Monday, October 13, 2008 ‘Be positive during crisis’
“DON'T let the ongoing financial crisis push you into looking at the negative side.”
This is SM Prime Holdings Inc. (SMPHI) president Hans Sy’s advice as the country and the rest of the world face the threat of a global financial crisis.
“It’s a matter of how you look at the situation and zero in on the positive things. If I were to think that the situation is really bad, I would have withdrawn our expansion plans and missed the opportunities,” Sy said during the grand launching of the SM City Northwing in Cebu last Friday.
He said the Philippines is not as badly hit by the financial crisis in the United States like other countries, saying that the country has a “certain peculiarity” that other nations do not have.
He cited the more than eight million overseas Filipino workers (OFWs) who sent about P14.4 billion to their families last year. The OFWs are expected to remit more than P16 billion this year.
The Bangko Sentral ng Pilipinas expects OFW remittances to reach P18.3 billion in 2009.
Economic development
“So where do you think that money will go? It will continue to circulate in the country,” Sy said.
With the money sent by their loved ones who work overseas, families of OFWs consume goods and pay for services and, in the process, help economic development.
Sy said one positive thing about higher fuel prices and expensive air fare, many Filipinos shop and travel within the country instead of going abroad. In doing so, they help the local retail industry, he added.
“Even in Cebu, we are doing well. Same-store sales posted a five to seven percent (growth) while growth in our new malls and expansion contributed 10 percent. So we are not affected and we are very much on track,” he said.
SMPHI, one of the country’s major shopping mall developer and operator, recorded a net income of P6 billion in 2007, up 10 percent from P5.4 billion in 2006.
In a statement, SMPHI revealed it will open three new malls—SM Supercenter Rosales in Pangasinan, SM City Baliuag in Bulacan, and SM City Marikina—as well as expand two new existing malls—SM City Fairview and SM Megamall—with an estimated capital expenditure of P6 billion.
China expansion
Sy said he recently came from Hong Kong where he assured investors that the company, is continuing with its expansion plans in the country and in China.
“I look at China like SM in 1995 when we went public. At that time, we only had four shopping centers in the country. We now have 31, 17 of which were built within the last five years. What is the relation? Just like in 1995, we have to build up our brand equity in China as well as strengthen our organization and make certain that we are financially strong,” he said.
SMPHI acquired three malls in China—specifically located in Chengdu, Jinjiang and Xiamen—from the Sy family through a share swap arrangement last year. SMPHI is now building its fourth mall in Chongquing, Sichuan Province in China, which is expected to be completed within two years.
“China is a growth story for SM Prime. Over here, how many can you build?
We are looking at 45 malls. After that, what comes next? We are looking at maybe one or two more malls in China in the next five years. (Since) China doesn’t know about SM, we still need to build our brand equity and strengthen our organization, which will take time,” Sy said.
In Cebu, SM Investment Corp. (SMIC) plans to open in March 2009 the hotel it built next to the SM City mall at the North Reclamation Area, Cebu City.
SMIC is also planning to build a convention center next to the hotel and mall.
SMPHI and the Cebu City Government, on the other hand, are still in talks over possible investments at the South Road Properties. (NRC)
