Philippine Tatler starts the year off with a look into the business sector by asking its major players and respected pillars for their thoughts on 2019. Listen in on their conversation, and pick up a piece of advice or two
The start of a new year is always a review of the past and a prediction for the future. Based on the known facts and the assessment of trends, safer decisions and surer directions can be made—especially by those hedging their bets on an investment, like entrepreneurs. Looking at the landscape in front of them are four major players in the business sector—furniture designer Kenneth Cobonpue, fashion and accessories retailer Anne Arcenas Gonzalez, food chain proprietor Eric Thomas Dee, co-founder of e-commerce hub Zalora Paulo Campos—and two from the same sector but on a corporate level—Marife Zamora, chairman of Convergys Philippines, and Wick Veloso, newly appointed president of the Philippine National Bank.
WICK VELOSO: Allow me to start this conversation with a picture of the current economic landscape. We are lucky that the Philippines is already into the US$4900 per capita income level. Any economy that has entered a $3000 per capita income experiences a strong consumer demand. We have a two per cent population growth rate, with an average age of 24. On a base of 106 million Filipinos, you’ll at least have a high single-digit growth rate, or if the economy gets further managed properly, a low doubledigit for the next 20 years.
Because of this strong consumer demand, you have a strong catalyst for employment. It brings about so much economic activity. Clearly, our country is now poised for a new segment that has become very empowered—the middle market. The situation is also good for us banks because it allows us to support small, medium, and large businesses. The overall message, therefore, that we see is that the Philippines is open for business.
MARIFE ZAMORA: Harvard professor Richard Vietor said that in the Philippines, you can sell anything because we have one of the highest consumption expenditures as a percentage of GDP ratio in the world. That’s at 73 per cent. We are on the list of the largest consumer markets globally, according to the World Bank.
PAULO CAMPOS: I think that there is no other country in the world more exciting than the Philippines today because of its digital opportunity. Out of 106 million Filipinos, about two-thirds now have access to the internet. We are the number one country in the world in terms of time spent on social media, the only country with a 100 per cent social media penetration. There are 60 million Facebook accounts from the Philippines alone. Given that we’re moving to the digital age, it really positions the Philippines well. We’re very tech-savvy and it comes naturally. There’s a power in Filipinos being online all the time that can be harnessed for positive change.
WV: It is also a fact that 62 per cent of the country’s GDP or its economic activity lies in the peripheries of Metro Manila. Everybody goes to Metro Manila not to shop but maybe to take connecting flights to other countries around the world. If you don’t have a presence in the province, how are you capturing this opportunity?
ANNE ARCENAS GONZALEZ: In the last two years, many of the stores we opened were outside Metro Manila. We have also been working with Paulo [Campos] and through Zalora, we are able to have a wider national presence. E-commerce allows us to serve places that we otherwise couldn’t reach through brick and mortar. Online shopping is becoming more convenient because of the increasing number of pick-up points for digital consumers who are at work most of the day and aren’t home to personally receive their packages.
PC: The majority of Zalora’s business is outside Metro Manila. We feel the power of the provincial regions growing much faster.
ERIC THOMAS DEE: All growth [in the food sector] is [also] outside Metro Manila. We see growth in CDO, Davao, all those areas, and they go to Manila to find a franchise. We joined a franchise expo for the first time two years ago; it took us two years to service the demands that we got from it.
KENNETH COBONPUE: You’re all from Manila and the perspective is different [in Cebu]. I agree that in the service sector, things are rosy; but for manufacturing, it’s a bit tough. Statistics are saying that there are a lot of imports and that exports are going down. The last Filipino clothing brands have been closing and their founders are now more into trade retail. Which I think is sad, culturally, even though it is good economically. I’ve been asked many times, “Why can’t you design things that people can afford?” I answer, sure; but it can’t be manufactured here, it must be done in China. If you notice, there’s nothing sold to the middle class that’s made in the Philippines. Which, in a way, is sad.
WV: One of the key factors in manufacturing is that raw material is available locally. It’s unfortunate that in some industries we export the raw materials to other countries, and guess what? These countries put it together and we import the finished product.
A programme [to revive manufacturing] must be based on a complete understanding of the chain of how products are created from start to finish. It also must be an effort by both private and public sector. There are financial institutions like the Development Bank of the Philippines who are mandated to support these kinds of industries.
MZ: The growth of the manufacturing sector has been steadily improving post-2010 financial crisis. This year, the volume of production index (VoPi) has grown, unlike last year’s negative growth. The improvement was attributed to the double-digit growth of eight major industries led by textiles, which rose 42 per cent. The highest capacity utilisation rate was recorded in petroleum products’ manufacturing plants and the semi-conductor and other electronic components industry employs the most number of workers.
