Will development get hit by a U.S. recession
and a global slowdown?
A downturn is eventually good for outsourcing — companies
need the savings more than ever. We haven’t
really seen the full effect yet [of a U.S. recession]. Our
high-end property sales to overseas Filipino workers
are down, but they are strongly up in the mid-market.
Sales are down in the U.S., but we’re shifting some of
our sales effort to Europe and the Middle East.
What of inflation and higher interest rates?
Inflation is a burden on our cost structure, in fuel
and steel prices, for example. People are feeling the
bite of higher prices in gasoline, electricity, and rice,
and this is affecting consumer confidence. But some
are thinking of buying property. Mortgage rates have
remained low — despite the fact that real interest rates
have gone up.
What are your views on future business prospects
China is an important nation and will be a big investor.
We need to develop relationships. We have projects
there. Chinese investors are also coming here, and they
tend to come to us first. We’re selective about partners.
There are people who are like us in terms of value systems
and governance. Some Chinese companies have
been heavy-handed, making deals at the top without
going through the governance processes.
Yet you have no choice but to engage?
The Chinese are looking for resources and locking them
in. The Philippines is right on their doorstep, and we have
an enormous amount of resources. But I don’t think the
Chinese feel very welcome here at the moment [in part
due to a government bribery scandal allegedly involving
Chinese telecom vendor ZTE]. We’re hoping for longterm
relationships with the right Chinese partners.
Is corruption the biggest problem facing the
Corruption is a big issue, not just in the Philippines
but in other countries around the region. But it’s not
just corruption; it’s the ability to execute at the governmental
level. In the Philippines, there’s a litany of
high-priority projects that never got to the operating
stage. They were hobbled by judicial intervention in
contracts, for example. That’s why we [at Ayala] put
in our own roads, our own electricity. We can’t rely on
other actors, particularly the government.
What do you like to see in your CFO?
Governance is a very big factor. It’s not just about making
sure we follow the right steps, but making sure the
control processes are in the right place and that there’s
integrity in the system. I like to see forward-looking
information, especially in terms of risk management.
I expect the CFO to set up the enterprise risk policy,
looking at business continuity, liquidity and cash. I also
look for performance management. This helps monitor
the trajectory of the company, helps us know what
we need to do to create shareholder value.