The job opportunities in the Philippines

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The appeal of the Philippines is that it is like no other country. Consider its unique features:
1. The people is English speaking - only the poorest cannot understand much. They have good fluency and they even have the American accent. There is of course a learning curve for Filipinos to take on more value-added roles, but expect in a number of years for Filipinos to be performing a number of your business outsourcing roles, e.g. accounting, sales, telephone technical support, etc.
2. The people are amicable - they have a positive and friendly personality; and more generally they have values not too far removed from the Western world; at least compared to the rest of Asia. This makes them particularly well suited to sales tele support roles. I recall a Telstra call promoting their telco services in Australia. My father answered the call, and was having a pushy Indian trying to cajole him to buy some service.
3. They are lifestyle orientated - which means you can expect good staff retention because they want to retain relationships more than climb the corporate ladder. India, the Philippines main competitor in this area suffers from poor retention rates. Indians are far more likely to aspire for more, so for business service providers its difficult to perform it.

There are obstacles as well. The Philippine work ethic more closely resembles the Spanish culture from which is drew its greatest influence. That said, the university population is more aspirational than the general perception one might draw driving around a slump or some provincial images which might permeate our minds walking the streets.

The outlook for the Philippines is rather good. The country is starting to develop some of its mineral resources, and remittances remain a strong & important contributor to the economy.
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Andrew Sheldon
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Yields on Philippine rental apartments

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The Philippine property market is looking very strong. According to Global Property Guide the yield on an aprtment in Manila is around 9% per annum, making it the 6th best yields in the world. The best yields are on property in Jakarta (Indonesia) and Lima (Peru), which are offering 12% yields. I would suggest however that some regional cities in the Philippines offer far better investment returns. Lipa City near the commercial port of Batangas and the Subic Economic Zone are areas which will benefit from satellite developments to the Metro Manila area. Further afield, you can expect places like Lucena City (Quezon), Naga City (Bohol) and Lauag City (Ilocos Norte), Davao City among others to perform very well as well. Improving infrastructure in the Philippines will see call centres placed in these areas in future, and expect these developments to result in a rapid rise in relatively high paid jobs, as well as new entertainment precincts. The most attractive areas are those with recognised universities like La Salle Lipa City. Foreigners will appreciate the improved facilities in these places as well. Lipa City already has 3 shopping malls, new tollway connections to Batangas and Manila. It also has the advantage of higher elevation, so its an attractive place to live. Part of its appeal is that its not as high as Tagaytay, so its not covered in rain clouds, making it an attractive place to live. Its perched on the edge of the Taal Volcano, though not so close that you have to worry, and being to the south, the city is likely avoid any unlikely prospect of a volcaniclastic eruption. Lipa is close to Batangas, Manila, as well as those tourist areas like Nusugbu, Tagatyay and Puerto Gallera. The improvement to the tollway to Manila means it can take just 1 hour and 15mins to get to Manila. Ten years ago the same trip would have taken you 4 hours; 2 years ago it would haven taken 2 hours. This should be important information to prospective investors looking for places to invest. Lucena City is currently isolated from Manila. In another 10 years the freeway might well stretch to Lucena City, which will also place that city in far closer proximity to Manila, but also Lipa, which is also likely to benefit from any development by Manny Villar in the Eton City - Calamba City area.
You can learn more about buying in the Philippines from our Philippines Property report 2008. Buyers of this report will receive the 2010 (2nd edition) free when it is complete. The Philippines is confronting a presidential election in May 2010, so that will be something to watch. There should be no big surprises on the downside, though I suspect better leadership could see the Philippines attract a RE-RATING in future years.

Buying property in the Philippines

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According to a survey by Global Property Guide the Philippines ranks in 3rd place with the best yields on property - with Jakarta and Lima (Peru) in 1st and 2nd places. The average yield for a property in Manila is 10.99%. I much prefer the Philippines for lifestyle reasons and because of a number of other reasons:
1. Greater regulation means restrictions on where you build - so prospect of restricted property development looking forward
2. Strong population growth - this country is growing at 2% per annum, that's almost 2mil people a year
3. Job creation - The Philippines is the preferred business outsourcing base because Filipinos are the best diplomats. Laxed work ethic aside, they have potential for more of this 'structural' shifting of jobs from the west.
4. Remittance - A great deal of money is flowing from expats abroad to the home country, as well as BFs sending GFs money.
5. Reform - The Philippines government on balance is getting its act together. Infrastructure is being built. The country could do with some ports reform, but is otherwise on a positive path. I note that they are increasingly building infrastructure for tourism around the country.
6. China proximity - The Philippines is close to some of the biggest and fastest growing countries in the world, so some of the benefits can be expected to rub off in terms of trade and tourism. There is a new airport flight from Lauag (Ilocos Norte) to China, and expect more of these links to draw tourists. Not just China, but Korea and Japan.
7. Tourist friendly - The Philippines is without a doubt the most tourist friendly country in the world. They are very diplomatic and engaging. Great sense of life, very personable. Gradually you can expect them to get their service culture in place, and a worth ethic. Better still - you can stay in the country on a tourist visa for 18 months without even leaving. Try doing that in Indonesia.

My advice is to check out some of the rural cities - as opposed to focusing on the Manila. My picks are Naga City, Vigan City, Lucena City and Davao City. If you need more info on buying property in the Philippines, I have written a 2 volume eBook "Buying Phililppines Property" on the topic. See my bookstore for more information. Currently updating the late 2008 edition - so I'm forwarding the 2010 edition to those who purchase the 2008 edition.

Taxation for Non-Residents of the Philippines

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If you are considering retiring or living in the Philippines you will want to familiarise yourself with the taxation laws. The Philippines actually has very favourable laws for taxation. This I guess is in support of all those expats who are so keen to remit funds.
Most foreigners in the Philippines live there on tourist visas, so they are effectively non-residents.
Here is an extract from the Philippines Law website:

Section 23. General Principles of Income Taxation in the Philippines.
Except when otherwise provided in this Code:

(A) A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines;
(B) A nonresident citizen is taxable only on income derived from sources within the Philippines;
(C) An individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract worker is taxable only on income derived from sources within the Philippines: Provided, That a seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively in international trade shall be treated as an overseas contract worker;
(D) An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines;
(E) A domestic corporation is taxable on all income derived from sources within and without the Philippines; and
(F) A foreign corporation, whether engaged or not in trade or business in the Philippines, is taxable only on income derived from sources within the Philippines.

Antipolo, Pasig, Cainta, Marikina

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Typhoon Ketsana's devastation is the worst in the last 40 years in Metro Manila. My partner and I almost bought a 2 br condo unit in Pasig, Riverfront Residences. We're lucky we didn't.

Pasig was one of the most badly hit areas where flood waters reached up to 4ft in 6 hours on September 25, 2009. Antipolo, Cainta and Marikina are the other cities that were drastically damaged and submerged. If you were to buy property in the Philippines, do not buy in these areas. On top of sewage and drainage problems, these places are near rivers and dams. They are overly populated as well. It's quite disheartening that many new real estate developments were concentrated in these areas and many people bought new houses just recently.

The current death toll in Metro Manila is 246. Many people died in their own homes as they weren't able to escape in time. Nobody expected the surge of water. Local officials had to let water out of the dams, fearing they would burst. One person died inside his car as the waters buried the streets. Many countries have provided overwhelming donations to aid the Philippine government in their relief operations:

Australia - AUD $1 Million
USA - USD $10,000
Japan - USD $220,000 worth of goods
Vietnam - USD $208,000 worth of rice
Korea - USD $330,000

For more information about the flooding in Manila, click here.

Healthy job creation in the Philippines

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I have long believed that the Philippines will weather the current recession better than most countries. By any standard the Philippines is well-placed. The most important factors are:
1. Strong remittances - the recession has not greatly decreased remittances from abroad
2. Mining - Mineral prices have collapsed but they still offer attractive returns
3. Tourism - The Philippines is at the cheaper end of the market, so it is unlikely to suffer
4. Structural shift in employment - There is a structural shift in jobs from foreign call centres to the Philippines.
5. Population growth of 2% per annum in the Philippines
6. Healthy economy - the government is in pretty good shape. There is no huge overhang of public or private sector debt like the bad old days. For this reason I suggest the Philippines will be looking at a property boom like Thailand in a few years.

In recent times I've seen continued moves by western firms to shift some of their call centre activities to the Philippines. The latest is Vodafone Australia and about two months ago Telecom NZ were doing the same thing. Expect more of this type of behaviour, and it will increasingly involve smaller companies outsourcing call centre activities.

Rebuilding the Philippines - start with the maids

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In the Philippines its common to have maids. Some households treat maids better than others. Relationships can range from 'almost close family members' to 'peasants held in contempt. Those that treat maids well tend to have respectful and real relationships with them. Often the households will even support the maid towards further education.
The flip side is that there are Filipino households which treat their maids with contempt. This is apparent in how they treat them and judge them. For those who would treat maids with contempt I would offer the following advice:
1. They are often poor in character, stucture, goals and lacking education through no fault of their own.
2. The way they treat you is a testimony to how you treat them.
3. The household is in the position of power, and thus in the best position to renegotiate the relationship.
4. Maid's are cheap not because their labour is worth so little, but because the marginal value of cash earnings is disproportionately high, and because of the disparity of income as a result of corruption and missed opportunities.

I have empathy for one maid I am aware of. She grew up in a family of 5. They were poor because their parents had too many children. They cannot afford birth control, and having a subjectivist philosophy it was easy for the parents to dismiss the consequences of their actions. They cannot afford abortion, and it would attract criticism/judgement from the family and community, so instead they have excess children living in poverty. They were homeless at one point until the father became a jeepney driver.
This particular maid was only offered a basic education because the parents could only afford to send two children to college. When one of those children fell pregnant, there was a fight resulting in the two oldest children leaving and not finishing their study. The other kids were thus denied a great opportunity, for support from their oldest siblings.
The 3rd daughter (in focus) lived and continued her schooling with her grandma until she fell ill. She had to drop schooling and find a job. Eventually she ended up as a maid with the host family. The maid is actually quite smart, with a positive outlook. The household tended to have many maids, and some had stolen money and possessions, but otherwise not conveyed much responsibility. I would however argue that these maids are often treated as a 'collective' with contempt. I would challenge households to:
1. Recognise that maid's are individuals, they have aspirations, needs and a social context. You cannot barr them from seeing guys (because you are worried they will bring the guys home, or that they will fall pregnant). You can only help them to make better decisions.
2. Recognise that maid's provide a higher level of relationship than their pet dog. I for one don't understand the appeal of pets when you can have a higher level of relationship with a human being (maids). People spend silly amounts of money on dogs when there are maids from broken homes who need nuturing. This is a great opportunity for people, particularly wives whose children have left home
3. Maids cheat, lie and manipulate generally because that behaviour has been modelled by their parents, or because they feel vulnerable or open to attack. Many housewives make the mistake of not considering the reasons for the maid's actions.

For example with the maid in focus. The household had gone to their child's wedding. They returned from the wedding to find that the maid had not come home. They were knocking for 20 minutes, finally awakening the grandmother to open the gate. Certainly they were inconvenienced by the maid leaving the house. But in such instances, what is forgotten is the context. The housewife did not call the maid to tell her that they were coming home, so she could be there to open the gate. Instead the housewife assumed the power to demand that the maid must be home, and give them notice that she was going out. The maid did not do that.
Looking at the context, you can understand her rebellious or inconsiderate act. She was discouraged from seeing guys. Her parents had not called her on her birthday, though other maids in the neighbourhood invited her out to drink. They drank to excess, so the owner of the house encouraged her to stay the night. It was a reasonable 'indiscretion' given the controls the owner had put in place. She did not invite strangers into the home. She locked up the home. More importantly, because the housewife on this occasion did not ridicule her, but asked why she was not home, she hear her explanation, and saw some 'reasonable' consideration in it.

The unfortunate part in this negotiation is that the housewife failed to take responsibility. The maid is entitled to have a personal life, and every opportunity should be maid to offer flexible free time. You cannot impose your standards on the maid. You have to negotiate the standards. A good standard might be established through discussions with other maids. Maybe the households could jointly organise a maid's night off, or a maid's union in the village. If these actions were taken, many people fear the maid's would demand more. Well maybe they are entitled to that power. Afterall in a sense they have the power to disceive, to abuse something more precious to the household - sacred possessions like jewellery, privacy, money, reputation. These things are more likely to stay in tact if the housewife does not abuse the maid because of their 'market power'. Their power is even greater than some housewifes realise. Some are cute enough and innocent enough to court the favour of the wife's husband. In the Philippines I often hear of maid's getting pregnant because they have had an affair with the wife's husband. Its not necessarily a vindictive act. Its just as probable that he was more fair minded than his wife. This occurs because the husband has learned not to criticise the wife because she considers household matters her responsibility, and is perhaps not open to interference.
There is a history of modelled behaviour on both sides of the relationship. The wife needs to be validated for any improvement she makes, but so does the maid. Particularly the maid given the historical legacy of contempt they have been held in. Housewifes are reluctant to redefine the relationship by apologising. Since they are educated, they should actually expect more of themselves. If they want to not just look 'classy' for the outside world in terms of managing their 'appearances', they are forgetting that the greater 'class' is conveyed in private when people are not looking. All sorts of infidelity and indiscretions are going on in houses around the Philippines. This culture has too much class-distinction. There is an entrenched culture of subjugation which creates victims and perpetrators. The implication is that higher levels of organisation are not possible. How can you trust workers who hold you in contempt. You can't.
I argue however that the Philippines ethic is ripe for companies to profit from the redefinition of the household-maid, employer-employee, tax spender-tax payer relationship. Until those relationships are based on respect, then the producitive capacity of this country will be constrained. I applaud Filipino values because I have never encountered a culture so willing to change than others. I find it very easy to work with Filipinos. If you try to save time by cutting corners, you will end up losing. You need to redefine the culture, and that takes time. The Chinese have been here over a hundred years, and they still use the perpetrator-victim model which lacks intellectual vigour and empathy. I have little regard for Chinese management. Just look at the lack of training in SM and Robinson's malls. Wrong culture, wrong values. Power highly centralised.