Why Henry Sy Believes The Philippines is not Hopeless

BULL MARKET, BULL SHEET By Wilson Lee Flores
The Philippine STAR

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?

HENRY SY: 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 Coast� 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 Dasmari�as 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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