REY GAMBOA: SOME MEASURE OF RELIEF
MANILA, November 14, 2005 (STAR) BIZLINKS By Rey Gamboa - There’s no doubt that inflation would rise to around eight percent this year — higher than the government’s target of five to six percent — given the across-the-board surge in consumer prices largely due to rising crude oil costs, and recently the new value-added tax (VAT) law.
The expanded VAT law, which took effect on Nov. 1, removed the VAT exemptions previously enjoyed by the oil, electricity, and transport sectors. As if to give a semblance of burden sharing, a higher income tax of 35 percent will be imposed on companies, up three percentage points from 32 percent.
Come January, President Gloria Arroyo is also authorized to raise the VAT rate to 12 percent from the current 10 percent. Economists say the impact of the expanded VAT would be minimal. Yet, if taken together with the effect of rising crude oil prices, all these would only mean an additional burden for consumers — from food to utilities and other basic day to day living expenses.
While consumers complain of the rising prices of commodities and utilities, a number of our countrymen could expect some partial relief. This is after Congress passed a new rent control law that limits the amount landlords can increase on rentals of apartments, boarding houses, and bed spaces.
The issue may sound parochial for those in the business community, or the upper A and B segment of the society, but the measure is expected to benefit around 15 million families — five million of whom are in Metro Manila — who have been renting their homes.
Some one million more students and workers living in dormitories will also be covered. To stress its relevance, it would be a reason less for workers to seek higher wages amid a backdrop of rising consumer prices. This too should be a worry less for businessmen.
The bicameral conference committee report on the new rent control law, which Congress has approved and the President is set to sign into law, mandates a limit of 10 percent annually on any increase that apartment and dormitory owners may impose on homes rented at a maximum rate of P10,000 per month.
The old law lapsed in 2004, technically giving landowners that leeway to indiscriminately adjust rent for the time being until its replacement is signed into law. The newer version will take effect for three years until 2008.
How different is the new measure from the old one? It essentially retains the 10 percent increase ceiling, but widens the base to include apartments with rents of P10,000 a month, instead of the previous coverage of only up to P7,000 in urban areas and P4,000 in the provinces.
Also, under the upcoming new rent control law, landlords are limited to collecting only a two-month deposit and one-month advance, much better than the current practice of a three-month deposit and a two-month advance, which certainly drains the income of a regular household.
The new rent law version is viewed by some sectors as a disincentive for prospective investors to build new apartment buildings, and therefore could hamper the government’s program to encourage the private sector to invest and build new homes that could help ease the massive housing backlog.
But with the new economic realities of higher oil prices and electricity rates and more costly basic necessities, more people (particularly those without an OFW family member) will just have to postpone the dream of owning their own home. For the moment, they only have to rely on a legislative relief to keep rented apartments affordable within their shrinking budgets.
For them, the renewal of the rent control law is a bit of good news in an increasing cacophony of price increase announcements.
Here is another good news, this time in the commercial property sector which is now enjoying unprecedented recovery in demand and prices, thanks to the fledging call center industry and increasing remittances from a growing number of OFWs.
The continued inflow of foreign remittances from our overseas Filipino workers have led to more Filipino families owning their homes in gated communities, reviving the residential property sector anew and pushing up house prices and mortgage rates once again.
As we’ve repeatedly been saying, domestic consumption has remained robust — despite all the challenges — not because companies here are doing better but due to the fact that our workers overseas continue to propel this nation’s growth.
Earlier, property consultant CB Richard Ellis said the continued growth of the business process outsourcing (BPO) sector will likely lead to higher demand for office space and increased rental rates. For this year, the BPO industry’s seat capacity is seen to grow 50 to 70 percent from last year and office occupancy to 350,000 square meters. At the end of the first quarter, seats totaled 40,000 and office space rentals were at 230,000 square meters.
Leisure and tourism market also appears bright as far as the property industry is concerned given tourists’ renewed interests in the Philippines. We should be seeing more hotels, resorts, and theme parks rising such as those being developed by Ayala Land and other major property firms.
After a long slump, brought about by a series of political crises in the country, things are looking brighter for property developers. They are said to be making a killing from the rising demand for commercial spaces and residential units in condominiums and gated communities.
The challenge now is for these developers not to be greedy. We hope that they can keep property prices at reasonable levels for the benefit of our hardworking overseas Filipino workers sacrificing and dreaming of a home of their own.
"Buisness & leisure" poker mall tour
A new activity will greet week-end mallers this Saturday, 19th November 2005, as "Business & Leisure" and Honda Cars Philippines launch the first poker mall Hold’em Challenge at City Walk 2, Eastwood City mall.
This "non-wager poker tournament" has three elimination legs (19th & 26th November and 3rd December) with the top three players advancing to the Championship Night on 10th December, All games will be played at the Eastwood City mall and shoppers who drop by and watch the games (for free) will not only have a glimpse of poker enthusiasts competing for "bragging right" and valuable prizes but will also have the opportunity to win goodies from
Honda Cars Philippines and other sponsors. All they need to do is participate in the raffles (submit your business cards) and pick the winners of the day’s tournament.
The mind-game competition, featuring decision-making under pressure and a lot of psychology and personal discipline, is also covered by television with monitors all around the playing area with "DJ Silde" providing the "play-by-play" color and highlights.
Those interested to join may visit www.PokerClubofthePhilippines.com or call Cindy at 817-9092 or Fe at 724-3939 for details.
Chief News Editor: Sol Jose Vanzi
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