NTC | Chairman's New Year Message
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Date: 
Wednesday, January 23, 2019

January 23, 2019

Dear colleagues and friends,

Chairman’s New Year Message

As we start the new year, I would like to thank you all for your strong engagement and consistent support of the many initiatives that we have embarked on over the past year.
As 2018 comes to a close, and we start 2019, let me highlight three key themes that have been on my mind. These themes will underpin the transformation of many industries in our domestic business environment. I touched on some of these trends last year, but the environment has since evolved then and I find it fitting to reexamine these themes and provide some new perspectives. In summary, these are:

(1) The digital revolution taking place across many industries is altering the overall business landscape and pushing organizations to adapt, 

(2) As a consequence of this digital revolution, it is imperative that we future-proof our country’s human capital to adapt to this new environment, and 

(3) The paradigm shift in responsibility that the private sector needs to embrace in order to help address societal challenges and incorporate solutions into its value creation process.

Let me start with the digital revolution. We have seen how digital platforms have changed the nature of consumption, competition, and market dynamics, particularly in areas around the retail, payments, banking, and even healthcare spaces. The explosion of connectivity, and the virtually limitless access to information that came with it, have paved the way for a new sense of engagement and empowerment among consumers.

To continue thriving under this new economy, many organizations are undergoing a transformation journey and are aiming to evolve from traditional analog thinking to incorporating a digital perspective. 

In the Philippines, conglomerates have started to develop a digital mindset. With their broad set of skills, significant resources and wide networks, conglomerates can help lead the country in this digital transformation. In our case, across the Ayala group, embracing this digital culture is a strategic imperative for long-term value creation. As the digital evolution is increasingly disrupting traditional businesses, it is indispensable for businesses like ours to take a proactive position in future-proofing our existing portfolio.

As you know, we have started to participate in businesses that are part of the current digital wave; particularly in e-commerce, fintech, and healthtech. BPI’s ongoing rollout of its digitalization program, our investments in Zalora, Mynt, Entrego, technology funds under AC Ventures, as well as the digital healthcare platforms Medgrocer, KonsultaMD, Aide, and Vigos are all designed to complement our group’s traditional brick-and-mortar operations and at the same time, broaden the digital experience of Filipinos.

In the past year, the group spent significant time exploring how we should approach our own journey towards this digital transformation. We studied other markets that are in advance stages of digital maturity and allocated resources to platforms that provide a lens into emerging trends and technologies.

From these learnings, we have started the process of devising an overarching digital transformation roadmap for the Ayala group. Underpinning this roadmap are three core areas: upskilling our talent base, investing in new ventures that have the potential to transform our existing businesses, and boosting our data-driven decision-making through more sophisticated analytics while upgrading our digital infrastructure.

As I have highlighted in recent years, this transformation entails massive changes in our corporate culture. We have to develop a mindset of continuous learning, innovative thinking, and mental agility. I am happy to note that we are starting to make progress on this front with the launch of our online learning platform under the framework of our Ayala University.

This brings me to the second theme, namely our need to foster our country’s rich human capital through education and healthcare.

We all know how the Philippines is entering a demographic window that has the potential to create a highly productive workforce over the next decade. Last year, there were 38 million Filipinos within the ages of 25 and 54. By 2050, this is expected to rise to over 60 million within that age group.

However, if we, as a community, are not able to prepare this young population for the profound changes in future employment needs, our environment could lead to even greater social and economic inequality. A study by the World Economic Forum states that the most in-demand occupations in a number of industries did not exist 10 or even five years ago, while 65 percent of children entering primary school today will ultimately end up working in completely new job types that do not yet exist. I cannot emphasize enough our need to transform our country’s education system to address both the gaps in accessibility and affordability and, of equal importance, the gaps in the quality of training and its relevance to the jobs of the future. With AC Education’s merger with the Mapua education portfolio, we hope to be able to contribute to this endeavor in a more meaningful way.

However, a progressive human capital initiative does not only entail new education initiatives; it also needs to address mental and physical health. Healthcare is a sector that is in dire need of its own evolution in terms of affordability, quality, and accessibility. It is unacceptable that 43 percent of Filipinos belonging to the low to middle income sector have not seen a doctor in over a year. We believe that effective healthcare is a fundamental right for all. This thinking has shaped our entry into the healthcare industry with a vision of democratizing the appropriate services through affordable, quality products and services. I am delighted to see the passage of the Universal Healthcare Act in our Congress which, once enacted, will provide healthcare
coverage and benefits to all Filipinos. This legislation should enable greater private sector participation in healthcare and open up exciting opportunities in this space. 

My third and final theme is how our group is redefining its entire value creation process in a way that aligns our economic, social, and environmental impact with our strategy, resource allocation, and risk management processes. 

I have often pointed out that the world demands a more encompassing role from businesses today---with accountability and solutions not only to its shareholder community but to a broader community of stakeholders and the physical environment we are a part of. Our contribution to the country’s economic, social, and environmental agenda must always be part and parcel of the way we do things. I have always felt that this value proposition and mindset would be an important cornerstone of our long-term success as an institution.

To incorporate this perspective, we have started the process of framing a long-term sustainability blueprint that lays out the strategy, targets, and accountabilities around economic, social, and environmental indicators across the Ayala group, in addition to our financials goals. This initiative provides a distinct framework that incorporates our sustainability agenda and ensures its alignment with the country’s broader development goals. Having a more deliberate framework will enable us to monitor and evaluate these sustainability targets and allocate our resources more appropriately. In addition, this greater level of transparency along sustainability goals effectively imposes greater accountability on ourselves to execute on these aspirations.

As Ayala celebrates its 185th anniversary this year, I look back with a great sense of pride on how we have been able to remain relevant as a business group throughout the years. We have been able to contribute to the country’s economic landscape through our investments and through the massive multiplier effect that they generate: from the capital we deploy, the taxes we pay, the jobs we provide to thousands of individuals and the reinvention we initiate across multiple products and services. Many of ourinnovation efforts across our businesses have served as catalysts for game-changing developments in sectors across the real estate, banking, telecommunication and water industries, and in our emerging investments in power, industrial technologies, infrastructure, education, and healthcare. 

This important 185th anniversary is an opportune time to celebrate the milestones we have achieved, reflect on the challenges we have overcome and plan ahead to tackle our continuous need for reinvention and innovation, which is what we intend to make a hallmark characteristic of the Ayala Group.

As we start 2019, I wish you all continued good health and continued professional and personal growth.

With my best wishes.

 

JAIME AUGUSTO ZOBEL de AYALA
Chairman and CEO