The Philippines GDP, property to extend gains fueled by Investor's confidence - BPOs

The Philippine economy will extend its gains as call center and other business process outsourcing (BPO) revenue rise, interest rates stay low, and President Benigno Aquino boosts investor confidence.

Rick Santos, Philippine chairman of property services company CB Richard Ellis, said economic growth is fueling the demand for office space and property in general.

"People are talking about BPO revenues surpassing remittances, which is an amazing stat considering this industry was basically at zero 10, 12 years ago," Santos said at a briefing in Makati. "Lower government spending affected some of the GDP stats but the domestic economy is still performing well."

"Every foreign investor that we talk to has good things to say about the administration," said Santos, also a vice-president of the American Chamber of Commerce in the Philippines. "President Aquino was the No. 1 choice of foreign investors. Things aren’t perfect, but investors see a very clear upcycle for the next 4 or 5 years."

Santos said demand for Philippines’ office space will rise because rents in other Asian cities are as much 14 times higher than in Manila.

He said U.S. companies continue to downsize, which means they'll outsource more jobs to countries like the Philippines. He said there's even greater take-up of office space here than in better known business hubs.

"Office take-up will well exceed 300,000 square meters this year," he said. "We see that as a huge metric whereas places like Singapore, who also have a very hot market, take up there is just about 150,000 square meters. So were looking at office take up in the Philippines double that of a place like Singapore."

 

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The Philippines Takes Friendly But Firm Stance in China Standoff

The Philippines Foreign Affairs Secretary Albert del Rosario (in foreground) and Foreign Affairs Spokesman Ed Malaya (in background) at a news briefing with the Foreign Correspondents Association of the Philippines on July 1, 2011

Philippines officials say they expect to hold high level talks with China in the coming months to maintain good relations, despite heated debate in recent weeks over disputed territory in the South China Sea.

Cooperation

Philippines Foreign Affairs Secretary Albert del Rosario says his office plans to take up an invitation to visit Beijing in the coming months as an opportunity to reaffirm good ties with China.  He says, so far, the country has signed 100 agreements with China related to trade and investment, defense, security and education.

“I believe that the relationship is healthy," del Rosario said, "and that if there are challenges in the Spratlys or in the South China Sea or the West Philippine Sea, we should abstract that challenge at this time and deal with it separately and not have it adversely affect our relations.”

Defense

But at a news briefing with foreign media in Manila Friday, the secretary reiterated the Philippines’ stance of “what’s ours is ours,” and said that joint cooperation and exploration should prevail in disputed areas in the South China Sea.  He said that since February, China has made more than seven intrusions into territory that officials in Manila now refer to as the West Philippine Sea.

The sea contains the Spratly group of islands that are believed to hold vast reserves of oil and natural gas deposits.  The area is also home to major international sea lanes.  China, the Philippines, Vietnam, Malaysia, Brunei and Taiwan claim parts or all of the Spratlys and most of the run-ins have been over these islands.  Beijing insists that nearly the entire South China Sea region has been under Chinese sovereignty for centuries.

American support

Del Rosario met last week with United States Secretary of State Hillary Clinton who renewed America’s commitment to upholding a decades-old mutual defense treaty with the Philippines.  U.S. officials say they have an interest in keeping the sea’s lanes free.

Clinton said Washington remains neutral in territorial squabbles on the South China Sea, but she also said it would help the Philippines obtain “affordable” military equipment.

Looking ahead

The Philippines’ largest warship is a U.S. destroyer used in World War II. Del Rosario says refurbishing old equipment gets expensive and takes a long time to complete.  So, he says his department is looking at the option of leasing U.S. military equipment.

“Which I believe could benefit us in terms of being able to obtain newer assets and earlier delivery and of course with the assistance of the U.S. Congress, something that is more cost effective,” del Rosario said.

Still, del Rosario says he does not believe tension in the South China Sea will reach any stage of aggression that would call for the use of weapons.

The United States has long favored multilateral talks regarding the South China Sea.  But China has repeatedly told the Washington to stay out of the dispute.

 

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The Philippines abolished joint Oil and Gas exploration in the Reed Bank of West Philippines' Sea

The Philippines on Friday ruled out on Friday any more joint exploration with other claimant countries in the Reed Bank in the South China Sea, an area believed to have huge oil and gas deposits.

"The Reed Bank is not part of the Spratlys," Foreign Secretary Albert del Rosario told reporters, referring to a disputed group of islands in the South China Sea.

"What is ours is ours," del Rosario said, adding that the Reed Bank, about 80 nautical miles west of southwestern Palawan province, was within the country's 200-nautical mile exclusive economic zone.

The Spratlys, also considered a rich fishing ground, are claimed entirely by China, Taiwan, and Vietnam and in part by Malaysia, Brunei, and the Philippines.

Tension has risen in the area in recent weeks. Many Southeast Asian countries see an uptick in China's maritime activities as a sign Beijing is becoming increasingly assertive in pressing its claims.

Del Rosario is expected to discuss Manila's concerns during a trip to Beijing next week. He said China had intruded into Philippine territory seven to nine times since February.

The Philippines has been pushing for the peaceful settlement of overlapping claims in the South China Sea through a multilateral approach that won the support of the United States, which offered substantial military aid to enhance Manila's external defense capability.

Manila will get a reconditioned warship from Washington next month and plans to lease newer patrol vessels.

Del Rosario does not believe the tension in the disputed waters will lead to a war, saying claimant-states have diplomatic tools to avert a conflict.

Still, he said the launch of China's first aircraft carrier, which is expected soon, would bring "a new dimension" to the dispute. (Reporting by Manuel Mogato; Editing by Rosemarie Francisco and Daniel Magnowski)

 

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