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Cuisia speaks on Aquino, Duterte

business / BoardTalk
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Cuisia speaks on Aquino, Duterte

/ 12:14 AM February 13, 2017

CuisiaLife should be easier after five years of serving as Philippine Ambassador to the United States and, simultaneously, an active director of several blue-chip Philippine companies.

But when you’re Jose L. Cuisia—who’s been Central Bank Governor, Social Security System Administrator, president and CEO of Philamlife, and Governor to the International Monetary Fund, among others—life is a continuous call to serve.

He’s currently a board member at SM Prime, Manila Water, Century Properties, Phinma, FWD Insurance, The Covenant Car Company (Chevy Philippines), AIG Shared Services, the Asia Breast Center, and the Asian Institute of Management’s Rizalino Navarro Competitiveness Center.

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“Even when I was abroad, I would come home to attend annual shareholder meetings in person, and occasionally, some board meetings. Most of the board and committee meetings were held in the morning in Manila, so I could attend them from Washington in the evening via Skype or teleconference,” he says.

Aside from good time management, he relies on a solid foundation in accounting and the ability to sift through a lot of information quickly, which are musts for corporate directors.

How about the musts for good boards?

“First, you must have diversity. In Manila Water, we have two outstanding women directors and we have very enriching discussions because our directors come from different fields of expertise. Furthermore, there is mutual respect for each other’s views,” he shares. “Second, management provides us with a lot of information to help us make decisions. I’ve been privileged to sit on boards which have practiced good corporate governance by making sure that all directors are provided with complete materials. And most importantly, we have independent directors who are not afraid to speak out, even if they have views that are different from those of management. That’s what good governance is all about.”

“We’re making progress [in corporate governance] because of the work done by the Institute of Corporate Directors (ICD), and by the companies themselves; some have been given regional recognition for adopting best practices in corporate governance. There’s a real effort by Philippine corporations to adopt good practices prescribed by the Asean Corporate Governance Scorecard. But we need to develop more qualified directors to ensure that there is an adequate pool of independent directors who can be invited to various boards,” he notes.

“The reason why it’s the same people on the boards is because they’re tested, they have a good reputation … New directors should get more training and exposure—they can start with small companies,” Cuisia advises. “Demonstrate independent thinking, attend more of these professional development seminars and eventually you’ll be noticed.”

Has the quality of boards improved over the years?

“Yes, because the directors, particularly independent directors, have gone through more professional training and development with the help of ICD and other organizations providing governance training,” he notes. “The SEC exhorts independent directors to be better prepared to tackle their jobs. I think directors today are more prepared.”

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Philippine-American

relationship

Has his stint as Philippine Ambassador to the United States changed his perspectives?

“Of course. Because of my job, I was inevitably exposed to the US-Philippine relationship much, much more. It made me appreciate the kind of military, security, socio-economic and diplomatic relationship that we have developed over the past 70 years. Despite what other people say, it has been very beneficial to the Philippines. And of course to the US too—because they also need us as an ally here in Southeast Asia,” he says.

“I see the value of a strong economic relationship. Which is why I’m concerned when they say we’ve got to move away from Washington. It is fine to develop other relationships with China, Russia, and many other countries—but not at the expense of the US,” he insists. “Why? Because we have a very healthy, very friendly relationship that has been mutually beneficial. We have over 600 American companies operating here, roughly 350,000 Americans living here. On the other hand, we have 3.4 million Filipinos and Filipino-Americans living in the US. So why should we move away from the US? Are we going to cut off relationships with the US just because we want to please China? It doesn’t make sense,” he adds.

“There is a greater bond between American companies and Philippine companies. Mainly because of our long history of shared values and friendship, the many Filipinos who live, work or study in the US and the lack of a language barrier— which allows Filipino nurses, who are so much in demand in the US, to get good jobs,” he muses. “Because of this, there is a greater affinity between Filipinos and Americans.”

“In traveling around the US, what surprised me is that outside of the major cities, many Americans don’t know much about the Philippines,” Cuisia says. “We did a business presentation in Miami and we were asked, ‘Where is the Philippines? How come we don’t hear the good news regarding your rapidly growing economy? How come we don’t hear about it?’ When Americans talk about Asia, they think of China, Japan, South Korea. They don’t know much about Southeast Asia or the Philippines. There’s not much exposure to our country, but we’re trying to change that. That’s why we had a lot of these trade and investment fora around the US.”

Economic policy

of Aquino and Duterte

The Philippines is in the news much more often now, because of the President’s rhetoric. How does this affect business?

“First, let me say that the administration’s 10-point economic agenda is very good. They’re building on the gains of the Aquino administration, they’re not throwing those away. If the Duterte administration implements that 10-point program, we will continue to see sustained economic growth,” he promises.

His reasons?

“Infrastructure spending’s going to be increased—that’s very important. Five percent of GDP was the highest target under the Aquino administration—I know we hit 4 percent of GDP at the end of 2015. But remember, when Aquino took over, it was 1 percent of GDP. The Duterte administration intends to bring up infrastructure spending to 7 percent of GDP.

“Second, they’re putting more emphasis on agriculture, which I would say was one of the weaknesses of the Aquino administration. In the third quarter, we had 7 percent growth because agriculture was growing by 2.5 percent, the best in the past few years despite bad weather. Government should pay more attention to building irrigation systems, farm to market roads, and providing greater support and assistance to farmers which could definitely contribute to increased economic development.

“Third is the commitment to education sector and health —that’s very critical. While President Aquino and his education secretary should be credited for having implemented the K-12 program, much more attention has to be given to the education sector to provide the youth with more job opportunities. In the health sector, President Aquino and his health secretary ensured better healthcare for the population particularly the lower income groups. Much more needs to be done by government to provide adequate infrastructure for social services.

“Fourth is tourism. We’ve seen our tourist arrivals move up from 5.5 million in 2016; we should be able to hit the 10 million target by the end of Duterte administration. But even if we hit that, that’s still very low compared to Thailand’s 27 million. The tourism sector can provide a lot of job opportunities because our people have the facility of the English language.

“There are tax reforms being pushed—a more progressive system—but they need to plug the loopholes. They’re still many people who evade taxes. You have to widen the tax base —that’s going to be one of the challenges.”

Cuisia adds: “One of our biggest challenges is developing the skills of our work force to meet the higher level of skills required in the future. As you know, we have millions of Filipino workers all over the world. Our Filipino workers are very adaptable, very trainable, and this is why they’re very much in demand. But if we are able to provide jobs here, and bring back these people who were exposed to technology in developed countries, they can contribute a lot more to our economy.”

Cuisia is keen to see more capital injected into the economy.

“Foreign direct investment will increase if you have less taxes, less bureaucracy, less regulation: Just opening a business takes so long because of so many requirements and too much red tape! You’ve got to have policies that encourage companies—both foreign and local—to bring in more modern technology when they invest in the country. But they’ll only do that if they see a more conducive business environment which provides incentive to the private sector to create more jobs,” Cuisia says.

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