Published on Thursday, 13 June 2013 00:00
Written by ALBERT CASTRO
Malaya
Business News Online - Philippine Business News | Online News Philippines
Amidst
concerns on the effect of the economic integration by 2015 of Southeast Asia,
particularly on agriculture products, the country’s property market is seen to benefit from this single economy,
according to property consultant Jones Lang LaSalle.
As the
integrated economy result to better productivity, it will redound to more real
estate developments in countries like the Philippines.
“With greater
ease of capital flow and investments, the level of real estate investment
activity is expected to rise in the untapped Southeast Asian markets as
investor appetite grows. The level of capital flow in Asean is also likely to
rise as and when regulatory barriers are removed,” according to Yang Liang
Chua, Jones Lang LaSalle head of research for Southeast Asia.
Chua noted that the Asean economic community’s
(AEC) goal of enhancing the mobility of skilled labor “will be the catalyst for
the exchange of best practices across Asean. Urban design and development will
benefit from these exchanges.”
“Greater
innovation is expected as the mature cities move up the value chain, as rising
pressure from limited and costly land and labor resources force these mature
cities to increase their productivity in terms of construction processes and
building efficiency,” Chua said.
“The
construction industry will rely more on labor sourced within rather than
outside Asean,” he added.
Chua also
said that as the primary concern of
companies and investors is to maximize
profits and reduce costs, areas with lower production costs will draw lower end
production away from costlier regions.
“The recent
outflow of industrial production from China into the emerging markets of
Myanmar, Vietnam and Cambodia and the outsourcing of backroom support functions
from Singapore to the Philippines are some examples,” he said.
“The
industrial assets in higher-cost regions such as Malaysia, Thailand and
Singapore will undergo adaptive reuse if not redevelopment, focusing on
providing higher value-added products and services while the new industrial
estates in the Cambodia, Laos, Myanmar and Vietnam will support lower-end
production. As more manufacturers relocate to Asean, the demand for industrial
and logistic properties should consequentially increase,” Chua added.
Recently,
University of Asia and the Pacific (UA&P) economist Bernardo Villegas said
the Philippines is in the cusp of a manufacturing boom as an estimated $5
billion investment is expected to come in five years.
“China is no
longer a cheap source of labor. Of course we compete with Vietnam and
Indonesia, countries still abundant with cheap labor. But our advantage is we
have tremendous labor peace. There are only two strikes in the Philippines as
against hundreds in China and Vietnam. We already have paid our tuition fee in
labor cost,” Villegas said.
Villegas also
said that as the AEC 2015 deadline draws near, businesses will scramble to have
a foothold in the expanded economy.
“You can be
sure a lot of the companies in the advanced countries will compete for a place
in the market and we are strategically located,” Villegas said.
Chua said
that should such a single production base prove successful, “the elimination of
tariffs on goods and services within Asean members will increase the region’s
overall economic growth and wealth.”
“The next
change could come from the shifting consumption pattern accompanying higher
disposable income. There will be more manufacturing and services as investors
take advantage of the tariff free region and consumption within Asean rises. We
already see this happening, especially in Indonesia. The retail market is
undergoing a transformation, as consumers armed with higher income are
demanding more of a lifestyle-centric shopping experience,” he said.
The AEC will provide businesses with seamless access
to a market of over 600 million people – 8 percent of the world’s population –
living in a land area of 4.46 million sq km.
__________________________________________________________
