Looking at 2014 economic outlook-A A +A
Real Estate Updates
Sunday, May 18, 2014
WE ARE into the middle of the second quarter of 2014, and it is noteworthy to take a closer look at the economic forecast for this year and the prospects for the expected growth in Philippine economy in general and the services sector, especially in the real estate industry in particular. We are sharing you this outlook to better see what we have been through this past few months of the current year.
The Aquino administration remains committed to fiscal consolidation, which includes keeping the budget deficit to two percent (2 percent) of GDP (Gross Domestic Product) and bringing down the National Government debt ratio to GDP below 40 percent after 2015. To keep this momentum of growth growing, the government will invest heavily in roads, highway, airport and other infrastructure projects through partnerships with the private sector (PPP).
Studies showed that poor infrastructure has been identified as one of the weaknesses of the Philippines. Both the World Bank and the Asian Development Bank have urged the Philippines to boost spending on infrastructure to sustain inclusive and sustainable growth and keep up with its neighboring countries.
The National Government normally allocates three percent (3 percent) of its GDP on public infrastructure. But in the last two years, infra spending has increased considerably at a faster pace to support longer term growth in the country. The destruction brought by Super Typhoon Yolanda last year has opened up the need to spend more money on providing basic services such as fixed phone lines, power and electricity as well as building quality infrastructure that can withstand super typhoons, ward off high-magnitude earthquakes, severe flooding and other catastrophes.
Developing world-class tollways, international airports and seaports will attract more foreign investments into the country, thereby creating new jobs and spurring more economic growth.
The present Aquino administration is looking at lobbying for the early passage of various key economic measures that will allow the country to sustain its momentum and attract more foreign investors. These include the rationalization of fiscal incentives, removal of investment restriction in specific laws cited in the Foreign Investment Negative List (FINL), the rationalization of the mining fiscal regime, amendments to Republic Act 7718 or the Build-Operate-Transfer (BOT) Law, the Customs Modernization and Tariff Act and the Tax Incentives Monitoring and Transparency Act.
Other bills certified as urgent include amendments to the BSP Charter, Anti-Money Laundering Act; the Act to facilitate the acquisition of right-of-way, site or location for national government infrastructure projects; and the Cabotage Law also known as the Jones Act of 1920. Revisions to the BOT Law would help fasttrack the Aquino administration's Public-Private Partnership (PPP) program, which was launched in 2010 with the aim of giving the nation's infrastructure development a boost.
The country is putting two infrastructure projects worth P 100.3 billion on the auction this April and will offer 12 more projects before the end of President Aquino's term in 2016. These include the Cavite-Laguna Expressway (P 35.4 billion) and the LRT Line 1 Cavite Extension Railway (P 64.9 billion).
The government has so far awarded five PPP deals three years after the program was launched, which included the $380-million Manila airport expressway project which was bagged by San Miguel Corp. It has yet to announce the winner for the $400-million Mactan Cebu airport development with India's GMR Infrastructure AND Philippine contractor Megawide Construction Corp. submitting the highest bid.
Growth prospects remain strong, especially with the Philippines hitting its demographic sweet spot the next few years, bringing more young people into the working-age population. Majority of the population would be of working age by 2015, a situation that would last until 2050, by the analysis of our economists.
The impact of Super Typhoon Yolanda which displaced thousands of people, is expected to slow down a bit growth in the fourth quarter of this year and possibly carry on into next year due to the wide-scale rebuilding efforts in Eastern Visayas. The Asian Development Bank, however, believes that the nationwide impact won't be long lasting, saying timely implementation of the country's recovery and reconstruction program will help the Philippine sustain a high growth rate.
This augurs well for the real estate sector, as it will be the principal beneficiary of the economic packages being offered to sustain our country's growth. The road to economic stability may be rocky but the Philippines is considered tough enough to weather any crisis, do better than most of its peers and perhaps experience a breakout economy again in the years ahead. We say amen to all this!
SPECIAL ANNOUNCEMENT: PhilRES-Benguet Chapter is still conducting a Continuing Professional Development (CPD) Program every weekend (Friday, Saturday and Sunday) for license renewal of real estate service practitioners. The program is a RESA complaint 48 credit units as a requirement for the renewal of their PRC licenses.
At the same time, the CPD sessions can also apply to Real Estate Salespersons who would want to be accredited with PRC/PRBRES. The CPD applicable to Salespersons is a RESA complaint 12 credit units as a requirement for their accreditation.
For more information, see us at Unit 306 3/F Antipolo Building, 89 Session Road, Baguio City (atop Tea House) or call/text us at (074) 427-1971/ CP Nos. 09384474133 /09384152888 /09182222653 /09279349478 09109302753.
(For comments, questions, queries, updates and other matters of concerns, you can email me at email@example.com)
Published in the Sun.Star Baguio newspaper on May 19, 2014.