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Jose
L. Cuisia Jr., president and chief executive
officer of Philamlife, knows the value of teamwork in
making organizations successful. He always makes it a
point to acknowledge the efforts and dedication of men and
women who provided him the support to make Philamlife the
leading insurance company in the country, as well as those
who helped him achieve the reforms he pursued when he
worked as head of the Social Security System (SSS) and
governor of the then-Central Bank.
Cuisia,
who is also the AIG country manager, is also known to
advocate social causes like uplifting the standard of
education in the country through his involvement in the
Philippine Business for Education. Just like any
civic-oriented citizen, Cuisia also responded to the call
of the times after the 1986 Edsa Revolution when he
accepted then-President Corazon Aquino’s offer to work in
government as head of the SSS.
He also
had a memorable stint as governor of the Central Bank,
where he was in the forefront of introducing reforms to
the banking sector.
In an
interview with the BusinessMirror, Cuisia shares his
thoughts on investment, business, the economy, management
and serving in government.
What are
your thoughts on being [the Management Association of the
Philippines’] Management Man of the Year?
Of course,
I am humbled because it’s a recognition that I appreciate.
But I always say that it’s an award that I share with the
men and women of Philamlife and my colleagues in the
public sector, such as the Social Security System and the
old Central Bank. Some of them are still in the new Bangko
Sentral ng Pilipinas (BSP). I always look back because I
could not have achieved all my accomplishments without
their support.
The
cooperation and commitment of my management team,
especially in Philamlife and AIG where I spent
14-and-a-half years, has been important. I’ve met a lot of
people, past and present, who contributed largely to
Philamlife’s undisputed industry leadership.
I also
want to thank President Fidel V. Ramos and President
Corazon Aquino, who invited me to do public service. I
thank both of them for the opportunity that they gave me
and for respecting the independence of the institutions
that I headed.
How would
you describe your stint in government?
I think it
was challenging and, at the same time, very gratifying
because I was able to introduce reforms that, I think,
have a lasting effect. An example is the liberalization of
the foreign-exchange environment, a major reform which I
initiated in 1991, which had a second tranche in 1992.
Then we
initiated a study to open up the banking system with the
eventual entry of 10 foreign bank branches such as the
Bangkok Bank, Tokyo-Mitsubishi Bank, Deutsche Bank, ING,
among others. I put up a committee headed by former Prime
Minister Cesar Virata that studied the pros and cons of
opening the banking system.
The third
was the passage of the establishment of the now-called BSP.
That was a major accomplishment because the whole thing
was fraught with political controversies. At that time,
the politicians were battering me left and right because
they could not understand why the government had to absorb
the losses of the Central Bank. I said, why do you shoot
the messenger? I am just delivering the news to Congress
that they had no choice but to set up a new Central Bank
because the existing one was ineffective. Eventually, they
passed the bill creating the Bangko Sentral ng Pilipinas.
I think
they recognized that they did not really have a choice. I
was battered in Congress but in the end, through the help
of President Ramos, they passed the bill.
Today the
BSP is able to do its job effectively because of the
passage of that law. We were able to start fresh with the
new BSP while many countries that wanted to set up a new
central bank were not able to do so. But again, I give
credit to President Ramos because without his support, I
would not have been able to get Congress to pass that
bill.
Could you
say the government stint made you a tougher manager?
Well, I
would think so because obviously, you’ve got to adjust to
the environment. In government, there’s a lot of
bureaucracy that you need to get used to, especially if
you’re coming from the private sector.
But I was
again fortunate that in both in the SSS and the Central
Bank, I had very competent and reliable people. Contrary
to the views of many people, I think we have a lot of
honest employees in the SSS and BSP. The majority of
employees are competent, honest and trustworthy.
As I said,
it was a satisfying experience but also a challenging one,
because when I came to the Central Bank, our reserves were
less than $2 billion. By the time I left, the foreign
reserves of the Central Bank had gone up to $5.643
billion. Today the Central Bank has reserves of around $34
billion.
In the SSS,
we had the funds. It was probably the most liquid of all
the government financial institutions. I didn’t ask for
the post. President Aquino asked me where I wanted to be
assigned. I said, “Madame President, you put me where you
want me.” At that time, the Philippine National Bank and
Land of Bank of the Philippines were burdened with all
those loans that the Marcos cronies obtained because of
their closeness to the dictator.
But when I
came in, the members’ records were so delayed because the
computers weren’t functioning and they were doing manual
operations. At that time, NCR [Philippines Inc.] stopped
the computerization program because the SSS refused to pay
them until the project was 100-percent complete. I asked
the head of NCR to continue the computerization project
and assured them that the SSS will pay. I was able to
convince the SSS to pay NCR based on the report of the
project in 1990 prepared by a joint task force created by
me and the NCR head, Mike Uy. Within one year, we were up
and running. We had the most advanced computer systems.
Two years later, I took a bigger system from IBM so when I
left SSS, it was the most automated agency in government.
As a
finance manager, are you in favor of merging the SSS and
GSIS?
It’s kind
of difficult. One, it’s their different contribution
scheme. In the private sector, the employer pays slightly
more for each employee, but in the public sector the
government pays a higher contribution for the
government-employee member. The private-sector employers
will definitely object to pay a higher contribution for
their employees because government employees have a higher
contribution. It’s going to be very costly for the private
sector and the employers to do the same. I doubt whether
that would push through.
There’s a
lot of talk on hedge funds to help overseas Filipino
workers (OFWs) to invest their remittances into more
financially rewarding ventures. What are your thoughts?
What they
should be looking at are the mutual funds or unit
investment trust funds (UITFs) from the banks. They
readily pool the funds of investors. When we put up our
first fund, called Philam Fund, we really wanted to
attract the small investor, that’s why the minimum amount
was small, around P1,000. The advantage we offered them is
professional management. We know the market and we can
offer better yields than the banks. That’s why the
industry has grown so much. If you look at the mutual-fund
industry, it must be worth around P65 billion to P70
billion.
The hedge
funds are riskier. I would not even suggest that to the
OFWs. They should look at more conservative mutual funds.
There are enough mutual-fund accounts to choose from—even
unit investment trust funds from the banks. These funds
offer them better yields than simple savings or time
deposits. But they must also understand the stock market.
They must be aware that the equity fund is riskier but
with very good returns.
But the
investor, whether regular or OFW, must understand the
differences. The fixed-income fund has less risk but the
yields are lower. There’s a tradeoff. Greater risks mean
greater returns. You must be willing to pay the risk.
Unfortunately, some people who sell the mutual funds don’t
even explain these things. That’s why those who sell these
mutual funds or UITFs have to be well-trained and
regulated not to make a misrepresentation.
In Philam
Asset Management, our mutual-fund sales representatives
are licensed, well-trained and disciplined. We will not
allow them to commit misrepresentation because we value
our name and reputation. We don’t want our mutual-fund
buyers or clients to complain. We make sure that our
customers understand the products and they have to sign
and acknowledge that they have read the contract and know
what they are getting into.
What are
your views on the strong performance of the peso? Do you
think it’s time for some people to unload their dollars?
If you’re
a long-term player, I think you have to hold on to the
dollar. If you have observed, the peso has depreciated in
the past 20 or 30 years. It’s only now that the peso is
appreciating. Now, will it continue to appreciate over the
next five to 10 years? We don’t know.
Now, the
dollar has somehow recovered. As the US is able to reduce
its trade imbalances, exports will go up and dollar
exports will improve. Some institutional investors believe
that dollars should not be unloaded because the dollar
surely will rebound in the long term. It all depends on
the person’s ability to study and understand the market.
In your
observation, do you think Filipinos are now more aware in
saving and investing?
Compared
with 10 years ago, yes, they are definitely more aware of
the investment alternatives. They are also more demanding
in terms of the kinds of yields they get because their
eyes have been opened to mutual funds. When they know that
the market is doing well, they will give serious
consideration because they can get 9 percent to 10 percent
annually as compared with the regular banking rates of 3
percent to 4 percent. Of course, there are a lot of books
on investing like the ones authored by Larry Gamboa and
Francisco “Topax” Colayco. As they read these books, they
become more aware. That’s part of the maturity I am
referring to.
What are
the prospects for 2008?
For the
economy, it will slow down a bit this year because of the
global economic slowdown. The US,
Europe and
Japan
will experience an economic slowdown. I honestly don’t
think there’s going to be a recession. For as long the
slowdown does not turn into a recession, I think the
Philippines will still do relatively well because our
economy is dependent on the services sector, which has
been an engine of growth. The economy will grow, but not
as high as in 2007. I think electronics exports will be
affected when the American and Japanese economies slow
down because these are our major markets.
What are
the milestones of Philamlife under your stewardship?
We have
several milestones. For instance, the first was when we
initially hit the P1 billion-mark in first-year premiums
in 1996. I came in 1993. There was so much excitement when
we hit the first billion. The second billion becomes more
of a regular thing.
In 2007 we
earned our fourth platinum award as a result of the
Reader’s Digest Most Trusted Brand consumer survey. We can
say that we’re the most trusted life-insurance company
because we’re the only life-insurance company that
received a platinum trusted-brand award for four years in
a row, since 2004. No other life-insurance company or
financial institution has attained this distinction.
Also in
2004 we were the first life-insurance company to get
worldwide recognition from the US-based Life Office
Management Association (Loma). Philamlife has the most
number of Loma Fellows. We were the only company to
receive excellence in education awards for 10 consecutive
years.
In 2006 I
was the first Filipino to be recognized as Personality of
the Year by the Asia Insurance Review based in Singapore
and The Review of London.
Among the
reforms we were able to achieve included convincing the
Insurance Commission to approve the proposal of an
expeditious approval of a new products process that has
hastened the introduction of new products for the market,
including the first text-activated, low-cost
micro-insurance product, Aksitext.
Philamlife
was also given a Presidential Citation by President Ramos
for having contributed to nation-building. Aside from
mobilizing savings from life insurance, we’ve used those
savings to contribute to the development of the country.
We financed the Coastal Road project and the Metro Manila
Skyway. Last year we’ve donated P5 million to the
Promoting English Proficiency program of the American
Chamber of Commerce, as part of our efforts to retrain our
teachers and students to improve their level of
proficiency in the use of the English language. |
