Remittances, drive vs. corruption key to country’s growth: Ayalas

FOR the Ayala brothers, high remittances from overseas Filipino workers and the government’s battle cry against corruption are important factors leading to the country’s growth.

Interviewed for CNN’s Talk Asia, Jaime Augusto Zobel de Ayala, chairman and chief executive officer and Fernando Zobel de Ayala, president and chief operating officer of the Ayala Corp. discussed the Philippine economy, the future plans for their business empire and what it was like for them growing up.

Jaime told CNN Correspondent Andrew Stevens that despite weaknesses in the global economy, the Philippines has a demand component of consumption, which has been lacking in many developed countries.

“We have a fairly unique business model in the country–the service economy is very much alive in our country. Manufacturing’s been weaker, but the service economy is alive,” he said.

He added that globally, Filipino service providers in different fields have been in demand and that about 10 million Filipinos abroad send their earnings back to the country and drives the consumption.

“Our housing, our telecommunication, the needs of households...and so the economy has continued to move, based on this consumption-led model,” he told Stevens.

New standard

The brothers also expressed faith in the Aquino government, saying the President and his cabinet have set a new standard in governance. Fernando said the current administration’s efforts at introducing reforms has brought a renewed confidence in the Philippines.

“It’s only been about a year and a half, but so much has been done to restore confidence. They’ve been extremely careful in how public funds are spent. They’ve made it very clear that foreign investment would be very welcome and that they will have a level playing field when they come to the country. And we’ve seen the results of that,” he said.

He added that they are pleased to see how Filipinos abroad have brought back their money to the country and are investing it ,as seen by figures at the stock market and growth of asset management.

Asked if instead of seeking work outside the country, Filipinos should be coming back as a sign of a good economy, Jaime said many of their senior executives once worked in a global space.

The Ayalas also believe the Philippines today is enjoying a period of political stability.

“Every businessman around the world is looking for stability. And it’s really playing to the strengths of the country. At the end of the day, investment depends on a very peaceful and predictable political environment. And that’s what we’re seeing,” Fernando said.

Asked how big a problem corruption is for the Philippines, Jaime admitted there has been a history of corruption the country but that there “has never been as much rigor and seriousness on the part of this government” in addressing it as they have seen under the Aquino administration.

Fernando admitted that it will also take time to bring corruption under control.

However, he said that because their company has operated many years and has built
relationships, they have not experienced some problems that others have complained about. He added that corruption is not solely a Philippine problem.

For his part, Jaime believes that as the country grows and more people are educated, the standards and governance will also move up while the corruption index will fall.

“As people start to earn more, as people start to get better educated, as people start to demand higher levels of governance, invariably, the whole corruption issue also begins to decline,” Jaime said.

As for their plans for the year, the brothers assured that 2012 is looking bright for them, as the rest of the country.

Infrastructure

Fernando admitted that the lack of infrastructure is significant for Philippine growth and that there is a lot to be done in terms of roadways, toll roads, rail systems and airports. “You’ve got companies and foreign partners very interested in participating in this, and the banks (are) ready to lend. So, it’s a very, very unique time for the country. And we need to take advantage of this opportunity.”

Fernando admitted that they sometimes worry tge amount of expansion coming could lead to similar problems encountered in other parts of the world.

“But we’re going through a fairly early period in our growth cycle. And we’ve had a bumpy ride for a fairly long period of time. We’ve had interest rates at these levels, with money available for the tenure that we’re seeing right now.”

The international news network features the Philippines in its week-long special, “Eye on the Philippines.”