DyBuncio’s long view propels SMIC’s trajectory

When Frederic DyBuncio, president and CEO of SM Investments Corp., rose to open a gathering of business leaders hosted by the conglomerate and its banking affiliate BDO, he offered a quiet reminder: The company he leads has been in the Philippines for nearly seven decades, and such longevity, whatever else it confers, teaches a particular discipline.

“Look beyond the cycle” was the phrase he chose, and it perhaps best captures how the head of one of Southeast Asia’s largest private enterprises views an economy whose headline figures currently invite more concern than celebration.

The figures did not escape his audience. Growth, he acknowledged, has slowed; energy and fuel costs have risen; and the country is edging toward upper-middle-income status, a threshold that may flatter national aspirations while complicating the arithmetic of every boardroom where capital must be allocated and risk priced.

Yet DyBuncio argued that these are more than economic indicators; they bear directly on where a company invests, how it hedges its exposures, and how it prepares for conditions it cannot yet name.

It is a measured way of looking at the economy as terrain to be read. It also reflects the temperament of an institution shaped by decades of uncertainty, disruption and rapid change, yet never convinced that the underlying story of the country had fundamentally changed.

That story, as DyBuncio tells it, rests on a constant that no downturn has yet dislodged: The long-term potential of the Philippines and the aspirations of its people.

What he added to this familiar creed, and what gives his remarks their particular edge, is a claim about geography.

The potential, he said, is increasingly visible beyond Metro Manila, and businesses that want to meet the next generation of demand must look past where growth has traditionally been concentrated and invest where it is now emerging.

No downturn has yet dislodged the long-term potential of the Philippines and the aspirations of its people.

For a company whose flagship malls have long been woven into the commercial life of the capital region, the statement amounts to an instruction to itself as much as to its peers, an acknowledgment that the map on which its fortunes were drawn is being redrawn by forces that began in the provinces.

The reasoning behind the claim is, characteristically, practical rather than rhetorical. The provinces, DyBuncio explained in another interview, are producing good graduates from their schools, and those graduates are finding work with business outsourcing companies, which in turn generates the disposable income that sustains consumption.

Where such income appears, he argued, the mall follows, retail follows the mall, and the bank follows both, so that a single expansion decision sets in motion a chain of commercial consequences across the group.

Because the Philippines is, in his words, a deeply consumer-driven economy, and because every consumer touches some part of the SM enterprise in the course of an ordinary day, each peso that a Filipino earns and then spends returns, in some measure, to the group that has positioned itself at the point of exchange.

DyBuncio observed that retail, property and banking are each already significant in their own right and that all of them have been growing while the sectors with the steepest trajectory ahead are logistics and renewable energy, which, though smaller today, are the ones to which a consumer economy increasingly turns once its appetite for goods begins to demand roads, warehouses and reliable power.

Energy puzzle

Power, indeed, is where his optimism meets its most stubborn obstacle. Asked whether the Philippines can ride the wave of artificial intelligence and capture a share of the data-center supply chain, he said the industry is only beginning in the country and that the main impediment is electricity costs, which make the nation less attractive to the hyperscalers it hopes to court.

The government’s push toward renewable energy, he suggested, is the instrument by which that cost might be lowered, and he expressed confidence that several such operators are already present and that many more will arrive in the coming years.

SMIC is not a bystander to this transition, not in a long shot, as it operates two geothermal assets, holds six new concessions it intends to explore and develop, and values geothermal precisely because it is base-load power that runs around the clock, selling its steam to generators who convert it to electricity. The arrangement serves a double purpose, advancing the country’s energy targets for 2030 and 2040 while helping the group meet its own sustainability commitments, even as sentiment about climate change has cooled in other parts of the world.

The same preoccupation with foundations shapes his view of foreign investment, which he regards as a priority of the current administration and ties explicitly to infrastructure.

What the country lacks, he said, are the projects that connect its places, and he reached for tourism to make the point, noting that the Philippines draws roughly a tenth of the visitors that Thailand does, a shortfall he called a shame in a country so generously endowed with beautiful places. The difficulty, as he sees it, lies not in the attractions but in the roads, bridges and airports needed to reach them, so the remedy is the unglamorous work of building, after which, he believes, tourists will come.

No way to fail

DyBuncio also based his confidence particularly on a population of some 110 million whose median age sits in the mid-twenties, and a conglomerate whose businesses touch nearly every purchase that population makes.

The argument is the same one he makes about geography, only turned inward, for it holds that a company positioned at the center of Filipino consumption, and willing to follow that consumption wherever it migrates, cannot be judged by the quarter in which it happens to be measured.

What emerges, then, from a short address and a briefer interview is the portrait of an executive who prefers patience to pronouncement and who locates conviction not in the momentary mood of the market but in demography, in the slow accretion of provincial incomes, and in a company history long enough to have outlasted several consensus views.

Whether the cycle he asks his audience to look beyond turns kindly or harshly in the months ahead, DyBuncio has made clear that the decisive questions lie elsewhere, in Cebu and Davao and the towns that have yet to see their first mall.

These are where the next generation of Filipino consumers is already forming the habits that will, in time, form the basis of DyBuncio’s confidence.