Panic time for the Philippines: Foreign relocators

(Conclusion)

MANILA, Philippines — After over 40 years, despite all our advantages, the Philippines has less than 100,000 foreign relocators.

We need a lot more, and let’s broaden the target demographic from “retired person looking for hot chicks”.

To make relocation a success, we need to fix all the mistakes.

Mistake #1 was making the Philippine Retirement Authority (PRA) part of the Department of Tourism. I have been at war with the DOT since getting into the hotel business in 1996. Regional officers are often helpful, but the national DOT staff in Manila consist of people with no business, tourism management or international experience (except shopping in outlet malls).

Their “track record” is 40 years of failure, yet they remain convinced they are the “experts.” They’re classic examples of the Dunning-Kruger Effect: The most ignorant don’t realize the extent of their ignorance, and thus have the highest confidence they know-it-all.

Each Secretary also knows nothing, and so relies on the clueless bureaucrats. The results are clear: We are dead last in tourism among major ASEAN countries.

More on tourism another time, but today let’s focus on foreign relocators.

Relocation is potentially a big business. It should be run on business-like lines. A new PRO (Philippine Relocation Office) should be created by Executive Order, and the President should appoint someone with business experience, not functionaries who can’t imagine what attracts or repels foreigners.

Whoever it is, he or she should have a mandate to over-ride LGUs and other cabinet departments on specified matters.

Mistake #2 was failing to identify a specific customer demographic.

Our target market should not be retired males from the lowest rung of the socio-economic ladder, which is mostly what we’re getting now. Tentatively, I would suggest aiming for working-age persons with entrepreneurial or passive income, and retiree singles or couples with monthly budgets of $4,000+ per person — people with mid-level income by US or European standards, who lead unexciting lives at home but who with the same money could enjoy an upper-class lifestyle by relocating to the Philippines.

Mistake #3 was not protecting the relocators from scammers and from the day-to-day annoyances of life in the Philippines. We’re like a hotel supposedly competing for customers but unwilling to control cockroaches. Filipinos who never lived abroad cannot imagine how frustrating it is for any American or European to encounter incompetence and dishonesty in every aspect of Philippine life. . .

The straightforward remedy is to insulate relocators by designating selected LGUs (whether they like it or not) as “relocation-friendly zones.” (Metro Manila isn’t eligible, but Iloilo City should be first on the list). Any other LGU could also volunteer by meeting the same standards:

? Have pre-drafted, no-changes-allowed residential rental agreements that include all utilities and furnishings in one monthly rent, so a relocator dealswith just one person instead of twenty. Ensure adequate stock of such housing. Allow the tenant-relocator to walk away from a rental if the landlord fails to provide the requisite services.

?  Require at least a functional community hospital capable of providing basic health, emergency and dental needs. Compel all hospitals in a relocation-friendly zone to organize their back offices so bills are rendered and paid within 15 minutes of a doctor’s visit or even an operation. Filipinos accept the “necessity” of a half-day odyssey trying to get discharged. Foreigners won’t.

?  Any one-star hotel can check out a guest in five minutes, having assembled all the charges as they arose. In contrast, hospitals with mentally lazy, paranoid administrators wait for the last minute then do the equivalent of telling the guest to get a clearance from this restaurant, Housekeeping, the other restaurant, etc. That’s analogous to how Philippine hospitals function and it’s barbaric. No affluent foreigner will tolerate it. No Filipino should tolerate it.

? Implement traffic-abatement programs with aggressive impoundment of illegally-parked vehicles; ban trucks and heavy vehicles during daytime; designate one-way street systems; build roundabouts instead of traffic lights.

?  Ban outdoor karaokes, discos, non-electric motorcycles, car radios audible outside the car, all music from tricycles and jeepneys. Confiscate to enforce.

?  Collect garbage.

? Ensure water supply. Jail government officials or quasi-private appointees who impede the development and provision of water supplies. I can think of one central Philippine province where uncontrolled greed by three specific persons has led to an ongoing water-supply crisis that is already stifling business and tourism.

? The PRO should be authorized to summarily remove and eventually imprison mayors and entire city councils as a group if they fail to comply. (If you don’t like it, don’t be a councilor in a relocation-friendly zone or don’t join the ticket of a corrupt mayor).

Mistake #4 was not providing any real incentives. We are competing with many attractive countries. Scenery and “Filipino warmth” aren’t enough. We need to:

?  Grant a lifetime right-of-abode quickly after proof of means. Require only two weeks yearly in the country to maintain right-of-abode, but at least six months to qualify for the tax benefits and legal protections described below.

?  Allow any person over 25 to apply.

?  Issue a lifetime Philippine driver’s license upon proof of any other country’s license.

?  Exempt foreign-source income from Philippine taxation. Exempt Philippine and worldwide assets from Philippine gift or inheritance tax, regardless of where the heir may be resident.

?  The Philippine “absolute community property” regime is practically unique on earth. Our forced-heirship provisions are among the most restrictive. These are serious impediments to any relocator with assets. We should allow relocators (and for that matter Filipinos) to choose the laws of any major country of their choice to govern their marriages and their heirship provisions.

?  To protect foolish foreigners from getting scammed, make marriage for any non-Filipino void without a prenuptial. Have standard forms ready for this, too.

?  Allow no-fault divorce instead of the hypocrisy of annulment due to “psychological incapacity.”

?  Allow same-sex marriage.

?  Permit voluntary assisted death for any relocator who has lived here for at least two years. Assisted death or variants are already permitted in numerous European countries and more liberal US States.

?  Permit 100 percent ownership of residential property, and small-to-medium agriculture or business. We are the only country in the world with such strict rules against foreign ownership, and see where that has gotten us.
We can do all of these reasonably easily with a flourish of the President’s pen and some vigorous implementation in model areas, overseen by the PRO and subject to its sanctions.

Over five to 10 years, this could attract 750,000 or more relocators (for context, there are 40 million retirees in the US, 100 million European, 10 million Korean — a big enough pool of prospects), each accounting for a net $20,000 per year in inflows. That’s $15 billion annually.
Are these ideas too extreme? Wrong question.
Correct question: Do we want to end up like Haiti? Off-and-on, I spent several years at the World Bank looking for ways Haiti could get out of its death-spiral. I failed, but learned from failure: Small, timid measures won’t cure a country’s death-spiral.
A full-court press on relocators is no longer a mere option or fringe idea; it is a necessity if our country is to avoid implosion.
Or maybe you can think of a better way to bring in possibly $15 billion annually?