Well Henry Sy Sr. finally died in his sleep at the age of 94. Then it had me thinking of writing something about Sy's success from rags to riches to finally holding the SM businesses. Did you know that SM was called that after Shoe Mart because shoes got him to where he is? Then I thought about one fact that rags to riches stories prove that it's businesses and NOT cash transfer programs that create jobs. While not every poor person is destined to succeed like him but at least - I hope that this post can inspire poor people to stop relying on cash transfers and get out of poverty to at least reaching the middle income level or two to finally encourage the repealing of the stupid state economic protectionist policy so more businesses can create jobs for Filipinos.
The success of Sy was found in hard work and diligence - not cash transfer programs
Believe it or not, Henry Sy’s story was a ‘rags to riches’ kind of tale. Born in Xiamen, China in November 1924, Henry Sy was not born with a silver spoon in his mouth. Wanting to escape poverty, Henry followed his father to the Philippines only to experience a miserable youth in a foreign country. Sy struggled hard living in a foreign country as an immigrant and had to learn the local language. Determined to become successful, he worked hard day and night to provide for his needs.
Sy started out with a small sari-sari store business that helped them in their day-to-day life. Sy and his father lived in a small space until the fruits of their labor made them successful in the following years. However, when the Philippine economy collapsed in World War II, their store burned down that forced his father to go back to China. Henry Sy stayed in the Philippines and built his own shoe business in Marikina.
Sy did not have an overnight success: he had to enroll himself in school, change legal names, sell rejected and overrun shoes, plus many other setbacks that he had to face early in life. He did not give up and pushed through maybe because he knew that something big, which is what he has now, is about to come.
After a series of failures in his business, Henry Sy stood back up and persevered to attain his goal. He established a small shoe store in Quiapo, Manila that marked the establishment of SM Prime Holdings. Now with three of the most valuable companies in the Philippines: SM Investments Corp. and SM Prime Holdings Inc., valued at over Php 1 trillion each, and BDO Unibank, valued at around Php635 million, he is has become the richest man in the country.
Did his success story follow something like, "Back then, Henry Sy was poor and when he went to the Philippines - the cash transfer program came. He got cash transfer programs and it helped him build his sari-sari store and then his shoe store. It was all because of cash transfer programs that got Sy to become the rich man he is today." Instead, we talk about how a once poor guy worked day and night to support his education, sell surplus shoes and learn how to invest the money. He didn't enroll in a cash transfer program. He worked day and night to at least get out of poverty and first to establish his shoe store in Quiapo then he kept persevering and investing the money properly to form his business.
The claim of the 4Ps program that it supposedly creates jobs and aggravates demand is nonsense for this reason - it's the businesses that create jobs! It's common sense really. What does cash transfer program do? Well some of them are called conditional cash transfer program because 4Ps is supposedly meant to give cash only if certain conditions are met - such as children attend school regularly and participation of said activities. However, 4Ps is only good on paper for this reason - more people get money from the 4Ps program whether or not they participate in said activities. Also, how sure is that certain crazy old man when he says that when 4Ps recipients get the PHP 3,000.00 that they spend PHP 2,500.00 on local goods and PHP 500.00 on imported goods? Did he put drones on the 4Ps recipients or microchips in the bills to make sure that they were bought on those items? 4Ps is mostly a hypothetical scenario if you ask me!
So how do businesses or how did Sy create jobs directly or indirectly? Sy's small shoe store started to create jobs by hiring people to do manual labor. The businesses would soon start to expand such as that the Banco De Oro group of banks have people deposit their money there and with that deposit - other people can borrow money from the banks for business spending. The SM chain of malls would provide spaces for rent for businesses for whatever purpose such as a starting place or expansion of one's business. The cottage industries may end up growing in the mall such as when Bongbong's Delicacies started out as a house business - now you can buy their homemade goods at the malls! Then we have the SM Department store which hires SM employees. Both the tenants inside SM and the department store in SM need employees - it creates jobs by hiring people to clean the place, to serve food, to act as salespeople, to take care of the inventory and many more.
So how can there be more businesses to create jobs in the Philippines?
I would like to make an analogy of foreign investors and the Philippines to the mall business. Foreign investors are considered tenants at best to a land that that's not their own. Want to do business in the Philippines? You've got to pay the rent in the form of taxes and other legal fees. The claim that only foreign investors will get rich in the process is bogus. Let's compare the Philippines to the mall and the tenants to foreign investors. How did the mall get its success? By saying that that the mall should own 60% of the tenant's business and the tenant can only have 40% ownership or by granting them 100% ownership in terms of ownership of intangible assets? Sure, the businesses still have to pay their rent to the mall's owner or risk eviction yet they still run the place 100% when it comes to intangible assets. Did the tenants overrun the mall by getting rich in their operations there or did the mall owner get rich by allowing tenants to invest in his or her place without asking for 60% of their business shares with him?
The same can be true to why foreign investors are badly needed. I agree that foreign investors are not a panacea to economic problems and that they could ruin your country. They will only ruin your country if they are not given more or less the same equal footing with local Filipino businessmen - they can have 100% ownership (or choose to have at least 50% with a local Filipino partner for familiarity reasons) but they have to pay their rent in the form of legal fees. Failure or refusal to pay one's taxes will get the businesses closed and foreign investors can be deported for that. The deportation of a foreign investor for not paying fees is just like the mall kicking out a tenant who's freeloading (that is refusing to pay rent) or violates any terms or conditions in said contract. Tenants in the mall will only destroy the owner when the owner doesn't set reasonable restrictions or make sure that money is collected on time. There's always a risk-taking and not taking any risks can be even riskier than taking a certain degree of risk.
The solution is to open up the economy. Remove the 60/40 and allow foreign investors to invest with reasonable restrictions. The influx of foreign investors in the Philippines would create jobs. I wonder did people even realize that Noynoy Aquino made 29 important economic amendments by easing restrictions in certain sectors or that Fidel V. Ramos starting to ease the restrictions helped prevent the Philippines from becoming another Venezuela? Think about that!
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