Investment Opportunities in 2006

With the continuing appreciation of the Peso against the Dollar and with many other fluctuating currencies, the obvious investment opportunities are in Peso assets and businesses. But currency speculation and investment are not for the fainthearted, and these are short-term volatile investments which are not as productive and as useful to the country as hard asset or business investments. Foreign "hot money" has already moved into Peso bonds, T-Bills, stocks, and other securities, further strengthening the Peso. This will soon settle down, leaving the currency market to the usual institutional.

For medium and long term investments in the Philippines, for local and foreign investors, there are quite a number of opportunities. For sure, tourism will be big in 2006 and beyond. Double digit tourist arrivals translate to the need for more hotels, resorts, restaurants, medical services, and entertainment. This will lead to a higher demand for food products for local consumption on top of the already good exports of food products to the world market, of our bananas, mangoes, pineapple, sugar, carageenan, and coconut oil. This will make agriculture a good investment and make good profits for the farmers.

The housing and property market was good in 2005 and should even be better in 2006. OFW money flowing into house and lot purchases will continue and a low mortgage interest regime will fuel purchases by local residents who can take 15-year mortgages. Construction, building materials, home furnishings and furniture follow a housing boom, so the growth in the property market will impact positively on this service sector. U.S. housing starts are continuing but at a slower rate, so it could be a flat year for furniture exports.

Metallic and non metallic mineral mining are supposed to take off this year due to the huge appetite of China for minerals. But the long gestation and capitalization of these projects could limit the immediate impact of this industry in 2006. Still the investment opportunity in this sector is significant, and far-reaching.

Inspite the slower projected growth of the economy at 5% for 2006, the above sectors could be the economy's leaders and would have a better distributive effect on the population. The cash flows from OFW's, tourism and agriculture go to the middle and lower classes faster. The government expenditures in infrastructures will further enhance these growth sectors by reducing transport cost and pump priming the regional economies.

The outsourcing sector, i.e. call centers, medical transcription, business processes and the like is another investment opportunity, but this is only available to big investors with foreign tie-ups. The investment opportunity for the locals is our investment in our people, which in the final analysis is the best investment of all.