Makati, Philippines – July 25, 2019 For Ayala President & COO Fernando Zobel de Ayala, Filipinos have massive potential to reap the benefits of Asia’s rise in the global economy. However, ensuring the Philippines’ long-term prosperity requires that the private sector adopt a long-term view, collaborate more closely and engage on a more concerted effort with government to generate sustainable social and economic impact. Zobel shared his thoughts in a keynote address to members of the Financial Executives of the Philippines.
According to McKinsey, Asia is on its way to exceed 50% of global GDP by 2040 and may account for 40% of total global consumption by that time. Other research by The Boston Consulting Group and HSBC also suggest that by 2030, the Philippines’ economy may surpass Malaysia, Hong Kong, Taiwan, and Singapore in size, to make it the 27th largest out of 75 countries. However, realizing this potential for growth would depend on implementing the right governance system, openness to technology, and the quality of its human capital.
“We need to establish the appropriate environment for progress. In my view, we need a deliberate and strong alignment with sustainability principles and adopt long-term thinking. This of course should also be complemented by effective execution and meaningful impact in critical sectors, especially finance, tourism, education and healthcare,” Zobel said.
Ayala believes that these areas hold tremendous potential to boost the country’s economic development. It is actively contributing to these sectors as part of its commitment to the UN Sustainable Development Goals (SDGs). The group formally aligned its business strategies to the SDGs in 2016 and is a founding member of the UN Global Compact Network Philippines. It continues to be guided by its newly launched Sustainability Blueprint, wherein all Ayala companies champion SDGs to achieve specific targets by 2030.
To illustrate this, Ayala is doing its part to promote inclusive finance, as two-thirds of Filipinos are unbanked and are vulnerable to the risks connected to unauthorized lenders. With the Bangko Sentral’s support, Ayala is able to provide alternative means to access the financial system through BPI’s BanKo, which to date has disbursed P4 billion of microloans to 60,000 entrepreneurs across its 200 branches nationwide. In addition, Mynt, a partnership among Globe Telecom, Ayala Corporation and Ant Financial, harnesses mobile technology and alternative credit scoring models to likewise provide microloans to its 171,000 users with active credit lines. To date, Mynt has disbursed P640 million of credit.
In the tourism space, Ayala sees potential to have a high impact on job creation as well as poverty alleviation in rural areas through sustainable tourism. Ayala believes that companies must leverage on the boom in tourism that the Philippines has seen over the last decade, wherein the sector’s direct economic impact more than doubled and now accounts for 8.7% of GDP and 2.3 million jobs. By 2028, the World Travel and Tourism Council projects that tourism’s direct contribution will reach P2.5 trillion, equivalent to around 10% of GDP and an estimated 3.2 million jobs. Ayala remains hopeful about sustainable tourism and what it can do for the country.
In the education space, 65% of Filipino graduates are deemed unemployable from the lack of industry-related skills. To help remedy this, AC Education is helping prepare the Filipino youth to enter the workforce and is training quality educators. With its partnership with the Yuchengco group, Ayala now reaches 60,000 students through Mapua University, Malayan Colleges Laguna and Mindanao, National Teachers College, University of Nueva Caceres, and APEC Schools. In some universities and other partner schools, Ayala works closely with employers to co-design a semester-long curriculum that is customized to employment needs. As a result, 90% of graduates who have undergone this co-designed program are employed within 90 days, and with 20% higher starting salaries.
In healthcare, AC Health is building an integrated healthcare system that aims to improve healthcare for all Filipinos. However, the overall physical wellbeing of Filipinos remains subpar with an alarming rate of childhood malnutrition and growth stunting. According to economists Dr. Cielito Habito and Dr. Emmanuel De Dios, there is a 50% rate of child stunting for the poorest 20% of the population. At the same time, 21% of children are underweight. Furthermore, a 1% loss in adult height as a result of childhood stunting is linked with a 1.4% loss in economic productivity, resulting in 20% less earnings as adults. Stunting is associated with up to 3% GDP losses annually. Ayala believes that this critical and often ignored issue can be resolved through long-term human development programs.
“In the Philippines, we have a unique opportunity to continue and even increase the impressive growth that we have achieved consistently for the past 10 years in a vibrant and fast-growing region. But it will not happen if we do not build far stronger foundations in infrastructure, social services, financial inclusion, job creation and education among others. Building these foundations will take time and will have to be continued from one administration to the next,” Zobel further stressed.