The economic boom is here

Our MOPC colleague Tony Lopez featured a fairly balanced article in his magazine about the economy — pointing out the reasons why the country seems to be “on a roll.” The question Tony asks, which many businessmen are echoing, is whether the boom can be sustained. While most other nations have been on a slump, the Philippines’ GDP growth averaged 6.6 percent last year due to higher household spending, good credit conditions and better investor confidence owing in large part to the atmosphere of reform initiated by the administration.

Projections for growth are very encouraging particularly in the real estate sector. Prices of condominiums especially in Metro Manila have been skyrocketing — with condo units obviously unreachable for most average income people. Nonetheless, local developers foresee a rosy future for real estate, with sustained growth from the BPO sector coupled with strong demand from the (midrange) residential sector as more OFWs invest their money on real estate. Industry experts also noted a housing backlog, saying that low interest rates will prop up affordable housing purchases. Even the retail sector is expected to do well in 2013, with growth also foreseen for gaming and leisure. It goes without saying that hardware, electronics and other industries also benefit from a vibrant property sector, with construction now in full swing.

Yesterday, ICTSI chairman Enrique “Ricky” Razon Jr. (“EKR” to his employees) led the very successful inauguration of Solaire Resort and Casino at Pagcor’s Entertainment City complex along Roxas Boulevard. At 2:28, the launch ceremonies started, with the casino and resort opened to the public at 3 p.m. following a feng shui master’s advice on the date and time that would be auspicious. No less than President Noynoy Aquino was present as guest of honor, with economic manager Cesar Purisima, Mar Roxas, Pagcor chief Bong Naguiat and Metro Manila’s top 1000 “who’s who” in politics, business and society all present and accounted for.

Over the years, I have known Ricky to be a courageous risk taker in business but this time, he’s literally taking chances and betting on the gaming industry. Solaire is his first venture into the gaming and leisure industry — a far cry from his port business. But like his father — Pocholo Razon — Ricky is ready to venture into any game of chance. Solaire features world-class amenities and facilities, with 500 luxury rooms, suites and bayside villas that include a butler and chef 24/7. Solaire has seven world-class dining areas including four signature restaurants, a top-of-the-line spa and fitness center, a high tech ballroom and state-of-the-art meeting/conference centers.

I have to hand it to Ricky who told us Solaire will be different from the rest as it virtually brings Las Vegas to Manila — he won’t settle for anything less than the best of the best. In fact, the hotel/casino had to interview 50,000 people to fill up the 4,600 positions needed. A government plan to build a skyway from the airport to the Entertainment City complex is already on the way to make it easier for VIP guests and casino high rollers. What guests saw and experienced yesterday is just for starters. An additional 300 rooms will be added for the next phase of the project expected for completion by year-end along with an entertainment theater where big name stars and celebrities both here and abroad will be performing.

Naturally, the tourism sector will get a big boost from the opening of Solaire (and the other locators in Entertainment City). Last year, the Philippines had over four million visitors — underscoring the effectiveness of the DOT’s “It’s more fun in the Philippines” campaign. According to the World Economic Forum’s Travel and Competitive Report 2013, the Philippines climbed 12 ranks higher, noting that it is the most improved country in Asia. While the Number 82 ranking is a big improvement from 94th place, unfortunately we’re still at the lower half of the 140 countries included in the WEF listing. Obviously a lot of work is still needed to sustain these promising developments.

On the other side of the equation is an ADB report — pointing out a potential threat to economic sustainability not only in the Philippines but other countries in the region: the possibility of a water shortage because of population growth coupled with the massive construction of residential buildings all over the metropolis. Water consumption has grown dramatically in the last five years with an expert pointing out that continued deep well excavation could result in sink holes bigger than a football field.

A power shortfall can also impact the upward trajectory of the economy, something that Zamboanga businessmen are starting to experience with the 7 to 8 hour rotational brownouts due to repair and rehabilitation work on plants in Bukidnon and Lanao. A government think-tank has already warned of a resurgence of the power crisis in the south especially this summer because Mindanao’s generation capacity is largely dependent on hydropower.

Although security threats on the domestic front seem to have been contained, our international relationship with Malaysia over the Sabah issue can have a high impact on the peace efforts in Mindanao. Then there is China whose newly installed leader Xi Jinping is the son of a military General, which could potentially have a strong influence on a hardline stance over the South China Sea territorial dispute. These are major problems that could undoubtedly rock the economic boat, so to speak, not only in the Philippines but the whole Asian region in general.

No doubt the boom is here. But the big question in everyone’s mind is — can this be sustained? Like Ricky Razon’s casino venture — it can be black jack or busted.

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