NEW 2013 BOOSTS FOR TOURISM, RESIDENTIAL AND OFFICE SPACES SECTORS

The Philippines’ effort to boost its tourism campaign has been recognized as the “most-improved” in the Asia Pacific.

WEF said that government spending for tourism as a percentage of gross domestic product is now the highest in the world, and tourism marketing and branding campaigns are likewise seen to be increasingly effective.

WEF said that government spending for tourism as a percentage of gross domestic product is now the highest in the world, and tourism marketing and branding campaigns are likewise seen to be increasingly effective.

The World Economic Forum ranked the Philippines at 82nd in its Travel and Competitiveness 2013 report, owing to the government’s strong campaign for tourism. The present ranking moved the country 12th notches up out of 120 countries and is ranked 16th in Asia.

Because of the policy improvements supporting tourism, the Makati Business Club, a partner of WEF under the Global Benchmarking Network, said that the Philippines is among the rising stars in the emerging economies in terms of travel and tourism.

Among the strengths the country possessed are its natural resources (44th), price competitiveness (24th) and very strong and improving prioritization of the travel and tourism (T&T) industry, with the government spending for tourism as a percentage of gross domestic product is now the highest in the world, and tourism marketing and branding campaigns are likewise seen to be increasingly effective.

WEF said that “In addition, the country has been ensuring that several aspects of its policy rules and regulations regime are conducive to the development of the T&T sector. Among these are better protection of property rights, more openness toward foreign investments, and few visa requirements for foreign visitors (ranked 7th).

These include better protection of property rights, more openness toward foreign investments, and fewer visa requirements for foreign visitors.

Despite of this, however, WEF said the challenge for the country remains noting the difficulty of starting a business in terms of cost (94th) and the length of the process (117th), safety and security (103rd), inadequate health and hygiene (94th), and an underdeveloped infrastructure. 

The top 5 in the rankings are dominated by European countries with 2011 first-placer, Switzerland again topped the list this year, followed by Germany, Austria, Spain and United Kingdom.

With regard to the concerns raised, Tourism Secretary Ramon R. Jimenez Jr. said: “We cannot solve all our problems in a few years. However, the first and most important step is to principles of good governance so that, with gathering momentum, we are able to clear away the obstacles to inclusive growth. One example of this is the convergence task force between DoT (Department of Tourism) and DPWH (Department of Public Works and Highways) for construction of tourism roads, bridges and other such projects. Also, the closer coordination among all sectors to streamline the tourist experience at all major ports.”

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Major foreign airlines are now exempted from tax breaks.

Another good news also came up when President Benigno Aquino signed into law the Republic Act 10376, a law giving tax breaks to foreign airlines and shippers, to help boost the tourism in the country.

The law exempts international carriers from paying the 3% common carriers tax (CCT) on receipts and income derived from transporting passengers. The 2.5% Gross Philippines Billings Tax (GPBT) was also lifted provided that the same exemption is granted by the carrier’s own country to the Philippines. Moreover, foreign airlines and shippers will also be exempt from the 12% value-added tax (VAT) imposed on seat sales.

The government, however, will continue to slap the CCT, GPBT and the VAT on outbound cargo revenues.

In the past, foreign aviation companies repeatedly urged the government to cut the CCT because of its heavy tax burden that is affecting them and forcing them to cut operations in the country. One example is the cancellation of direct Manila-Europer flight operated by Air France-KLM in 2012, the last airline to stop the direct flight.

Now, they are no longer affected as what President Aquino said, “With this bill, everybody wins: from our aviation industries, to our tourism industries, to the millions of our peoples who will have greater freedom in planning their trips.”

The law would enhance the country’s competitiveness as what Steven Crowdey, first vice-chairman of the Board of Airline Representatives, said that “This enabling law makes the Philippines a more competitive destination in the region.”

He is now looking forward to a partnership that with the completion of major airport infrastructure projects that will expand capacity.

This law will “greatly improve the tourism potential of the Philippines when foreign carriers increase the number of their flights,” according to American Chamber of Commerce Executive Director Robert M. Sears.

A removal from the watch lists of European Union and United States are also in sight because of the law.

“This gives all of us great confidence that, as we continue to improve our aviation industry, we may soon see our removal from the watch lists of the European Union and the United States. Perhaps before I step down from office, we will see our own airlines flying to Rome, Paris, and other cities in Europe and North America — giving us greater access to these markets, and vice versa,” President Aquino said.

In other developments, Jones Lang La Salle said that in the next 5 years, 149,000 residential units expected to be built due to an increased purchasing power of Filipino consumers. The total is higher than the 135,650 units completed from 1999 to 2012.

The Real Estate Investment Act will help in the economic growth and help the real estate sector as well.

JLLS also said that due to robust economy and the increasing migration of people to the city from the countryside driving demand for real estate, Manila is expected to post the highest growth rate in office and residential space among Asian cities this year.

According to David Leechiu, JLL Regional Director and Country Manager, the demand for residential projects across all sectors was being fueled by remittances from Filipino workers overseas, strong domestic economic growth and increased purchasing power of business process outsourcing employees.

JLL said at least 55 percent of the units would cater to the affordable market, with units costing from P1.5 million to P3 million.  Most of the condominium developments will rise in Quezon City, Ortigas, Mandaluyong, Makati, Fort Bonifacio and Alabang.

JLLS said that SM Develoment Corporation, Ayala Land Inc., and Megaworld Corporation are expected to build half of the residential units from 2013 up to 2018.

The remaining half will be built by other developers such as Filinvest Land Inc., Vista Land and Lifescapes Inc., DMCI Homes, Eton Properties Philippines Inc. and Robinsons Land Corp.

JLLS also said that due to robust economy and the increasing migration of people to the city from the countryside driving demand for real estate, Manila is expected to post the highest growth rate in office and residential space among Asian cities this year.

JLLS project a 47.2% increase in condo units in 2013 in Manila, higher than Bangkok (15.1%), Jakarta (13.6%), Shanghai (11.2%), Kuala Lumpur (9.1%), Singapore (6.9%), Beijing (6.9%), Ho Chi Minh City (4.5%) and Hong Kong (1.2%)

For office spaces, JLLS projected that Ho Chi Minh City is higher at 33.5% followed by Manila at 18.7%.

Following the two cities are Shanghai (10.2%), Jakarta (9.3%), Seoul (7.4%), Beijing (6.9%) and Kuala Lumpur (5%).

Chris Fossick, JLL managing director for Singapore and South East Asia, mentioned that there is a healthy demand. “Southeast Asia in general is seeing urbanization that creates demand in the cities. The young, dynamic workforce that also has purchasing power is good for the property market.”

He mentioned that the Philippine economy’s strong performance has boosted the property business.

“The Philippines was our fastest-growing business in Southeast Asia last year because the economy was very strong. Rarely do we have a situation where we have strong economic growth and a real estate on a decline,” Mr. Fossick said.

With sources from Business World, Manila Standard, and Philippine Star

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