Foreign News on Philippine Real Estate and Economy – July 2017

Posted on Jun 15, 2017 in Blog, Newsletters

hello everyone,

here’s some interesting articles from widely read online portals known for their well chosen issues regarding current and the future of finance, management.information technology and real estate that’s worth reading.  most articles will inform everyone of current trends experienced by top companies / individuals, be it a success and failure and also help us make better decision based on what’s happening from a global perspective. specially it’s effect on the Philippines :

from asia.nikkei.com staff writer, Cliff Venzon :

Mitsui Fudosan enters Philippine Property Market

Japanese real estate giant partners with Rockwell Land on Condo Project

MANILA — Japanese property giant Mitsui Fudosan and Rockwell Land, a local mid-size real estate developer, are partnering on a condominium project in the Philippines.

Mitsui Fudosan, which is entering the Philippine real estate sector for the first time, will be involved in the development of three residential towers as part of Rockwell’s The Arton project in northeastern Metro Manila.

The partnership will give Mitsui Fudosan a 20% equity stake in the 9 billion pesos ($177.5 million) mixed-use project, according to a statement announcing the signing of a joint venture over the weekend.

The Arton is on a 1.9 hectare site. The three towers, which range from 24 to 34 floors, will have a total of 1,700 residential units. The first tower will be launched later in July.

Japanese real estate companies are looking for opportunities abroad, particularly in Southeast Asia, where economic growth is faster. Mitsui Fudosan has projects in Malaysia, Singapore, Thailand and Indonesia, as well as in other markets such as China, the U.S. and U.K.

The Rockwell-Mitsui Fudosan partnership is the second link-up by Japanese and Filipino developers within a week. On July 10, Federal Land, the real estate unit of conglomerate GT Capital Holdings unveiled a $400 million commercial and residential project in Metro Manila with Nomura Real Estate Development and Isetan Mitsukoshi Holdings.

Rising tourism

The moves capitalize on Filipinos’ fondness for almost anything Japanese. The Philippines is one of the fastest-growing tourist source markets for Japan because of rising disposable income. Last year, Filipinos visiting Japan rose by nearly 30% to around 350,000, according the Japan National Tourism Organization.

The Japanese companies are entering the Philippines at a time when condominium prices in Metro Manila are barely growing. In the first quarter, prices rose only 0.8% from a year ago, according to the Philippine central bank.

However, Rockwell, which is chaired and controlled by the family of Manuel Lopez, former Philippine ambassador to Japan, was optimistic about the venture.

from bloomberg.com correspondent, Norman P. Aquino :

Chinese Tourists Flock to Friendly Neighbor Philippines

The Chinese traveler is discovering the Philippines as relations warm under President Rodrigo Duterte’s so-called pivot to the mainland. The Chinese posted the fastest growth  of 57.3 percent among the top five markets in May with 73,649 arrivals, according to tourism agency data. They’re going not just for the Southeast Asian nation’s famed white-sand beaches, but also for its casinos  as an anti-corruption drive in Macau sends gamblers to Manila.

from www.forbes.com contributor, Panos Mourdouskoutas :

Duterte’s Philippines Is The 10th Fastest Growing Economy In The World

President Rodrigo Duterte’s death squads may have killed democracy in the Philippines, but they haven’t killed the country’s vibrant economy, which is the world’s 10^th fastest growing economy in the world in 2017.

That’s according to the World Bank’s latest edition of Global Economic Prospects.  For 2017, Philippines’ economy is expected to advance between 6.5 to 7.5 percent. That’s almost twice the country’s long-term growth.

GDP Annual Growth Rate in Philippines averaged 3.68 percent from 1982 until 2017, reaching an all time high of 12.40 percent in the fourth quarter of 1988 and a record low of -11.10 percent in the first quarter of 1985, according to Tradingeconomics.com

The Philippines economy has benefited from a stable macroeconomic environment of low inflation and low debt to GDP ratio, which has helped sustain a healthy domestic demand growth; and from a revival of the Asian Pacific region that have boosted exports, which account for close to a third of GDP. Exports from the Philippines rose 12.1 percent from a year earlier to USD 4.81 billion in April of 2017.

Apparently, President Duterte’s harsh domestic policies and foreign policy flip-flops haven’t undermined Philippines economic growth, at least not yet. But they have touched the country’s equity markets, which have underperformed the markets of the region.

Source: E*Trade.com 12/20/2017 

Meanwhile, Duterte’s Philippines is getting corrupt and less competitive, according to Transparency International and the Global Competitiveness reports, raising serious doubts as to whether the current robust economic growth rates will be sustained in the future. 

Those who have followed the Philippines economy for a long time have seen a familiar show: hard working Filipinos remain poor, watching the people of other nations in the region get rich. Revolutions come and go in Philippines, but the old villains — corruption and political oppression — remain intact, holding Filipinos back from making the transition from poverty to riches.

from www.yahoo.com :

Ex-Philippine leader Aquino faces charges over botched raid

Former Philippine president Benigno Aquino is to be charged over a botched anti-terror raid that left 44 elite policemen dead in 2015, a special government prosecutor said Friday.

Aquino, who ended his six-year term last year, was indicted for usurping authority and allowing a suspended police chief, Alan Purisima, to run the fatal January 2015 commando raid, the government Ombudsman said.

“Purisima would not have been placed in such a position… were it not for the complicity and influence of President Aquino,” Ombudsman Conchita Morales said in a statement.

Supporters of Aquino’s successor, President Rodrigo Duterte, had also filed a complaint of “reckless imprudence resulting in multiple homicide,” against Aquino but Morales dismissed this.

Aquino, who could face several years in prison if convicted, is studying the Ombudsman’s order so as to file a motion for reconsideration, a statement from his aide said.

“An initial reading shows that there may have been a misappreciation of some facts surrounding the incident, leading to some erroneous conclusions,” the Aquino statement added.

The police commandos were dispatched on an anti-terror mission to the rural, southern town of Mamasapano and killed Malaysian suspect Zulkifli Abdhir, who was on the US government’s most wanted list.

The policemen were later ambushed by Muslim militants and other gunmen, leaving 44 officers dead in an incident that shook the nation.

As a result of the carnage, the Philippine Congress refused to pass a Muslim self-rule bill that would have crowned Aquino’s efforts to bring lasting peace to the rebellion-torn Mindanao region, home to the Catholic nation’s large Islamic minority.

Morales alleged Aquino had violated the law by assigning leadership of the mission to an official who was serving out a suspension at the time over allegations of corruption.

The bloodbath, infamously known as the “Mamasapano Massacre”, helped to turn public opinion against Aquino, who later unsuccessfully campaigned to prevent the election of Duterte as his successor.

Duterte has frequently raised the Mamasapano incident as proof of Aquino’s alleged misdeeds.

Reacting to the Ombudsman’s announcement, Duterte’s spokesman Ernesto Abella said that he hailed the “heroic sacrifice” of the slain police commandos.

“It is his – and the nation’s – hope to finally bring justice to the victims and families of the Fallen 44 and put closure to the issue as part of the healing process,” Abella added of the current president.

from http://blogs.worldbank.org, submitted by Birgit Hansl and co-author, Olivier Cattaneo :

The Philippines: Resurrecting Manufacturing in a Services Economy

The Philippines is at a fork in the road. Despite good results on the growth front, trends observed in trade competitiveness, Global Value Chain (GVC) integration and product space evolution, send worrisome signals. The country has solid fundamentals and remarkable human assets to leapfrog into the 4^th Industrial Revolution – where the distinction between goods and services have become obsolete. Yet it does not get the most out of this growth, especially with regards to long-term development prospects. In order to do so, the government will have to make the right policy choices.
The Philippines seemingly performs well. From 2011 to 2015, the Philippines grew on average at 5.9% a year and in 2016 growth reached nearly 7%. At the same time, the manufacturing sector resurged with an average 6.9% growth from 2013 to 2015—surpassing services that posted an average 6.4% growth. However, the recent World Bank Philippines Economic Update illustrated trends in recent export performance and GVC integration which could be read as early warning signs:

• Increasingly remote in GVCs, the Philippines has become a supplier of intermediate goods to China, exposed to demand fluctuations, and has not penetrated new markets;
• The Philippines has not diversified its exports basket, if only to move away from sophisticated products, with little domestic transformation;
• This move will make future upgrading and innovation more difficult, as illustrated by the low export survival rates (Figure), including for sophisticated products.

At the doorstep of the 4^th Industrial revolution, because the poles of growth have moved, the country has not kept its sophistication edge. Today, it is not enough to create just more jobs, but to create better jobs. Participation in GVCs should be a path to socio-economic upgrading and facilitate transfers of technology, sustainable practices or skills. Little transformation actually takes place in the Philippines with value added captured in other countries along the value chains.

To avoid short-term growth that translates into long-term downgrading prospects, quick action would be required. The government has already initiated a number of programs (e.g., for the resurgence of industry or the support of small and medium enterprises) as part of the Presidential Socioeconomic Agenda, and launched vast consultations to design trade roadmaps in 40 different sectors. These are excellent first steps, but additional efforts will be needed, and the experience of other countries that have found themselves in the same corner could help in identifying the right solutions.

But there are preconceived ideas about trade and GVC integration that could lead to strategic mistakes. For example, governments often focus on increasing domestic value added—which is a good and legitimate objective—but attempt to do so by using inappropriate methods, e.g., by introducing import substitution or imposing more- restrictive-than-necessary rules on trade on local content. The impact could be harmful to investment attractiveness and industry competitiveness. It is about positioning the domestic industry or services providers in the right segments of the value chain: Vietnam, for instance, reduced the share of domestic value-added in its exports from 45 to 30% between 1995 and 2011, but increased the volume of its exports from $0.2 to $3.8 billion (World Bank, 2016). Other ideas include the necessity to add more incentives, when their effect is not obvious and economic development policies are more productive when focused on improving the country’s fundamentals.

A number of good solutions have been tested elsewhere that could help the Philippines move back to a more sustainable and inclusive growth path. For example, “servicification”, with the development of higher services content in goods, has become a major path to competitiveness and diversification in the 4^th Industrial Revolution.

The Philippines is a services economy and a lead exporter of services; paradoxically, however, efficient linkages between services and other sectors of the industry (manufacturing and agriculture) are lacking. Clearly, the Philippines cannot compete on prices only to attract foreign investment—ending the “race to the bottom” to attract lead firms would require, for example, putting in place an environment able to reduce sustainability risks along GVCs, following the examples of countries like Vietnam or Colombia.

Flexibility, quality of labor, and innovation are key to the Philippines’ future success. While the Philippines innovates a lot, it does so in areas where there’s little impact on trade performance. In areas where chances of being competitive and surviving are lower for innovation strategies, a look at successful Philippine companies would show that they have identified the right niches (technology or skill-based) and could go around the competition of low-cost emerging countries. Support for SMEs will also be a determinant in the success of this innovation strategy. The GVC and economic complexity analyses provide some guidance on the way to go. Beyond seeing its evolution in the service and product space as a linear process, considering a third dimension—increased innovation and services content—will allow the Philippines to make a double leap in value added and technology.

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robert
Robert G. Sarmiento Properties
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