Urban Property Development and the Creative Destruction of Filipino Capitalism

This material originally appeared as Cardenas, K. (2014) “Urban Property Development and the Creative Destruction of Filipino Capitalism”. In W. Bello and J. Chavez (eds.) State of Fragmentation: The Philippines in Transition. Bangkok: Focus on the Global South. This entry is the first in a four-part serialization.

Part II: The new rules of the game
Part III: Back to the land
Part IV: The city and the restoration of class power

The past decade had been incredibly good for Filipino capitalism. In 2000, the combined profit of the thirty companies comprising the PSE composite index stood at PHP 26.1 billion. By 2010, it grew to 304.23 billion, or an increase of 635 percent in real terms. Within the same ten years, the Philippines’s gross domestic product grew by only 59 percent (see Table 1). In 2006, when Forbes began publishing an annual list of the richest Filipinos, the combined net worth of the forty wealthiest Filipinos was US$16 billion. By 2010, their fortunes were collectively worth 22.8 billion dollars, an increase of 32.3 percent in real terms. In comparison, GDP per capita increased by a mere 13 percent within the same period.[1] Far from depending exclusively on the Philippine market, several of their conglomerates are presently embarking on ambitious foreign expansion plans. Henry Sy’s SM Prime is presently planning to open five more malls in China within the next three years;[2] the Gokongweis’ Universal Robina is eyeing a factory in Burma, which would follow successful investments into manufacturing in Thailand, Vietnam, Malaysia, Indonesia, and China;[3] and San Miguel Corporation, as part of its plan to bring total sales to one trillion pesos by 2013, is planning to put up plants in Burma, Cambodia, and Laos.[4]

TABLE 1. The Philippine economy versus PSE Composite Index company net incomes, 2000 and 2010.[5]

table-1

This was by no means an expected outcome. The 2000s was a very turbulent decade for business: it began with Philippine capitalism in serious crisis, with the economy still reeling from the Asian financial crisis of 1997-8. The initial contraction, at half a percent, was mild compared to the severe drops seen in the rest of middle-income Southeast Asia. But an anemic recovery, coupled with a hollowed-out neoliberal state unwilling and unable to either stem the outward flow of portfolio investments or to spend its way out of the crisis, prolonged the economy’s stay in the doldrums, culminating in a fiscal crisis in 2005. For much of the decade, the country was also in the grips of a political crisis. The impeachment trial of Joseph Estrada, the subsequent revolt of middle Manila, and the installation of Gloria Macapagal-Arroyo in 2001 proved to be only the beginning: as the decade wore on, Arroyo’s questionable mandate increasingly became illegitimate, and would echo throughout the decade as a rigged election, mass mobilizations, and the reanimation of an adventurist, impune military. Finally, its closing years saw the global capitalism erupt in a systemic crisis that it has yet to emerge from.

Continue reading “Urban Property Development and the Creative Destruction of Filipino Capitalism”

Cash-crop condominiums

A version of this piece was first printed by the Philippine Daily Inquirer’s “Talk of the Town” section on 16 March 2014 (p.16). An expanded version of this analysis appears as a chapter in the forthcoming co-authored book, “States of Fragmentation”, to be published by Focus on the Global South.

When we tell the stories of our wealthiest men, we tend to tell the stories that are of no consequence: we repeat their names, which have mostly remained constant for most of recent memory; we futilely recite the numbers of their net worth; we mythologize the secrets to their success.

These stories are of no consequence for the simple fact that we are telling ourselves things that we either already know, or things we don’t need to know. When we dwell on who the ten Filipinos on Forbes’ 2014 list of world billionaires are, we learn nothing of value. Henry Sy’s net worth is a few hundred million dollars lower this year, the Ayalas are mysteriously absent, the majority of the names are Filipino-Chinese. So what?

But once we turn our attention to understanding what the richest Filipinos are, an entirely different story reveals itself. The true significance of the recent fortunes of our Ten Millionth Percent is in how their stories can help make sense of the puzzles of our recent economic successes, such as jobless growth, our inability to address deep and widespread poverty, or whether the near future holds an East Asian-style ‘takeoff’ in the Philippines.

To tell this other story, we need to ask different questions: how are the biggest Filipino capitalists building their fortunes? Why, in the Philippines of the 21st century, is wealth being built in this way? How does this strategy compare to strategies seen in other periods of our economic history,s or in other places? Finally, what does the success of this strategy mean for the prosperity not just of the few, but of the country as a whole? Continue reading “Cash-crop condominiums”