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Holidays abroad, new car: Philippine boom puts middle class comforts within tantalizing reach

Just three years ago a new car and an overseas holiday were unthinkable luxuries for J. Ante and her family of six. The insurance company manager's commissions have soared since then as the Philippines, blighted for a generation by venal and incompetent leaders, has unexpectedly boomed, putting middle class comforts within tantalizing reach of many.

The $250 billion economy surged 7.8 percent in the first quarter of this year, outpacing China, and a middle class stunted by widespread poverty, political strife and corruption is beginning to share in a prosperity captured for decades by a clannish business and political elite.

The growing affluence and a burgeoning population have lured many global brands. Students and office workers flock to gleaming outlets opened by Zara, Gap, Forever 21, Starbucks and Japan's Uniqlo. New apartment blocks are springing up on almost every corner of metropolitan Manila and other cities, often clustered around malls and office buildings housing outsourcing businesses such as call centers, which are forecast to earn around $25 billion by 2016.

Luxury car maker Rolls Royce said it was flooded with inquiries since it opened its first dealership in Manila two weeks ago. The first car selling for $605,000 went to a popular TV show host, according to newspaper reports.

"Last year and this year have been a big leap in terms of my total income," Ante said. "Times have become better for our family."

She said three years ago it was difficult to come up with the school fees for her four children. Travel abroad or a new car were impossible, but "they seem more realistic now since my income is growing at a faster rate," she said. The family holidayed in Hong Kong this year and a vacation in the U.S. and Canada is planned. They hope to afford a family-friendly Toyota Innova this year.

Many credit the new vitality to the policies of President Benigno Aquino III, elected in 2010 on promises of eradicating graft and fighting poverty. He introduced new taxes, reformed the judiciary, and set the country on a path that shows sign of enduring — it has now enjoyed three straight quarters of economic growth above 7 percent. Standard and Poor's and Fitch Ratings earlier this year upgraded the Philippines' credit rating to investment grade for the first time.

"Disposable income has increased and we see a rising middle class," said Jose E.B. Antonio, chairman of Century Properties Group that brought in Donald Trump's sons and Paris Hilton to launch luxury condos in Manila.

Sheila Abay, a real estate agent for the past 10 years, said competition in her industry has become stiffer but she still sells more condominiums these days compared to five or 10 years ago.

The bulk of her clients are Filipinos working abroad, who buy property for retirement or investment. Over the last few years, however, she said she has seen a growing number of younger clients mostly aged 25 to 35. Many of them are mid-level managers at outsourcing companies who receive good pay for doing backroom operations for overseas companies.

"Their buying power is bigger," she said.

It adds up to dramatic shift for a country that has perennially lagged most of its Southeast Asian neighbors despite perceived advantages of a relatively free media, democratic elections and widespread use of English — the language of global business.

The Philippines is only sixth among 10 Southeast Asian countries in terms of GDP per head. Compared with Indonesia, which attracted nearly $20 billion in foreign investment last year, the Philippines managed only $2.8 billion, not far from $2.2 billion for Myanmar, a pariah state until recently. Thailand wooed more than 22 million visitors last year, the Philippines received 4.3 million.

Doubts still linger whether the country can stay on its new course.

President Aquino, in the mold of his late parents — democracy icon and former President Corazon Aquino and anti-dictatorship champion Benigno Aquino Jr. — won the presidency on a reformist platform following two corruption-tainted predecessors. His term ends in 2016.

But in a country where powerful families dominate politics and "name recall" spells votes even for corrupt or incompetent leaders, another wrong turn can reverse recent gains.

There is a still a long way to go before the 28 percent of the population who live below the poverty line feel they too are benefiting from the boom that has dotted Manila with cranes and propelled the local stock market to new heights.

Elizabeth Yap, a 51-year-old single woman with close-cropped hair, scrapes a living by pedaling her tricycle around Manila to ferry passengers. She makes 400 to 500 pesos ($9 to $11) on good days, when she does not run afoul of law enforcers on their on-and-off campaign to clear the capital's traffic-choked streets.

"How can we feel the progress in the Philippines when we are poor," Yap said. "We can see the nice buildings, but for us poor, we can see that we are still poor."

Antonio, the property developer, believes it's only a matter of time before prosperity trickles down. He called for more focus on building infrastructure — roads, airports, hotels, restaurants — to support the tourism industry, which he said is a key to providing jobs for drivers, farmers, cooks and other lower income groups.

Despite the strong economic growth, joblessness soared to 7.5 percent in April, up from 6.9 percent a year earlier. Another 19.2 percent were "underemployed," or part-time workers.

Aquino blamed the increase in joblessness to delays in the planting season due to poor weather, leaving farm workers temporarily out of work during the survey period.

The government has intervened through a program that gives cash directly to the poorest families on condition children stay in school and see a doctor. The program will continue in the remaining three years of Aquino's administration, along with building mass housing and creating durable jobs in manufacturing, tourism and agriculture, Aquino said.

"We cannot have a society where a few flourish, and the rest must make do with crumbs," he told a recent development conference. "We must have inclusive growth."

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Follow Teresa Cerojano on Twitter at https://twitter.com/mtmanila

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