Where is the money coming from?

[mikek1]

I have been travelling to the Philippines for the last 20 years. When I first went there with my wife, we were predominantly staying in Manila. What was fairly obvious to me was there were basically two classes of social status, stinking rich or poor.

When we went to her home Province, Illocos Sur it was, for me, like going back 100 years. The poverty was very apparent. I can remember that just to own a tricycle or small motorbike was beyond 95% of the locals.

What amazes me now, particularly in Manila, is the amount of perceived wealth. There are more new cars on the roads on Manila than in my own town of Birmingham. More surprising is that the majority of these cars are gas guzzling, SUV's and 4 x4's. I know fuel is cheaper than the UK, but I would have thought - given the lower salaries in the Philippines - it doesn't make sense to drive these vehicles.

Another sign of change is the amount of condos and new sub divisions (going out to Cavite) that are being built. These are not cheap. I would accept that the condos in Manila carry a premium because of the location. However, the new sub divisions travelling down the SLEX are very expensive - especially for Filipinos.

If we go to a shopping Mall, I have noticed that a cup of coffee in Starbucks costs 180 peso. This is expensive when the average pay in the provinces is 340 peso a day. We have picked up items in SM and put them back on the shelf when we noted the price. The items were cheaper in the UK! It may have something to do with the exchange rate 69 Php/£, but I think there are other factors.

I would add, that when you go out of Manila, prices drop dramatically, although good food in supermarkets is still pricey. Property prices in Manila are very high compared to the Provinces. The other item that seems very high is the price of used cars. In the UK, when a car is 3-5 years' old, it is very cheap, whereas in the Philippines, even a 10-year old banger seems to carry a high price.

Does anyone on the forum think like myself, that there is now a defined 'middle class', and not just the rich or poor? Could it be that the Philippines' growth is maintained on the back of easy credit? Most people have credit cards (which was unheard of 20 years ago). Is the Philippines due a property 'Bubble' burst? I think so, when I see 2 identical condos, one built, the other unfinished and the cranes stationary. I know the biggest earners for the Philippines are overseas workers. However this is now not as easy as before.

Anyone know the answer?

[fred]

I`m almost clueless to be honest, but I suppose we cannot discount the 24 Billion $$`s in OFW remittances the country receives each year.

Its not, as you say, "easy" to get credit here - and never has been - so that's not the answer!
I think it's more expensive here in the Province for many things compared to Manila including real estate.
People have been talking about a "property bubble" for years here.. Never happened!
In the last 30 years I have never seen the prices go down..Only up.
It may be a different situation in the future regarding Condos, but who can be sure?
The economy is growing here faster than just about every Western country in the world right now and I don't think it's in any mood for a bursting bubble.. They say the economy will boom for another 5 years at least.
It's a mystery to me, because the foreign investor laws are so rubbish!!
The 60/40 rule is the best example of that and don't forget..WE, as aliens, cannot own land.

Like you, I notice the big brand new cars here everyday..Most of them in the 1.6 million PHP range..
Most days I cannot get a parking bay in a very large parking lot because of them.
Second hand cars may be expensive but the good thing is that once you have one it will hold its value for years.
Not so in the UK.

Lots more work for college graduates these days.. I have 2 nephews that, like thousands and thousands of other graduates, work in the call center service industry.. Their pay is pretty good compared to many in the R.P.. 15/20k per month.. Hardware/software engineers up to 30k a month etc etc.. So I`m sure that these jobs have contributed greatly to the success of posh coffee shops like Starbucks and their ridiculous prices!

Like the OFWs I don't think we can underestimate the many (certainly not all) corrupt workers in the public sector that help themselves to peoples' taxes and of course the political classes that own many of those posh SUV`s and expensive condos you mentioned...Or business owners that help rake in all this cash that is being splashed around like confetti.

Sorry I cant answer your question fully because:
I`m still mystified too!: Cuckoo:

As the Yanks say.."It is what it is"!

[stevewool]

I understand what you are saying, and the only answer I can give is what Fred has said, the OFW!

I know of a family who have a great home - 3 apartments attached and a shop - all brought by one member who works so hard to support the people back in the Phils. They have 2 cars and live very well. All the bills from feeding the dog each month are paid by this person working abroad.

It amazes me how they live and are supported by this person while living a great life themselves.

[jonnijon]

It's all down to status, you're nobody unless you have a SUV.

[Michael Parnham]

Its all down to status, you're nobody unless you have a SUV.

Well here's one who's a nobody then!

[Michael Parnham]

Saw a family depart from a Toyota FJ Cruiser. What a beautiful beast, looked great in bright red! Dread to think what it would cost. The family that owned the vehicle came into the place where I was eating and they were nobody special. Just don't know what kind of people can afford a vehicle like that in the Philippines. If I was to buy one of those in UK, my Pension would be just enough for the finance!

[Terpe]

We have a close friend who has a number of small businesses mainly fish and rice.
She works hard and her business is her priority.
She visits us fairly regularly.

She told me that her average monthly profit is P450k but sometimes it can reach P1.5M
Amazing.
Most is ploughed back into the business with more rice fields, fish ponds and fishing boats. But she has a number of houses she rents out and a couple of nice SUV's

Her money is solely down to her own motivation and dedication.

She still lives in the Province with a modest lifestyle.

[Arthur Little]

Oh well ... I've lived in the UK for the whole of my life. And, having never been accustomed to much money coming in ... ... (just about sufficient to keep me financially solvent) I'm unlikely to discover how I'd cope with a lot - if you catch my drift!

[Arthur Little]

Oh well ... I've lived in the UK for the whole of my life. And, having never been accustomed to much money coming in ... ... (just about sufficient to keep me financially solvent) I'm unlikely to discover how I'd cope with a lot - if you catch my drift!

... so, put simply: What you've never had, you never miss!

[Arthur Little]

Besides ... ... as my dear wife is fond of reminding me, real wealth is built on the foundations of good health and contentment.

[stevewool]

I must admit the SUV does look nice over there and maybe one day I might own one too. Compared to here the prices are very good, so work for another 6 months here and then buy one over there. Or do I buy a new lens?

[Michael Parnham]

Besides ... ... as my dear wife is fond of reminding me, real wealth is built on the foundations of good health and contentment.

Many true words said Arthur!

[Trefor]

Yep, we've noticed the number of brand new Toyota Fortuners (still waiting for their registration plates). Surely they are mostly on some kind of HP/loan?

[fred]

Yep, we've noticed the number of brand new Toyota Fortuners (still waiting for their registration plates). Surely they are mostly on some kind of HP/loan?

Yep..But the loan conditions are quite stringent we found.. Proof of income amongst them.

[jake]

Yep, we've noticed the number of brand new Toyota Fortuners (still waiting for their registration plates). Surely they are mostly on some kind of HP/loan?

Not mine!

I would imagine the vast majority are on finance. Most cars in the UK must be on finance as well?

[jake]

It's all down to status, you're nobody unless you have a SUV.

For me having an SUV is about being practical. The car is to small most of the time for work, so i have a choice of using a van or SUV. The SUV wins hands done because it is more comfortable

[stevewool]

For me having an SUV is about being practical. The car is to small most of the time for work, so i have a choice of using a van or SUV. The SUV wins hands done because it is more comfortable

even more comfortable when being driven around,

[Michael Parnham]

It appears that many seamen buy big SUV's they spend most of their salary on them, but when a family member is seriously ill they have no spare money. Is seems it's only the higher ranking seamen are the sensible one's such as Captains ect, they are the one's that invest in very nice homes and SUV's also a substantial amount is put aside for family healthcare!

[Terpe]

As we walked home from the local market last night I commented to my wife on the number of tricycle drivers lounging in their vehicles playing with their smart phones.
Most of them look like they don't have 2 pesos to rub together.

We have people living close by with brand new SUV's and massive houses. They also look like they don't have 2 pesos to rub together.

You just don't know

[stevewool]

I did see that a lot too when on our last visit, everyone has a phone and the bike riders even text while ridding there motor bikes too,
How things have changed, i cant text without sitting still glasses on and no one talking to me,
I wonder is that just my age

[Iani]

Ever notice mind - all these cars and SUV's, they're nearly always Toyota. Nothing wrong with this, and everything right - it's like the car dealers say if pushed, notice how the taxi drivers here, especially the stani ones, they drive Japanese cars..............it's because they're so reliable and frankly good.

As for the condos, well.......ok this is probably really going to tread on someone's toes, but I've been told at least some of the growth of these is down to the army of OFW's, who are conned into "investing" into these without realising the downside. Actually I've even seen this touched upon on tv in the Philippines - how they said often OFW's might buy goods not exactly essentials (They gave as examples stupidly sized stereos, the size of a chest freezer - oh come on, we've all seen them over there )

Oh just as a footnote, as Fred said, house prices don't as a rule come down.......much........but it has happened. It was around the 1995/1996 mark, it hit some areas more than others, but they did reduce quite a bit. Irrelevant really as they soon rose again as everyone knew they would. That's when the whole negative equity seemed such a problem, but it's only a problem if you have to move house really to downsize, that's what people didn't get, and the so called experts only stoked the misinformation

[stevewool]

My Toyota is still going very well, if i could i would drive it to the phils, i trust it 100%,
There are so many new looking cars over in the Phils now, and like i said i would like one one day i think and a SUV in my eyes would be safer to drive being that bit bigger,

[Michael Parnham]

There are 3000 pedicabs in Dumaguete and they are all busy all day and most of the night, also about 2000 absolute wrecks of vehicles, cars and trucks mainly from the 70's and earlier, brand new vehicles only a few hundred and then every other era in between. In fact Dumaguete is a unique place to visit