Owner of the Philippines’ Largest Malls Says China Feud May Hurt Businesses

Cliff Venzon
·3 min read
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(Bloomberg) -- Escalating tensions in the South China Sea are making the owner of the Philippines’ biggest lender and shopping malls cautious, urging the government to not be hostile toward its neighbor and to steer clear of the US-China competition.

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“China is very close to us, we cannot be too antagonistic,” SM Investments Corp. Vice Chairperson Teresita Sy-Coson told reporters late Wednesday on the sidelines of her company’s event. “Even though we know what is happening, I guess we have to do it through a more peaceful negotiation,” Sy-Coson added.

Sy-Coson’s comments, the first such remarks from an influential Philippine tycoon, show that President Ferdinand Marcos Jr.’s increasing pushback against Beijing’s sweeping maritime claims is starting to create unease in the corporate world. She frowned on the government’s strategy of publicly calling out China, the Philippines’ top trading partner, after every encounter.

“That’s why we are all cautiously optimistic because of the things that are happening beyond the businesses’ control,” said the owner of BDO Unibank Inc., the nation’s largest lender. SM Prime Holdings Inc., also owned by the Sy family, has shopping centers in China.

Since Marcos took over from Rodrigo Duterte in June 2022, the Philippines’ maritime strategy has taken a dramatic shift, with the current leader discarding his predecessor’s non-confrontational approach in the disputed sea. While several countries have overlapping claims in the South China Sea, it’s the increasingly intense competition between Beijing and Manila that’s been drawing global attention.

The prospect of an armed encounter in the waters that could drag the US into direct conflict with China is making the South China Sea at times more dangerous than the Taiwan Strait, observers say. The Philippines has repeatedly protested China’s actions in contested waters, including its use of water cannons on Filipino vessels. But Beijing has maintained its actions are lawful and has called on Manila to stop infringing on its sovereignty.

“I think we have to look at our own position. We don’t want to get involved in the US-China tensions,” Sy-Coson said. “What we have to do is to have peaceful discussions with them because, after all, we can’t change our neighbors,” she said.

Teresita’s brother, Henry Sy Jr., owns a stake in the company that runs the Philippines’ power transmission network which is 40%-held by State Grid Corp. of China.

Marcos has granted the US military greater access to Philippine bases to help safeguard the Philippines’ interests in the South China Sea. The sea dispute escalated over the weekend after Chinese ships rammed and blasted water cannons at Philippine boats, prompting Manila to summon the Chinese ambassador.

“We just hope there will be no skirmishes in that area because whatever happens (there) will affect us, all of us,” Sy-Coson said.

Apart from geopolitical tensions, threats of natural disasters due to climate change also risk clouding the business outlook, she said.

“But left to our own, the Philippine economy is okay,” Sy-Coson said.

--With assistance from Cecilia Yap and Andreo Calonzo.

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