Philippines as a retirement haven: An uphill climb?

In my March 9, 2009 column, I quoted three of the several reactions of readers of different nationalities on my piece on February 16, 2009 headed “Philippines: A retirement haven?” Honestly, I didn’t expect such piece will elicit numerous reactions from readers all over the globe. Among others, I showed comments and reactions from two foreigners who now reside in the Philippines and a Filipina who now lives in Spain. 

To recall, Byran Bellamy (apparently residing in Cebu) then talked about how the Philippines lost its marketability to foreigners-retirees and why Mexico tops as the world’s most preferred destination. He emphasized that “in Mexico you can own property in some kind of a renewable 50-year lease. Here (in the Philippines), as a foreigner-retiree, you can’t own real property on a similar program”. Apparently, Mr. Bellamy is opting for ownership of an abode he can call permanent home.

On the other hand, Mrs. Hill Roberts (a Filipina), who is apparently married to a foreigner and has since stayed in Europe for three decades said something on some foreigners visiting our country and who more often complained. She declared that “still, to be reading silly, stupid, downright racist comments can make every other Pinoy cringe, naturally. But what I am trying to say is-that many of the expats living there now somehow, I get the feeling are only half-educated.” Obviously, Mrs. Roberts prefers quality retirees or visa holders.

Moreover, Mr. Guy Aelvoet (another foreigner-retiree), expressed his disappointments over his sad experiences on the inconveniences brought about by the bureaucratic red tapes in obtaining the country’s special resident retirement visa (SRRV). Apparently educated, he further said that “I totally agree with your views and would like to add some of the experience I am having trying to get a resident's visa as a retiree. It's not enough that I have invested some 30mm Peso in an apartment and will deposit the required US$ 20K (not to be seen again...) but I have to submit a police record which has to be authenticated by my country of birth and submitted for stamping by the Philippine embassy there. So far so good. The only problem is that to obtain that police record, I have to request it by physically be present then get it officially translated by a court interpreter then authenticated by the Ministry of Justice then further authenticated by the Ministry of Foreign Affairs and only then can I submit it to the embassy. Talk about red tape.  I can't ask my embassy here to authenticate. Not permitted. So much for the Friendly Retirement Visa action being taken by the government.”

With months passing since I wrote about this topic and the deluge of comments and reactions I received early this year, I thought all the while that my March 16, 2009 piece is already a passé by this time.   Surprisingly however, last Friday (October 9, 2009) I received another reaction from Mr. David Kuracina. Apparently, a retiree from Ottawa, Canada, he wrote “thank you for your wonderful article. As a 57 year old Canadian with the resources to settle abroad and live very comfortably I have wondered why your lovely country does not embark on a program offering more incentives to people such as me.  Malaysia seems to get the nod. Nonetheless I do plan making a foray to your country in July 2010.  I hope in the meantime to read that there may be additional incentives for people such as me! Many thanks for sharing your article!”

With the seemingly undying interest in our retirement program, revisiting it is necessarily imperative. Indeed, it’s been over two decades that the nation’s visionaries are consistently 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. 

As usual, just like any business endeavor, for this to succeed, we must understand what the customers (prospective retirees) needs are. 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 thirty (30) preferred destinations in the International Living’s 2009 survey. This year’s survey has a new leader in Ecuador. Last year’s leader, Mexico, is comfortably behind at second place. Inarguably, because of these two (2) countries proximity to the USA, it comes naturally as the first choice. Other Latin American countries like Panama, Uruguay, Brazil, Argentina and Costa Rica are also in the top ten (10) rankings.   Surprisingly, however, while Latin American 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 16th (13th last year) of the world’s most preferred. Likewise, Thailand was impressive at number 19 (20th last year). 

What Malaysia did is not earth-shaking after all. They simply studied it long and hard. They started it five 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.   Do this and the Philippines as a retirement haven won’t be an uphill climb.

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