Investing in growth amid challenging times
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Investing in growth amid challenging times

Frederic Dybuncio

Frederic Dybuncio —Contributed photo

“Cautious optimism” is not just a buzzword. As we approach the balance of the year with both caution and optimism, it denotes, for many of us, genuine hopefulness in the best possible outcome despite unforeseen circumstances.

From which well of optimism do we draw from? Overall, economic expansion was better than expected with gross domestic product posting year-on-year growth of 5.7 percent in the first quarter.


Underpinning this growth are improvements in job indicators. Underemployment was lower at 11 percent in March, compared with last year’s 11.2 percent and February’s 12.4 percent. Unemployment rate likewise dipped to 3.9 percent in March, compared with 4.7 percent in the same period last year. Employment rate continued to grow to 96.1 percent in March from 95.3 percent year-on-year.


Consumer trends

These markers are adding fuel to the demand side with household final consumption expenditure growing by 4.6 percent in the first quarter.

The good news is, there is consumer confidence. And consumers continue to spend, albeit selectively.

During the last quarter, we have come across interesting changes in consumer spending habits and priorities.

There is still strong spending on food essentials, driven by footprint expansion. In the malls, consumers are flocking to casual dining and new experiences malls have to offer.

With discretionary items, we’ve also seen consumers become more discerning in planning their purchases and are spending more on health and beauty and tourism-related items.

And it’s not just here in the Philippines. What’s even more fascinating is we found similar trends in consumption around the world.


Globally, there is an increasing wellness trend among today’s generation. According to a report by consulting firm McKinsey in January 2024, millennial and Gen Z consumers are purchasing more wellness products to address health, sleep, nutrition, fitness, appearance and mindfulness.

Tourism is becoming more energetic. International tourist arrivals in the Philippines have grown to over five million in December 2023, providing impetus for more spending around the country. Around the world, we are also seeing travel demand and expenditure reach record levels.

Regional growth

The world, and economies in particular, are undergoing major changes, partly rooted in geopolitics and its ensuing effects. But there are enough lessons in history to help temper global caution. The world now is far too connected; Eventually, we will seek to resolve these issues as a global community.

But right now, we are focused on our own communities and on matters we have control over.

There are still many areas in the country which have yet to benefit from access to modern retailing, formal financial services and integrated property developments. Expanding coverage nationwide allows the creation of new markets that improve access to these sectors in order to serve more communities.

Fueling our own expansion is the growth in the provincial areas, which is accelerating much faster than the national growth rate.

According to the Philippine Statistics Authority, all 17 regional economies continued to record positive growth in 2023, with Central Visayas, Western Visayas and the Ilocos Region growing above 7 percent.

To further promote urban areas and regional development, the government’s infrastructure program aims to expand the country’s highways and expressways network as well as interisland linkages through short- and long-span bridges. Under the “Build Better More” program, there are plans to develop and expand airports around the country to serve as new gateways.

There are also efforts to improve technology to enhance internet connectivity to the regions. And coupled with a young, dynamic and higher earning population, all these will spell more economic activity that will further enhance growth around the country.

Putting money where mouth is Our group is supporting this growth with expansion across our malls, residences, retail and banking businesses, especially in the provinces. We are opening a mall in Caloocan and three more in provincial areas this year. Our residential business is rolling out 8,000 to 10,000 residential units in northern Philippines and the Visayas-Mindanao areas. BDO and its regional arm, BDO Network bank, will also expand by a combined 100 to 120 branches this year.

Across our portfolio companies, we have strong growth plans in place.

Logistics plays a major role in connecting local economies and in facilitating regional growth. We’ve recently added two new ships in 2GO to increase our fleet to serve more ports of call. Airspeed is also keen on expanding its distribution facilities in key cities in the regions.

With an expanding economy, energy requirements are also growing, and we are committed toward responsible development by supplying clean energy. Following our acquisition of the Philippine Geothermal Production Company, we are set to explore new steam fields with the aim to double the company’s current steam production of 300 megawatts within the medium-term. These projects are set to generate around 2,000 jobs during exploration and development, which will boost livelihood in each respective locality.

Often, our investors give feedback on how our companies are viewed as a proxy for Philippine growth. But beyond this, SM has always been committed to the Philippines. We continue to believe in the country’s strong growth potential, regardless of the prevailing economic conditions.

We exercise financial prudence in keeping our balance sheet strong as we keep a watchful eye on external developments. This is on the side of caution. But we continue to see the Philippines as the long-term bet and that is also why we maintain a positive outlook. —CONTRIBUTED

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Frederic DyBuncio is the president and CEO of SM Investments Corporation, a leading conglomerate with interests in retail, banking and property. He has been instrumental in major merger and acquisition activities to diversify the group’s interests and currently leads some of SM’s portfolio companies.

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