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My Rotary Club of Manila speech

"Why do some companies thrive and last?"

 

 

(Following is the last part of my speech delivered Nov. 15)

When the rules for doing business are easy, red tape-free, graft-free and less costly, people with some money want to do business.  They create companies, put up projects, employ people.  In this country, 99 percent of enterprises are small or medium, with capital of P20 million or less.  Investments are about jobs. 

This country has at least 10-million unemployed or underemployed. To create one job, it takes P2 million.  If the government makes it difficult for you to do business, you are better off parking your P2 million in some other place.

According to the World Bank, a potential software entrepreneur in Canada would take just two procedures, one and a half days and less than 1 percent of income per capita to start her business in Toronto. 

First, she would need to file for federal incorporation and provincial registration online via industry Canada’s electronic filing centre; this costs 200 Canadian dollars ($159) and is completed within a day. Second, she would need to register online for value added tax; this costs nothing and is completed within half a day.

If the same entrepreneur applied in Quezon City, the business incorporation process would require 13 procedures, take 31 days and cost around 20.3 percent of income per capita. She would need to make 14 different tax and contribution payments and visit multiple agencies in person. 

Further, the Filipino enterprise would be expected to pay 42.9 percent of its commercial profits in taxes and contributions annually. “Cumbersome business regulatory structures such as these constrain the ability of entrepreneurs to transform their ideas into viable businesses,” laments the 2018 World Bank study of 190 countries in ease of doing business.

Among 190 countries, the best in starting a business is New Zealand.  Only one step and you get your permit in half a day. In Quezon City, a permit takes at least 13 steps and 31 days (since there is no work on weekends, 31 days is actually 40 days). 

The world best in construction permits is five steps and 26 days.  In the Philippines, a construction permit takes 23 steps and 122 days or at least four months.

One of Rodrigo Duterte’s charming qualities as president is that he hates red tape.   Indeed, one distinctive quality in his nearly 23 years as mayor of Davao City is the ease with which businessmen could do business in davao city.  Walang red tape.  Walang lagay.

In June this year, Republic Act (RA) 11032, the Ease of Doing Business and Efficient Government Service Selivery Act of 2018, was enacted.

An Anti-Red Tape Authority (ARTA) was supposed to have been set up last October yet.              

Today, there is still no such anti-red tape authority.  Why? red tape.

By the way, have done business with the Securities and Exchange Commission?   People there have not heard of Duterte’s dictum of no red tape.       

It takes eight months to incorporate, which means your capital lies idle in a bank while the sec takes its time registering your articles of incorporation.   You cannot collect because strictly, you are not a legal personality.

The largest corporations in the Philippines are family owned. 

San Miguel by Ramon Ang, Eduardo Cojuangco, Iñigo Zobel.  SM by Henry Sy, JG Summit by John Gokongwei Jr. Ayala by the Zobel-Ayala family,  LT Group and PAL by Lucio Tan,  Jollibee by Tony Tan Caktiong, ICTSI by Ricky Razon,  Vista Land by Manny Villar, Aboitiz Equity Ventures by Aboitiz family.  Metrobank, Toyota and Federal Land by George Ty.  Megaworld and Alliance Global by Andrew Tan, DMCI by Consunji family.

Not a few of these companies are very old.  Ayala is 184 years.  San Miguel is 128 years old.  Yuchengco is 100 years. JG Summit is 61 years.  SM is 60 years. The first Aboitiz came to the Philippines in the 1800s.

Why do these companies thrive and last?

First, they are family owned.   Being family owned, they were built on old-fashioned virtues of hard work, patience and persistence, integrity, loyalty. 

Because their companies are the crown jewels, the families try their best to make the business grow, prosper, and be resilient. They look long term and beyond. 

Unlike in America, where business models are calibrated for the short term profits and immediate gains.

When he came from China to the Philippines as a boy of 12, Tatang Henry Sy cried when he saw his father. 

His Dad’s sari-sari store was so small it also served as his bed and dining table and store all at the same time.  “This is not the kind of life I would want,” Tatang Henry told himself.  And so he persevered.

“I saw how difficult life was for him, his struggle and hard work to earn a living with that small store, so I cried,” said young Henry.

Today, Henry Sy is the richest Filipino, with wealth of $18 billion, according to Forbes, or $14 billion, according to BiznewsAsia.  Today, the three largest public companies are owned by Henry—SM Investments Corp., SM Prime, and Banco de Oro  are three all trillion-peso companies  in assets or in market cap.

Henry Sy’s wealth did not balloon overnight.  Or through any short-cuts. He worked 10 to 12 hours daily for decades, even on Saturdays and Sundays.

Success does not come on a silver platter.  It is more the result of hard work, discipline, persistence, guts, and of course, good luck and good timing.

Henry Sy said, “success is not just good luck. It is a combination of hard work, good credit standing, opportunity, readiness and timing.”

In the course of the last 17 years, at least four local magazines tried to copy my format—a newsweekly devoted to business and economic news.  They all failed eventually and miserably.   This year alone, two foreign branded business magazines folded up locally, their print version, that’s Entrepreneur and Forbes Philippines.

BizNewsAsia easily outsells local magazines and foreign brands because of its broad and deep coverage of business, politics and global issues, and profiles of exceptional achievers in business and governance.

We claim a pass-on circulation of 350,000 readers with each copy being read on the average by 10 readers.

We claim 350,000 readers. Why? Because our record sale for a single issue was 35,000 copies, with power 100 issue. That is how compelling we are.

Finally, the market is hungry for a publication like BiznewsAsia.  A magazine that focus on the things that count—business, the economy, the Philippines.

Nightly, our major TV stations devote considerable minutes to the inanities of movie stars and showbiz personalities—their quarrels, intrigues, gossip, fashion tastes.

May I suggest: Why not reallocate these precious minutes to the good deeds and achievements of our tycoons, taipans, and achievers?

I think our country would be much better off. 

Email: [email protected]

Topics: BiznewsAsia , Rodrigo Duterte , business , economy , Henry Sy
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