A dozen more conglomerates like RSA’s, maybe we have a chance

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BY RSA, I mean, of course, San Miguel Corp. President and CEO Ramon S. Ang, who is usually referred to by his initials. By “maybe we have a chance,” I mean a chance for this country to finally crawl out of its essentially stagnant, stop-and-go economy since 1987 if, say, we have just a dozen conglomerates like that led by RSA. One of the richest countries in Southeast Asia, our economy’s pitiful path has resulted in our falling (in terms of GDP per capita) behind China in 1997, Thailand in 1985, Indonesia in 2001, and most recently, Vietnam in 2020.

SMC river cleanup program’s results.

You see, rarely discussed as a factor in a country’s development has been the behavior and quality of its big businesses, even if it is mainly these entities, especially large corporations, whether private or state, and not government, which actually undertake most of the economic activity that determines the course of our economy.

This phenomenon has been little studied — except in the past few years* — because of the dominance of the neoclassical economic ideology, which decrees that corporations’ raison d’etrè and overarching goal is to maximize profits for its shareholders, period. The invisible hand of the free market will then automatically allocate resources for an economy’s growth. The economic growth of the country it operates in is not of its concern but that of government, the neoclassical theory says.

However, this theory falls flat on its face in the cases of China and, most recently, Vietnam, both run by governments on socialist principles.

Even as China had liberalized its economic structure to a free-market one in which private enterprises strive to maximize their profits for their shareholders, many of these companies, whether private or still state-owned, balance profits (and their release to stockholders) with the country’s needs for economic growth as determined by the state. In China’s state-owned firms (which still dominate the business sector), the Communist Party of China maintains an organization often called the party group inside these corporations, which ensures company policies balance the need for profits with that of the party’s economic targets. There is a similar structure in the Socialist Republic of Vietnam.


Even Japan and South Korea, although run as democracies with a capitalist system, actually relied for their growth, especially in the post-war period, on such big business groups, which had not only profits as their goals but that of national prosperity. In Japan, these companies were the so-called keiretsu (which evolved from the pre-war zaibatsus), the big four being Sumitomo, Mitsui, Mitsubishi and Yasuda (Fuji). South Korea mimicked the Japanese model, with their conglomerates known as chaebols, which evolved into large business groups such as Samsung, LG and Hyundai.

A Wikipedia article explained the case of Korea: “Government-chaebol cooperation was essential to the subsequent economic growth and astounding successes that began in the early 1960s. Driven by the urgent need to turn the economy away from consumer goods and light industries toward heavy, chemical and import-substitution industries, political leaders and government planners relied on the ideas and cooperation of chaebol leaders. The government provided the blueprints for industrial expansion; the chaebol realized the plans.”

An essential feature of both the keiretsus and chaebols was that while they profited from government support in the form of cheap bank loans and other subsidies, they implemented the state’s economic program, even to the extent that their dividend payouts, or profits distributed to stockholders, and executives’ salaries were kept low so they would have enough funds to undertake the government-mandated plans. They, in short, balanced their profit-seeking goal with their role in economic development.

The SMC conglomerate is certainly not a government-support keiretsu or chaebol. Its only state support — its monopoly over the beer industry — ended when the elder President Marcos allowed Lucio Tan to enter the business in 1983.


However, its CEO, RSA, has consistently been saying in his report to shareholders in the company’s annual reports that, as in its 2021 report: “Nation-building for San Miguel Corporation has always been more than just about building roads and other infrastructure. It is about helping create the best economic conditions for the Philippines, to enable the upliftment of the lives of more Filipinos.” In the 2022 report: “Our main goal is to help build not just a stronger, more resilient economy, but one keenly focused on meeting current needs and the demands of tomorrow.”

While skeptics would easily dismiss those statements as good PR, I haven’t read any similar declarations by other business magnates. And after all, probably for RSA, still very energetic at 70 years, what else is there to aim for after leading SMC to the top of the Philippine business world?

And after all, RSA, in at least two cases, has demonstrated he really means what he says.

The recent bidding for the upgrading and running of the Ninoy Aquino International Airport, which would cost P171 billion, has starkly demonstrated the vast gap in RSA’s business philosophy from that of our usual tycoons.

The SMC consortium offered 82 percent as the government share in NAIA’s revenues. That was incredibly triple the 26 percent of the consortium of our well-known magnates — the Aboitizes, Ayalas, Gokongweis, Gotianuns and Lucio Tan.

It was two-and-a-half times more than that offered by the other bidder, mainly consisting of the Yuchengco conglomerate and India’s biggest airport builder and manager.


While RSA may see that NAIA would be more profitable than what his competitors calculated, still it guaranteed a bigger share for government, the proceeds of which will be going to the state.

This is the second time that RSA has pulled off such a feat (or contributed much to government coffers).

In 2013, RSA bid P11 billion for the NAIA Expressway (NAIAx) project, the first to lead to NAIA’s Terminal 3 in 2013. Its nearest competitor, Metro Pacific, bid a fraction of that, P305 million. The NAIAx turned out to be as profitable as RSA thought, as it wasn’t just an expressway to the airport, but among others, to the booming business and entertainment district that has the Mall of Asia as its anchor.

Much earlier, RSA actually demonstrated his commitment to having the SMC conglomerate help in “the upliftment of the lives of more Filipinos.” There has been no other business group in the country that has undertaken what SMC has done in spending billions of pesos to improve the environment in the metropolis and adjacent areas.

In 2020, SMC embarked on a massive river cleanup program, which, so far, has cost it P3 billion. While initially covering the Tullahan River in the northwest (which flows through Caloocan, Malabon, Valenzuela and Navotas and empties into Manila Bay), it has since expanded to include Pasig River in the southwest (from Laguna de Bay to Manila Bay) and the Bulacan river systems. So far, the program has removed over 4 million metric tons, with the expanded Bulacan River cleanup hitting the 2-million mark.


One big impact of the cleanup would be to increase the rivers’ capacities to contain what otherwise would be waters flooding the metropolis — as well as the NAIA.

The cleanup of the Pasig River and its tributaries has been the dream of residents of metropolitan Manila for decades after the rivers had become so horribly polluted. However, SMC would also profit since its beer brewery is located on the riverbanks of the Tullahan River. SMC also has a standing proposal submitted to government for the conglomerate to build an expressway traversing Manila and built on the Pasig River’s banks.

All of these point to RSA’s genius: his insight and audacity to undertake initiatives that will help build a better country, which at the same time — or in the near future — generate profits for his conglomerate.

That’s why I certainly don’t think it an exaggeration for me to say that a dozen more like him, and we can finally become a developed country.

*e.g., Anjan Thakor and Robert Quinn, “The Economics of Higher Purpose,” European Corporate Governance Institute; and George Serafeim, “The Role of the Corporation in Society: An Alternative View and Opportunities for Future Research,” Harvard Business School; World Bank Discussion Paper, “Large Firms Make Distinct Contributions to Development.”

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This Post Has 3 Comments

  1. Cecille Chan

    Hopefully, my previous comments will be posted. Here is an addendum for those interested in getting out of the plantation (getting out of the control of the elite). Listen to this interview because it will educate and empower you. https://youtu.be/5M72lySrNZg

  2. Cecille Chan

    The Philippines will never change for as long as the elite run the country. They like the country as it is where the majority of the population is impoverished and easy to control. They do not care about the slums, the homeless, the “government” corruption which circles back to the controlling elite. Here is how they operate in every country in the world:



    All the shallow discussions about the ails of this country will not result in any change. It is a measure of how clueless people are to what is really going on, and how to address the entrenched problems. The ruling elite need to be removed from power, profit, and control, and that can only be done by a bottoms up movement, people/the masses rising up against the controllers. Marcos, Aquino, RSA, etc., are all part of the swarm. Don’t you all get it?

    Dr. Shiva is running for president in the US, and the elite has shadow-banned him in all social media platforms. Volunteers collecting signatures to put him on the presidential ballot are being illegally arrested, strip-searched, and cavity-checked just to make sure the volunteer is totally humiliated. He is the only person in the entire world trying to start a bottoms up movement. He may not win the presidency, but the BUM is pushing through because the elite in the entire world operate like a swarm intelligence. They are all interconnected. You can join the BUM by going to Vashiva.com/volunteer. We are not building a local movement. We are building a worldwide movement, meeting every Thursday via Zoom. We are now in 120 countries. I can pretty much tell where the level of awareness of the Filipinos are. I’ve been extending this invitation and yet no takers. When you join the movement, you can take classes on systems science thinking which we all need to learn in order to effectively remove these tyrants from power, profit, and control. Dr. Shiva used to teach systems science at MIT. He has created a simplified curriculum for everyone. Once you enroll in the course, you can gift a scholarship to as many minors as you want to make the future generations elite control-proof. Dr. Shiva wants kids as young as eight to learn systems science thinking. They should teach it in schools so our kids won’t grow up digging in the trash for food just to survive.

    The kind of leaders you deserve or have, is based on your level of awareness. I cannot find any better way to say it.

  3. Dorina S. Rojas

    I can only agree. After all, everything will depend on the kind of leaders we have who must not even grow to another percent of a dozen. RSA is a game changer but some of our leaders only play games that will make the rich.

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