Gokongwei: PH prospects now clearer

MANILA, Philippines – The influx of foreign investors coming to the Philippines validates what the Gokongweis knew all along: doing business here is worth it. 

“The prospects of the Philippine economy is now clear to many,” Lance Gokongwei, president and CEO of conglomerate JG Summit Holdings, said in an ANC interview on Wednesday, February 20.  

The vote of confidence in the Philippines translates to lower interest rates, which means more affordable access to capital, Gokongwei said. JG Summit and its units are into capital-intensive businesses, including airlines, real estate, retail, banking and more.

“The Philippines has never been in a better position,” said Gokongwei, a second generation businessman whose entrepreneurial family “recognized the opportunities in the Philippines from the start.” 

He attributed this to the country’s primary surplus, which stood at P155.037 billion at end-November 2012, according to figures released by the Bureau of Treasury.

When asked about growing competition in the industries they are in, he replied, “The prize is also much bigger.”

He sees no immediate risk to the Philippine’s economic growth. “I think the worst thing that can happen is we get complacent because everything’s going so well…We just have to be aggressive without going overboard.”

Riding the wave

The Gokongweis are among those that are riding the Philippine economic wave. The Philipines grew an impressive 6.6% in 2012, attracting attention from foreign investors keen on higher but safer returns.

It’s an opportunity that led them to partner with former telco and real estate rival Manuel V. Pangilinan’s Philippine Long Distance Telephone Corp (PLDT) and Metro Pacific Investments Corp (MPIC). The groups repaired ties in 2011, entering into a profitable agreement that allowed former price-cutter Digital Telecommunications (Digitel) to be folded under giant PLDT.

The two teamed up again to bid for the P17.5 billion Mactan-Cebu International Airport expansion project, one of the hotly eyed assets the government is in the process of auctioning off.

“It will not be [a one-off partnership]…With regards to airport bids, we would like to work most closely with Metro Pacific,” Gokongwei said. “We’re very comfortable with the relationship and there’s no reason why we shouldn’t work together [on future bids for other airport projects].”

The Gokongweis are particularly keen on winning the Mactan-Cebu airport contract since his father and JG Summit founder John Gokongwei Jr. hails from Cebu.

“My father was from Cebu and he would like to give back to Cebu…Helping build a world-class Cebu airport is certainly one of his aspirations,” he said.

Property and casino

When host Coco Alcuaz asked Gokongwei about other businesses, including real estate, Gokongwei remained optimistic.

Despite the flurry of construction of high-rise residential projects especially in Metro Manila, Gokongwei said he does not see any property bubble as the case was before the Asian financial crisis in 1997. He said there is a real pent up demand that the developers are filling, and that companies have not stacked up on borrowings. 

“The base now is much more solid in terms of interest rates and affordability…All the big property developers have very strong balance sheets,” he stressed. 

It’s the property and retail game that led them to also seek a partnership with the between Robinson’s Land Corp. and the group of controversial Japanese pachinko magnate Kazuo Okada who is spearheading a multi-billion casino-entertainment project at the upcoming Pagcor Entertainment City in Pasay City. 

“That’s clearly a growth industry,” he said. Gokongwei’s optimism comes from the influx of gamblers from North Asia. The Philippines is a preferred destination because of its proximity to the region.

Gokongwei also praised the government’s effort for bringing more tourists into the country. It’s an industry that the group’s airline, real estate and hotel units benefit from. 

When asked what he thinks of the “It’s More Fun In the Philippines” viral campaign of the government, he replied, “[At least] now we have something to talk about. There’s a vibrancy in the Philippines.” – Rappler.com