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The Philippines property market is positioned to generate the strongest property price increases over the next 10 year thanks to ongoing economic and administrative reforms by the Arroyo government. The ASEAN countries have yet to exhibit the price gains of Western markets, which is just another sign that this super cycle is far from over. The current credit crunch will provide a great opportunity to profit from property foreclosures.

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Wednesday, December 19, 2007

Living in the Philippines

I have been living in the Philippines with my girlfriend for a year now. Living in a developing country is a bit of an adjustment, though its easier for me since the Philippines is English speaking, I have had the assistance of my girlfriend’s family and I am accustomed to living overseas, and traveling to developing countries. The Philippines offers some big positives:
1. Proximity: The Philippines is centrally located in Asia – if that’s where you want to be. It has a number of discount airlines providing cheap linkages. There are heaps of MTB trails and few fences to hinder exploration
2. Cheap: The cheaper cost of living and setting up a business
3. Good public transport: Cheap and convenient public transport – be it ferry, bus, jeepney or tricycle. Its very easy to get around. Out in the countryside, its easy to pick up a lift. My bike got a flat tire, a guy offered me a free ride home. The buses are pretty tidy, though have a shower after the trip to avoid skin diseases.
4. Good expat life: The Philippines has a good expat lifestyle, though that is true for most places outside your own country. The problem is most of the expats are dirty old men looking for a root before they die.
5. Culture: The live music is great in the Philippines. I’m sure the gay humour and the like would mean more if I spoke the local language. No chance of that. Access however is limited by bad traffic.
6. Fairly safe: Contrary to popular opinion – I don’t find the Philippines unsafe. Though I do worry if I pass a group of young, poor guys in the countryside when I go mountain biking alone. Particularly when they are carrying machetes to break open coconuts. Also walking around quiet areas at night, in poor shanty communities, unfamiliar neighborhoods, or when there are no people around. Some of these communities have drug and most have drinking problems financed by relatives overseas. You could argue its more dangerous in west Mindanao.
7. Respectful: Westerners are treated with more respect, though there is often mocking attached to it. Kind of like they see me as someone’s sucker. Eg. I regularly have McDonalds breakfast, and they often treat me with my own newspaper. Kind of feel like a king. Military people and security guards are very respectful.
8. Easy going: Filipinos are generally very affable, easy-going people, very tolerant

On the negative side:
1. Unhealthy meals: Its difficult to buy restaurant meals with vegetables, poor variety
2. Poor variety: Supermarkets have food familiar to westerners, however the range is narrow, and the imported foods which foreigners prefer, are not cheap. You pay a premium for good looking vegetables. There are few healthy dietary products of any merit.
3. Bland shopping: Shopping malls are bland, dominated by the same franchises, 70% of them serving fried chicken with no vegetables.
4. Traffic congestion: The traffic is terrible, long delays, and I wouldn’t think of driving here – except maybe in the countryside. Too scared to hit people, and nobody sticks to their lanes, and they routinely overtake
5. Food poisoning: I often seem to be getting food poisoning. Had two bouts of diahorrea in the last 4months.
6. Pitiful service: The owners of the dept stores think that if staff greet you every 10secs - that that is service. McDonalds and city areas tend to be better. Service in boutique, upmarket stores and restaurants is good.
7. Power outages - we can have outages that last 4-8hrs outside Manila. Paying your bill requires you to go to head office. Some outages are just 15 minutes.
8. Disconnections: Telcos have a monopoly, so dont expect good service. I often seem to be loosing my internet connection whether I’m in the countryside or Manila.
9. Noisy: The noisy is terrible in suburban areas, whether its trucks, jeepneys or tricycles on the roads, barking dogs, kids playing, families singing karaoke or roosters crowing at 1,2,3,5,7,9AM, or your neighbours running a noisy cheese factory, you will be lucky to escape noise. At Xmas you can expect a ‘chorus’ of poor kids singing Xmas carols – and they don’t top until you pay them off. That’s where apartments are better, but they are mostly only in the polluted city. This is all made possible because Filipinos are very tolerant of such things, they just accept it. There are no by-laws governing noise levels, though I do have limited recourse to the Homeowners President and the Barangay Chief. But really there is no protection. If I complained, there would likely be retribution because I am surrounded by the landlord’s relatives.
10. No public green spaces: There are few public spaces to escape to in the Philippines. Basically if you see a green space, its a future condominium site, owned by the top 100 wealthy people. You’d think that all land is privately owned. Lack of planning or development zoning regulations means that all sealed roads have urban development along them. Strangely the natural agricultural areas are hard to get access to in areas bcause all road arteries are congested by local family traffic on tricycles. The only development-free roads are the tollways and they are poorly maintained. The only green spaces in Metro Manila are around Intermuros, plus 5 private golf courses and the University of the Philippines. There is the odd vacant lot around the airport, but they will be developed in time.
11. Bad pollution: The trucks, jeepneys and tricycles are very polluting, so street level pollution is very bad, even if its low ambient pollution in the countryside.
12. Poor Infrastructure: Few areas actually have good roads, paths, even the national highway from Manila to Batangas is potholed and swerves ceaselessly. The road from Manila to Subic has just been upgraded by the Japanese. Though the road floods at EDSA North after rain.
13. Smelly: There are a range of smells in the Philippines, whether its the outtake air of aircons, sewerage, split garbage on the streets, dog shit everywhere, the squalour of slum areas. People burn their household rubbish in their backyards, so the smoke causes eye irritation.
14. Purchasing power: One of the benefits is cheapness, but then living here you might wonder because everyone expects a tip from you, and they charge you accordingly. Eating foreign foods is as expensive as eating in the west. Rent and transport are cheap.
15. Humidity: This can be a bother in certain areas – but there are cooler places like Tagaytay, Antipolo, Lipa City and Baguio City.
16. Work ethic: Filipinos can be counted among the least productive workers in the world. They are not terribly ambitious, they tend to place more emphasis on socializing and have a strong sense of entitlement that the employer’s role is to take care of them. They will ask for loans to support sick parents, take days off without notice, and if you don’t have a trusted manager, they might give in to such demands.

Its interesting to ponder whether this needs to be the case. You might well find that perfect place as I did, but then it only takes a neighbour to undermine your personal harmony. The problem is the lack of institutional protection, which is based on weak cultural values. I dare say if you are wealthy or committed to living here a long time, you can buy a 2500m2 property and build a 3m high fence wall around it. The fence will cost you $30,000, the house $40,000. Not bad, though buy your own materials, and get local advice, otherwise they will scavenge off your exposed carcass.
This is what happens in developing countries. I realized this is the case because:
1. There is no service culture
2. There is no planning
3. There is a tolerance for corruption and a poor personal ethic that is allowed to permeate all government agencies
4. Governments have supported certain business interests or crony friends in big business who support them. Therefore you wont see a local biz selling out to a foreign company. But foreigners will help them for marginal gain, or because they rely on them for network backups.
5. Poor people live close together – that undermines harmony
6. Poor people are less considerate because its generally their recreation or job which would be lost if they couldn’t work from home
At the end of the day, you can always pay more to get what you want, but that is no guarantee. Of course the world isnt perfect. The question is what would get you closer? What ethic would people have?

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