In 2010, the world watched as Benigno Aquino III won the Philippines’ first automated elections by a landslide victory. The president’s pledge to “make our country attractive to investors” by cutting red tape, improving infrastructure and tackling corruption had the crowds cheering on with hope for a brighter future. But two years on and with the May mid-term elections fast approaching, how far has he come in achieving his promises?
So far, the ratings are looking good. The president’s approval and trust ratings improved by double digits across almost all areas and classes with an average of 78 per cent according to a September survey conducted by Pulse Asia. The lowest registered were on issues of controlling inflation and poverty reduction – both at 39 per cent mostly due to ongoing discussions on the reproductive health bill and continuing tensions between the Philippines and China over territories in the West Philippine Sea (aka the South China Sea).
Significant moves have also been made to tackle the country’s widespread corruption. On September 18, the preliminary results of the 2012 SWS Survey of Enterprises on Corruption showed that of the 20 government institutions rated for sincerity in fighting corruption, 17 have improved. However, the survey results also highlight a number of worrying practices within the private sector, such as the prevalence of double bookkeeping and the low number of companies that report paying taxes honestly.
A GOOD HEAD START
In the initial glow of Aquino’s victory, the Philippine economy rallied. The growing buying power of Filipinos working abroad, a booming call centre industry and an influx of international firms choosing the Philippines as their location for offshoring jobs has helped the steady economic growth. The economy grew 6.4 per cent in the first quarter of 2012, while the stock market surged 20 per cent to hit all-time highs and the country’s credit rating was bumped up to just a step below investment grade.
Investors’ eyes are now turned towards the Philippines. While the Eurozone battles with its financial crisis and other Asian economies feel the repercussions, the archipelago’s local economy continues to look rosy. On a recent visit to the Philippines, International Monetary Fund (IMF) head Christine Lagarde heralded the strength of the Philippines’ economy saying, “This year 2012 has been a very difficult time because of the financial crisis in other parts of the world. The Philippines is the only country for which we have increased the growth forecast as opposed to other places where it has decreased.”
In the IMF’s April World Economic Outlook, the 2012 economic growth rate projection for the Philippines was boosted to 4.8 per cent from 4.2 per cent. This year’s forecast was also bumped up to 4.8 per cent from 4.7 per cent. Lagarde herself was even more bullish, predicting that local GDP growth in 2012 would be “way in excess of 5 per cent” with a similar range expected for 2013.
A groundbreaking peace deal made between President Aquino III and Al Haj Murad Ebrahim, the head of the Moro Islamic Liberation Front (MILF) in October last year also promises a positive future, with many economists believing that this peace agreement could transform the Philippine economy. The Asian Development Bank and the World Bank both raised their economic growth forecasts following the announcement of the agreement. A recently published booked titled Breakout Nations describes the Philippines as the fifth richest country in the world in terms of natural resources, holding the world’s largest nickel, third largest gold and fifth largest copper reserves – most of which are located in the disputed southern region which, following the peace agreement, will now become an autonomous land for the Muslim minority.
LIMITED SUCCESSES
In mid-November 2010, the Aquino administration launched a public-private partnership (PPP) programme inviting foreign groups to invest in the Philippines and raise US$3.4 billion worth of investment to fund 10 priority infrastructure projects.
However, many of the projects planned in 2010 have seen staggered starts and delays. Officials announced that some were shelved because the government wanted to be prudent about the structure and rules under which they would be bid out to private investors. Feasibility studies also took a lot more time than expected. Since 2010, the government has successfully awarded only two PPP projects. The first one is a four-kilometre, four-lane road to the southwestern Luzon city of Cavite, which will improve its connection to Manila. The private sector of this project is Ayala Corporation and the amount of investment involved is projected to be US$46.6 million.
The other is phase one of the PPP for School Infrastructure Project (PSIP), which aims to expand the supply of classrooms as quickly as reasonably possible and cut the current shortage of around 66,800 classroom units nationwide. The project involves the design, financing and construction of about 9,300 one-and two-storey school buildings, including furniture and fixtures.
This year, the PPP Center announced a target to bid out eight new PPP projects. The centre’s deputy executive director Ferdinand Tolentino said that four of these have already been put forward for bidding, most of which involve infrastructure and include extensions on Manila’s Metro Rail Transit and Light Rail Transit projects.
ROLLING OUT THE WELCOME MAT
The Philippines, which has for many years remained in the shadow of neighbouring countries such as Thailand, Vietnam and Cambodia as they hogged the tourism limelight, has recently been trying to beef up its visibility on the Southeast Asian tourist scene. The government targeted 4.6 million tourists in 2012 and aims to boost this number to 10 million by 2016, when Aquino steps down.
The Department of Transportation and Communications (DOTC) is spending close to PHP500 million (US$12.2 million) on developing key airports and seaports. In addition, the Public Works and Highways Department has earmarked PHP8.1 billion (US$198 million) for the construction of access roads to airports, while additional funds will go to the construction of roads to ports leading to various tourist destinations.
Of the 10 priority PPP projects mooted in 2010, four are airports – in the provinces of Palawan, Bohol and Albay, and in Cagayan de Oro City – all of which tourism officials refer to as “high-priority tourism destinations”.
The government has also dedicated PHP1.64 billion (US$41.4 million) to rehabilitate Ninoy Aquino International Airport’s Terminal 1, which has faced flak after being labelled the world’s worst airport in 2011 by a site that reviews the quality of airports.
There are also plans to develop the neighbouring city, Clark. Following two decades of stagnation, the government has been converting the former army bases at Clark into an air-sea logistics hub. There are also plans to move traffic from the rundown Ninoy Aquino airport to Clark International Airport – effectively making it the city’s main airport.
“For the first time in the history of the republic, the bulk of this year’s infrastructure projects is geared towards improving tourism through roads, airports and seaports,” said tourism secretary Ramon Jimenez at a meeting of the Consular Corps of the Philippines. “At no time in the history of this country will that much money be spent on tourism infrastructure.”
Along with boosting its tourism infrastructure, at the beginning of 2012 the Department of Tourism unveiled a new tourism slogan: “It’s More Fun in the Philippines”. A campaign depicting the country as a fun and warm place aims to distract potential tourists from past events such as the 2010 hostage crisis on a Manila bus that claimed the lives of eight Hong Kong tourists, and the longstanding fears of rebel groups and kidnappers mostly on the Muslim-dominated island of Mindanao.
Currently, the Philippines is served by 770 flights per week (360 of which are by foreign carriers), a far cry from Singapore’s 2,390 and Thailand’s 2,065. Around three million tourists visit the Philippines annually, but that is one million less than Vietnam, which started its tourism industry two decades later.
Various restrictions have hampered these airline links, but there is light at the end of the tunnel. Philippine Airlines (PAL), which since April 2012 has been on a blacklist of countries whose carriers are banned from Heathrow Airport, may be allowed into its airspace again. Transportation and Communications Secretary Mar Roxas announced that the matter was under discussion with Lord Mayor of London Alderman David Wootton.
BETTING ON THE FUTURE
In preparation for this influx of tourists, the local hotel industry is also booming. In December 2012, Fairmont Makati, Raffles Suites and Raffles Residences opened in the Ayala Commercial Center, ending the city’s 20-year drought of luxury hotel openings.
A report by STR Global, a hospitality consultancy firm, states that Manila is second only to Delhi in India for highest expected hotel room growth, with 7,486 new rooms in the pipeline and a boom of 34.8 per cent.
Manila is also looking to attract the gambling crowd. Three of the world’s biggest gaming industry leaders are building a US$4 billion, 100-hectare Entertainment City complex of casinos on Manila Bay. This new destination – along with the revenues being pulled in by the currently established chain of Pagcor casinos and the Philippines’ first large-scale casino complex, Resorts World Manila – means the country is establishing a firm foothold as a major player in the gaming industry. So much so that Rick Santos, chairman and managing partner of CBRE Philippines, expects the Philippines to be on a par with casino destination Las Vegas in terms of gaming industry revenues. “In five years, the Philippines will challenge Macau and Las Vegas in casino revenues,” he said at a recent press briefing.
It’s not only the tourism infrastructure that’s seeing a makeover. Pockets of Manila are being transformed into chic F&B-populated neighbourhoods surrounded by high-end condos. Previously shabby areas such as the Fort are seeing a big revamp, including Ayala Land’s (one of the Philippines’ biggest property developers) ongoing US$714 million One Bonifacio High Street project, which will feature numerous retail outlets, a 63-storey residential tower, a Shangri-La hotel and the Philippines Stock Exchange.
Serial celebrity investors such as Donald Trump, Versace and Paris Hilton are also looking to grab a piece of the action. Trump recently put his name to a US$150 million Trump Tower that broke ground this year, while Versace will be erecting a first-of-its-kind residential tower complete with Medusa-headed wading pools, named The Milano Residences. Hotel heiress Paris Hilton is also testing her creativity on the design of a new residential project in Manila that will feature its own man-made beach.
“It took 20 years to get the stars aligned, but now we’re looking at sustained growth. We are now experiencing the best real-estate market in the Philippines in the last 20 years,” said Santos during a year-end briefing last November.
RAKING IT IN
The main driver of growth in the last few years has been the country’s booming Business Process Outsourcing (BPO) industry. The country is now the world leader in BPO. “The Philippines has taken over the lead in the global ranking from India,” stated IBM’s Global Locations Trend Annual Report, released in late November 2012. From virtually nothing a decade ago, outsourcing now employs more than 600,000 people and is worth US$11 billion annually.
Remittances from overseas Filipino workers (OFWs) also play a part in driving the economy. Roughly nine million OFWs send amounts equal to 10 per cent of the nation’s GDP back home.
The services sector remained the key driver of growth in the second quarter of 2012, contributing 4.3 percentage points according to the National Statistical Coordination Board (NSCB). It was followed by agriculture, hunting, forestry and fishery industries with 1.5 points. The farm sector accounts for about one-fifth of the economy.
Over the past two years, the Philippines has emerged as the darling of Asia both locally and internationally. While PPP projects have struggled to take off, Aquino’s efforts in promoting the country’s tourism industry, eradicating corruption and improving infrastructure have brought the Philippines a long way – from a relatively subdued role in Asia’s economy, it is now set to become the region’s next big player.
Greenbelt Mall in Manila, one of the city's prime shopping destinations
ISLAND HOPPING
Tourism is one of the Philippines’ main sources of revenue, and with improved domestic air connections, many of the holiday destinations are seeing a boost in tourist numbers. Here are the major ones at a glance:
Palawan
After its subterranean river was named one of the seven natural wonders of the world, Palawan (pictured below) recently gained a prominent position on the international tourist map and is now enjoying the sudden boost in tourists that comes with it.
How to get there: You can fly either to Puerto Princesa if you want to see the underground river or Coron if you want to access the island’s numerous islands or diving spots. There are 22 flights daily into Puerto Princesa from Manila and one from Cebu. Cebu Pacific, Philippine Airlines, Airphil Express and Zest Airways all have regular flights to Puerto Princesa. To go elsewhere in Palawan, catch a bus from the San José terminal, near the New Market.
What to do: The underground river – This 8.2km navigable underground river is number one on tourists’ lists of things to see in Palawan. Be aware though that there are a limited number of spaces and in order to get in you’ll need to book in advance.
Dive – If you’re a diver, then Palawan is the place to come. Visit the Coron reefs in Busuanga, which hold a number of old Japanese shipwrecks. If you have more money, head to the Tubattaha Reefs National Marine Park – the country’s best dive spot.
Hike – Nature lovers should definitely pay a visit to El Nido Marine Reserve on Miniloc Island. Accessible by bus from Puerto Princesa, you can explore the rainforests, mangroves, beaches, coral reefs and cliffs of the vast area.
What to eat: Kinabuch grill – Set in a large garden area, this place serves consistently good Filipino food from an extensive menu.
Badjao Seafront restaurant – This restaurant’s selling point is its location. It sits on stilts above a metre of water among mangroves. Its great for sunset or when there’s a full moon. Their speciality is seafood.
Where to stay: Dos Palmas Resort and Spa – This four-star resort near Puerto Princesa features the usual amenities of pool, spa and recreational facilities.
El Nido Miniloc/Lagen – This five-star resort sits in a secluded area in a cove fringed by limestone cliffs. The accommodation is made up of thatched cottages that are made from local materials and fronted by a powdery white beach.
Bohol
For its small surface area, Bohol is packed with a lot of sights and activities. The island is southeast of Cebu and is famous for its nature, tarsiers and chocolate mountains – a series of hills that become brown in the summer.
How to get there: There are daily flights from Cebu to Tagbilaran Airport and Philippine Airlines has flights to Manila. Most people go via ferry from Cebu. There are nine daily ships from Cebu to Bohol.
What to do: Hike – The Rajah Sikatuna National Park is a 9,000-hectare area of native molave forest, grasslands and caves.
See the world’s smallest monkey – The Tarsier Research & Development Center is a tarsier sanctuary open to the general public.
Go for a cruise – Cruise up the mangrove-lined Daet River from Buenavista to the village of Cambuhat, where you’ll see an oyster farm and raffia weaving, and enjoy a delicious seafood lunch.
Where to eat: Garden Café – A cowboy-themed restaurant that employs deaf waiters and serves wholesome American food.
Cainget Fish Grill – Choose your dinner from a selection of fresh seafood and tell the chef how you want it cooked. Good views at sunset.
Where to stay: Bohol Divers Resort – Located in the south of Panglao Island, the hotel is on a 6.5-hectare beach and has a variety of rooms, including villa suites and apartment suites, with panoramic sea views and private swimming pool.
The Peacock Garden – A boutique resort set on a hilltop amongst beautiful gardens overlooking the Bohol Sea. It has 32 rooms decorated in a traditional European style with great views of the sea.
Cagayan de Oro
Located on the northern coastline of Mindanao Island, Cagayan de Oro is often called the gateway to Northern Mindanao. It serves as a regional centre, being the most populous and highly urbanised city. It is also known as the “city of golden friendship”.
How to get there: Cagayan de Oro Airport serves flights from Cebu, Manila and Davao with local airline carriers such as Philippine Airlines, Zest Airways, Cebu Pacific and Air Philippines. You can also travel by boat from Manila, Cebu, Tagbilaran, Bacolod, Dumaguete, Iloilo, Iligan and Jagna, Bohol.
What to do: Gardens of Malasag Eco-Tourism Village – Located in a reforested area in Malasag Hill, this seven-hectare village has replicas of tribal houses in the region and a panoramic view of Macajalar Bay.
Macahambus Hill, Cave and Gorge – An underground cave with a 40-metre circular gorge thick with various species of plants and huge trees.
Whitewater rafting – There are 14 rapids along Cagayan de Oro River. The rainy months of September and October are good for intermediate and professional levels while the rest of the year is good for novice or amateur rafters.
What to eat: Divisoria Night Café and Night Market – Every Friday and Saturday night, the streets surrounding Divisoria are closed to traffic and fill with food stalls and cheap pitchers of beer.
Reynadelrio – For the golden Cagayan sunsets, head to this out-of-commission river ferry docked a few blocks north of City Hall. The restaurant offers seafood and Filipino fare.
Where to stay: Ridgeview Chalets – Located within the Xavier Estates complex in the city, Ridgeview Chalets offers guests with a private escape but still takes them within proximate distance to the hub’s sights and conveniences.
Gardens of Malasag Eco-Tourism Village – Nature lovers can enjoy northern Mindanao’s landscape at its best at this relaxing place.
DAVAO
Geographically, Davao is one of the largest cities in the Philippines, with the urban expanse stretched over a number of hills. The city is famous for its durians, Mt Apo, the Philippines’ highest peak, whitewater tubing and the Philippine Eagle sanctuary.
How to get there: The region acts as a southern gateway to the Philippines from Asia via Singapore, and services direct flights to major international airports in the country, such as Manila, Cebu, Clark and Iloilo. Other international flights include a direct flight from Davao City to Kota Kinabalu in Malaysia.
What to do: Mount Apo – Climb the Philippines’ highest peak. For non-climbers, the national park also has lots of lakes, hot streams and waterfalls.
Philippine Eagle sanctuary – Visit the area’s most famous resident, the rare Philippine Eagle.
What to eat: Kulasa’s – This popular dining place serves grilled chicken parts and other local delights. The ambience is very native with the building and the furnishings made of bamboo or wood.
Ranchero Grill – Mouthwatering steak and fresh seafood are available here.
Where to stay: Marco Polo Hotel – The best hotel in the city centre, it overlooks the Davao coast and the major city streets.
Ponce Suites – An artists’ haven and great for those looking for privacy, since it is located in a village some distance away from the main thoroughfares.
New accommodation facilities are popping up in Davao, both international, such as Air Asia’s Tune Hotel and Park Inn by Radisson, and local, such as Seda Hotels of the Ayala Group.
