Ricardo J. Romulo Lecture Series

Speech delivered during the launch of the Ricardo J. Romulo Lecture Series “Business and Society” on the occasion of MBC’s 25th anniversary, 21 November 2006, Hotel Inter-Continental Manila

By Ricardo J. Romulo, former MBC Chairman

My address this evening will be in three parts. The first part will deal briefly with MBC’s founding, since many of our current members were not with us at that time. The second will be in a way an accounting of my stewardship and my thoughts on some of the activities MBC should undertake in the next 25 years. And the third and final part will attempt to discuss broadly what the role of business should be in our society. Actually, MBC’s story is interrelated to our main topic because it portrays a way by which business may play an advocacy role in society.

MBC History and Issues of the Decades

MBC was organized in October of 1981 for the purpose of “defending the right of business to exist independent of government intervention, for as long as business did not lose sight of its greater social responsibility,” as explained by its founder, Don Enrique Zobel. The first MBC board of trustees included Enrique Zobel, chairman, Bernardo Villegas, Rogelio Pantaleon, Jose Romero, Jr. while the advisory board was composed of Jaime Ongpin, James Collins, Wash SyCip, Antonio Ozaeta, Jaime Zobel de Ayala and Cesar Buenaventura as chairman.

One of its earliest activity was a speaker’s bureau whose members were Jaime Ongpin, Vicente Paterno, Jose Romero, Jr. and Bernie Villegas. They barnstormed the country denouncing the excesses of martial rule. In September 1983, Jimmy Ongpin gathered the moguls and members of the press and berated them for their subservience to Marcos.

Of course the big events were the assassination of Ninoy Aquino, the snap election and Edsa I, the combined effect of which was to bring down President Marcos. During those critical times MBC became the rallying point for and the voice of business. In February of 1984, prior to the elections for the Batasan Pambansa, MBC published a booklet entitled “Let Our Voices Be Heard” from which I quote the following passage:

“The voice of the people is a most compelling force. It preserves order. It presages change. It indicates direction. Listened to, and heeded, it is a constructive influence that can lay down the foundation for a just and progressive society.”

In 1984 MBC was incorporated as a not for profit corporation. Enrique Zobel continued as chairman until around February of 1986 when Vicente Paterno took over the chairmanship. When Ting ran for the Senate in 1987 and won, I became the chairman and stayed on by the grace of successive boards of trustees for the next nineteen years.

Keeping to its mission as the forum for constructive ideas, MBC took an active part in policy discussions and public debate to craft a new constitution in 1987, in investigating the failed coups in 1989 and in shaping a new policy environment of economic reforms, trade liberalization, deregulation and privatization.

In this connection through the years, MBC supported legislation to open up foreign investments, the ratification of the GATT-WTO treaty, the new mining law, recreating the Department of Energy, opening up retail trade and the banking industry, the break-up of monopolies, deregulation of industries such as energy, power, airline and telecommunication, support tax reform and new fiscal measures. MBC also espoused transparency and accountability in governance. Just as we supported the impeachment and resignation of President Estrada for his excesses, we similarly called for the resignation of President Arroyo in view of the Garci tapes.

So if I may summarize, in 25 years MBC has lived its mission as a forum for constructive ideas. We believe in an open economy as we believe in an open society. We believe that free markets work best in an environment of freedom and democracy.

The question we need to ask ourselves is whether or not we have succeeded? May I quote in this regard an unbiased opinion. The World Bank report of September 2001 on the subject of “Combating Corruption in the Philippines: An Update ” has this to say about MBC :

“In the Philippines, the Makati Business Club represents the progressive elements of the business community who are looking at the larger picture of the economy, not only at their own business interests. This group was instrumental in supporting the movement for accountability and has endorsed the demand for good government. This is the segment of the business community that is plugged into the global economy through exports or international partnerships. The Makati Business Club’s members are more closely attuned than other businesses to international standards and corporate governance and more aware of obstacles that rent seeking and corruption create for them individually and for the growth of the Philippine economy.”

I cannot let this occasion pass without paying tribute to Bill’s contribution to MBC’s success. His entire professional life has been with MBC, and i dare say he exemplifies the values and ideals of MBC. Bill, it has been great working with you.

The Future of MBC

What do I envision for MBC’s next 25 years?

Certainly, MBC should continue to be a forum for constructive ideas by supporting or opposing policies which affect across the board our national life, and not lobby for our own corporate or sectoral interest. This is MBC’s distinctive feature as compared to other business or trade associations.

With regard to MBC’s relationship with government, present and future, I believe it must be on the basis of “critical collaboration,” Cardinal Sin’s felicitous phrase. And at all times, we must be prepared to defend freedom. That remains our highest obligation. History suggests, according to a recent IHT editorial, that once a political party achieves sweeping powers, it is only a matter of time before power becomes the entire point. Note the propensity of the present administration to play legal brinkmanship.

MBC should aspire in the words of Ting Paterno to become “the national forum of business for constructive ideas” in the next 25 years by encouraging the formation of more affiliated business clubs throughout the archipelago. Some already exists such as the Iloilo Business Club, Cebu Business Club and Iligan Bay Chamber of Industries. MBC should then maintain an interactive relationship with these clubs in order to gain a greater understanding of the problems in the provinces in real time and conversely provincial reaction to national issues. MBC then would be in a better position to speak with greater authority on national as well as regional issues.

I would like to see MBC formalize links with business clubs or think tanks in Southeast Asia to facilitate exchanges of information and for the enhancement of trade and investments. In time, as MBC gains the confidence of our peers in the region, it should provide our business sector with a credible voice in the formulation of ASEAN trade and investment policies.

Lastly, a way must be found for the younger members of MBC to become more involved and eventually to take positions of leadership in MBC and the business community as senior citizens like myself and Cesar Buenaventura fade away. We must also bring to the public’s attention promising young men and women who may be potential leaders by providing them access to our public fora and our network.

The Role of Business in Society

The Anglo American business orthodoxy that dictates the pursuit of profit without regard to social costs or obligations has actually been liberalized over time and social pressure to include the general concept of “the good of society” as a corporate objective which in practice translated, however, mainly to corporate philanthropic endeavors and/or doing more than required by law or regulations regarding the welfare of employees or the immediate community. What I am about to suggest is that we further enlarge the definition of “the good of society” to include a direct contribution to sustainable development as a new dimension to the role of business in society.

Business, I propose, must now take a direct hand through the medium of its core businesses in alleviating major societal problems, such as poverty, population, environment and globalization and thus contribute to the country’s sustainable development. The task I propose is for business to provide leaders who will develop technologies and innovations in their core businesses of products and services which will deal directly with these societal challenges whether on a small or large scale. The rationale behind this proposition is based on a social contract that impliedly exists between business which is allowed to make substantial profits from selling their goods and services to the consumer, whose overall welfare, therefore, must be of concern to business. Or as an English business leader said – it is a matter of corporate honor borne of privilege.

Allow me to illustrate how some companies around the world using their core businesses have tried to meet these societal concerns, poverty in particular. To resuscitate East Timor’s moribund coffee industry, Delta Cafes, Portugal’s coffee market leader, developed a Delta Timor brand by training East Timor farmers. Delta Timor coffee has become a popular brand in Portugal. The more obvious one is ABN Amro’s approach. ABN Amro together with a Brazilian NGO created a micro-finance unit. Loans of $70 to $3,000 have created 1,000 micro-entrepreneurs. Grupo Nueva in brazil offers a credit card that low income households can use to pay in installments for materials to build and improve their homes.

Other corporations have developed ways to help our environment. Again, the most obvious is the development and manufacture of hybrid vehicles and hybrid fuel by Honda and Shell, respectively. Cargill Dow uses corn polymers from which clothing, carpets and packaging are made, while a cement company in Japan is using incinerated urban waste ash to produce cement.

I am encouraged to note in last week’s newspaper a report that the Philippine’s largest manufacturing companies, like Nestle, Unilever, San Miguel Foods, Kraft Philippines, Dole Philippines and Figaro Coffee, have banded together to take a more proactive role in improving agricultural production systems for particular commodities used in their respective products. These companies participated in a conference sponsored by “Sustainable Agricultural Initiative”, an international organization, whose main purpose is to pursue the proper implementation of programs designed to promote sustainable development in agriculture on a worldwide basis.

As you can see by these illustrations, societal challenges also open opportunities for business, limited only by business’s ability to innovate.

The time has come to reexamine the role ascribed to business as principally that of increasing shareholder value. The need for business to directly address major societal issues by utilizing a purely business approach and elements of their core businesses to help achieve national development on a sustainable basis has become a necessity in societies such as ours where massive poverty and inequality exist, and where government resources are either inadequate or misdirected.

It may be said that to develop a shared set of priorities and values in this regard is the task of our nation’s leaders. However, if our leaders lack either the courage or imagination to do so, the burden falls on our shoulders. I cannot think of a challenge more worthy of MBC’s best traditions of leadership.

I have spoken about MBC’s past, present and future and the role of business in society. But what of our country’s prospects, present or future to which the fate of MBC is inextricably entwined? My reply is expressed in a paraphrase of what Thomas Wolfe wrote about America in the 1930s as follows:

• I think the true discovery of our country is before us.
• I think the true fulfillment of our spirit, of our people, of our land is yet to come.
• I think the true discovery of our own democracy is still ahead of us.
• I think it is certain all these things will come to pass, and that this glorious assurance is not only our living hope, but our dream to accomplish.

Conclusion

It only remains for me now to thank all of you for having given me the privilege of heading MBC, and the rare opportunity to serve the business community and our country. The success of MBC does not belong to one person. It belongs to all of us – to our members who sustain us with their annual dues and who vote for us, to our trustees who take principled stands on public issues, and to Bill Luz and his staff for their efficient and devoted service.

I take with me memories of great events that have engulfed our nation in which, due to my involvement in MBC, I was able to play a modest part. But most of all I shall remember the committed men and women of principle with whom I have worked these past nineteen years for a common cause – the betterment of our people and our nation.

My father was fond of saying that gratitude is the memory of the heart. Ladies and Gentlemen, tonight, my heart is full to the brim!

Go to:
• Inside MBC
• Ramon del Rosario's Opening Remarks
• Cesar A. Buenaventura's Introduction
• Jaime Augusto Zobel de Ayala's Closing Remarks