You know, for a year or more now, financial times have been really bad worldwide. The mortgage crisis has thousands of families in America losing their housing. Banks are failing all over the world. Food prices are soaring. Oil prices have skyrocketed, although in the past couple of weeks, they are falling back down to more realistic levels. Stock Markets all over the world have been on a wild roller coaster ride. It would seem that financially, we are in a very uncertain time.
The Philippines has been sort of an economic basket-case for decades now. People are hungry, going without food. Many of the poor get little or no medical care. Frankly, the number of poor people here is seemingly uncontrolable. With the added economic instability turning into a worldwide phenomenon, you would think that the Philippines would really be in terrible shape these days.
However, it doesn’t seem to be the case! Davao is booming. Some other areas that I frequent in Mindanao are booming right now too. General Santos City has really seen some huge economic pluses lately, even while the fishing industry, which has long been the main-stay of the GenSan economy, has been on the downturn.
Here in Davao, over the past year or so, three new malls have been announced, and construction has already started on two of them. All three of the new malls will be located on J.P. Laurel Avenue with two in Bajada, and one in Lanang, probably within 2 to 3 Kilometers of each other! Actually, when these 3 new malls, there will be 6 malls that I can think of within a 5 to 10 minute drive of each other:
- Chime’s Mall – Only about 1 1/2 years old, as I recall
- Gaisano Mall
- Victoria Plaza
- Abreeza Mall (Ayala Davao) – One of the new malls under construction
- Robinson’s Cybergate – Another of the new malls under construction
- SM – they are constructing a second Davao location in Lanang soon
And, these 6 malls are not all of the malls in Davao City. We also have other malls too, about 4 more that I can think of.
Frankly, I don’t see how Davao can support this many new malls. We’ll see, though, how it works out. I hope that they will all do well, no doubt about that. One thing that is unique for the new malls under construction is that they each will be a mixed-use area, with mall shopping space, and also call center areas where BPO/Call Center operations can locate. Davao has become one of the leading areas for Call Center operations in the Philippines over the past couple of years, so this is a wise move by these developers to include these spaces. From what I can tell, by including this mix of spaces in the development, the developers are aiming to create sort of a “self contained city” in the mall area, where people can get all of their needs accomplished all at one place. Imagine, a person can go to his place of employment and have everything needed within walking distance!
So, while the world is in economic turmoil, it seems like Southern Mindanao is booming. Let’s hope that it lasts!
Morning Bob,
Uncertain economic times indeed. AVOID DEBT, mate! One thing that has gone quiet is the rice shortage. I heard a brief comment on the radio this morning that it is still happening. What is the latest, Bob?
Hi Bob. George Carlin once said that America, the Beautiful, is no more. The whole country has turn itself into a big Mall. Hopefully the Philippines, the Beautiful, will not become a big Mall :wink.
On a serious note….indeed… the whole world has not felt it yet, that is the worldwide recession that is just starting.
I hope Mindanao will not suffer much. I think there is a big chance that it won't. Mindanao is mostly an agricultural economy so it's in solid ground so to speak. People will have to eat no matter what.
The Malls though will surely feel it. Most of those high paying jobs in Hongkong, Taiwan, Singapore, etc.. are in the financial centers on those areas. There will be a lot of layoffs from these industry and therefore a lot of Filipina maids will be out of work as their bosses lose jobs.
Private schools in the Philippines will surely feel it too for the same reason.
OFW's who are in the Healthcare industry are shielded for now but the sky rocketing cost of healthcare vis a vis to the overall economy downturn will make those jobs not a 100% sure thing in the immediate future.
We are living in interesting times.
Cheers.
Hi Bob
these are very worrying times indeed, especially in the past few months the news has gone from bad to worse. Like you i am surprised at the malls all being constructed in the same general location.
The Philippines has been sort of immune from the financial crisis as banks here are certainly more traditional and conservative than banks have been recently in the uk and us. However i don't think the Philippines will be immune from fallout….for example as economies shrink back then overseas foreign workers will be vulnerable to cut backs, this is just one way that will affect families here and the economy in general
Good luck to us all
Hi AussieLee- Rice prices, while still historically high, have receded a bit. Also, there is not a shortage here, so it has kind of faded as an issue, at least for now.
Hi Dr. Sponk Long- Actually, in my opinion, the Philippines is more of a "mall society" than the USA is. Malls are a part of the culture here these days, more so than they are in the USA. Malls are everywhere, and as I pointed out here, more are coming. The Philippines is certainly a different society than it was the first time I came here.
Interesting times indeed.
Hi rick b- In some ways, I feel that part of the reason for the immunity that we have experienced from the financial crisis is because most of Asia experienced extreme crisis in 1997 when currencies lost half of their values. The rest of the world was immune from that crisis, yet, I believe that it kind of flushed out the bad practices from Asian banks and financial institutions, and made them healthier now.
Hi Bob,
The banks' being conservative on their Loan approvals, (60% to 80% only of the appraised value) , really paid off. In some cases, their approval is only 50% of the actual amount. Frustrating but understandable, considering the economy and the borrower's capacity to pay. I'm glad that's the way it is and has been or the banking industry here would be greatly affected by the international economic crisis.
RE: rice shortage, there was never one. The next time we meet Bob, I'll tell you who told me that. 🙂 The news of a rice shortage caused the hoarding. Hence, the problem and the price increase. At least the prices now are not as expensive as it used to be. But it's still high.. gee!
Been showing properties to a group from Manila for another mall site in Davao. Hopefully, everything will work out right. We'll probably see them in the next two years.
Yes Bob, Davao is indeed booming. And thank God we're not as affected as the rest of the world.
Let's just hope that there won't be cutbacks on OFW's or that would greatly hurt the Philippines.
Thanks again!.
Lea
Chimes – used to be Felcris (same owner) and have been here for a long time (30+ years). I read somewhere that the reason why Philippines is not too affected is because it is not quite sophisticated here – yet. Most investors are not familiar with investing in some of the sophisticated equities we find in developed countries. If you noticed going to banks here, there are booths where bank employees explain (or try to sell) these "fancy" investments portfolios. If you know what to ask, you will find out that some of them are backed by American institutions, i.e. AIG. I guess with whats happening to AIG now, these employees will have a hard time selling that product.
Hi Lea C. Walker- You have some good news this morning. Yes, I agree that conservative moves by the banks here have proven to be a good thing indeed.
Another mall? Wow… that will be another one to follow!
Hi Ellen- Maayong buntag, Ellen. Yeah, I didn't think of it that Felcris has been around, but the main part of Chimes is all newly built. Maybe we should say it is newly renovated….
Hi Bob. UI'm reminded continually of a kind of see saw situaton. While everyone (including the Philippine government) thinks of the Philippines as 'poor', in fact certain aspects of the Philipopine economy are booming. Last week I saw a former Philippine Defense chief report on a comment from his counter part in Singapore. The Singaporean minister chided the Filipino about the government here getting their act together … referring I think to the continual impeachment calls and other political grandstanding … and acknowledging the fact that this years Philippine economic growth rate made Singapore's look puny. It was laughed off by ost Filipinos … the Philippines and Filpinos are so used to running down their own country they can't recognize strengths even when pointed out by knowledgeable foreigners.
I'm not saying Philippine banks may not have trouble down the road … anyone who thinks they can predict accurately is kidding themselves .. but the banks here are currently in a very strong position.simply because they are conservative and the BSP will not allow banks to risk money on the "latest and greatest" investment scheme du jour.
Finally I had to chuckle at Ellen';s comments regarding the failure of AIG. AIG's operations in the Philippines are virtually the only part of AIG which has not lost a dime and is being sold off to outside investors to help pay AIG's massive debts. If the rest of AIG had operated, profitably, as they do here, the whole company would be a beacon to the world rather than the burned out 20 Watt bulb as they are today.
I'm neither a Pollyanna nor a Philippine apologists, but a lot of banks around the world today could come here and learn a few lessons if they chose to.
More malls in Davao? Indeed seems like a lot to me, but life here seems to center around malls much more than in the USA … I wish them all well.
Hi Dave- Indeed, the Philippines does have some economic things going in it's favor, something which is often unrecognized (even by Filipinos, which you point out).
It will be interesting to see how the coming malls will affect Davao's lifestyle!
Hi Dave, I didn't say AIG failed here. I said the bank employees will have a hard time selling now because of what's happening to AIG. 🙂
Mornign Bob. I guess I will be a regular now, hehe. it's the same thing in Cebu. But not as grandios as in Davao. The SM mall here has seen a huge expansion of sorts. There are new restaurants, stores, etc. There is even a new mall opening 5 mins from SM…However, the new stores are quite expensive seemingly almost as expensive as Canadian stores!! My wife and I frequently went to the new Japanese restaurant…yummy. The most important thing that we need to remember is that all these mall are owned by wealthy filipinos that are overseas. They might have lost touch with the reality of poverty and daily struggling of their own people. Don't get me wrong because it does stimulates the economy by creating jobs…but people just have no $ they rather window shop and enjoy the aircon.
PS: I sent you an email Bob and how do I add myself to your list on this website. I have a great many things to say and have experienced a great deal in Asia for many years.
Malls are such a centerpoint for life over here. After 3pm mon-sat the malls are packed with people. Are they all buying? probably not. The mall is a place to hang out and enjoy the aircon and relief from the heat.
Maayong Buntag Bob
I know there are a lot of people talking about the economic crisis but from what I have seen in the Midwest of the states the economy is still strong. High end SUVs sales were off this summer but now with the present gas prices SUV sales are as strong as ever. Bare land and affordable housing is still climbing in value. The only thing that has taken a hit here is the expensive houses in the $500k range. Unemployment is also very low here. Glad to hear that the economy is also good in Southern Mindanao and yes, let’s hope it stays that way.
Good advice Aussie Lee on avoiding debt
Hi Jason- Welcome aboard! It will be nice to have you pass by each day, then! I did hear about the SM expansion in Cebu, it sounds pretty nice. Yes, like you mention, things are certainly getting more expensive here.
I never got any e-mail from you, Jason, regarding writing on this site. I would be happy to talk to you about it, and will e-mail you directly.
Hi BrSpiritus- I enjoy people watching at the malls sometimes. Just going there for a cup of coffee or lunch, sitting back and watching the people while they shop and enjoy their good times is very enjoyable.
Hi Larry- You are the first person to give me this news, and I am happy to hear it! Certainly the doom and gloom of Wall Street is not everywhere, no matter what the news media tells us!
Bob,
I have also heard a rumor that someone is buying/bought Victoria Mall and will tear doown the existing and rebuild.
Have you heard anything about it?
Hi Jason- I just e-mailed you at the email address that you left with your comment, regarding your desire to write for the site. The email bounced, message from yahoo was that there is no such account.
Please contact me through the "Contact Us" link at the top of this site if you are still interested.
Hi Bruce- I have also hear that as well.
Hi Bob
Most of the problems at AIG was caused by a financial arm in London run by less then 400 employees who issued close to 450 billion dollars in credit default swaps. This has led to the downfall of AIG. There are 117,000 employees in AIG. Philamlife is the number 1 insurance company in the Philippines and will be sold for around 1 billion dollars. One reason why rice became so expensive was that reserves of rice was dropping to low (historical levels) and the Philippines (NFA) was buying in huge allotments. (Japan has a lot of rice that they make into pet food because by a trade agreement they are required to buy rice from the U.S. and they dont like to eat U.S. made rice but also by this agreement not allowed to sell this rice overseas unless the U.S. agrees with it).
I think when you look at Davao it is becoming much like Cebu where they are getting a lot of investments especially when Davao is a very safe place. You are seeing a reduction in the economic growth rate to 5% or so this year compared to more then 7% last year. It will probably move a little lower next year. Malls are considered a hangout for families and couples. Also there is no internet shopping in the Philippines compared to the U.S. Like Bob said they are also putting in BPO centers to get rent from these companies and potential customers for the shops in the malls. 3 of the 10 biggest malls in the world are in the Philippines. I think when you look at the U.S. and the Philippines who are both economies based on consumers spending money to account for a large part of the economy compared to a country like China (which saves their money). The U.S. was able to do this was because of the housing boom and refinancing and borrowing from foreign countries in the early part of this decade. As we have seen this is not sustainable and will now force a change in some of our habits. In the Philippines with all the OFW money being sent home (will be close to 16 billion dollars this year) some of this money will be spent in those malls and should be sustainable in the long run.
Hi neil- Interesting point about the comparison between the US and Philippine economies being sustained by consumerism. I had not really thought about that, but it is very true, in my opinion. That OFW money really does prop up the country in many ways.
Hi Bob,
I think we need to be careful when discussing the resiliency of the Philippine economy. The Philippines is still one of the ASEAN economies most dependant on exports to the US. The DTI has been talking for years about growing Philippine exports to Europe to conter-balance this problem. Right now, all economies that are export-oriented have trouble on the horizon.
As for Philippine banks, yes, they have traditionally had more stringent lending practices since 1997, but that doesn't mean they won't have liquidity problems of their own. Mortgages in the Philippines can still go bad, and banks need that revenue source now that other sources are drying up. This is especially worrying because a lot of the mortgages out there are based on OFW remittances. If OFW's start losing jobs, or have salaries pared down, this could have a cascade effect. And this brings up my last cautionary note . . .
Malls are also very dependant on OFW remittances! So, the problem now becomes two-fold: OFW's who are not squeezed too much can probably still make mortgage payments, but excess funds will dry up and that means less trips to the malls for the rest of the family. So, I suspect mall-retailers will feel the pinch, as they need to pay for high rents and all that expensive electricity to run the aircon for 'window-shoppers'.
I really hope this post doesn't come off as a bunch of doom and gloom, but I really think it pays to be more cautious at this stage of the game. I'd advise people to keep their cash in different banks and accounts, some here in the Philippines for daily transactions, and excess savings in other jurisdictions like Singapore, or Hong Kong, where there are huge foreign currency reserves that can be used to prop up the financial sector in the event the current crisis widens.
Cheers!
Hi Bob Just like larry I really don't think the problems with the U.S. economy is as bad as the press is reporting. To me it seems to be a conspiracy for political reasons. I called 3 banks today as an experiment on getting a home loan ad was told if I qualified it would be granted. Of course they aren't giving loans to people not qualified like they were before but really it's the case of don't believe everything you read.
I sent you two emails just now. Hopefully it works 🙂 We'll discuss via email, Thanks again!
Today we paid 2.97 per gallon of gas at costco. Some prices have gone down. There are many more sales with lower prices at the clothing stores. My retirement account has gone way down. But the bond fund has a very good return at this time. Both the good and bad of times. It will be intresting to see what happens when your curret presidents term runs out. I hope your economy stays strong there for you sake and my family there. Exports to the US will soon be dropping off if they havent already.
🙂 Denials, denials, denials. Bob, I talk to my friend there almost on a daily basis. I always complain to him how bleak the US economy is while he always tells me how manageable things are in the Phil, i.e. that there's no rice shortage, that I could get a job if I go back there. You get the picture of our "asaran" and the irony there.
Here in Chicago, jobs have become really scarce. Just look at craigslist, in hospital websites w/ the exception for RNs. Meanwhile prices have shot up. It is a very trying times. I had years of poverty "training" in the Phil, this should be peanuts to me but, still it's scary to be insecure in a foreign country.
On a lighter note, it seems to me after reading the comments that malls have become barometer of boom times. I observed the same thing when malls had mushroomed all over Metromanila in the 90s and they were built also during bad times, i.e., daily brown outs during the energy crisis, peso devaluations and asian crisis. But some also argue that malls provide for the most part a place to get free airconditioning, not much shoppers and therefore not really profitable. What do you think?
Malls in DVO are about 12 years old, give or take. I think they would weather the challenges just like most malls in Metromanila.
Hi Bob I run my own business here in tagum and although it is only an inland resort I have noticed that over the last 4-5 months my business has picked up considerably, we have 5 resorts here and as mine has only been open for about 8 months I have noticed a marked in crease of people using my resort so I dont feel that the average filipino is feeling the pinch as much as other countries, I have recently returned from the UK and everyone that I spoke to was complaining about the high cost of living and many were also thinking of emigrating as they think the country as a whole is in decline whether thats the same in the U.S I dont know
Hi Martin- You do make some good points. I will say that so far, I think that the Philippines has fared well in bad times, and I hope that it can continue!
Hi Dan Mihaliak- I am really happy to hear these contrary reports from you and Larry. I only know what I see on TV, and like you say, that is not always accurate.
Hi Jason- Got them! I have a few commitments this afternoon, and may not be able to answer until tonight, but I will be responding to you.
Hi don M- Gas prices here are significantly higher than you are paying. We are still paying significantly over $4 per gallon. Prices are very slow to decrease here.
I hope that all goes well with your retirement funds!
Hi roy- It does seem that jobs are fairly readily available in Davao right now.
By the way, my 2 favorite malls in Davao are:
1. SM (about 7 years old)
2. NCCC (about 3 years old, maybe 4)
Hi andyp- I am happy to hear that your business is up, that's great news. I visited your website the other day, and it seems that you are making steady improvements to your place!
Hi Bob,
The malls always seemed to represent a contradiction. I have regularly visited Glorieta in Makati for example and found it strange that amongst all the expensive "label" shops with marble floors etc. there was a throng of really poor people who came to hang out, soak up the aircon and maybe buy some cheap food from the food hall. It seemed to me to really highlight the huge gap between the many poor and the elite in the RP. I must admit I always wondered how most of the stores made a buck when they were largely empty.
Here in Aus we like our malls but we actually go there to shop rather than just cruise around and hangout.
cheers,
Michael
Hi Michael- You guys actually shop at malls? 😯
Bob,
You better believe it. If there was a competition for shopping my asawa would be an Olympic gold medallist!
All these uncertain time makes me more careful over past mistakes I am building
my house as I go and not borrowing and I plan to continue to work in the middle east 5 more years, and throw in the towel at age 50
Hi Michael- Not if she is up against Feyma! 😯
Hi James- I agree, this is a good time to avoid borrowing.
Hi Bob,
Your favorite malls in Davao are the same as mine! I actually prefer NCCC over SM, though. 🙂 I especially liked the supermarket at NCCC. They carried an assortment of products like some of the largest supermarkets here in Chicago! I can't believe I enjoyed shopping more than my girlfriend did. 🙂
Hi Henry- Yep, there is good shopping here. I am looking forward to seeing the news malls after they open too. I think we are in for some really nice places here in the City.
I guess it is good with the new malls in some ways, but do you have a comment on which influence it will have on the traditional open markets. Will they survive? If they disapear it is like loosing some folklore, that I as a tourist love.
I am fully aware that progres cannot and shall not be stopped, but I allowe myself to be a little selfisIh, sorry.
One writer mentions about Victoria Plaza is possible up for sale! I was under the impression that it was build and belongs to Imelda M. I might be wrong thou..
I believe the Philippine economy will not be really be affected by this world crises if OFW's remittances continues. However, the first business in the Philippines that will suffer is the tourism business. Is Boracay still fully booked from Korean tourist boom even during this off season? Anybody knows?
The last business section affected will be the food and entertainment industry!
The filipinos priority in life is FOOD, FOOD and FOOD.
Do you know that the number 1 blog site in the Philippines is Starmometer. The blog writes about news and gossips about actors/actresses, TV shows, male and female models etc,
Speaking of malls, my favorite is the Glorietta Mall in Makati, My wife and I love to shop/eat and also hang out in the mall to enjoy the air conditioning when we are in the Makati area. Greetings to all from California!!
Hi Preben- I think that the public markets are here to stay, I don't see any chance of the malls pushing them aside.
Regarding Victoria Plaza – no, there is no Marcos involvement there that I am aware of. I know some of the people who own Victoria, and they are not part of the Marcos family.
Hi David B Katague- Yes, I also like Glorietta a lot, it's a beautiful mall indeed. However, I rarely make it up to Manila (it's been over 4 years since I've been up there), so I have to rely on Davao malls!
Wow! As always LIP has become like a university extension class, there are so many more intelligent commenters here than the run of the mill "complaining about the taxi driver" groups.
@ Ellen … I understand better what you said, and did not mean to say you said AIG Philippines failed .. but as others point out, if the folks who run PhilAmLife would just give themselves credit and forget about AIG they will do just fine. I often get very discoraged here with the continual 'it's better if made in the USA' claptrap. Toyota tops out their sales at the mid-line Forester for example becuase Filipinos would rathe rpay more money for a made in Mexico Ford Expedition (all Ford trucks are made in Mexico) rather than a real quality product like the Crown … these can only be bought 'back door' becuase Fords are better becuase they are 'mad ein USA"? Spare me. Virtually nothing is 'made in the USA' any more … and there could be a relationship between that fact and the current crisis. You cna sign me an American who is proud if is country but not proud of much that they produce anymore, sayang.
@ martin, yes caution is certianly advisable (I mentioned that) and indeed no ne can tell, but I still would submit that the current largest problem Philippine banks face is that they run themselves down … and banking is based more than any other factor on confidence.m If they beleive in themselves they still could have problems, but if they think of themselves as second rate, as in the statements various movers and shakers make in the mass media, they will then assure problems.
Hi Dave- Yes, the quality of the discussion here always makes me happy!