Philippines: A retirement haven?

Many years ago, the country was harping on the possibility of establishing huge retirement villages for other countries’ aging population. Today, however, the frustration is just as high as that lofty dream and as deep as a retiree’s final resting place.

Never fault our line agencies, however, because whether their efforts are inadequate and so limited, it is a fact that they’ve done their best in promoting it. We must realize though, that success in every undertaking does not rest solely on best-effort basis. More often, when we give our best on the more appropriate courses of actions, better results are achieved. 

Just like any business, for this to succeed, we must be customer-focused. Therefore, first and foremost, we should know their (retirees) preferences. Definitely, our potential customers are those who are willing to be away from their families and friends and have the money to give away for paid comforts and caresses. Therefore, rich countries with superior retirement benefits are great potential. 

Though they can be easily identified, let us not forget that the real issue is they can recognize us. For easy recognition, this country should be on top of the list of their preferred destinations. How? That’s the challenge. One thing though, these retirees decide based on their priorities. Priorities include, among others, proximity to their homes, cost of living, weather, availability of telecommunications, infrastructure, safety (peace and order), best health care, investment priorities and tax incentives (should retirees find a way to invest their retirement pay). Their main consideration really is whether what we are to offer are far greater than those offered in their home countries. 

With these criteria in place, you can’t see our country on top nor as one of the top 29 preferred destinations in the International Living’s 2008 survey. Just like the 2007 survey, Mexico tops the 2008 survey. Inarguably, because of its proximity to the USA, it comes naturally as the first choice. Notably, however, aside from its proximity to the USA and Canada, it also offered so many things other countries are giving, like exemption from paying import duties and the best health care provided by US trained professionals. Other Latin American countries like Ecuador, Panama and Uruguay occupy the 2nd, 3rd and 4th places, respectively. On the other hand, Italy tops European countries by placing 5th.

Surprisingly, while Latin American and European countries have the edge and will probably dominate due to their proximity to the huge markets, our neighbor, Malaysia, installed itself as Asia’s best by being placing 13th of the world’s most preferred. Likewise, Thailand was impressive at number 20. 

What Malaysia did is not earth-shaking after all. They simply studied it long and hard. They started it four years ago when they launched "Malaysia-My Second Home" (MM2H) by offering foreigners, particularly retirees, to live permanently in their country. They started by giving five-year visa with unlimited entry/exit privileges and without minimum annual residence requirement. Permanent residency is also a possibility after a five-year stay. Retirees may also bring in household effects duty-free, and import or purchase one vehicle locally, tax free. Income tax incentives are also offered for investing retirees. Notably, recipients (foreigners) are eligible to buy houses at a cost of not less than RM150,000.00 (or roughly US$41,677.50 at the current exchange rate) each. More importantly, for purposes of owning the house, they are also entitled to borrow from local banks 60% or more of its cost or value. 

On the other hand, what do we (Philippines) offer to these foreigners (retirees)? The Philippine Retirement Authority’s (which promotes and grants Special Resident Retiree Visa) website simply bragged about, among others, “our world-renowned Filipino hospitality, our diverse culture, and reasonable standard of living”. Other incentives include the option to retire permanently, and exemptions from income tax over retirees’ pension and annuities; exit and re-entry permits of the Bureau of Immigration; annual registration requirement of the Bureau of Immigration; customs duties and taxes with regard to the importation of household goods and personal effects up to US$7,000.00; and travel tax, if the foreigner-retiree opts to stay in the Philippines for less than a year from the last entry date.

The country’s time deposit requirement in obtaining the visa (PRA accredited banks’ certificate of inward remittance is necessary) ranges from US$10,000.00 to US$50,000.00 depending on whether one is a pensioner or not and his/her age. While it seems that our time deposit requirement is not stiff, its subsequent conversion is irrational. These required time deposits can only be converted into active investment through purchase, acquisition and ownership of a condominium unit; long-term lease of house and lot, condominium or townhouse for a period not shorter than twenty (20) years; and purchase, acquisition and ownership of golf or country club shares.

Comparing our country’s and Malaysia’s programs, any ordinary citizen can simply tell why ours is bound to fail. It is just too inferior. We shouldn’t brag about our serene beaches and hospitality because Malaysia and other countries have that as well. The disparities are very evident and are all in Malaysia’s favor. 

Apparently, Malaysia’s incentives to foreigners-retirees to purchase house and lot and offers of numerous incentives for those who may go for businesses make our country’s restrictions (condominium, long-term lease & club shares) in the conversion of the required time deposit mockingly obvious. 

However, Malaysia’s being on top should not be a source of envy for us but an inspiration. Since geographically we are similarly situated, the possibility of taking a sizeable slice of that huge pie of moneyed retirees is a possibility. Taking it from Malaysia’s experience, we can still be a preferred destination. All we need to have is the right direction, supported with more appropriate legislations.  

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