Q/A with Gokongwei

I recently sat down for an hour-long televised interview with JG Summit Holdings Gokongwei Group CEO Lance Gokongwei, the affable Wharton-educated double summa (Finance and Applied Science). Excerpts:

How is the economy doing?

LANCE GOKONGWEI: The economy is doing very well. Right after COVID, the Philippines underwent a very difficult economic time.

There was a 9.5 percent drop in GDP in 2020. Since 2022, with the improvements, the rapid reopening of the economy and the strong leadership of President Marcos Jr., we’ve had two years in a row of 6.5 percent growth, which is either No. 1 or No. 2 in the whole of Asia. What we lost we have regained. In 2023, we were back to 2019, and 2024 is growth time.

A good economy is very good for business. As business people, we want to see the whole economy grow. Our products depend on the support of our countrymen.

We’re seeing a tourism boom, domestic and international. Not only Manila is growing. Provincial cities like Cebu, Siargao and Bohol are benefitting from the boom. This trend will continue because the PBBM government is really supporting privatization of infrastructure like NAIA. Even the provincial airports are now being invested in by private institutions. Airports will be improved and people flying to Bohol, to Cagayan de Oro, to Cebu, won’t need to pass through Manila.

Our entire Cebu Pacific team has worked very hard and believed in our mission of making flying affordable to more Filipinos. More than that, business really requires the support of the entire stakeholder group, particularly the government which creates the playing field and the infrastructure that enables this travel.

The PBBM government has disclosed the largest infra-spending program in the history of this country – P9.5 trillion.

Because of all the investments being made by the PBBM government, and also their private sector partners, companies are expanding. San Miguel is investing in NAIA and Bulacan airports. Aboitiz group investing in Cebu. You saw the Filinvest, JG Summit, Changi Group building Clark, and you see these replicated in the other airports. And we can also see the growth in hotels, restaurants and other industries. We are inspired. Cebu Pacific just announced last month the largest aircraft order ever in Philippine history.

We invested in 150 Airbus 321 Neos, which will represent a potential investment of $24 billion, the single largest investment made by a Philippine company. That represents our confidence that Philippine tourism and trade will grow.

We’re making a bet for the next 10 years. My children will be paying for this ($24 billion) for the next 20 years. So I have to be very confident because I want to make sure that my shareholders will benefit from this. The Philippine consumer will benefit from the most efficient aircraft possible. This will allow us to provide the lowest affordable fares to them. I would not do this on behalf of my shareholders if I did not have such immense confidence that our country will continue to progress.

We’re just beginning to recover now. The future looks bright. Therefore, we are making the necessary investments.

The country has all the essential elements for growth. Good demographics, very hardworking, dedicated people and natural resources. But the missing element is now available.

We have a very strong, positive leadership from the President who really supports business. Walang drama, is totally focused on building the economy and trying to build a balanced economy that meets all the Filipinos’ needs. The level playing field for business people, the right regulatory frameworks. But also listening in terms of fighting inflation, and creating good jobs for fellow Filipinos. So when you have that kind of environment, the future will really be bright.

I’m fortunate enough to be the head for tourism for the Private Sector Advisory Council. We meet with the President three to four times a year.

Tourism is very important to the Philippines’ current and future. It’s 8.6 percent of the GDP. The President is actively seeking out and consulting with various representatives of the private sector. Nakakagana for me as a business person.

We want to work with the government because we recognize that that’s the only way for the whole country to progress. For such a busy person to reach out, it’s really inspiring. The President has never been late to any meeting. He is always on time. It’s very special.

He’s exceptional in the sense that when you work with a man like that, he respects your time, he respects your input. The more you work with him, he gives you the confidence to really continue to invest.

Other success stories?

Two things. One, the President has called for building up manufacturing; and two, financial inclusion.

Our neighbors have manufacturing contributing 30 percent of GDP. With the China Plus One policy, many multinationals are looking to invest abroad to build alternative manufacturing bases.

We have made the single largest manufacturing investment, $2 billion, in the Philippines in Batangas with our pioneering JG Summit Petrochemicals. It’s has been a very difficult industry.

Our investment in Cebu Pacific is larger (with a $24 billion aircraft purchase).

The President is very supportive of financial inclusion, financial services that are affordable to more Filipinos. Historically, a lot of our kababayans don’t want to go to banks because it’s inaccessible. Two-three years ago, 60 million-70 million had no bank account.

With our GoTyme investment, people don’t even have to go to a bank. Just use your national ID or whatever identification you have.

Where’s the business going, Lance, from your vantage point of view?

The company vision is an unrelenting commitment to providing better choices for our customers, in finding new ways of doing things to be meaningful and to create meaningful breakthroughs.

*      *      *

Email: [email protected]