Highlights
- 21 years experience with Bisaya (Cebuano) language
- Mindanao represents one of the final undeveloped frontiers - economic low pressure
- Philippine Stock Exchange has many resource companies with exposure to Mindanao
- Resource rich
- commodities: gold, iron, copper, nickel, oil, gas, coal, coconut oil, lumber
- agriculture: decentralized, small-scale, non-mechanized, high-efficient production
- human: large, unorganized populations. intense competition keeps wages low
- Strong desire to move beyond traditional simple lives
- collective psychology is a near opposite of the West
- Strategically located - centralized between Australia, Japan, Singapore, and China
Language
Stock Market
President Duterte
What Not To Do
Be Aware
Real Estate
Adventure
Currency Exchange
Example Costs
Local Produce
Language
English is widely spoken and Westerns are warmly accepted. If you are able to speak the local language, you will have tremendous benefits, because there are very few who speak it. It's not a big surprise that with over 7,000 islands, many dialects (over 100), developed. The official language is Tagalog, that northerner's speak. But the central and southern Philippines speak a language called Bisaya or Cebuano. It is an evolved language with elements of Indonesian, Tagalog, Chinese, English, and Spanish.
Stock Market
The Philippine Stock Exchange has many listed resource companies involved in the production of gold, silver, nickel, coal, and energy. Examples include: Apex Mines (APX), Nickel Asia (NIKL), Philex Mining (PX), Lepanto Consolidated Mines (LC), Petroenergy Resource Corporation (PERC), Coal Asia Holdings (COAL), and Philex Petroleum (PXP)
My top pick is Apex Mines - on August 10, 2016 it delivered an incredible earnings report
Charts as of August 10, 2016
APX
NIKL
LC
PX
COAL
PERC
PXP
President Duterte
Dubbed, "the Punisher", the new Philippine President is a lawyer and politician from booming city of Davao, in the island of Mindanao. Davao was a lawless wild west area, a "kill zone", due to its vast wealth (gold) and friction zone between Christians, Muslims, kidnap for ransom gangs, and general mafia-like activities. President Duterte created a model city, and is extrapolating his policies to the whole country.
I love the President. He is an ugly, foul-mouthed, straight-shooting, SOB, but he is the People's President, winning by landslide (much to the chagrin of drug lords and previous corrupt administrations). The ruling party spent hundreds of millions of pesos in elections to slander him, yet it failed. Duterte won using a grass-roots company that leveraged social media. He is a wonderful negotiator - nobody knows what he'll do next. His lawyer background already gives him the fork-tongued experience of being a powerful politician and negotiator. His double-speak is entertaining, and the hallmark of someone you want working on your behalf.
Most foreigners are not too happy, but we locals are extremely pleased. I will write in detail as to why in another article - essentially, we are expecting martial law in his war on drugs. He has the people's support in this movement. It has to happen to remove the multi-generational clans that have raped and pillaged the people for far too long.
What Not To Do
- Give your trust away easily
- Be flashy
- Insult the locals
- Be confrontational
- Trust anyone with money
- Visit the Muslim-controlled regions
- Think that you are a King or Famous
- Abuse the woman
- Drink from questionable water sources
- Mix jackfruit with alcohol.
- Mix durian with soda pop.
Be Aware
- High Growth is balanced by High Decay - brush your teeth, take care of your feet, stay extremely clean.
- People want to monetize power - traffic enforcers, policeman, town watchers, security checkpoints are all not above trying to squeeze you for money, especially if you are ultra fair skinned.
- Filipino's, the best and the worst, will all approach you with a beautiful warm smile.
- Filipino's are extremely opportunistic, keep guard of all your valuables.
- There are no big predators (though some places have massive crocodiles), the micro scale is what you must be aware of.
Real Estate
Most of the Philippines is decentralized - information is valuable. Real estate properties have no central listings. If they do, the prices are usually jacked up high to look for someone not knowledgeable of the area. Foreigners can only own residences, but have angles with corporations in order to get more control, if desired.
Agriculture land is a great investment. I especially like coconut. The taxes are extremely affordable, and you can recoup your investment in usually a minimum of 10 years. If you picked up a great property, maybe in 4, or if you didn't get a good deal, maybe it'll take 15. Coconut takes little investment - it has less risk/reward than corn or rice. You can harvest every 2 to 3 months. If you trust the caretakers, harvest every 3 months. If you cannot trust the locals, harvest every 2 months. The reason is that coconuts will begin to fall on their own after 2 months, and in some places the neighbors or passerby's will steal the coconuts.
An alternative to buying is what is called "prenda", like leasing a property. I recommend it because you can get leverage to a property, and it gives you time to see if you really like the area, the production, the neighbors. The cost may be 1/5th of the buying price, yet you gain access to all its resources. We write our own contracts on these lands, and have them signed by the village captain with witnesses within the village, including the owner's family. We usually put a term of 3 or 5 years on these before they can be bought back.
Please be wary of scams, there is a whole lot of "Florida swamp" for sale. You have to check with the Registry of Deeds (reviewing the title and any encumberances), City Hall (check for back taxes), make sure they are the legal owners, and that the original owner is still alive (otherwise the estate tax can be absolutely stunning).
Adventure
One of the best advantage of the Philippines is the ability to live in a pre-industrial revolution way. The majority of land is tilled by water buffalo. When the electricity goes out, businesses often don't miss a beat. Why buy a forklift when you can easily have 5 guys as labor for a fraction of the cost? There are still many native people despite the waves of foreign pushes against them.
The Philippines is largely mountainous, so it is easy to evade incursions. The old culture still exists. The traditional belief systems are fascinating. Herbal medicines are normal. It's even in the language - in Bisaya, the word "gamut" means root, but in the northern Tagalog language, "gamut" means medicine.
Interacting with the natives can be a John Smith / Pocahontes like adventure. Some of the best memories you can create are from these experiences with your extreme opposite. So go you of the well-beaten paths!
Currency Exchange
The local currency is the Philippine Peso. Back in WWII, it used to be par, 1:1, with the U.S. Dollar. It peaked at about 57:1 in 2004. It has since been appreciating against the dollar, hitting 40:1, it is now 47:1 with the dollar strengthening for the past 5 years due to global uncertainties.
You exchange at the airport, banks, pawn shops, or stores like Gaisano. We've exchanged on the "black market" too, as Chinese are often looking for dollars. You can send money using xe.com, xoom.com, remitly.com, money gram, or Western Union. Capital controls have been tightening, especially for Americans. Even Europeans are now facing issues transferring money - requiring to show documentation as to what the money will be used for (German friend had to do this and was told it was new).
My expectation is for the Peso to strengthen against the Dollar, because the Philippines is an excellent growth story. I would advise not get Dollar accounts, but some people feel more comfortable with that.
Example Costs
- Labor, per 9 hour day - 180 pesos per day ($3.80)
- Apartment, 2 story, downtown Ozamiz City - 4000 to 6000 per month ($85 to $125), excluding utilities
- Water bill, monthly minimum 252 pesos ($5.35)
- Yearly Taxes, 4.5 hectare coconut farm (11.25 acres), 573 pesos ($12.19)
- Global commodities, like rice and sugar, are very expensive for the locals
- Sweet Potato, 12 pesos (.25 cents) per kilo (2.2 pounds)
- Local produce are price for the locals, if you eat like a local, you will save much money
Local Produce
Fruits
- mango, durian, pineapple, jackfruit, sour sop, lansones, marang, guava, sontol, sinegwelas, rambutan, mansanitas, banana, avocado, dragon fruit, sambug, macopa, atis, tisa, tambis, grapes (local variety, difficult), cacao, star apple, caimeto, grape fruit, chicos
Vegetables
- Cheap Root Crops: sweet potato, onions, garlic, tumeric, ginger, peanuts, casava
- Expensive Root Crops: potato, carrots
- Others, Cheap: bok choy, water spinach, string beans, squash, mung beans, rice, corn, eggplant, tomatoes, peppers (Note: peppers and tomatoes both are thick-skinned).
Vegetables are very similar except that they have local varieties accustomed to the heat. They are usually more concentrated. Note: I use the word concentrated, rather than smaller. Yes they are smaller, but they tend to have more truer, less water-down taste. Eggplant is a perfect example.