Cebu - An Asian Rising Star in the Philippines
I have been living in the Pacific islands for several years. It is great and I plan to stay here. I love the sun, the ocean, the natural beauty, the laid-back lifestyle. So do a lot of other people from all over the world.
Everywhere you go in this part of the world you find expats. Americans, Aussies, Brits, Germans, Russians, Chinese, you name it. But there is no expat group as ubiquitous as the group from the Philippines. Why? It doesn’t seem to be for the sun, the ocean or the laid-back lifestyle. They have that in their own country. The Philippine economy just doesn’t seem to be able to provide everybody with suitable work.
Still, in spite of this, there is considerable interest from foreigners investing in the Philippines amid some signs and economic trends that might help alleviate this condition somewhat. This includes a potentially positive effect of the U.S. economic downturn on commercial real estate in the Philippines as reported by CNN.
7,107 islands, one nation full of potential
The Republic of the Philippines is an archipelago consisting of 7,107 islands located in Southeast Asia. As a former U.S. possession the Philippines has a long-standing history of cooperation and affinity with the United States. The country is well positioned geographically in one of the world’s premier economic growth regions and it has a highly educated, motivated workforce, which, for the most part, speaks English. There are approximately 91,077,287 Filipinos, and an estimated 10% of them are overseas workers.
Given its educated, English-speaking population that would presumably rather stay home than relocate to Dubai, it was only a matter of time before the Philippines became a prime site for outsourcing and this could present a really attractive opportunity for investors.
Where to invest in real estate in the Philippines
So what part of the Philippines is of particular interest to foreign property investors? When I discuss the Philippines with people who know the place, they usually mention Cebu. Cebu is the second largest city in the Philippines-but it is middle sized, with a population of 718,821 as of 2000. Magellan landed there; the Spanish colonizers made it their first capital.
“Cebu” refers to three things: an island, and a province, a metro area within the island and province, situated roughly in the center of the country. Many people contrast Cebu favorably with Manila, which is generally considered to be too big and too - well - many other things. If there is a place in the Philippines that seems poised to take advantage of the country’s competitive advantage in the area of outsourcing, it is Cebu. What is special about the place? A number of things stand out:
Special economic zones (PEZAs)
Cebu has seven special economic zones that the Philippine government has set up to encourage foreign investment. These so-called PEZAs grant incentives to property developers, exporters, and I.T. service providers - incentives such as 100% foreign ownership of enterprises; tax holidays; tax and duty-free importation of capital equipment, among other things. There is a proposal in the Philippine Senate to turn the entire island of Cebu into a special economic zone.
Tourism Potential
Of course, it makes sense to invest in a place that people actually want to come to and Cebu’s coral reefs, jungles, rivers and biodiversity make it an ideal spot for diving, ecotourism, and adventure sports. Cebu is getting a reputation as attractive location for expatriate retirement, and already has a large community of expats from all over the world. It seems to me that the Philippines has lagged behind some other tourist destinations in Asia, but that could be changing with Cebu investing heavily in promoting itself as a naturally exotic tourist destination.
An educational hub with booming BPO and IT industries
Cebu has an abundance of college graduates and is the educational hub for a large geographical area (most of the central and southern parts of the Philippines). Cebu boasts 8 Universities and 30 colleges and an impressive availability of training in a wide variety of disciplines.
It is also a business product outsourcing (BPO) center and encourages the establishment of such businesses. One of its PEZAs is Asiatown Information Technology (IT) Park, set up to attract information technology investment. The proposal to create an island wide PEZA could be particularly helpful to the technology industry in Cebu and some are even suggesting that Metro Cebu should be turned into a cyber city.
Cebu- a widely acclaimed city on the move
Cebu’s reputation as a rising star has generated international recognition. It was rated by Conde Nast Traveler as the 7th best island in the Asia-Pacific for 2007 - and that’s out of a lot of islands. It was rated the 8th Most Promising City in Asia by London-based FDI magazine. It was recognized as No. 9 among “Asian Cities of the Future”, No. 7 in “Quality of Life:” and No. 2 in “Best Business Development and Promotion” by AsiaBIZ Strategy in 2007. It has developed a reputation for safety and livability.
Pros and cons of investing in the Philippines
From what I hear, doing business in the Philippines has a definite downside. The Philippines has some pretty sound foreign investment laws, but it seems to be better known for problematic government. That’s probably not irrelevant to why so many people have to leave to find work elsewhere. Neither Transparency International nor the World Bank in its “Ease of Doing Business” survey gives the Philippines particularly high marks.
If you talk to someone from the Philippines about what is good and bad about their country it doesn’t take long for the subject of graft and corruption to come up. People I know who do business there seem to regard official corruption as simply a cost of doing business. Cebu is hardly immune from allegations of corruption, but it seems that local business groups such as the Chamber of Commerce are taking strong stance against it.
The Philippines clearly has to get a handle on this problem if it expects to progress and people taking a strong and vocal stand against governmental corruption is a good start.
Nevertheless, despite its shortcomings, the problems are outweighed by the attractions. The Philippines has immense potential. And Cebu seems to be in the vanguard!
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