MANILA, Philippines – It’s the golden age of financing, as business leaders like to stress, but is the Philippines well positioned to seize this opportunity?
Jaime Augusto Zobel de Ayala, chairman and CEO of Ayala Corporation, talked to Rappler’s Maria Ressa on the sidelines of the World Economic Forum on East Asia held in Makati from Wednesday, May 21, to Friday, May 23.
Ayala shared his positive outlook on the much-touted Philippine economy and the anticipated integration of Southeast Asian countries under the ASEAN Economic Community in 2015.
Here are the highlights of the interview:
On the dangers that could be faced by the Philippines amid its rising economy
Zobel de Ayala: Well, the dangers, like anything in life, are: never to be complacent and to build sustainability for the future. Success is wonderful, and all of us even in the corporate sector face this. There are always cycles to things and the key is to use good times to prepare for the challenges ahead. But… the Philippines has been having just a great run, and a lot of good things have been done. I think the President has managed to build a great deal of credibility around his governance agenda. That’s allowed the economic cluster, the economic team to build in the momentum that comes with that, and they’ve done it wisely, creatively, and with their own momentum as well. So, I think we’re reaping the benefits of a new credibility in the country.
On how corruption scandals during the Aquino administration may affect institutional credibility
Zobel de Ayala: I think to a certain extent, there has been a systematic approach. Of course, it’s received a lot of news, it’s out there in the open. Issues of credibility – one has to be careful about [these]. I mean there’s always a balance. Right now we’re at the stage where transparency is being encouraged and so it has not had a negative effect.
On perceptions about how President Benigno Aquino III has addressed corruption issues
Zobel de Ayala: He has been quite systematic in the way he’s dealt with them. But at the same time, in parallel, you’ve got an economic story that’s been quite productive. I think, generally, the way I feel is people have been giving the President the credit and the benefit of the doubt. They feel he’s addressing those issues while at the same time keeping the engine of growth in place. Our job in the business sector is to keep that engine of growth going and we’re all trying to contribute to it in the best way we can.
On what he wants to see in the last 2 years of the Aquino administration
Zobel de Ayala: I think this always happens with any administration. The first couple of years are building confidence and momentum. I think there’s a lot of momentum now. The story of the country is good, the credibility is there. The key is really to take that momentum and give it everything you’ve got, all the way to the end. To be fair to the President… we’ve grown tremendously. The population has grown, we’ve got a young population, and the economy has grown. As it happens with something like that, you know that infrastructure has to be there to support that growth. We are, as a country, a decade or two behind where we should be. So there should be a lot of focus on the PPP Projects – the Public Private Partnerships, but to be fair to government, if you look at what’s been taking place in the DPWH and other areas, I mean people like Public Works and Highways Secretary Rogelio Singson have really been [working] in that sector in a very productive way. There’s just been a lot taking place in the roll out of infrastructure.
On whether the PhilIppines is ready for the ASEAN economic community
Zobel de Ayala: I think so, very much so. I think people have seen this ASEAN economic community as a kind of preparation, a date when all these things happen. There have been a lot of wins within each passing month, within each passing 6 months, each passing year. We’ve really moved already, beyond, ahead of time to a fairly low-tariff for most goods and services. That’s already the environment that we’re in. Many of the issues that ASEAN has been trying to institute, have really been happening.
On how to raise awareness regarding ASEAN
Zobel de Ayala: I think some countries are more advanced than others. We tend to be a little bit insular around the ASEAN arena. I think a lot of it came from the fact that we’ve had one big crisis and one small crisis. A lot was happening between Asian countries in the ’90s; people forget that. Then ’97 [the Asian financial crisis] happened and people retreated back to their homes and their countries and national boundaries. Then they started coming out again in 2008 and that was a more global phenomenon and people paused again. I think there has been a natural movement. While many companies are not fully aware, a lot of them must be small and medium-sized entities. I generally think that they’ve all been adjusting in their own way to a new reality, and even if they don’t really know it, they’re feeling it in the price of goods, the way things are done, how transactions take place. Not everybody is cognizant of a broad framework that drives this, they’re just cognizant of the way they move on a daily basis.
On who may be on the losing side in ASEAN 2015
Zobel de Ayala: I think the ones who will lose are the ones who have been comfortable or have thrived in a highly protected environment, I think there are less and less of those industries. Of course, they still exist. But anyone who has not had the kind of pressures to bring down cost, to be more efficient, to take productivity up, to look for talent that is imaginative, find solutions, anyone in industries that have been very closed will have a tough time adjusting. Anyone in the export industries by their very nature are usually quite competitive. If not, they won’t be able to thrive. So, those are already okay. It’s maybe the very entrenched domestic industries that have lived in a fairly protective environment that will have a tough time.
On how prepared the Ayala Corporation is for the ASEAN Economic Community
Zobel de Ayala: I’d like to think that… all our companies, we’re all in competitive industries. Real estate is very competitive across the board. The banking sector is very competitive, much more so than ever before. Water distribution is of course a monopoly, but highly regulated and with some very tight controls. And then we have a couple of export industries that have had to deal in a global environment. We’re as prepared I think as any company can be. We like an environment where there’s a lot of transparency, where the rules are clear. ASEAN is encouraging that. This is good for us. – Angela Casauay/Rappler.com