SM hopes new law won’t affect its ability to scale up

A KEY pillar of the country’s largest conglomerate, SM Investments Corp., hopes that the proposed fair competition law would be implemented in a way that won’t constrain the ability of large Philippine corporations to compete globally.

Teresita Sy-Coson, vice chair of SMIC—the dominant player in property development, banking and retailing in the Philippines— said the global environment today was “dynamic, constantly changing and highly competitive.”

In a keynote speech before the Shareholders Association of the Philippines (SharePHIL) last week, Sy-Coson said scale was critical to doing business in the international markets.

Citing other local companies who have done well in the international markets—International Container Terminal Services Inc., Jollibee Foods Corp., San Miguel Corp., JG Summit Holdings, Ayala Corp., Metro Pacific Investments Corp. and Alliance Global Group Inc.— Sy-Coson said these firms shared common traits.

“They are listed companies with scale in terms of resources, revenues and market share,” Sy-Coson said.

“Competition is quite keen in the global arena and for business to be competitive, you will need the advantage of size and ample financial resources to gain market share in different industries globally,” she said.

The SM group, for its part, has consolidated its real estate businesses to become one of Southeast Asia’s largest property firms.

Property arm SM Prime Holdings has 52 shopping malls in the Philippines and is likewise building a shopping mall chain in mainland China.

“Our businesses continue to do well there especially in second-tier cities where incomes and aspirations are growing despite the recent economic slowdown,” she said.

Locally, Sy-Coson noted Philippine legislators’ recent move to ratify the Philippine Fair Competition Act or Anti-Trust Act, which awaits the signature of President Aquino.

The principal author of this legislation, Paolo Benigno “Bam” Aquino IV, believes that this would make the economy more efficient by eliminating monopolies, cartels and other unfair business practices that result in higher prices of goods and services.

“The act aims to level the playing field in terms of market opportunities for companies whether big or small,” Sy-Coson said. “It is my hope that this will not downsize Philippine companies as they need scale to compete in the international arena.”

Sy-Coson said companies with similar businesses in neighboring countries were much bigger than many large companies in the Philippines.

In banking, for instance, she said the SM group’s banking arm Banco de Oro Unibank—which Sy-Coson chairs—had total assets of $41 billion, paling in comparison with Southeast Asian giants like DBS Group which had $332 billion in assets and OCBC with $302 billion in assets.

Sy-Coson thus said there was a gap when it comes to defining scale between corporate Philippines and regional counterparts.