Hoping for a resounding economic recovery
The Philippine economy is expected to grow by 7-9% in 2022, one of the highest in Asean. This optimistic scenario is due to our moderately successful vaccination efforts and low number of COVID-19 cases, which earned the downgrading of the NCR and many parts of the country to Alert Level 1.
According to the National Economic and Development Authority, if the whole country is at Alert Level 1, reduced mobility restrictions will lead to a weekly increase in economic activity of 16.5 billion pesos, a rebound domestic tourism of 750 billion pesos in 2022 and 297,000 new jobs. in the second quarter alone, which highlights the importance for every Filipino to adhere to minimum public safety protocols.
It is in our interest to avoid another outbreak of COVID-19, which other Asian countries are currently experiencing with much higher vaccination rates than ours.
One of the hottest business topics right now is the Department of Finance (DOF) back-to-office mandate to the business process outsourcing (BPO) industry by April 1, in which the non-compliance will result in the loss of certain tax benefits.
The industry is looking for a phased approach that will span six months, but the DOF appears to be adamant with its order. The real estate industry is watching for further action on this, as it will have a significant impact on the office, retail and residential segments.
At the end of 2021, the office space industry has a vacancy rate of around 13%, which translates to unoccupied office space totaling 1.6 million m².
The return to the BPO office will result in an occupation of around 450,000 sqm in the NCR alone, based on the estimated 180,000 new jobs created by the industry in Metro Manila for the years 2021 to 2022. The government may need to balance the benefits of implementing telecommuting for the BPO industry with the economic rationale for ordering back to the office.
The signing of Republic Act No. 11659, which amends the Civil Service Act, is good news for the business community and could prove very important for the country’s economic recovery and long-term competitiveness.
In 2020, the Organization for Economic Co-operation and Development (OECD) ranked the Philippines as the third most restrictive economy in the world.
Allowing up to 100% foreign ownership in telecommunications, railways, metros, highways, toll roads and airlines should not only remedy the ranking of restrictions but, more importantly, stimulate foreign investment and economic growth and address the poor infrastructure situation in the Philippines.
IMD’s 2021 Global Competitiveness Report ranked the Philippines 59th out of 62 countries, a dismal performance even in light of the current administration’s massive building, building, building spending over the past five years.
In the meantime, we are less than 50 days away from the election and the results will certainly impact how the country is run for the next six years.
Everyone hopes that our decision will serve us well as a nation and start with a resounding economic recovery this year.
Sheila Lobien is the President and CEO of Lobien Real Estate Group
By Sheila Lobien
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