Skip to main content Skip to footer

Manila Market Intelligence: October 8, 2020

oct-08-2020-hero-image

Filipinos to spend less this Christmas — BSP 

NEWS

The Bangko Sentral ng Pilipinas (BSP) or the central bank projects that Filipino consumers are likely to spend less in the fourth quarter of 2020. According to the Q3 2020 Consumer Expectations Survey (CES), consumer spending outlook is expected to reach a record low of 26.4%. The central bank added that spending outlook on clothing and footwear and restaurants and cafes also weakened. The share of Filipinos planning to acquire properties in the next 12 months also plunged to 3.3% from 5.9% in Q1 2020. Meanwhile, the survey also showed that planned spending on big-ticket items such as consumer durables and motor vehicles has declined as more Filipinos shift their spending on essential items

CLICK HERE TO VIEW ARTICLE

RESEARCH VIEW

Due to the lingering effects of the pandemic, we see consumers’ subdued confidence and diminished purchasing power affecting the retail sector. In Q1 2020, vacancy among malls in Metro Manila reached 10% from 9.8% in Q3 2019. Due to the implementation of a lockdown, physical distancing and limited consumer spending, we expect muted absorption of retail space, likely raising vacancy to about 12% by the end of 2020.. Colliers encourages major mall operators and retailers to line up marketing efforts to recapture retail footfall once the pandemic wanes and household spending recovers. Mall operators should also ensure that proper sanitation measures are implemented. The country’s economic managers are expecting the economy to grow by 6.5% to 7.5% and OFW remittances to increase by 4% in 2021. These should lift consumer confidence and retail spending. 

House bill proposes major push to attract fintech firms

NEWS

House Bill No. 7760 or the proposed Financial Technology Industry Development Act of 2020 aims to attract financial technology (fintech) firms to the country. According to House Ways and Means Committee Chairman Jose Ma. Clemente Salceda, under HB 7760 the Bangko Sentral ng Pilipinas (BSP) or central bank will be able to establish a Financial Technology Office (FTO) that will develop a Financial Technology Industry Roadmap. The FTO will also be able to issue special resident visas for executives of international fintech companies. Rep. Salceda added that foreign firms are now looking for alternative locations as major global centers are saturated while some adopted strict data management laws. The proposed bill, once enacted, would authorize an annual review of data management policies to be headed by the FTO, BSP, and the Department of Information and Communication Technology (DICT) to ensure that standards are met. HB 7760 will also allow fintech firms to run pilot projects in smaller markets.

 

CLICK HERE TO VIEW ARTICLE

RESEARCH VIEW

Due to the lockdown, selected online payment platforms have recorded an increase in transactions and volume as consumers shifted to digital solutions. Data from the Philippine Payments Management Inc (PPMI) showed that InstaPay transactions reached PHP175.51 billion (USD3.7 billion) from March to May 2020, up by 54.4% from December to February. PESONet transactions also increased by 34% to PHP134.04 billion (USD2.8 billion) during the same period. The growth in the use of digital financial services will likely lead to an increase in demand for fintech companies to keep up with consumer needs. Companies under the sector may help boost the demand for office space and data centers once the pandemic is contained. In H1 2020, office transactions only reached 261,100 square metres (2.8 million square feet), down by 64% from 730,000 square metres (7.9 million square feet) in the same period in 2019. This resulted in vacancy reaching 4.9% in Q2 2020. We now expect vacancy to peak at around 7.0% by the end of 2020 with a gradual recovery starting in 2021.

Senate panel OK’s foreign retailer rules 

NEWS

The Senate Committee on Trade, Commerce and Entrepreneurship approved the amendments to the Retail Trade Liberalization Act (RTLA) that aims to attract more foreign in investments in the retail sector. Under the approved amendments, the minimum paid-up capital for foreign investors is now lowered to USD300,000 (PHP14.5 million) from the previous USD2.5 million (PHP121 million). Moreover, other requirements such as the USD250,000 (PHP12.1 million) capital per store for luxury products and five retailing branches have been removed. Trade Secretary Ramon Lopez added that companies from China are relocating to other countries but with the Philippines not on top of their list. Other legislative measures such as the Corporate Recovery for Enterprises Act (CREATE) should also be enacted to attract other foreign investments. 

CLICK HERE TO VIEW ARTICLE

RESEARCH VIEW

Colliers believes that further liberalizing retail trade in the Philippines will likely be beneficial to the retail sector as the entry of foreign investors should promote competition among retailers and help mall operators fill their vacant spaces. In Q1 2020, vacancy among malls in Metro Manila rose to about 10% from 9.8% in Q3 2019. Due to the implementation of a lockdown and physical distancing, we see vacancy rising to 12% as we expect only about half of the 108,900 sq metres (1.2 million sq feet) of new leasable retail space due to be completed in 2020 is likely to be absorbed. Data from the Bangko Sentral ng Pilipinas (BSP) or the central bank also show that foreign direct investments (FDI) in H1 2020 dropped by 18.3% to USD2.9 billion (PHP140 billion) from the USD3.6 billion (PHP174 billion) in H1 2019. In our opinion, liberalizing retail trade should encourage mall operators to diversify their offerings post-pandemic. In 2019, we saw the entry of food & beverage (F&B) firms such as Red Lobster, The Alley and Panda Express. 

 

CLICK HERE TO VIEW PREVIOUS MARKET INTELLIGENCE REPORTS


Related Experts

Joey Bondoc

Associate Director

Research

Manila

Prior to joining Colliers in March 2016, Joey worked as a Research Manager for a research and consutancy firm where he handled business, political, and macroeconomic analysis. He took part in a number of consultancy projects with multilateral agencies and provided research support and policy recommendations to key government officials and top executives of MNCs in the Philippines.

View expert