our CEOs as they look to the future. On the heels of the recent MAP PwC CEO Survey on building partnerships in a regional growth environment, we proceed with sharing our CEOs’ sage lessons. Read on.
Registered or not, micro enterprises that account for 99 percent of all enterprises in the country provide inclusion. They provide jobs. “Kung wala kang trabaho, pwede kang mag-negosyo (If you don’t have a job, you can be an entrepreneur),” says Sec. Lopez, while challenging more big corporations to address the question: “What is your inclusive business model?” In other words, he believes big business must make it a point to adopt micro enterprises in their value chain, enable them, and even act as their mentors. This can accelerate small business’ access to the local market, as well as the regional market. As for the ASEAN, the Secretary points out that he has personally observed the individual relationship built by the president with each of the ASEAN leaders, and states as a matter of fact that the president enjoys “rock star” status anywhere he goes. This should pay dividends.
2. Allow the public to help finance big infrastructure projects. – Governor Nestor Espenilla, Jr., Bangko Sentral ng Pilipinas
Partnerships between government agencies and the private sector to develop the debt market is essential to help big infrastructure projects. There is a limitation to what banks can do in supporting development financing. Developing the government securities market will provide a foundation for a broader bond market. Whether it is for corporate debt or infrastructure bonds, or structured finance government securities, what is important is to make it more convenient to issue long-term debt.
As to financial inclusion, digitizing the financial system is key. An efficient clearing system will allow faster transfer of cash from one account in a bank to another. This will be a game changer for a country that still conducts its retail transactions still mostly in cash. This modernization will also ensure inclusion so that people, even those in far-flung areas, are not left behind. They will have the ability to move money more efficiently internally or across borders, and saving their money can be done remotely by mobile phones.
3. Look for your strength, bring it to other countries, but be patient. – Ramon del Rosario, Jr., PHINMA Inc.
We are not only Filipinos but are members of the broader ASEAN community. In this context, it’s time for us to make our modest contribution to our ASEAN brothers by investing and sharing our technology and expertise in education. But we are young in the game. So we are taking it small and slow at first. The chosen ball carrier in that foreign country is important. He must have the skills and the personality to interact well with a different culture. When the rules of the place are still being written, such as in Myanmar, the relationship with partners with very good reputation and strong interest in the same business (education) is key to navigation. For our partners, they do not need to reinvent the wheel. They are happy just to replicate what we have done in the Philippines.
4. Watch out for regional opportunities, but Philippines first. – Dennis Uy, Phoenix Petroleum Holdings Inc.
Dennis says that while he will entertain good opportunities in the ASEAN, there is still a lot of room for growth and for opportunities to take advantage of in the country. Especially with the government’s declared Build-Build-Build program, logistics requirements will be abundant, for example. If foreign investors are coming in because of opportunities here as a high-growth economy, why not take go after these opportunities in your own country?
5. You can build a regional base, starting with our OFWs. – Nina Aguas, The Insular Life Assurance Co. Ltd.
Nina recognizes that the biggest opportunities for the insurance business is still within, with the country still being an underinsured nation. But she sees that building a regional presence is quite doable due to the natural market in OFWs. Seafarers, domestic helpers, and the rest will benefit from insurance and investments when they eventually get home. As to their recently entered bank assurance partnership, she says what really stood out in deciding is the chemistry and cultural fit. This fit is tested initially in how tough issues or challenges are addressed quickly and patiently by the parties while drawing the partnership.
6. Build a regional base in a cost efficient territory. – Mario Berta, Flyspaces
Mario, the founder of Flyspaces (what Airbnb is to lodging, Flyspaces is to workspaces), develops technology and has a regional business. He built his regional company out of the Philippines because it allows him to manage his cost better. His rent, transportation, and personal expenses, he said, will be five times higher if he were to set up in Singapore. For a startup, if you don’t control your burn rate, you will be bankrupt. Philippine airports are not world-class but the cost of entrepreneurship here is way lower, and opportunities are everywhere. He says the investment for the small bar he recently opened in Jupiter St. in Makati City will be seven times that amount if he did it in Singapore.
Before I run out of space, I would exchange my usual last paragraph to make way to the legacy statements shared by our CEO icons during my interviews with them:
Ernest Cu (Globe Telecom, Inc.) – If you built a culture that is strong enough to stand without you, that to me is the ultimate success.
Tessie Sy-Coson (SM Investments Corp.) – Reach a moving target, be happy when you achieve it, then move forward again.
Manny Pangilinan (Metro Pacific Investments Corp.) – Success is not so much about the legacy I could leave behind, but the improvement I could bring to the lives of our people.
How about you, my dear readers? What do you want to be your legacy?
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Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He also chairs the Tax Committee of the Management Association of the Philippines (MAP). Email your comments and questions to aseasyasABC@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.