PH up 10 notches in ‘economic freedom’ list

Philippine Daily Inquirer (January 14, 2013) - The government’s anti-corruption efforts helped push the Philippines’ global ranking in terms of economic freedom by 10 notches to 97th among 177 countries and territories.

This was according to the editors of the 2013 Index of Economic Freedom, jointly released by Washington D.C.-based The Heritage Foundation and The Wall Street Journal.

Based on the latest annual index, the 19th since it first came out in 1995, the Philippines scored 58.2 out of 100 points.

Such score keeps the Philippines in the category of “mostly unfree” countries or those within the range of 50 points to 59.9 points.

“(The) score is 1.1 points higher than last year, with notable improvements in investment freedom and freedom from corruption outweighing a decline in business freedom,” the editors said in a statement.

They added that such score was below the global average of 59.6, but noted that the Philippines’ improvement provided contrast to the world’s 0.1 point gain.

“The global advance toward economic freedom has ground to a halt,” they said. “Since reaching a global peak in 2008, economic freedom has continued to stagnate.”

Even then, the editors observed an overall positive trend in 2012, with 91 countries improving their scores compared to 78 that declined.

As for the Philippines, they noted that the government has pursued a series of legislative reforms toward an improved business environment that encourages broader-based job growth.

Still, the editors said Philippine institutions needed “deeper commitment to reform.”

“Although the perceived level of corruption has declined in recent years, more effective anti-corruption measures need to be institutionalized,” they said.

“The inefficient judiciary remains susceptible to political interference and does not provide strong and transparent enforcement of the law, undermining prospects for long-term economic development,” they added.

The index takes into account 10 criteria, including property rights, freedom in trade and financial freedom—of which the Philippines’ record showed no change from the previous year. This suggested a need for improvement in terms of market liberalization.

The country improved in terms of government spending, freedom from corruption, fiscal freedom and investment freedom.

However, the Philippines worsened in terms of business freedom and freedom in trade. This meant that the regulatory environment has become more inefficient.

Hong Kong remained the “freest” economy for the 19th time with 89.3 points. Mainland China placed 136th while Taiwan ranked 20th.

There were only four others in the league of “free” economies or those with scores of 80-100. These were Singapore, Australia, New Zealand and Switzerland.

North Korea retained its bottom rank at 177th with 1.5 points, improving from the previous one point. It was among 32 other “repressed” countries, all scoring less than 50 points.  

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.ph.

Gov’t Focus: Stronger Fiscal Position

Manila Bulletin (January 13 2013) - The Department of Budget and Management (DBM) expects the tax effort of the government to continue improving in the coming years in keeping with its ultimate goal of reducing public debt while increasing its tax take that should ensure a stronger and healthier fiscal position for the country.

Data from the DBM showed that the national government plans to downscale its budget deficit to 2 percent of the country’s gross domestic product (GDP) starting this year up to 2016 when President Aquino’s term ends.

“The fiscal year 2014 budget will continue the policy of fiscal consolidation,” the DBM said in its national budget memorandum that kicked off the preparation for the Aquino administration’s budget for next year.
Aside from reducing the government fiscal deficit, the DBM said that the country’s tax effort would, likewise, continue to increase to around 17 percent by 2016.

“The ultimate objective is to reduce the public debt and increase the government’s tax take to levels comparable with peer countries for a stronger and healthier fiscal position,” the DBM said.
In the first semester of last year, the government’s tax effort increased to 13.3 percent despite the absence of any new revenue measure from 12.7 percent in the same period in the previous year.

Meanwhile, as of October 2012, the national government debt stood at P5.359 trillion, while its budget deficit was at P127.3 billion at end-November, well below the P279.1 billion ceiling for the year, equivalent to 2.6 percent of the country’s GDP.

“In view of the continuing economic weakness of Europe and the United States, it will be prudent for the government to strengthen its fiscal position and sustain its fiscal reform,” the DBM said.

The budget department cited the need for more revenue generating measures.

The Department of Finance (DOF) and the DBM have lined up several proposed measures to bolster state revenues, including the rationalization of fiscal incentives and the new mining regulations.

“The success of these reforms will depend on the government’s strategy of aggressively pursuing tax administration reforms to improve tax compliance, expanding its revenue base, and further sharpening its sector and geographical expenditure prioritization and execution,” the DBM said.

“These reforms will also determine the extent of government’s ability to use its expenditures to push domestic economic activity,” the department added.

Last year, President Aquino signed into law the long-delayed new excise tax law that is expected to generate additional P33.5 billion in revenues for 2013.

Proceeds of the excise tax reform law will be used for the government’s universal healthcare  program and the livelihood, training, and assistance needs of tobacco farmers and workers in the alcohol industry.


For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.ph.

Taiwanese Investments Relocate In RP

Manila Bulletin (January 13 2013) - Year 2012 was a good year for Taiwanese investors whose investments reached $400 million from $300 million in 2011 as more investors dismayed by the high cost of labor in China  migrated into the Philippines.
MECO president and CEO Amadeo Perez Jr., in an interview with reporters that the  Philippines has become the beneficiary of Taiwanese firms relocating from China because of the increasing cost of doing business there.

“The reason that we are able to come up with sizable investments is because lots of investors in mainland China want out because of stringent labor cost,” said Perez.
According to Perez, some of these disgruntled Chinese investors relocated to Vietnam but while they were able to get cheap labor, they were dissatisfied with the quality of Vietnamese labor.

In addition, Vietnam is also suffering from power supply shortage making it difficult for companies to operate continuously.

There were at least 16 Taiwanese firms that relocated into the Philippines in 2012, most of which chose the economic zones in Clark, Batangas, Cavite and Laguna as other ecozones in the country like Subic have been filled up already.

Perez even noted that three Taiwanese investors alone invested $100 million. All the Taiwanese investments are for the export market.  

The new entrants, he said, are not into the electronics manufacturing that Taiwanese have been known for, but are into other export-oriented industries such as furniture making.
MECO will to continue its investment promotion this year noting that last year’s inflow was a result of high-profile missions led by Trade and Industry Secretary Gregory L. Domingo and Philippine Economic Zone Authority director-general Lilia B. De Lima.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.ph.

Tetangco named as best central banker for Asia-Pacific

Businessworld (January 10, 2013) – BANGKO Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. was again recognized as one of the best central bankers in the world for keeping the Philippines afloat amid the global economic downturn.

The Banker, a monthly magazine published by The Financial Times, Ltd., cited Mr. Tetangco as the Central Banker of the Year for Asia-Pacific, the BSP said in a statement yesterday.

“The Banker’s Central Bank Governor of the Year awards celebrates the officials that successfully steered their countries through the economic turbulence of 2012,” the magazine said.

Along with Mr. Tetangco, other awardees were Erdem Basci of Turkey, representing Europe; Mark Carney of Canada, representing the Americas; Jose Massano of Angola, representing Africa; and Fahad Al-Mubarak of Saudi Arabia, representing the Middle East.

The Banker cited the BSP’s role in the Philippines’ strong fundamentals: inflation fell to only 3.2% in 2012, well within the 3-5% target, despite the expansion of the gross domestic product (GDP) by 6.5% as of the third quarter, which exceeded the government’s goal of 5-6%.

The central bank has even cut its inflation target to 2-4% for 2015 and 2016, it noted. Mr. Tetangco told the magazine that this would send a signal to the market that the regulator is “serious about keeping prices low and stable.”

Moreover, the BSP should be lauded for placing importance on the stability of the banking system and consumer protection, the Banker added.

Looking ahead, Mr. Tetangco said the major challenge for the Philippines now is the “magnitude, speed and volatility of capital flows.”

“Because there is a time lag between when the capital flows into the financial markets and when the funds are actually absorbed into the real economy, their presence makes policymaking more challenging,” he explained.

As investors flee struggling markets like the United States and Europe in search of better yields in emerging economies such as the Philippines, the BSP is put in a precarious position.

“The very tool which textbooks say we should employ in the face of surges of inflows -- raise interest rates to combat the potential inflationary effect of increased domestic liquidity -- could in fact attract more inflows and thus perpetrate the cycle,” Mr. Tetangco said.

This is the third time that the BSP chief has been ranked among the world’s best for 2012. Global Finance Magazine gave Mr. Tetangco an “A” rating along with five other governors in its Central Banker Report Card last year. Emerging Markets, an international magazine of the Euromoney group, also named Mr. Tetangco as the Central Bank Governor of the Year for Asia.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.ph.

Entrepreneurship in RP's leisure property sector

BY DANILO A. ANTONIO, Entrepnews (Nov 2010) 

The local real estate industry is experiencing an upsurge after years of flat growth. The overall market confidence brought about by the new Aquino administration promises a rosy scenario for the sector over the next few years.

Strong performance across all residential product lines points to sustained demand for dwelling units. Shopping center projects likewise benefited from a very strong consumer spending base that has been expanding, thanks in no small part to the remittances sent by overseas Filipino workers (OFW).
And so long as the Philippines continues to be a preferred site for outsourcing services, office space builders can expect a continuous growth in demand from business process outsourcing firms.

Encouraging Signals
Ranged against the sterling performance of other real estate products, investments in resorts and hotel projects have not been as buoyant. The international decline in tourism, brought about by the weakening propensity for leisure among citizens of developed countries, have caused this below par performance.
But things are looking brighter for the segment. For one, major real estate players are now adding hotel and resorts projects into their portfolio. Likewise, the increasing interest among foreign resort and hotel operators to locate themselves in local leisure spots is a source of optimism in the subsector.
The country actually has all the necessary elements needed to become a strong player in the resort tourism business. We have all the natural spots waiting to be developed, and all the manpower competencies to staff all the key positions for tourist facilities, from managers to front desk clerks. What we lack are more entrepreneurs to put up all these facilities in significant numbers.

Potential Investment Areas

Condotel projects in selected tourist areas should be further explored. OFWs and returning Filipinos could be invited as “passive investors,” particularly in the provinces and localities from which they originally came. Not only will they earn handsomely from their investments, they can also contribute to the growth and economic improvement of their hometowns.
Setting up health and wellness facilities is likewise a lucrative opportunity that’s worth exploring. Thailand and Indonesia are doing great here; and there is no reason why we can’t do the same.
Finally, retirement facilities and gaming sites are other investment possibilities that are just waiting to be tapped. Again, there is no dearth of qualified and competent local manpower to provide the needed staffing for these projects.

The Segment’s Critical Role
Apart from the inherent business rewards, leisure property’s major contribution to the economy should not be overlooked. Tourism dollars from increasing traffic in the medium term should go up dramatically, as we currently make only one third of what Thailand makes. The infrastructure and facilities investments in resorts and hotels create a lot of value added and multiplier effects to the rest of the country. Finally, the jobs created by escalating resort tourism investments should go a long way towards improving overall labor and employment rates.

All told, it is hoped that with all of these positive signals, a lot more investment activity among local entrepreneurs in the resort tourism subsector can be expected in the next few years.

Danilo A. Antonio is one of the Gurus for the Master in Entrepreneurship Program of the Ateneo Graduate School of Business. He is currently the president of the ACE Center for Entrepreneurship and Management Education, Inc. and the chief executive officer of Land Excel Consulting, Inc. (LEC).  A former faculty member at the Asian Institute of Management, he handled the Development of Enterprise (DE) and Real Estate/Property Management and Finance elective of the AIM’s Master in Business Administration Program. For inquiries about the Ateneo’s Master in Entrepreneurship Program, call 8994579, 8997691 loc 2407.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.ph.

Cebu steel bar maker forms property unit

Businessworld:  CEBU CITY -- Steel bar manufacturer Worldwide Steel Group, Inc. has formed a property development unit to take advantage of a booming real estate market fueled by demand from business process outsourcing (BPO) here.

Worldwide Central Properties, Inc., with an initial capitalization of P100 million, is also seen to complement the group’s businesses, said Alan Kent Ong, company president. The group has been manufacturing and distributing steel bars and other construction materials for 36 years.

“Our mission is to build communities. We’re taking it a step further by not just providing construction materials but also building homes for our customers,” Mr. Ong said in a briefing last week.

The firm’s first project will be a two-tower residential condominium dubbed as Sundance Residences in Banawa, Guadalupe, the most populous barangay in Cebu City.

Mr. Ong said he believed the real estate boom in Cebu “will still continue for a few more years because of the growing BPO industry, the housing backlog and increasing OFW (overseas Filipino workers) remittances.”

Sharon Anne G. Ong, vice-president for marketing and sales, said their first project will rise on a 3,200-square-meter family-owned property in Banawa.

The first tower, estimated to cost P450 million, will have 208 units in 12 storeys and a retail component. Construction will start middle of next year and is targeted to be completed in 2015.

Ms. Ong said the units, which will be priced starting at P1.8 million for a studio, will be designed for the middle to upper middle class segments.

“We are looking at the second generation of families living in the Banawa and Capitol area,” she said.

Amenities will include a pool, kiddie pool, day care center, and a sky garden with fitness center and family entertainment center on the 14^th floor.

The project’s design team includes architect Antonio Trillanes, Jr. for the condominium and furniture designer Kenneth Cobonpue for amenities.

The company also plans to develop a two-hectare property in Lapu-Lapu City on Mactan Island into a residential subdivision. “This is still in the planning stage. But we’re looking at (launching this) late next year,” Mr. Ong said.

Worldwide Steel started in 1976 as Cebu Worldwide Hardware & Electrical Supply. It later formed Worldwide Home Depot, Cebu Diamond Industrial & Manufacturing Corp. and Worldwide Polytech Industries, Inc. -- Marites S. Villamor

Manila rising, and so are rents

Businessworld - MANILA’S CHANGING skyline demonstrates a city coming up in the world.

The Philippines’ capital is in the throes of a property boom described as the best in two decades, reflecting increasing confidence in an economy that only recently began shedding its image as one of the region’s basket cases.

Nowhere is it more obvious than at Bonifacio Global City, carved out from Manila’s biggest army base. Originally sold by a cash-strapped government in the mid-’90s, building only got underway in earnest during the last six years after Ayala Land, Inc. took ownership.

"Work here is 24 hours," said Renel Reyes, an engineer and property manager overseeing a 30-storey tower due to be completed by the year-end.

Soon to be home for Nickel Asia Corp. and local conglomerate Aboitiz Equity Ventures, Inc., NAC Tower is just one of several tower blocks under construction.

Located near Makati, the main business district that grew up in the 1970s, Bonifacio is a project in progress, but rents at P800 per square meter ($19.5) are already catching up with its older, established, but saturated rival.

Though rents paid in Makati have recovered almost 30% in the last three years, they are still way below the peak of P1,200/sqm ($29) paid before the global financial crisis hit in 2008, data from property manager and consultancy Jones Lang La Salle Leechiu (JLL) shows.

That makes renting in Manila’s business districts far cheaper than Hong Kong, Shanghai or Singapore. But then infrastructure remains a drawback, as anyone arriving at Manila’s airport quickly realizes.

Still, as Bonifacio lures companies tired of Makati’s cramped spaces with its sprawling parks, luxury hotel chains and Italian supercar makers have followed the money. Lamborghini opened its first Philippine showroom, side by side with Ferrari, in Bonifacio, while Hyatt and Shangri La hotels are opening there soon.

Office space in most new buildings are snapped long before completion. At the NAC Tower, for example, only six floors remain un-let, but Mr. Reyes said they have potential takers.

Take up of new office space this year is set to hit a record 400,000 to 450,000 sqm, up as much as 25% from last year, according to Jones Lang and CBRE Philippines, another of the country’s biggest property manager and advisers.

"Pre-leasing is back," said Rick Santos, chairman of CBRE. "We are now experiencing the best real estate market in the Philippines in the last 20 years."

The primary driver of demand for office space comes from business process outsourcing (BPO) firms catering for European and American multinationals that want to cut costs.

With one of the region’s fastest growth rates, GDP grew 6.1% in the first half, the Philippines has shown resilience in the face of falling demand in the West and China that other more export driven economies must envy.

Analysts say the Philippines could achieve its first investment grade sovereign debt credit rating in the next 12 months.

Strong private and public consumption has underpinned growth, while inflows of foreign capital have driven the stock market to new peaks and the peso to near five-year highs.

An anti-corruption drive launched soon after President Benigno S. C. Aquino III came to power in 2010 has help the Philippines’ image.

Low inflation, low interest rates, and a ready supply of reliable, English-proficient labor are strong draws.

The vibrancy is evident in Bonifacio, where shops are open until midnight and fast-food chains and coffee shops cater round the clock, mainly for call center employees.

The BPO sector accounts for 80-90% of office space take up in the country, and is a major source of employment for the country’s nearly half a million new college graduates annually. The industry is forecast to double its current employee base of more than 600,000 by 2016, fuelling sustained growth in demand for office space.

But steady growth in demand from the traditional front office market such as banks, insurance firms, and representative offices is also fuelling the property boom.

CBRE’s Mr. Santos saw the Philippines, known as the world’s call center capital, fast becoming Asia’s back office banking hub.

JP Morgan Chase, HSBC, Bank of America, Citibank, ANZ and Deutsche Bank have all transferred critical back office processes to Manila in the last five years, while Wells Fargo is among the more recent newcomers.

Rents are expected to stabilize in coming years as new office space totalling at least 1.3 million sqm become available in 2013 to 2015, according to Jones Lang, with little danger of property bubbles as supply is just keeping up with demand.

Outside Manila, a similar transformation is unfolding, with industrial parks, especially those close to the capital and devoted to manufacturing, drawing more foreign firms than ever before, despite cribs about the high price paid for power.

"What we are seeing now is the re-emergence of manufacturing, which is really good for the economy because manufacturing employs people that the BPO industry won’t employ," Lindsay Orr, Jones Lang chief operating officer, said. -- Reuters