The Philippine Economy in a Nutshell

Hello readers, I'm back - not from outer space - but from hectic work. As of 1229AM September 29 Manila time, the US bailout package is still being worked on. Since there's been and there'll be lots of news coverage about it, I won't talk about it anymore.

The first Ber month is about to come to an end, and we're opening the window to the usually festive and ultra consumerism period of the 4th quarter. It's been quite a year so far, both for the investing world and my personal world. I wonder if there'll be some respite and good news, again both for the investing world and my own.

I've been visiting SM Manila for quite a number of times recently and I am just amazed at the number of foot traffic it has - even on weekdays. A majority of those are students. Not surprising considering that there are many colleges within the vicinity of the mall.

That observation made me recall what a friend of mine (a Finance grad) once told me. He told me that the Philippines is basically just a student economy. Business is bad during the summer break, then it picks up when children and young adults hit the schools once more. That's open for debate, but if you think about it, it is a good point.

I don't have specific data on what students spend on these days. Years before though, I was able to encounter a research on where they used their money on. The problem with that piece of research was that it was centered only on drinks and snacks. So it did not show the complete pie of student allowance, but a portion of it. The research sought to pinpoint what brands students bought for their snacks given their limited budgets.

I am also unaware how much is given to children as allowance these days. I remember that when I was still a young boy, I would get about 5.00 or 10.00 a day. (not a week, I'm not that old! haha). But that wasn't everyday as my parents wanted to control how much money I was getting.

Teaching kids about money is an important value that parents most often forget. I think I should talk about that in the future. Going back, I wondered about my friend's comment. He probably based his conclusion on a microcosm of the Nursing students population. The population particularly surrounding the area of Metropolitan Hospital in Sta Cruz Manila.

During the years after 1997, the vicinity of the hospital was a dead area. Even though there were a lots of private schools there, when students are dismissed from classes everyone immediately goes home. 10 years after, the place is alive with students in white uniform - Nursing students. Old commercial areas were renovated into food kiosks and stalls. There was a mini-economy that was created in the area. All because Metropolitan Hospital introduced a Nursing course.

I am amazed by how the wheels of economy work. Money and wealth were created in that area. This was all because of that course offering by the hospital. I just wonder, where did the parents supporting these students with tuition money and allowance, originally spend their money on? The growth in the money supply of the area may have also been spurred by the exponential growth of the OFW remittances. It's definitely the case that not one answer can suffice.

If you want to do business, it's these kinds of opportunities that you must seize. In a future post, I'll talk about investing in the next business wave of the Philippines. Sort of like an Alvin Toffler type of forecasting. But mine is more based upon observation and tons of hindsight. I don't have the benefit of tons of research to make a scientific prediction.

Ciao for now.

**** I guess I have to go back to the bailout issue. My source of inspiration - Warren Buffett, said to the US Congress: Bail out economy or face 'meltdown'.