The Philippines
Published: May 21 2007 12:42 | Last updated: May 21 2007 19:18
The Philippines, the old joke went, is the country of the future – and always will be. Now, with the stock market at a 10-year high, a slew of equity offerings and an increasing number of investors boarding Manila-bound flights, the joke is looking a little dated.
Sentiment has improved on several fronts. The economy is expected to grow by more than 6 per cent this year, bolstered by foreign businesses moving more of their operations to the country. Business process outsourcing is a $3.6bn industry that the local trade body expects to top $12bn in four years. President Gloria Macapagal Arroyo has pushed through sales tax increases so that the country – once Asia’s biggest borrower outside Japan – is no longer reliant on foreign debt. The political landscape appears stable. All this has impressed foreigners. This month, Texas Instruments of the US announced plans for a $1bn assembly test site, while Saudi Arabia’s Prince Alwaleed bin Talal is to plough $153m into a Manila hotel complex.
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Less wealthy investors have been piling in, too. Net foreign buying on the $160bn stock market rose 73 per cent year-on-year in the first four months of 2007. Real estate is on the up. Office prices rose 6 per cent in the first quarter, compared with the previous three months, according to Colliers International, slightly ahead of luxury condominiums. Given low vacancy rates, minimal new supply in the central business district and increasing rents (which are still at a 25 per cent discount to Bangkok and Kuala Lumpur), there is scope for further appreciation. At the grittier end of the investment spectrum, there are opportunities in infrastructure and mining: the Philippines has extractable mineral wealth worth $840bn, or 10 times gross domestic product, says the government. Only a fraction of this is being tapped, reflecting past, botched liberalisation plans. Snags remain, including corruption. But the country no longer looks like a bad joke.
Copyright The Financial Times Limited 2007
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