Manny Villar is on his way to building a million Filipino homes | Bilyonaryo Business News
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Manny Villar is on his way to building a million Filipino homes

By RAFAEL A. S. G. ONGPIN

P+P: Our economy is taking a beating because of the pandemic. I imagine Vista Land must be having a tough time as well. Do you see a bright side? What sectors of the economy have proved resilient?

Manuel Bamba Villar Jr. (MBV): In 2020 we got hit in the second quarter, but we were okay, because the Overseas Filipino Workers (OFW) sector [which comprises the bulk of Vista Land’s housing market] was not hit that badly; total remittances were practically the same. Right now, many of the OFWs [abroad] have been vaccinated already. Our OFWs are from United Arab Emirates, Saudi Arabia, the US, the UK, and most of these countries are already advanced in vaccination. So far, the pick-up in the fourth quarter 2020 has been good.

In the malls, we are still doing okay. Our malls are different, smaller [the anchor stores are] primarily AllHome [hardware and home improvement] and AllDay [supermarket]. Between these two, and my Coffee Project, they occupy 70-80 percent of my malls. In short, I am my own primary tenant for most of the newer malls. The older malls, like Starmall and the like, we still have a lot of external tenants. I’m not worried. My two main retail stores are okay. Home improvement is steady, positive, with slight growth, and the supermarket is >> actually booming.

During the crisis, everyone has been forced to stay home. They discovered they need things for their homes. They started doing repairs, they started buying additional appliances. Family members are now competing for TV screens, so they bought additional TVs. They bought additional air-cons. It’s not booming like the supermarket, but it was positive in 2020, it did not contract along with the economy.

The other 20 percent of our tenants did get hit, especially food. Coffee Project did not get hit so badly. It was doing very well [before the pandemic], now it’s just okay. There’s a lot of take-out. When people want to make a quick restaurant visit, normally [they will choose] a coffee shop. No more long lunches, long dinners. Except for ECQ (enhanced community quarantine), then we have to shut down entirely. That’s when we lose.

 

The worst affected are the small restaurants and service establishments, like beauty parlors, massage, gymnasiums, in the malls. I feel bad for them, the small entrepreneurs. The more typical [larger] malls have really been hit hard. My first mall [Starmall], many shops have closed. Vista Malls aren’t going to close, because I’m the tenant.

We missed the POGO (Philippine Offshore Gaming Operator) boom, in fact, we completely missed it, because we are not so big in leasing. That’s why we haven’t suffered as much. We do have some BPO (business process outsourcing), my whole building in The Fort (Bonifacio Global City) was taken by Google. They weren’t affected at all. They haven’t sent me letters requesting for discounts. Some of my other tenants are asking for discounts. We give them maybe 10 percent.

Mall operators in the Philippines are big guys, like Robinsons, SM, and Ayala. They can survive. We are a new player, and luckily, our malls are smaller, so we are not hit as bad, and largely, we are our own tenants. [When we started this business] we were worried about our ability to get tenants. We were right—but this worked in our favor during the pandemic.

We do have restaurants, a pizza place, a Chicken Deli, my bakeshop “Bake My Day,” and Coffee Project. I like having my own brands. I like starting them, I am an entrepreneur at heart. I don’t like taking over big companies. I’d rather start from scratch, and, as much as possible, Filipino. I don’t see the reason why we have to pay royalties to a foreign franchise.

P+P: So, the retail sector is okay?

MBV: It’s always relative. Of course, our 2020 earnings are low compared to 2019. But it’s not like a disaster. The worst affected are the small ones, like two-store, or five-restaurant entrepreneurs.

The public is more afraid to go into big malls, because they’re indoors, sometimes low ceilings, and there is often a long walk to get to where you are going. My malls are park and shop. Quick lang, no need to loiter.

P+P: The pandemic has also given rise to a lot of online retail. I wonder if there are opportunities in that for a lot of these smaller entrepreneurs who are losing out in physical retail?

MBV: There is definitely an opportunity there. Definitely. There is a boom in online, people are shopping in their homes.

I put up a little market for small entrepreneurs. It’s an experiment. I call it the South Molino market. We have big tracts of land in the South, so I cleared one. At first, I put up conventional market stalls. Then I invited small entrepreneurs. At first, I didn’t even charge them anything. It boomed, suddenly everyone wanted to come and sell. Many were selling out of the trunks of their cars. They call it a trunk sale.

Initially, it was free, but eventually we started charging them, just for parking, to cover maintenance. But it’s doing very well, so many people are coming. It’s part of my service to the small entrepreneurs, I kind of pity them. So many have joined. It’s better [than a mall], because it’s open air, so it’s less “COVID-friendly.” People feel safer shopping and eating. I put up some tents for food and drinks.

The pandemic has changed things. It has given birth to many more entrepreneurs, maybe because people lost their jobs. I think this trend will continue, because the pandemic will be around for a long time. More and more people will become entrepreneurs.

I’ve always been an advocate of entrepreneurship. I’ve always felt that, unless we develop an entrepreneurial culture, like that of the Chinese, we cannot develop. We have an employment culture, everyone wants to be employed. Maybe the pandemic will spark an entrepreneurial revolution, or at least an increase.

P+P: Let’s talk about the housing sector. This was your first big business. You sold your very first house to an OFW.

MBV: I sold two. One was a seafarer, the other was a teacher.

P+P: Since then, how have you seen the sector evolve? Are they still an important part of your market?

MBV: Now, after all these years, it’s still 50-50. Half of my market is still OFWs. I’m not sure I should be happy. During those times, I thought, in the future, there will be fewer OFWs, sana more entrepreneurs. But it’s still the same.

The seafarers were the hardest hit by the pandemic, especially because many Filipinos work on cruise ships, which all shut down. But now, they’ve started recalling them. They discovered that they have to operate the ships pala, even if there is no business. If you don’t run the systems, they break down, it will be more expensive. So, we are getting back to pre-pandemic levels of employment.

P+P: How has this affected the housing sector?

MBV: The housing sector is forever. There has never been a time when there was no backlog of demand, in fact that backlog steadily increases over time. You always want to have a house. My favorite joke: As long as there is such a thing as in-laws, you will have a housing industry. They are the biggest incentives to buying a house.

Despite the backlog, when the pandemic hit in the beginning of the second quarter of 2020, the industry froze. No one wanted to make the jump. But by the third quarter, it started trickling in. Now, we are almost back to pre-pandemic levels, especially in the mass housing market.

P+P: That’s your market. How about the condo market?

MBV: Not recovering as fast. Unfortunately for them, the boom they were enjoying was a result of the POGO business. Unless the POGO recovers, it will take some time. A lot of people were buying units, even building towers to lease out to POGO employees, who were paying more than local tenants. Now, they’re gone. There’s a glut in condos.

P+P: You have spoken in the past of the social costs of the OFW phenomenon. What do you think, long-term, the effect on our society is going to be?

MBV: We know that it cannot be good, it’s more of a question of, how bad? But some steps have been done to help the plight of the workers. There are more protections in place to prevent exploitation. For example, there are no more japayuki. In that respect, there has been improvement.

In the Middle East, many of the Filipinos work in the more democratic countries, like the UAE, Abu Dhabi, and Dubai. Two-thirds of the populations there are non-Arabian foreigners, to begin with. They are treated better. In places like Hong Kong and Singapore, they are very particular about the rights of the OFWs. I would say that the rights of the OFWs now are much better protected than before.

P+P: Do you think the MSME (micro, small, and medium enterprises) sector is growing? Does it receive enough support from government, from society?

MBV: The small and medium enterprises never had help from the government. I’m not talking about the present administration, or any administration. This is ever since. You’re on your own. In all my talks on entrepreneurship, I tell people, “You have to do it on your own, don’t depend on the government. You have to do it despite the government.”

P+P: When we talk about financing, who exactly are the government banks, like the Land Bank and the Development Bank, supposed to be supporting?

MBV: Banks are very conservative. They’ll never lend to MSME. Kaunti lang, token, so they can claim they are lending to them. Pero ‘yung mga pinapautang nila, small entrepreneurs with big collaterals. Maybe your father is wealthy, and you can borrow from him a plot of land that you can mortgage. Pero ‘yung clean? Wala.

To me: government helping the small entrepreneurs? Forget it. Not going to happen. That said, this pandemic is creating a lot of small entrepreneurs, like those who retired, those who lost their jobs. In the last 20 or 30 years, per capita income has been growing, there has been some prosperity. So, there are people who can give capital to their children, siblings.

We were doing well, up until this pandemic. I thought we were on track to be an upper-middle country. Sayang. We missed it. Or, na-postpone lang naman.

 

After working with PDCP for three years, I decided to go on my own in 1975. I bought two trucks. The P10,000 I spent was a down payment. I bought those two Ford 600 trucks for about P35,000 each. The collateral was the trucks themselves. I had seven years to pay, and the interest was very low, 6-7 percent. For whatever reason, there were very few takers, despite the excellent terms. I guess, wala akong mabentahang loan, ako na lang. I wanted to go on my own, be an entrepreneur.

I used to sell the gravel and sand myself. My customers, when I was starting, were my friends. Then I used to drive around and look for houses under construction. I would knock on the doors and offer my gravel and sand. I also had a small hollow-block business. That’s how I started.

I watched BF (Banco Filipino) Homes, where a lot were being built at that time. They used to have joint venture partners. They would offer a 50-50 deal to raw land owners. A lot of people who had invested in lots took this, because it was easier to sell the lot with a house on it. I saw this opportunity, so I approached a few lot owners. I said, why don’t I build houses on your lots, then we split the proceeds? I then presold the lots. I got an architect friend to do drawings for me, then I sold the houses to buyers based on those.

I was able to offer them much cheaper than BF, at that time they were selling at P100,000 to P110,000 per unit, big houses. My houses were smaller. At that time, you could easily borrow P50,000 from the Social Security System, they were very generous with their appraisals. Pag-Ibig Fund did not exist yet. The monthly payment was P361, I still remember that. I offered my house and lots at P60,000, P5,000 down, then the P50,000 loan and the balance of P5,000 payable over three years.

It sold like hotcakes, it was so cheap. That’s how Camella Homes started. It really clicked. I borrowed from Banco Filipino, and bought raw land. I found that everything I could produce, I could sell. I had no competition at that time, except from BF themselves. BF got into trouble [with the Central Bank] in 1984, so most of the brokers transferred to me. Suddenly, my marketing organization tripled, then quadrupled. It really boomed.

I kept on drawing on my credit lines. I was very aggressive, I had nothing to lose. I was very poor then. Some people still doubt that, even today, especially when I ran for president. We are a family of nine, I am the eldest boy. I was the one really helping my mother. We had nothing.

 

P+P: So, financing really played an important role in your business.

MBV: Oh, yes. You know, in the market, we were victims of the five-six. We would borrow enough in the morning to buy one banyera of shrimp, then we would pay it back plus 20 percent in the afternoon.

P+P: Financial inclusion has been a very elusive goal for the nation. How much of our economy do you believe remains underground—unregistered, unreported, and untaxed?

MBV: Our banking system is very conservative; I think you know that. It’s composed of a few big banks. When the Bangko Sentral ng Pilipinas (BSP) lowers interest rates, they don’t pass it on to the borrowers. Their contention is that it is the payment for increased risk. I think we should leapfrog, we should do what China did. We are not only underbanked, our banking system is practically obsolete.

MBV: Our banking system is very conservative; I think you know that. It’s composed of a few big banks. When the Bangko Sentral ng Pilipinas (BSP) lowers interest rates, they don’t pass it on to the borrowers. Their contention is that it is the payment for increased risk. I think we should leapfrog, we should do what China did. We are not only underbanked, our banking system is practically obsolete.

In China, banking was so crude, they didn’t even really have credit cards. Instead of going through that stage, they went straight to fintech. I think we should do the same.

Although I think the BSP will be very quick to put their foot down. I think we should leapfrog, because it will take us a very long time to catch up— if we can even catch up.

 

Leapfrog na lang, go straight to fintech. To be fair, [BSP Governor] Ben Diokno is very progressive, he is one of the most progressive central bankers I have known. I don’t know if he will be progressive enough for fintech. Very challenging iyan. It is both a threat and an opportunity. We can skip two or three generations.

China is ahead, even of the US. When I was there, I couldn’t even buy anything, not even iced tea, with cash. They just don’t take it, not even my credit card. It has to be your phone. That’s when I saw the future of money and banking.

P+P: As an entrepreneur, as a taxpayer, and as a businessman who has to engage with government regulation, how do you feel about the underground economy?

MBV: It’s not good, but it is inevitable. At our state of development, you will always see an underground economy. It’s bad, but as you progress economically, it will become smaller and smaller, percentage-wise. Of course, if you lower the rates, more and more people will pay. For the longest time, we have been paying 30 percent corporate tax, now it has been lowered to 25 percent. More people will be encouraged to pay taxes.

P+P: Speaking of engaging with government regulation, what is your opinion on the ease—or difficulty—of doing business in the Philippines? In what ways do you wish it could be improved? Do you think the current state of regulation is fair and socially equitable, or do you agree that wealthier people have an advantage?

MBV: Anywhere in the world, wealthier people will have an advantage. I had a chance to be in the government [MBV served as congressman from 1992 to 2001, and became Speaker of the House, and served as senator from 2001 to 2013, including as Senate President from 2006 to 2008.], and of course, I have been in the private sector, first as a small entrepreneur, then a big businessman. I have had the chance to compare. Grabe ang bureaucracy natin. To be fair, it’s not because of President Duterte, or any president. It’s an accumulation over time. We keep making more laws.

Any time we cannot solve a problem, we create a new department. Department of Water, Department of Public Safety, Department of This or That. Every time you create a department, you have to create it all the way from the municipal level, the provincial level, the regional level. The bureaucracy that it adds is terrible.

I’ve gotten used to the bureaucracy, to some extent it’s a matter of getting used to, but in the matter of housing, for example, grabe iyan. You have to deal with the local governments, and you’re not taking about mayors, you’re talking about barangay captains, the barangay council, the municipality, now, even the provincial boards are interfering. That’s just the local. You’re not even at Agrarian Reform, Agriculture, Bureau of Internal Revenue, Register of Deeds, Department of the Environment and Natural Resources. You name it, it’s there. Then, every department has a regional level, municipal level, provincial level. It eats up so much overhead.

Yet, our Congress continues to make more laws. When I was the Speaker, I was trying to reduce the number of laws. I think we should not be passing more laws, we should be reducing them. We would be doing the country a great service. I don’t know, we somehow like bureaucracy. That is a problem.

But, to be fair, this will be diminished as we develop economically. You cannot do this unless you develop. We were already on our way. The per capita income was increasing, until the pandemic. When salaries rise, more people will work in the private sector than in the government. When that happens, it will be more efficient, more streamlined. We need more people joining the private sector instead of the government.

Even corruption will be significantly reduced, if we develop economically, because salaries will be increased.

P+P: have you seen this in your own operations, for example in your malls?

MBV: Yes, before the pandemic. We were doing well. You noticed that my malls are much better. Actually, I went around. We took over some malls, the older ones, especially the Starmalls. We took over that business, we bought it from the family of my wife. The standard of malls in Asia has risen, especially in China, Japan, Thailand, Indonesia. Even their supermarkets are beautiful. I asked, why are we being left behind? So, I wanted to come up with a world-class standard, of supermarkets, of home improvement stores, restaurants. I want to be in that level, world-class.

Our OFWs are beginning to come home. Travel was cheap, before the pandemic. Everybody now can travel. These people can see the quality of retail, of restaurants abroad, supermarkets, home improvement stores, department stores. I wanted to leapfrog to that, without going through a slow progressive improvement phase.

So that’s what happened. I improved everything. Even with coffee shops. I love coffee, and I was thinking why are coffee shops here so behind? So, I came up with my own coffee shop, Coffee Project. It has been very successful.

P+P: Tell us about your relationship with coffee.

MBV: I am in love with coffee. When I started, at 9 years old, selling with my mother in the market, I was already drinking coffee. Before we would leave the house, there was already coffee boiling on the stove. We premixed our coffee. We would bring it with us when we walked from Tondo to the market in Divisoria, at 1 or 2 am. We would wait three or four hours for the customers to come, around 5 am. We would drink coffee and talk while waiting.

During my early entrepreneurial years, you would rarely see me without a mug of coffee in hand. Now, I’ve reduced my intake significantly. I’m down to three cups a day. I used to have six cups a day.

They’re now saying coffee is good for the health. They used to say it was bad.

The reason my coffee shops are nice, is that I believe the coffee business is 50 percent the coffee, and 50 percent the ambiance, where you drink it. Coffee Project is my favorite company now. It’s not a big company, but it’s profitable, and it’s the closest to my heart. I love it. It’s my office. Wherever I go, I have my meetings there.

P+P: Do you have a favorite kind of coffee?

MBV: It varies. I like cold brew, because I’m trying to reduce acidity. Arabica, of course. Some people experiment, but not me, I’ll stick with arabica.

P+P: It’s a very competitive field.

MBV: Yes, very competitive, but we have a chance of being number two this year, next to Starbucks. Starbucks is, of course, way ahead.

P+P: Do you think our coffee industry can ever progress to where it once was? We were briefly the largest coffee exporter in the world (in the late 19th century), now, we can barely meet 25 percent of local demand.

MBV: Our agriculture is bad. In fact, I can say this of almost all our agricultural crops, rice, even pork. I don’t know why we’re doing so badly in agriculture, but our agriculture is very poor. Productivity is low, and farmers don’t want their children to be farmers.

P+P: Yes, because it dooms people to poverty. If agriculture were making people rich, everyone would want to be doing it. But that’s small farmers. Industrial agriculture, for export, in this country can be very profitable.

MBV: I agree, and I’ve always espoused industrial agriculture, corporate farming. But there are many social issues connected to it. But it can increase productivity very significantly.

P+P: What do you see as your biggest failure? What was the worst period of your life? What did you learn from it?

MBV: That’s my advantage. I’ve had a lot of crises in the past. I look at my life as a boxing match, maybe I’ve had 15 rounds already. In one round you get knocked down, in the next round, you knock out the opponent. I can’t say which of these crises has been the worst. One could argue that what I went through when I started was the toughest. In 1983, of course, was a huge crisis [the collapse of the economy following the assassination of Ninoy Aquino], but 1998 [the Asian crisis] was very bad also. The 2007 crisis was bad for the whole world.

I’ve gotten through all those ups and downs, so during this COVID crisis, I’m not that worried. My only worry has been that I might catch COVID. But otherwise, I think it will pass. I’ve seen many crises, they come and go. I look at this as one bad round, and the next round will be better.

P+P: You’ve had many successes. Which one, for you, has given you the most fulfillment?

MBV: Coffee. My family. I find my business more fulfilling because my family is okay. My family has not suffered because of my business. I’m glad I was able to do both. That makes me feel good.

P+P: You famously live simply, rather than luxuriously or ostentatiously. Surely, however, you must allow yourself some minor personal extravagance. What do you indulge in, that you personally consider luxurious?

MBV: You know, when I was studying in the University of the Philippines, I never liked Humanities. I would sleep in class, and I questioned the teachers, what is the relevance of Humanities to our lives?

Later on in my life, someone who needed money sold me a [Fernando] Amorsolo painting, a very small one. This was my first painting. I was about 28 years old. Every time I looked at that Amorsolo, I felt good. I realized, this is what they call “art” pala.

Somehow, I started buying. Now I like to collect. So that’s my luxury in life.

Otherwise, I have few others. I have certain things I like to eat, a specific siopao, for example. I don’t eat these things every day, I only eat them at specific periods of the year, like Chinese New Year. I like to eat moon cake during the Moon Cake Festival.

P+P: You’re known, once again, as the richest Filipino. You have suggested that this is not how you would prefer to be known. How would you rather be described?

MBV: I have always said I would like to be the man who has built the biggest number of houses for our people. I want to build a million homes. I’m already close to it. I’ve always believed in housing, shelter is very important. Housing is not loved by the finance people. They don’t look at housing as a means to improve the economy—I do, but they don’t. To me, not only can it improve the economy, but it can provide decent shelter.

 

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