Lifestyle Business

Why Henry Sy believes the Philippines is not hopeless

BULL MARKET, BULL SHEET - Wilson Lee Flores -
I am optimistic that we can achieve a better future. It’s not true that the Philippines is a hopeless case," 82-year-old SM Group and Banco de Oro founder Henry Sy recently told The Philippine STAR. "I’m an immigrant who came here at 12 years old, spoke no English or Tagalog, but I came to appreciate the natural beauty and many economic advantages of the Philippines more than many other people do, and I kept working and investing with positive thinking."

The exclusive three-hour interview took place at his simple but elegant bungalow in North Forbes Park, Makati City, and at Tanabe Japanese Restaurant in his SM Mall of Asia in Pasay City.

In the over two decades I have known the legendary rags-to-riches taipan and shopping-mall pioneer, Henry Sy has become more mentally sharp and energetic than ever before. He is strong despite his weak knees, which occasionally forced him to use the wheelchair when we briefly toured his newest pride and passion – the SM Mall of Asia.

PHILIPPINE STAR:  Congratulations on the success of the SM Mall of Asia. What did your competitors say about your biggest shopping-mall project yet?

I called Robinsons mall boss John Gokongwei Jr. to personally invite him to the blessing of the SM Mall of Asia, but he said he couldn’t make it. Even though we are competitors, I don’t think Gokongwei has any complaints about me.

Your executives tell me that one million people came to the SM Mall of Asia on your first day, May 21, then 400,000 came the next day, Monday. Why are people coming here, when this location is not along a highway like SM Megamall or at a crossroads like SM North Edsa?

A lot of the customers to this mall came from the provinces – they enjoy touring the place. It’s not only constructing the place that creates a good mall, we at SM create destinations using continuous research, studies and new ideas to match the needs and wants of the people. Doing a mall is not only construction of the physical place, what’s important is the merchandising mix. We strive to serve the convenience of the public. We want shopping at our malls to be a unique and an enjoyable experience.

Why did you build an Olympic-size ice-skating rink in this mall?

Very few people know this: I love skating and bowling. I used to roller skate a lot in my youth on Taft Avenue, Manila. That’s the reason there’s always a skating area in all my SM malls. I want more people to share my love for skating.

When you were a kid, what was your original ambition?

I’ve always wanted to be a businessman. No other ambitions, I just wanted to be in business, even when I was a child in Fujian province, south China.

Why did you invest P7 billion in Mall of Asia’s 500 outlets, 180 restaurants and other facilities, at a time when the Philippine economy is not that strong?

It’s investment that manifests my strong confidence in the Philippine future. I hope this biggest mall project will have a positive impact on the Philippine economy and I hope to encourage other business people to invest, too. Not everything I do is purely for money. Of course, as a businessman and as head of publicly listed companies, we have to earn, but at this point in my life, there are other considerations more important besides just money. I took a risk and invested in SM Mall of Asia because I wanted to create something that could contribute to Philippine tourism growth. If I am only after profits, the easiest way is for me to construct high-rise condominiums here along the seashore facing Manila Bay, or I could just develop high-end subdivisions here and subdivide the lots to cash in quickly with big profits. But constructing this mall is a long-term investment; it is proof of my faith in the future of the Philippine economy. I wanted to build a beautiful destination for shopping, wholesome family-oriented entertainment and leisure. That church outside this mall, I donated it – everything from the structure, the land, to the interior furnishings and decor – it’s not for profit.

What else do you wish to achieve after the SM Mall of Asia? What other big projects can we expect from you?

My biggest wish is for government, the private sector and all of us to work together to make the Philippines the best tourism destination in Southeast Asia. This is the reason I am always optimistic that the Philippines is not a hopeless case, contrary to what a lot of cynics claim. What Thailand can offer in tourism places and services, we in the Philippines can match, except for our past reputation in peace-and-order problems. That’s what has held back our tourism growth. Philippine economic prospects are very good; we just have some problems in the investment environment which the government is now rectifying. Other export industries often rely on imported raw materials and the Philippines often only earns the labor input, but in the tourism industry, the Philippines can earn as much as 80 percent for every dollar spent here on food, shopping, entertainment, hotels, transport, etc., while 20 percent probably goes to imported liquor and other luxury goods. I’m into tourism with Tagaytay Highlands, Taal Vista Hotel. We shall keep investing in new tourist-friendly malls, we are now master-planning a new 5,700-hectare seaside tourism project called Hamilo Coastâ in Batangas, and many others.

Why do you think the Philippines is ideal for tourism?

First, there’s the location: we are just two to three hours from all the major Asian cities like Singapore, Malaysia, China, Hong Kong, Taiwan and others. Second, our people are famous for the best service in Southeast Asia. Third, people here are proficient in English. Fourth, the Philippines has many naturally beautiful tourist destinations, beaches, thousands of islands, unique flora and fauna, vast fishery resources, and others. Fifth, the Philippines is excellent in entertainment, which is important in tourism. Look at the singers and bands in top hotels, from Shanghai to Seoul to Tokyo, many of them are Filipino entertainers. Sixth, you don’t need much capital or foreign investments for tourism development. Seventh, Philippine hospitality is better than others in ASEAN – just look at the people’s smiling faces. In our Chinese language, we call this ho khe chieng, or people who are warm and hospitable in welcoming clients and guests. There are many more advantages. I could spend all day and all night talking to you about the tourism potentials of this country.

What are your suggestions on how to build up Philippine tourism?

I have a very simple formula based on common sense that will help accelerate Philippine tourism growth: the government should improve the peace-and-order situation as well as the international image of the Philippines on this crucial issue. The government should upgrade infrastructure, there should be a strong information campaign worldwide to promote the Philippines as an ideal tourism destination. In a recent event of HSBC, a TV talk show host of CNN asked for my advice to politicians and I shared only a few words of advice: work more, talk less.

Government every year claims over two million tourist arrivals. What do you think should be the ideal number of tourists coming to the Philippines annually?

Our target should first be to attract five million tourists in the first five years, then go for over 10 million in 10 years. Every time I meet President Gloria Macapagal Arroyo, I always tell her this dream of mine and my excitement about Philippine tourism potentials because I know she really wants a better Philippine economy.

In this era of globalization, SM is also going international like the western multinationals Walmart, Carrefour, Metro and others. What are your plans in China?

We have four major projects in China. In August or September this year, we shall inaugurate our new mall in Chengdu City, the capital of the 100-million-people Sichuan province. China is a dynamic place, it is amazing in progress.

Why is it that your children didn’t grow up spoiled, and seem to have imbibed your work ethic and business acumen? How did you train them?

I think it’s their innate natural drive. I also trained them in the importance of hard work. Even while they were in high school, my children used to spend their free time working at our SM Department Store in Makati.

Who among your six children – Tessie, Elizabeth, Henry Jr., Hans, Herbert and Harley – will become your future successor and the leader of the SM Group’s next generation?

I cannot for now ascertain who will be the leader. We are organized as corporations, publicly listed firms. Whoever becomes the leader of the next generation shall rise based on merits and abilities. Unlike other top Chinese business families in Asia, which favor male sons over daughters, all my six children are treated equally. My eldest child Tessie is hardworking and very capable; it doesn’t matter that she’s a woman. She always wants to learn and she is a fast learner.

A billionaire asked me recently who is richer, you or Lucio Tan?

How can I know for sure who is bigger in net worth when each person has his own strengths that not everyone fully appreciates? I don’t like to say this guy is the biggest in wealth, because some people have wealth which is hidden – isn’t that a fair point of view?

John Gokongwei Jr. told me that when he first applied for a loan with PBCom it was not approved, and it was China Bank’s Dee K. Chiong and Dr. Albino SyCip who approved his first loan of P500,000 in 1950. What about your first loan?

I don’t usually like to get loans. In fact, the reason why we did well and completed our first mall project, SM North Edsa, even after the 1983 economic crisis and after the Ninoy Aquino assassination, was because we had very little loans then. I got my first credit line in 1949, it was from China Bank and they lent me P1 million. My credit line was approved by Mr. Yap Tian Siang in their head office before at Juan Luna Street, corner Dasmariñas Street.

Did you ever imagine in 1949 that you would someday own more than 70 percent of China Bank, and that you would have Banco de Oro and soon, possibly, Equitable PCIBank?

No, I never imagined then that I would own banks. You know, despite our many shareholdings in China Bank, the Dee family of the original founder has managed the institution so professionally and profitably, we never attempted to change the incumbent chairman Gilbert Dee or president Peter Dee. We are not that greedy, it’s not good. I don’t believe in wanting both power and financial gain. Even those executives who have been with China Bank for many years, they are still there. If a venerable institution like China Bank is doing so well, why make changes?

Is it true you already own 11 percent of San Miguel Corporation?

I have invested a lot in that well-managed company, but I don’t want to mention figures.

What are the business principles or strategies that made you successful?

I wouldn’t classify this as a secret to success, but one of my lifelong practices is to pay my obligations on time, especially my suppliers. Even in my early years as retailer, I didn’t delay my payments to suppliers, because I tell my kids that we have to be considerate to suppliers and think of their own hinyong or how they have to protect their sense of trustworthiness with others. If it’s time to pay others on Monday, we would already deposit the money in their bank accounts on Friday, so they need not even come to our office to collect.

Your SM Cinemas do not allow R-18 or For Adults Only movies, including The Da Vinci Code. Are you a Catholic or is it just your wife?

I am Catholic, but yes, it’s my wife Felicidad Tan Sy who is the most devout among us in the family. She devotes almost all her time and money to the Catholic Church.

Your SM Group leases out or has retail businesses in millions of square meters of prime commercial space. When you came to the Philippines as a 12-year-old boy, how big was the sari-sari store of your father and what was its name?

It was a small ha-ya-tiam, it had no name. It was located on Echague St., which is now Carlos Palanca Sr. St. in Quiapo, Manila. It was only about 30 square meters in floor area.

Why did you cry when you first saw your father in his store?

I cried because I saw how hard the life of my father was as a small shopkeeper. He worked from early morning to late at night every day. He would go to chay-chi-khaw area or Divisoria to buy goods, carrying them himself on his back in order to resell in the store. I learned the importance of honest hard work, frugality and discipline from his example.

Where did you and your father sleep at night, on the second floor or at the back of the store?

Our sari-sari store was so small it had no back or second floor, we just slept on the counter late at night after the store was closed.  

When you were a kid and you saw your father struggling with his sari-sari store, did that motivate you to aspire to become Southeast Asia’s Shopping Mall King?  

As a kid, I had the will to strive for excellence and to overcome the hard environment, but I never imagined attaining big success. Whatever I have achieved did not happen overnight; ever since my teen years I’ve devoted many, many years of my life to non-stop studying, diligent work and dreaming of a better future.
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