Lucio Tan wants faster growth for RP

Lucio Tan wants faster growth

On a recent trip to Shanghai, Lucio C. Tan climbed the 367 steps of Lupo Bridge without much difficulty. He recently had to be operated on in one leg to fix a torn ligament after he slipped while getting off his helicopter.
At 75, the Kapitan doesn’t show the wear and tear of a man his age. He plays six holes of golf daily, swims and exercises regularly, and keeps a daily grueling schedule. He is a voracious reader. His mind is like a sponge for information. He dutifully writes down important names, dates, and data. He keeps a small tape measure, a magnifying glass, and even a flashlight in his pocket. He attends to the macro and the minutiae of doing business.
A rags-to-richest legend, Tan has to keep himself in top shape and on top of the situation to oversee a huge and diversified conglomerate–airline, tobacco, brewery, distillery, chemicals, food, hotels, steel fabrication, education, even travel.
The group is one the Philippines’ biggest employers and biggest taxpayers. Despite the recent global financial crisis and the downturn in the local economy. “we have not closed any of our factories nor have we significantly reduced manpower,” he points out.
Being involved in different businesses is a unique challenge, he says, “we have to know everything about each of the industries we are in. The constant need to study, learn, innovate and make ourselves globally competitive is, to me, our greatest challenge.”
Tan owns the fourth largest banking group in the Philippines, the merger of PNB (P16.6 billion revenues and P744 million in profits in 2008); and Allied Bank (P9.38 billion in revenues and P345.3 million in profits). Together, PNB and Allied have combined assets of P460.84 billion (No.4), deposits of P350.37 billion (No.4), loans of P174.62 billion (No. 4), and equity of P47.97 billion (No. 3).
Tan owns the largest airline, Philippine Airlines (P62.9 billion revenues and P1.28 billion profits in 2008 fiscal year; for the 2009 fiscal year, PAL Holdings, which owns PAL, generated a record P75.3 billion revenues, up 13.56 percent but lost a colossal P12.95 billion); the largest tobacco company, Fortune Tobacco, (P33.2 billion in revenues in 2008 and P457 million in profits); the largest piggery, Foremost Farms (P1.28 billion in revenues and P38 million in losses); the biggest rhum company, Tanduay Distillers (P9 billion in revenues and P299 million in profits); as well as the 510-room Century Park Hotel in Manila, a full bank in Xiamen, Allied Bank; a 460-room five star hotel in Shanghai, The Eton (one should try the hotel to know what five-star means); a 500-room hotel under construction in Xiamen, the 36-story International Bank Center again in Xiamen, a 2.3-hectare planned commercial-residential and shopping mall planned also in Xiamen, a residential complex in Beijing, the Charter House in Makati and Hong Kong, and various other properties in the region. He is developing a city out 1,100 hectares south of Manila and overlooking Laguna Bay, The Eton.
One enterprise that has yet to deliver plenty of profits is the University of the East. Among major educational institutions in 2008, according to SEC data, UE was only No. 5 in revenues (P959 million) with profits of P77 million. FEU had P1.74 billion revenues and P593 million profits; University of Perpetual Help Rizal P1.32 billion revenues and P193 million net; CEU P1.2 billion revenues and P269 million net; and Malayan Colleges P1.14 billion revenues and P209 million net.
Despite his riches, Tan remains a plain-spoken man. He dresses simply, preferring the neat and practical over the elegant and fashionable. He believes in “ren” – the Chinese word for perserverance, and in the virtues of humility, frugality, and benevolence. They are, he stresses, important ingredients for success. “As one earns more, one must also practice humility and frugality by leading a simple lifestyle. Otherwise, everything that one has worked for could easily be lost.” Also, he adds, “one who shares is likely to get more in return.”
Tan is disappointed with the pace of development in the Philippines. He notes that in China, the landscape changes every year, for the better. To catch up with China’s phenomenal growth (9 percent to 10 percent a year in GDP rate), he winces, it will take 100 years; 200 years with the corruption; and probably 300 years with a militant union. He says we need a long-lasting industrial peace if we want to make Philippine brands globally competitive.
In China, Tan notes, labor strikes are banned. In such competitive countries, ne says, “you would see a level of worker productivity that is four or five times that our ours> Some countries have even scrapped minimum wage laws to boost employment generation and enhance productivity.”
He asserts, without hyperbole, that if a road were to cost P1 billion in China, the same road would cost P10 billion to P12 billion in the Philippines, with the scale of local corruption.

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