Pandemic forces ‘fragile’ capitalist system to evolve

Jaime Augusto Zobel de Ayala

The COVID-19 pandemic is rewriting the playbook for surviving a crisis, prompting the country’s business elite to take charge.

And as the pandemic unfolds, causing massive damage to the economy and livelihoods, they are turning their attention to combat the rising threat of inequity.

For Ayala Corp. chair and CEO Jaime Augusto Zobel de Ayala, this is a time for capitalism to evolve.

“Our capitalist ecosystem has brought millions out of poverty and improved the lives of many millions more,” Zobel said during a business forum last week.

“But our capitalist ecosystem can be fragile, favoring some segments much more than others,” he added.

“All of us who thrive on the successes of capitalism need to have a sense of responsibility and empathy to counteract the forces of inequity that the system also creates,” Zobel said.

The virtual event was organized by the Management Association of the Philippines (MAP).

Joining Zobel as speakers were Hans Sy, chair of the executive committee of SM Prime Holdings Inc., Securities and Exchange Commission chair Emilio Aquino, MAP president Francisco Ed Lim and Rex Drilon II of the MAP Share Prosperity Committee and chair of the Institute of Corporate Directors (ICD).

The MAP brought together business groups, foreign chambers, professional alliances and the academe on Thursday. They are joining forces to shrink the widening gulf of inequity.

Crucial ties

Called the Philippine business community’s Covenant for Shared Property, the gathering was more than symbolic.

After all, the crisis revealed the crucial ties that bind the business community. Strengthening these links will ensure the survival and even success of small to medium sized enterprises, or SMEs, to the country’s largest conglomerates.

“One of the things we emphasized was to take care of our tenants and SMEs,” said Sy, whose SM Prime is one of the country’s largest property developers and shopping mall operators.

“It is important that all of them survive or else we would also be affected in terms of our business,” he added.

Sy said cooperation was even more powerful when combined with the public sector.

“No amount of work can be successful if we try to do things ourselves,” Sy said. “The success can only come when it’s both government and private sector working together.”

The SM and Ayala Groups are among those that supported employees as well as tenants with a reprieve on rent payments through the most challenging periods of the pandemic.

Their banks deferred payment deadlines and cut fees for customers. This was apart to donations and aid to government programs.

Ayala provided further relief to customers through Globe Telecom and Manila Water.

“All of us have reduced profits, all of us have put emphasis on keeping our employment teams together, all of us have contributed in one way or another in helping and I think that must be recognized,” Zobel said.

Moreover, he believes the goals of supporting stakeholders and the external community are aligned with meeting shareholders’ expectations.

“We are all linked up,” Zobel said.

“When a problem hits you cannot just act alone, particularly, a problem of this magnitude. Your future success will depend on everyone being able to come out of this safely,” he added.

Disaster resilience

MAP’s Lim said inequity was a long-term global issue that has worsened because of the current health crisis.

Thus, the “new normal” calls for change in how businesses handle stakeholders, employees, customers, business strategy, communities and the environment, he said.

To illustrate this point, Sy pointed to SM Prime’s programs to harness technology, reduce energy usage and recycle water at its malls.

The company, part of conglomerate SM Investments Corp., has embraced disaster resilience, allotting 10 percent of capital spending for programs related to climate change and resource conservation.

Zobel said Ayala had also diversified its products and services that were previously centered on “the affluent end of the market.”

This vastly expanded its business but also allowed the company to serve a broader swathe of the Philippine population.

Zobel cited an initiative with Bank of the Philippine Islands president Cezar Consing and the board to expand into microfinance.

“We wanted to create and leave a legacy of BPI that was relevant to addressing inequality on people’s lack of access to financing at that level,” he said.

This was one example of aligning business objectives with service to the community. Zobel said this was more sustainable than “pure philanthropy.”

Promoting equality

“We cannot continue to give what we cease to have,” he said.

Lim said the signing of the pledge was only the beginning. The next challenge was moving forward with their commitments and meet the goal of promoting equality among stakeholders.

The MAP and 25 others have joined this endeavour.

These are Alyansa Agrikultura, American Chamber of Commerce of the Philippines Inc., Bankers Association of the Philippines, Cebu Business Club, Cebu Leads Foundation, European Chamber of Commerce of the Philippines, Federation of Philippine Industries Inc., and Filipina CEO Circle.

Also joining were the Financial Executives Institute of the Philippines, FintechAlliance.ph, Institute for Solidarity in Asia Inc., ICD, Integrity Initiative Inc., Investment House Association of the Philippines, IT & Business Process Association of the Philippines, Judicial Reform Initiative, Makati Business Club, People Management Association of the Philippines, and Philippine Chamber of Commerce and Industry.

The Philippine Institute of Certified Public Accountants, Philippine Women’s Economic Network, Semiconductor and Electronics Industries in the Philippines Inc., Shareholders Association of the Philippines, UP School of Economics Alumni Association, and Women’s Business Council of the Philippines Inc. were among those that signed the pledge.