x Abu Dhabi, UAESunday 23 July 2017

Economic boom spreads wealth wider in the Philippines

The US$250 billion economy surged 7.8 per cent in the first quarter of this year, outpacing China, and the middle class is beginning to share the prosperity.

Just three years ago a new car and an overseas holiday were unthinkable luxuries for J Ante and her family of six. The insurance company manager's commissions have soared since then as the Philippines, blighted for a generation by venal and incompetent leaders, has unexpectedly boomed, putting middle class comforts within tantalising reach of many.

The US$250 billion economy surged 7.8 per cent in the first quarter of this year, outpacing China, and a middle class stunted by widespread poverty, political strife and corruption is beginning to share in a prosperity captured for decades by a clannish business and political elite.

The growing affluence and a burgeoning population have lured many global brands. Students and office workers flock to gleaming outlets opened by Zara, Gap, Forever 21, Starbucks and Japan's Uniqlo. New apartment blocks are springing up on almost every corner of metropolitan Manila and other cities, often clustered around malls and office buildings housing outsourcing businesses such as call centres, which are forecast to earn around $25bn by 2016.

Luxury car maker Rolls Royce said it was flooded with inquiries since it opened its first dealership in Manila two weeks ago. The first car selling for $605,000 went to a popular TV show host, according to newspaper reports.

"Last year and this year have been a big leap in terms of my total income," Ante said. "Times have become better for our family."

She said three years ago it was difficult to come up with the school fees for her four children. Travel abroad or a new car were impossible, but "they seem more realistic now since my income is growing at a faster rate," she said. The family holidayed in Hong Kong this year and a vacation in the United States and Canada is planned. They hope to afford a family-friendly Toyota Innova this year.

Many credit the new vitality to the policies of the president Benigno Aquino III, elected in 2010 on promises of eradicating graft and fighting poverty. He introduced new taxes, reformed the judiciary, and set the country on a path that shows sign of enduring - it has now enjoyed three straight quarters of economic growth above 7 per cent. Standard and Poor's and Fitch Ratings earlier this year upgraded the Philippines' credit rating to investment grade for the first time.

"Disposable income has increased and we see a rising middle class," said Jose Antonio, the chairman of Century Properties Group that brought in Donald Trump's sons and Paris Hilton to launch luxury condos in Manila.

Sheila Abay, a property agent for the past 10 years, said competition in her industry has become stiffer but she still sells more condominiums these days compared to five or 10 years ago.

The bulk of her clients are Filipinos working abroad, who buy property for retirement or investment. Over the last few years, however, she said she has seen a growing number of younger clients mostly aged 25 to 35. Many of them are mid-level managers at outsourcing companies who receive good pay for doing backroom operations for overseas companies.

"Their buying power is bigger," she said.

It adds up to dramatic shift for a country that has perennially lagged most of its Southeast Asian neighbors despite perceived advantages of a relatively free media, democratic elections and widespread use of English - the language of global business.

The Philippines is only sixth among 10 Southeast Asian countries in terms of GDP per head. Compared with Indonesia, which attracted nearly $20bn in foreign investment last year, the Philippines managed only $2.8bn, not far from $2.2bn for Myanmar, a pariah state until recently. Thailand wooed more than 22 million visitors last year, the Philippines received 4.3 million.

Doubts still linger whether the country can stay on its new course.

President Aquino, in the mould of his late parents - democracy icon and former President Corazon Aquino and anti-dictatorship champion Benigno Aquino Jr - won the presidency on a reformist platform following two corruption-tainted predecessors. His term ends in 2016.

But in a country where powerful families dominate politics and "name recall" spells votes even for corrupt or incompetent leaders, another wrong turn can reverse recent gains.

There is a still a long way to go before the 28 per cent of the population who live below the poverty line feel they too are benefiting from the boom that has dotted Manila with cranes and propelled the local stock market to new heights.