Tycoon Jaime Augusto Zobel de Ayala has urged private enterprises to join the bandwagon on “inclusive growth,” saying business initiatives that help address inequality in the country can be profitable.
In fact, he said that enterprises that would not take into account the lowest-income groups in their business models would eventually lose out in the market competition.
In a forum on Monday organized by the Asian Development Bank, Ayala said the responsibility of making the benefits of economic growth more equitable did not lie on the government alone, but the private sector as well. While the state was in charge of providing an enabling regulatory environment, he said private firms should take the lead role in investing in initiatives that help achieve inclusive growth.
Inclusive growth, which has become a buzz phrase among economists, is a favorable situation wherein a growing economy is actually helping lift people out of poverty.
The Philippines is believed to be suffering from “non-inclusive growth” because its poverty incidence has remained high even as the economy has grown by a respectable 5 percent over the past decade.
In the case of Ayala Corp., Zobel said the company has changed its business model to one that provided benefits to low-income groups and included them in the target market.
For instance, he said Bank of the Philippine Islands and Globe Telecom have created a unit called “Globe BanKo,” which provides financial services to low-income individuals and micro-enterprises. These services are delivered with the aid of mobile phones.
He added that Ayala Land Inc. recently came up with housing projects that catered to low-income groups while another unit, Manila Water, has been conducting community-development projects.
Given the significant proportion of Filipinos living below the poverty line (at about 26 percent in 2009, according to latest government data), Ayala said targeting the poor as a market and helping lift them out of poverty would boost corporate profit.
“If you operate in a market like that of the Philippines [where a significant portion of consumers are poor], it makes business sense to touch base with the low-income segment,” Zobel said during the forum.
Meantime, Economic Planning Secretary Arsenio Balisacan said infrastructure development was essential in helping achieve inclusive growth.
Balisacan expressed optimism that infrastructure projects under the Public-Private Partnership (PPP) program would help the Philippines catch up with its neighbors as far as infrastructure sophistication was concerned. Under the PPP, the government invites private firms to invest in public infrastructure.
The country’s chief economist admitted that the Philippines was about 20 years behind Indonesia and even more years behind Thailand and Malaysia as far as the level of infrastructure was concerned.