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INTERVIEW

  Ms. Gilda Pico
 
Ms. Gilda Pico
President and CEO, Land Bank

Ms. Gilda Pico
President and CEO, Land Bank

In 2010 the Philippines registered a GDP (Gross Domestic Product) growth of 7.2%, the highest it has been for 35 years. This is hugely impressive following the 2008 downturn. How has BSP supported the financial markets here and helped the economy to flourish?

The BSP has done a very good job in terms of managing inflation, interest rates as well as the exchange rate. That meant that businesses could invest more. Of course, BSP has implemented a very strict risk management system which improved the operations of banks. We have implemented Basel II and a risk-based internal audit approach. The BSP has also been very strict in evaluating the oversight function of the board and senior management. They have a lot of initiatives in terms of risk management and corporate governance.
Moreover, the BSP has contributed significantly in strengthening the banking system and the Philippine economy. Thus, the Philippines has ably withstood the external global shocks such as the 2008 US financial crisis and the upsurge in crude oil prices.

How do you think the BSP is supporting new products and new types of financing?

The BSP has been very supportive of the developmental needs of the country. BSP's focus on financial inclusion and microfinance is very timely and will definitely result in expanding credit outreach. In addition, the BSP has been very responsive in the Public-Private Partnership or PPP Program of the Philippine Government by allowing higher loan limits to banks.
It is not just BSP but it is the country as a whole. For example, 8% of total loan portfolio should be for micro and small enterprises and 2% for medium enterprises. In the case of agri-agra, 15% of total loan portfolio should be in agri and 10% in agra. These are the initiatives of the Government to support the agricultural sector and SMEs. These are being monitored by the BSP and banks are penalized for non-compliance to these new laws.

What methods do you think need to be implemented in order to develop the consumer loan base in the country?

Micro and small enterprises usually do not have hard collaterals which they can offer to banks. If we insist on hard collaterals, then micro and small enterprises will not be able to access credit from banks. We need to evaluate the project itself, their cash flows and the ability of the enterprise to pay back the loan. We need to relax the requirements without sacrificing credit standards and the viability of the project. We look at what are available like receivables, purchase orders, etcetera.

Agriculture is the backbone of the economy here.

The agriculture sector plays a very crucial role in shaping the country's overall economic growth and development. It remains as one of the most economically significant and promising industries in the Philippines in terms of its vast potentials and opportunities for expansion and growth.

This is primarily why LANDBANK is helping the farmers and fisherfolk sector through financial and technical assistance. We want to reach as many farmers and fisherfolk as we can, and we tap rural banks and cooperatives which serve as conduits in extending the much-needed credit support to our mandated sector. We are working with about 500 rural banks and their branches and over a thousand cooperatives in order to serve farmers and fisherfolk across the country.

Preparation is very important when lending to farmers and fishermen. We have established a group in LANDBANK called the Development Assistance Center which focuses on the institutional and capability building of these cooperatives.

The success of the bank depends on the strength of the conduits. Before we lend to them, we make sure that they are prepared technically in terms of bookkeeping and in other areas of managing their business.

Another basic thing we require from them is equity. If they do not have a stake in the business, they can easily abandon the project. So for every one peso that they put in the cooperative, we give them six pesos in loans. They use these loans for relending to the small farmers and fisherfolk.

The other priority sectors of LANDBANK are the micro small and medium enterprises, livelihood, agribusiness and agri-infrastructure, renewable energy and water.

Are you developing any more products to target even more farmers?

Yes, we developed a synergy program called the Food Supply Chain Program, which is in support of the National Government's thrust of promoting food security. The objective is to increase farmers' income by providing financial and technical support along the value-added chain of a commodity or industry.

We launched this last year where we allocated P50 billion for the program, particularly to support the financial requirements for crop, livestock and fishery production, working capital and acquisition of processing and other fixed assets.

LANDBANK provides financing to all the players along the value chain system consisting of a full range of activities that are undertaken in turning a particular product into a form that is sold and consumed.

At the onset, a cooperative and a processor will establish production, technical and marketing contracts, where the cooperative thru its farmer members commits to supply the processor with their produce based on the latter's product requirement. The processor on the other hand, commits to buy the produce of the cooperatives at a competitive price; and may also commit to provide the necessary inputs and technical assistance if only to ensure product quality and standards. The processor then makes use of the produce to convert into a product that will again be an input to another activity.

It is really a complete chain from farm production to processing to marketing. Farmers will now be assured that their products will be bought. The problem in the past was that there was no market for their produce, so we are now addressing that. In line with that, LANDBANK is also investing in research. We have linked up with universities and state colleges in the provinces and the countryside so they can study and research on how farmers can increase their production and profitability. We will pilot test their findings and if successful, the idea will be marketed to the farmers so they can adapt the technology. We then pilot test their recommendation and if successful, encourage farmers to adopt these new technologies.

A country like the Philippines should not have to import rice, so this has to be developed. Could you tell us more about your partnerships with universities and individual centers in the provinces?

We have tie-ups with state universities, local government units and non-government organizations where we validate viable technologies that contribute to production efficiencies of farmers.

The objective is to encourage technology adoption among farmers, fisherfolk and entrepreneurs in order to increase their income. It could be a new variety of rice or vegetables. If the technology is tested to be viable, we give it to the farmers so they can adopt and implement it. In return, their production will increase and the quality of their produce will improve and thereby, they will be able to command a higher price. LANDBANK aims to increase the productivity of the farmer as well as the quality of the produce so they can sustain their operations.

Land Bank is ranked as the top 5 commercial bank in the Philippines. Speaking specifically about your institutional investments, what avenues do you like to go down besides agriculture obviously?

Our priority sectors are not just the small farmers and fisherfolk. We also support SMEs and we finance local government units for infrastructure projects. We also support renewable energy and water projects as well as the requirements of government agencies and corporations because we are a government bank. For example, if the NFA (National Food Authority) requires financing for domestic rice procurement, then we lend to them.

Local government units are crucial in the food supply chain and in the development of the rural economies. We need infrastructure so that the produce of the farmers can be brought to the trading center at the least cost possible. Sometimes it takes them a long time to transport from the farm to the trading areas, so transport costs are high. We finance local governments so they can build farm to market roads and rural infrastructure.

LANDBANK cannot do this alone; it needs the support of the other units and local governments.

LANDBANK has adopted an integrated countryside development philosophy. This synergistic framework is the most effective approach. Adopting a silo approach towards countryside development has a higher risk of failure.

Do you think that the private sector needs to play more of a role? Do you think that there needs to be more of a synergy?

The private sector can participate under PPPs (public-private partnerships). Sometimes the local government units have an arrangement where the private sector builds the infrastructure and then when it is completed, they turn it over to the local government. That can be considered as a partnership between the private and public sector.

Last year OFW Overseas Foreign Workers) remittances were successful with huge growth compared to other years. What role do you think the OFWs play in the development of these provinces?

Our OFWs have savings from their jobs abroad and they remit the money to the Philippines for investment. We offer them investment opportunities like retail treasury bonds and long term negotiable instruments which are higher yielding instruments. We provide financing if they decide to put up a business. We encourage them to start a business for their families while they are abroad so they will have a regular source of income when they come back. Before the leave the Philippines, we conduct pre-departure seminars where we discuss investment opportunities for their money and business projects for their families.

It seems like the underlying theme for Land Bank is promoting sustainability within the country.

Yes. We have a new program called the OFW Reintegration Program for OFWs who lost their jobs and had to come back to the Philippines. We will offer financing depending on the type of project and business they want to pursue. We will provide them with a list of projects they can choose from.

Gilda Elepano Pico you have been the Chief Executive Officer and President of Land Bank of the Philippines since November 2006 and have been its Vice Chairman since August 2005. You served as Senior Executive Vice President of Agrarian and Domestic Banking Sector of Land Bank of The Philippines. You also served as Executive Vice President of Operations and Support Sector at the Land Bank of the Philippines, where you started your banking career in 1981 as Assistant Vice President. You are a Certified Public Accountant, earning a Bachelor of Commerce degree from the College of the Holy Spirit and attended the Masters in Business Administration Program at the University of the East. With such a focused and illustrious career within Land Bank, what do you think have been the key achievements that have defined you and Land Bank for the future?

I was fortunate indeed to have been assigned to different areas, taking on various roles which prepared me for the position at the helm. I have worked with five former presidents of this Bank and I've seen how they steered the institution. I had the advantage of getting the best leadership and management style and lessons from my predecessors. This, along with my extensive hands-on experience in the different sectors, equipped and prepared me when I was called upon to lead the Bank. It was a gradual process starting off as assistant vice president then gradually moving up to senior executive vice president, then later as acting president until I was appointed as full fledged president. It also helps that I know the people I work with, having been with LANDBANK for 30 years and counting.

What is your vision? What is on the agenda for Land Bank over the next few years?

Simply put, the vision of LANDBANK is to serve our mandated sectors, and to play a key role in countryside development.
This is a tall order, a challenge which we are endeavoring to fulfill. While we continue to remain committed to this noble purpose, we realize that there is much more to be done. We strike a balance in generating profits so that our development programs are implemented and sustained.

Now and in the years ahead, we will remain focused in our three business goals namely: pursuit of mandate, institutional viability and customer service.

Ultimately, we want to be remembered for having worked hard to ensure that LANDBANK remains a leading institution in promoting development in the countryside. Generating profits is of course important, but foremost in our agenda is to serve the farmers and fisherfolk, micro, small and medium entrepreneurs, and other key players in rural development.

What CSR (Corporate Social Responsibility) programs is Land Bank trying to push forward with right now?

As our head office is along the Manila Bay, we are very much involved in the clean up and rehabilitation of the bay. Apart from rolling our sleeves to clean the surroundings of Manila Bay, we also finance garbage boats which collect debris from the waters.
Other CSR programs which we undertake include tree planting activities nationwide where our strong 7,200 employees troop to watersheds, parks and school grounds to plant trees. We also have scholarship and donation programs to communities and other charitable groups.

When we met with Mr. Washington Sycip he told us that the absolute key to business in his opinion was human resources and understanding that management is important in terms of knowing your people and how to get the best out of them. Having been here for 30 years, it is clear to me that you have gained the respect of people throughout the business. What has been the key to you management and leadership style here at Land Bank?

It's a fusion of strategies or styles, but mainly, the focus of our leadership at LANDBANK rests on the respect which we give to every member of the organization, and the respect which we reap in return. It works both ways - respect people, and they will respect you back. It's easier for a leader to ask people to do what is right if that leader has the respect of the people.

Setting an example is another key. It's no use telling people to do something which I am not willing to do myself. We believe that leaders should set and be the examples themselves.

And third, know your people. I've learned that it's important to spend time with them and show sincere interest not only in their professional growth but also in their personal well-being. We're a family here and as in any family, we try to give as much care and concern to our members.

What final message would you like to send to the readers?

Well, for one, we'd like to invite them to visit our country not only to behold the many natural wonders in the Philippines, but also to explore possible investment options.

On our part at LANDBANK, we will continue to do our share in promoting economic growth especially in the countryside where potentials for development are endless. Ultimately, we would like to see LANDBANK fulfill its mission and be able to touch and make a difference in the lives of the people we serve.

Thank you very much.

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