Managing Asia

The Philippines' oldest conglomerate goes back to school

Ayala takes the leap into social infrastructure

The Ayala Corporation, the oldest conglomerate in the Philippines, has made a push to invest in businesses that could play a major role in shaping the country's "social infrastructure," the company's chief executive said.

The company's investments in the education, healthcare and renewable energy sectors came about after "opportunities for disruption" were spotted, said Jaime Augusto Zobel de Ayala, chairman and CEO of the Ayala Corporation.

"Both education and healthcare have been fairly rigid spaces and I think there is a lot that can be contributed in those spaces," Ayala told CNBC's "Managing Asia."

While the company's foray into the private education sector is still in an early stage, Ayala said responses have been "very positive" so far. The Ayala Corporation's education investments arm entered the primary and secondary school education space with schools that offer affordable rates and standards that are "above the public school system," Ayala said.

The Ayala Corporation also has stakes in the private tertiary education sector. It acquired a 60 percent stake in the University of Nueva Caceres in the Bicol Region of the Philippines in 2015.

According to a report on private education from the World Bank, close to 9 percent of the Philippines' 6.5 million high school students were enrolled in schools that were part of the country's public-private partnership program.

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"On the average, if you look at the number of Filipinos who enter the high school system, a very small percentage goes to college. And of that college group, I think only 19 percent finally graduate. The filtering mechanism through the educational system to employment is really very small," Ayala said.

The Ayala Corporation's solution to this issue has been to make the links between education and employment in its educational institutions stronger.

"The basic philosophy that I think is different to what's taken place in the past is we're looking at this education-to-employment model, and making sure that the education that our schools participate in are relevant to the employment needs of tomorrow," Ayala said.

The company's ultimate goal in the education space is to increase the employability of graduates of its colleges by making sure the curriculum and skills taught are "more relevant" and up-to-date.

While the number of college graduates and adult literacy rate in the Philippines is high — 97.5 percent of Filipinos above 15 years old can read and write, according to UNICEF — the quality of education across the country can vary due to income inequality.

Government reforms in the education system during former President Benigno Aquino's term extended time spent in public schools by 2 additional years. However, media reports have shown that roadblocks remain for education providers, including poor attendance, dropout rates and what some critics have referred to as encouragement of the export of cheap labor in the country.

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