MANILA- One of the scions of the Philippines' richest man said local companies must scale up to remain competitive amid the move towards a single Southeast Asian market by 2015.

In her keynote address at meeting of the Financial Executives of the Philippines on Wednesday, SM Investments Corp vice chairperson Teresita Sy-Coson said the conglomerate must take into account the effects of Asean market integration, considered a "game changer" for the next decade, into the group's business decisions.

"We need to think regional. [Asean Economic Community] integration means a market base of 600 million consumers that will support future growth. The free flow of people and goods reveals a bigger market, even in the domestic front with more investments interest and tourist-driven business," Sy-Coson said.

The eldest child of retail tycoon Henry Sy said SM must have a "change of mindset" and be "more forward-looking" so it can match up against its regional counterparts.

In particular, she saw the need to grow SM's banking operations to a "comparably regional scale," noting that the Philippines' three biggest lenders is equivalent to just one regional bank. Her family owns BDO Unibank Inc and China Banking Corp.

For a start, SM has consolidated the property companies and assets of the Sy family under SM Prime Holdings Inc.

"By combining all the property groups, we are now one of the biggest in Southeast Asia so there is an economy of scale from the integration," SM Prime chief financial officer Jeffrey Lim told reporters on the sidelines of the event.

Aware of the opportunities in Asean, SM Prime will continue to focus its efforts in the Philippines and in China, where it is growing its shopping mall business, Lim said. SM has five shopping centers in the cities of Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing.

When asked if SM will expand in the Asean, Sy-Coson said: "It depends on opportunities."

The Asean Economic Cooperation aims to attract foreign direct investments (FDI) through the reduction of business costs associated with multinational activities in the region.

The Asean integration will create a European Union-style single market that aims to ease cross-border trade through lower tariffs. It will liberalize areas such as air transport, business services, construction, financial services, maritime transport, telecommunications and tourism.

"Southeast Asia remains a popular investment destination because of the ongoing integration resulting from the efforts of these member states, matched by the region's strong economic fundamentals and this makes the investment very appealing," Sy-Coson said.

Integration however presents a range of known obstacles, which includes multiple bureaucratic costs, some confusion in terms of regional and national legal applications, among others, she said.

"Even if the political support and the momentum process of Asean members may not meet the many of the deadlines of implementation in 2015, there will be more awareness of the Asean integration as there is a real demand in the business community to get it working. Another five years, after 2015, the Asean economic community may become a stronger economic bloc," Sy-Coson said.

The Asean is composed of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

By Krista Angela M. Montealegre, InterAksyon.com

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