Presidents Report 2012


Welcome to the annual stockholders’ meeting of Mabuhay Holdings Corporation. I am very happy to see many old acquaintances and some new faces among our valued shareholders who are here with us today.

Every year, I have always started my report by giving you a brief outlook of the world economy, then share with you the general economic situation of the Philippines before going to the operational developments of our company. For the past four years, I had painted a gloomy picture of the world economy, but predicted a satisfactory economic performance of our own country, and we were correct in those aspects. I am afraid that I do not have anything new to report to you but have to repeat the same story this year.

The economic situation throughout the world is still worrisome. The worst situation is happening in Europe. The so-called European PIGS countries, namely Portugal, Ireland, Greece and Spain, are all in deep trouble. Germany and France are trying to help their poor brothers in the Euro zone in order to avoid a total debacle of the European alliance, but whether the situation can be salvaged is still a big question. In countries like Greece and Spain, the austerity programs initiated by their respective governments are inviting strong protests from the masses, resulting in serious social instability.

As we all know, the United States is very heavily indebted. As of now, the national debt of the United States government stands at close to 16 Trillion US dollars, and the amount is still increasing by 3.5 Billion dollars every day. No one knows how the Americans can ever repay those debts. But in order to survive, the US government is continuing to issue bonds and borrow more money from China, Japan, Middle East and the other countries. 

For a while, the economy of the United States appeared to be recovering, but no, it is not. Statistics show that the unemployment rate is still very high, and the Federal Reserve has to come up with another round of Quantitative Easing, or the QE3. This is the third time that the US government is trying to boost the economy by printing more green bucks. The US government hopes to stimulate economic activities and generate more jobs by injecting new money into the financial system. But since the US dollar is commonly used as the settlement currency for international trade, over printing of the bills will weaken the dollar and cause the prices of all commodities to go up, including food stuff. In effect, QE brings inflation to the whole world, and the developing countries suffer the most as a consequence. 

Following the US, Japan has also started printing money to solve its own problems, bringing more disasters to the global economy. Inflation is now the common epidemic facing the whole world. At present, even the fast-growing BRIC countries have to deal with a lot of problems arising from the international economic chaos. The economic growth of both China and India had slowed down, and both countries are now confronting a serious inflation. Brazil and Russia are not spared either from the same problem of inflation. I regret that I have to paint this pale picture of the world economy but worse, it seems there is still a long way to go before we see the lights at the end of the tunnel. 

But as in the previous years, I am happy to give you yet another bright picture of the Philippine economy this year. The peculiar structure of our economy enables our country to stand firm against the odds in the international crisis. The Business Processing Centers and the Overseas Filipino Workers continue to contribute immensely to our economic stability. We have overtaken India as the world’s largest provider for offshore business services, thus generating a lot of foreign exchange for our country. The remittance of the OFW’s also continues to grow month after month. As for the first seven months of this year, the OFW remittances amounted to US$11.936 Billion. Last year, our Central Bank registered a surplus in the BOP (Balance of Payments) in the amount of US$10.179 Billion. For the first 8 months of this year, we have already registered a surplus of US$5.08 Billion. This explains why the Peso is so strong, it stands below 42 Pesos to a dollar now, but if not because of the intervention of our Central Bank, the value of Peso may even be stronger. 

Another indication of our good economic performance is that the stock index of the Philippine Stock Exchange has reached historical high yesterday. Unemployment rate has dropped to a controllable 7%, even lower than that of the United States. Our GDP grew by a remarkable 6.1% in the first half of this year, next to only China and Indonesia in the whole Asia. In view of the healthy conditions and the bright prospects of our economy, we expect more foreign investments to come to our shores. In fact, after BRIC, the international financial community is now talking about TIP becoming the new focus of economic growth. TIP stands for Turkey, Indonesia and the Philippines.

However, as concerned citizens, we really hope that the Philippines will soon transform its economic structure into industrial and financial services oriented. It is true that we are generating so much income and foreign exchange from the BPO’s. But as we all know, people who are working in the BPO’s have an upside down schedule since most BPO’s are servicing the Americas and Europe where the time zones are different from ours. It is indeed a health hazard for the young people to work in the BPO’s in the long run. As for the OFW’s, they are really the unsung heroes who contribute so much to our economy. But with them working overseas, social problems arise. Many families are broken and many young people who have parents far away become problematic. We hope that our economy will eventually change in such a way that we can provide enough job opportunities for our compatriots to work at home.  

As for Mabuhay Holdings Corporation, we have a smooth year last year. We continued to exert our efforts to nurture our subsidiary, Interport Resources Corp. which is now renamed as IRC Properties, Inc. IRC is now developing a low cost housing project in Binangonan, Rizal and we have already realized income from this project. We have entered into a joint venture agreement with a new business partner, and another socialized housing project on the IRC property will soon be launched. Recently, IRC has also signed a memorandum of understanding with a prestigious and big time property developer for the sale of some land and possible joint ventures. This will undoubtedly bring a higher value to the IRC properties in Binangonan in the near future. You must have noticed that the share price of IRC has doubled over the past few months, rising from around 60 centavos a share to 1.20 Peso at present. There was even a time that it rose to over 2 Pesos. Apparently investors in the stock market realize the value of this company. Mabuhay will benefit immensely from the appreciation of the IRC shares since we are holding more than 40% of the total shares of this company. You can therefore conclude that our future is really bright.

The management of Mabuhay Holdings Corporation will diligently monitor the changing conditions in the domestic and international business communities, and continue to explore growth opportunities for the benefit of our share holders. 

Allow me to reiterate our gratitude and appreciation for the continued support and trust that you have given us all these years. Let us look forward to a better year ahead of us. Thank you.

Esteban G. Peña Sy
October 5, 2012