July 22, 2016
Keynote Message at the Opening of the Franchise Asia Philippines Expo 2016, SMX Convention Center, Pasay City
A few days ago, I was invited to talk before a Business World…Business Forum with the same theme, in a world that is already very competitive.
So my speech this morning is very similar to the speech I delivered with the Business World audience.
And I would like to, if you can indulge me, this is more the same of our foreign guests here to get the idea of the inclusivity problems that the Philippines is facing right now.
When I was elected Representative of the 3rd District of Camarines Sur, one of the first things that I did was visit the most remote barangays in my district. There, I discovered a wealth of information, which were beyond me before.
I saw children walking several kilometers each way to go to school. Some had to cross broken, hanging bridges. In one elementary school, a Manila paper in front of a classroom shows the schedule of which child can sit on Monday, on Tuesday, on Wednesday and so forth.
It turned out that classroom had 38 children, but only nine chairs. Even more heartbreaking was the sight of extremely malnourished children in one small town, where barangay health units had no salter weighing scales and height boards. So let me ask each one of you to imagine, how you would feel if these were your children?
On several occasions, I spoke of classroom with only nine chairs of 38 children, and even without asking for help, we got a deluge of donation of chairs. The hanging bridge is no longer there. We already built a concrete bridge instead.
Children do not anymore have to walk too far because we have built schools nearer to where they live. The barangay health units that I was talking about earlier now have equipment to measure the progress of the children who are now part of our feeding programs.
All these happened in very remote towns with very small population. But why should everybody else in this country—including those of you who live in Metro Manila who are now preoccupied with traffic and weather—why should you care about our bottom poor?
And here is the answer: research has shown that nations where everyone can live and thrive, grow faster. Severe inequality, on the other hand, stunts growth.
A Forbes article said, that in the Philippines, the richest 20% of the Philippine population received 52% of the country’s total income in 1994, nearly 11 times the share received by the poorest 20%. In 2009, the poorest 20% of the population accounted for just 4.45% of the national income.
Both my experiences working with those at the fringes of our society and the macro numbers are very compelling. Inclusive growth is not just critical for those in the fringes but also for your businesses to grow sustainably.
You see, while market-led economic growth transformed whole chunks in the global map, its unfortunate by-product was the exclusion of swaths of population who did not gain equality of economic opportunity.
Faced with this trenchant problem, businesses around the world are re-inventing capitalism. They are turning their backs on the traditional way of doing business, which is to keep wealth circulating within a small closed group. The new crop of young businessmen know that as more people break the cycle of poverty, more people can afford to buy their products or services.
How is this disruption happening? Profit is now no longer the sole driver of growth. Shared value is. This way, growth does not have to slowly trickle down to the poor.
As the private sector redefines products and pricing models to turn the swaths of population that have been left out as their new target market, shared value is created. Growth and progress happen at the same time. We need growth for all not just for a select few.
Progress that benefits only the elite is no progress at all.
You who are in the business of franchising are equally positioned of the support, inclusive growth. Your business model allows those who have limited capital to benefit from your tried and tested business strategies.
You have lowered the barriers to business entry and you ensure that those who buy your franchises are mentored. This is one way of sharing value. Franchising is one of the oldest business disruptions that have brought about inclusive growth, even in the countryside.
In the franchising business, as well as all other sectors, competition is heating up. ASEAN integration will intensify competition even more. Global markets behave like they are local markets, and local markets behave like they are global. The more nations differentiate themselves from each other, the more they act the same. But competition is a good thing. There is evidence that more competition reduces inequality. It lowers prices, gives customers more choices, allows fairer wages, improves labor practices, and gives startups and smaller businesses a better chance at succeeding in a bigger market.
No government, no nation can turn back the tide of hyper-competition. But organizations and businesses can level up. You can disrupt. You can innovate. And the best way to do these would be to create a business that addresses a social need. This is how you are uniquely positioned to be successful as well as boost our nation’s economy.
The role of government, on the other hand, is to find better ways to enable micro, small to medium-scale enterprises (or MSMEs) to be more integral players in our growing economy.
We need to create a better and more efficient business environment. We must remove inefficiencies in doing businesses. More than 99% of companies in the country are small and they employ 64.97% of our people. As we support small players and social entrepreneurs, we bridge progress to the excluded bottom.
However, anti-poverty programs are not enough to achieve inclusive growth. We also personally believe that there is value in considering the continuation and expansion of the current social protection system through several programs of the government. We need to target hunger, food security, universal health care, rural development, education and people empowerment.
These are the social programs of the Office of the Vice President that we have committed to in the next six years, to change the face of poverty. We want to look at what is currently being done, look at the gaps, and improve coordination so that we maximize all our efforts. And we plan to do this by partnering with the private sector. By partnering with all of you.
The President has also recently offered us a cabinet position, as Housing Secretary. We want to address the big housing backlog within our term. We will enjoin the private sector to be our partners in providing not just houses, but decent and affordable communities where people will find jobs, where their children can safely go to school, attend church, run around and play safely.
We are not asking for charity. Companies like, many in the environment today have proven that these developments can be commercially viable. There is one very good example, one company has shown by their on-site resettlement investments in Quezon City.
In the past, informal settler families (ISFs) would pay anywhere from 1,500 – 3,500 pesos a month to dwell in a 10 sqm space with no proper sewerage and drainage system. Through this companies partnership with the Quezon City government, Pag-ibig Fund and several partner NGOs, Informal settler families today shell out not only a little bit more than P2,000 as monthly amortization through Pag-Ibig for decent 26 sqm homes with loft provisions that have proper sewerage and drainage and security of tenure.
There are so many things we can all do, but there is so little time. More important than what is how we will do them. We must focus on building inclusive communities that make their residents think: “I belong here, because I helped shape this place. I helped make sure it is responsive to my needs and those around me.”
In other words, collaboration and communication is always key.
So I hope, our driving force for all that we do, help in the inclusion and the transformation of the lives of our people who have long been excluded in our society.
Inclusion is not just a buzzword now. It is critical for our nation’s future. I’m looking forward with partnering with all of you in achieving our progress.
Thank you very much again for having me this morning.