Wealth spreads as Philippines economy is on a roll

Updated 04 July 2013
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Wealth spreads as Philippines economy is on a roll

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 US 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.”


Russian big gun rolls out latest hardware for Gulf customers

Updated 18 February 2019
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Russian big gun rolls out latest hardware for Gulf customers

LONDON: As the region’s biggest military exhibition gets underway in Abu Dhabi, Sergey Chemezov, CEO of Russian defense conglomerate Rostec, spoke exclusively to Arab News about the company’s regional ambitions.
What is the expected value of your exports this year? 
The order portfolio of Rosoboronexport, Rostec’s subsidiary, currently exceeds $50 billion. Russia is the second-largest arms supplier in the world.
In 2018, arms and military machinery were supplied to over 40 countries worldwide. In addition, we signed more than 1,100 contractual documents to an amount of over $20 billion, which is nearly one-quarter more than in 2017. 
The Middle East and North Africa accounted for almost half of Rosoboronexport’s supplies of military products, more than 40 percent. Only two years before, that share had been significantly smaller, about 20 percent. That trend says it all; military and technical cooperation with the countries of that region have been strengthening. The Middle East is currently the leading region in the world by the volume of arms purchased, accounting for nearly one-third of the total market. Middle Eastern states (Saudi Arabia, Israel, Egypt, the UAE and Qatar) make half of the list of 10 major importers of military products, and Saudi Arabia remains the top importer. 
Which country will most likely become your largest client in the Middle East in 2019? Which systems is Rostec planning to sell in the region this year?
We’re implementing a range of projects in the UAE, both in civil and military areas. Russia is also interested in developing military and technical cooperation with all countries of the region. In recent years, we’ve resumed close contacts with a whole range of states, including Iraq.
I’d like to particularly focus on the Yak-130 combat trainer aircraft. The countries of the region are showing a continuously increasing interest in combat trainers. The Yak-300 has all the necessary characteristics required for aircraft of that type, and I firmly believe that it has great potential for supplies to the countries of the region.
What are the potential consequences of the suspension of the New START Treaty with the US? Is it affecting Rostec’s production plans? 
As a person who cares about what’s happening in the world, I can say that I’m worried by the position of the US. It is leading to a new arms race and aggravating international tension. The Russian Army is well equipped, and is capable of efficiently responding to attacks. Our corporation has done its best for this purpose. Yet there will be no winners in a third world war if it happens. 
Is there up-to-date information on supplies of S-400 systems to Turkey?
The contract for the S-400 was signed in 2017. We’ve agreed to reduce the terms already twice, and in autumn 2019 the obligations will be fulfilled. Of course, Turkey does have ambitions to develop its national defense industry, and in this regard, it has already achieved significant progress in a range of areas. Therefore, our partners are interested in such topics as joint development of machinery, including such advanced equipment as air defense systems.
As to joint production, the contract for the S-400 provides for an option. This is about cooperation in technology. We’re ready to agree to localization of manufacture of certain elements of that system. I’ve said it earlier and will repeat it again: The S-400 is a defense system, not an offensive one. We can sell it to the Americans if they want it. Thus, strategically there are no problems in this regard. And I can see no problems for Russia in terms of security.
Is Rostec discussing any potential sales with Saudi Arabia, and if yes, in which area?
The military sector prefers silence, therefore I wouldn’t go into detail. I’d only say that we’re actively working in a range of areas. We can confirm information about signing a number of contracts with Saudi Arabia, as well as about both parties’ readiness to fulfill them, including on the S-400. Talking of the civil area, Rostec possesses a whole range of innovative technologies that can be demanded within implementation of the ambitious NEOM city project. These are water treatment systems, electronic services, various solutions in the area of composite materials, glazing with special features, as well as advanced technologies and innovations for manufacturing biodegradable polymers and products based on natural renewable raw materials. 
Do you have up-to-date information on progress in the privatization of Rostec’s holdings?
The sale of shares isn’t an end in itself for Rostec, but rather a tool for developing its assets in compliance with the corporation’s development strategy until 2025. We’re interested not only in attracting additional investments, but also in gaining new competences, technologies and markets. Private-public partnerships help our enterprises, and holdings become more efficient and take new positions quicker. 
What are your expectations of the corporation’s profit for the year?
We’re finishing assessment of the results, and will officially announce them in the near future. Now I can say that the company continues to show good financial results, and we expect an increase in both revenue and net profit compared to 2017.
Do you expect that long-standing low oil prices will affect regional sales this year?
The example of Russia shows that oil prices do not determine everything. Even when they are low, the economy can develop. 
We sense that the countries of the region have already adapted to the new price realities that dramatically appeared in 2014. At the same time, interest in our products, both military and civilian, in the region is growing from year to year.
What products will Rostec holding companies present at IDEX 2019?
The IDEX exhibition is one of the world’s largest venues where Russia demonstrates its latest developments in the field of weapons and military equipment. This is an opportunity for us to negotiate and discuss cooperation with our traditional partners, primarily from the Middle East, which is of particular interest to Russian industry. After all, the Middle East and North Africa account for almost half of the sales of Russian military products abroad. The joint exposition of Russian enterprises at IDEX, which occupies more than 1,100 square meters of exhibition area, will feature about 1,000 samples of military products.
In particular, the unparalleled Pantsir-ME, an air defense missile and artillery system, will make its international debut at the exhibition, presented by the High-Precision Complexes Holding. The system is able to protect ships from all types of aerial kill assets.
A large-caliber automatic assault rifle complex, the SHAK-12, designed for close combat, will also be shown there. Units of Russian special services are armed with these complexes.
Kalashnikov Concern will showcase a wide range of small arms and hunting weapons. The AK-15 and 200 series Kalashnikov certified for export will be shown abroad for the first time. The 200 series assault rifles will be one of the key Russian novelties at IDEX 2019. 
Tecmash Concern will exhibit a number of its latest ammunition products. These include a 122-mm unmanned rocket missile with a detachable blast fragmentation warhead for the Tornado-G multiple-launching rocket system. This ammunition has much greater kill effectiveness than issued shells of the Grad system. At the same stand, visitors will for the first time see a unique video showing how the Tornado-G works. In addition, at the show the world community will for the first time see Tecmash’s AZ-TSR-47, an increased-efficiency jet-stabilized projectile designed to protect surface ships from weapons equipped with radar guidance systems.
TSNIITOCHMASH will present at IDEX its already well-known second-generation Ratnik combat equipment, which is exactly what is now supplied to the Russian Army. Ratnik in the color of sand, presented at IDEX, has been successfully tested in Syria. Its components include a body armor backed with a special armor panel. This panel can withstand 10 hits of SVD sniper rifle armor-piercing incendiary bullets, fired from a distance of 10 meters, and the plate is not deformed on the back, providing protection against contusion damage. The Russian bulletproof vest also wins in terms of weight: It is 2.5-3 kg less compared to the US general military bulletproof vest.
Each exhibition held in the Middle East demonstrates that the corporation has immense potential to cooperate with the countries of the region.