The New Pensionados
PerryScope
By Perry Diaz
March 9, 2007
In 1903, U.S. Congress passed the Pensionado Act which allowed qualified Filipino students to
study in universities in the U.S. at the expense of the U.S. government. Upon completion of
their studies, the scholars -- called “pensionados” -- went back to the Philippines to serve the
colonial government in important civil service positions.
Today, a new generation of “pensionados” has emerged. However, today’s pensionados are
not scholars of the government nor do they work for the government. As a matter of fact,
most of them do not work at all… because they don’t have to. To them, money is not a
problem. Last year, according to Central Bank records, these pensionados received a
whopping 12.8 billion dollars from their benefactors -- a 19.4% increase from the previous
year. It is estimated that there are several billion dollars more -- some estimates are as high
as 10 billion dollars -- that were received from benefactors through other means of transmittal
such as door-to-door remittance centers and private couriers.
There are approximately eight million benefactors, a tenth of the country’s population. These
are the Overseas Filipino Workers (OFWs) deployed in 194 countries around the world. It is
estimated that one out of two Filipinos benefits from the OFWs’ remittances. Indeed, there is
a glut of money -- an amount equal to the 2006 national budget -- in the Philippines right now.
The pensionados are the emerging and growing middle class -- the nouveau riche.
The constant flow of money to the debt-free pensionados has created a large pool of liquid
cash -- ready to be spent at the blink of an eye. And what is the easiest way to spend this
kind of wealth? Shopping, isn’t it? It is no wonder then that four of the 10 largest mega
malls in the world are conveniently located in Metro Manila. In addition to these four mega
malls, there are 11 other mega malls in Metro Manila and hundreds of super malls and smaller
malls all over the country. The SM Prime Holdings owns the four largest mega malls and
another 25 super malls located as far as Davao in the south and Baguio in the north. SM has
planned to build at least 15 new super malls within the next two years, from Laoag in Ilocos
Norte to Naga in Camarines Sur; thus, creating a nationwide web of retail outlets -- or
“magnets.”
The second largest mall developer is JG Summit Holdings whose brand name is “Robinsons.”
Currently, there is one mega mall, Robinsons Galleria in Quezon City, and 18 super malls. Five
more are scheduled for 2007. Ayala Corporation, one of the country’s biggest developers, has
five super malls including the famous Glorietta in Makati. Other mall developers are Greenfield,
Star Group of Malls, Araneta Malls, Ever Goteco, Olivarez Plaza Malls, and more.
Recently, Lucio Tan -- the airline, tobacco, liquor, and banking tycoon -- started his own real
estate company, Eton Properties, Inc. A shrewd businessman with a Midas touch, he is called
“Kapitan” in the business industry, a moniker that best describes his preeminence in the
business community. It is anticipated that he will soon be building malls. With malls
mushrooming across the country’s landscape, “shopping” has become a habitual -- nay,
addictive -- preoccupation among the pensionados.
The air-conditioned malls are built for comfort. With a variety of gourmet eateries, boutique
shops, state-of-the-art hi-tech outlets, entertainment centers, and all the amenities of a
“good life,” a visit to the mall has an “opiating” effect which induces an insatiable urge to
come back… and spend more. Indeed, these malls have created a shoppers’ paradise for
pensionados, OFWs, and the largest group of tourists, the balikbayans. The malls are like
beehives where honey is collected from the bees. Now, we can say that our Motherland is the
“Land of Milk and Honey,” but only for those who have money. As the expression goes, “No
money, no honey.” Of course, as long as the eight million “milking cows” remain productive
there will always be an abundance of milk. I am just hoping that they will not be put out to
pasture.
But how about those who do not have milk and honey? According to the 2006 World
Factbook, 40% of the Philippines’ population are below poverty line. That’s 35 million poor --
and hungry -- Filipinos. To put it in perspective, Taiwan has less than 1% of its population
below poverty line, China has 10%, Malaysia has 8%, South Korea has 15%, Indonesia has
16.70%, and Vietnam -- the country to watch -- has 19.50%. Clearly, the Philippines has a
long way to go in achieving real progress. It’s ironic that while the OFWs’ beneficiaries are
progressing, the poor are getting poorer and the rich -- particularly those in the mall business
-- are getting richer.
In my opinion, the Philippine government is missing a grand opportunity to eradicate poverty.
Instead of pushing for industrialization, it’s promoting a consumption-driven economy that is
beneficial to the rich elite and depleting the wealth of the middle class. The enormous profits
earned from the malls are funneled to build more malls; thus, further increasing personal
consumption expenditure. The Senate Economic Planning Office said no less in its September
2004 Economic Report which states: “Our growth has been largely fuelled by personal
consumption expenditure. It has accounted for an average of 74% of GDP for the past decade
and has been steadily growing.”
In another study, “The East Asian Experience of Economic Development and Cooperation,”
written by Kenichi Ohno in December 2002, states: “For each country in East Asia, the long-
term growth path and the achievement of industrialization can be tracked by income trends
and structural shifts in GDP and exports.” In regard to the economic growth in East Asia, Mr.
Ohno observed that “associated with this high growth are high savings and investment rates,
active but managed external opening, export orientation, industrialization, and general
improvements in social indicators.”
Clearly, the economic growth in East Asia was driven by trade and investment. This was
proven by the “Newly Industrialized Countries” (NICs) or tiger economies, as they are called --
Taiwan, Singapore, South Korea, Hong Kong, Malaysia, and China. It is anticipated that
Vietnam -- with an economic growth of 8.4% -- will soon be the next tiger economy. I strongly
believe it’s time for the Philippine government to rethink its economic development strategy
and gear its efforts towards a market-driven economy.
(PerryDiaz@aol.com)
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