Calling World’s Baby Boomers! (Part 2)

The Philippine retirement industry offers the creative entrepreneur great returns. With more local and foreign retirees (from the US, Japan, and Korea) looking to extend limited pensions in tight Economic times, the selected global market is huge, and the country can earn unimagined revenues, positioned as The Asian Retirement Haven.

Puny Pensions, Generational Tensions

Today’s American Baby Boomer retiree’s average pension -- US$1,000–$1500 - affords little in their home countries, a danger to be likewise inherited by succeeding Generation X’ers, despite the two demographics’ differences and tensions. The twain will never meet: the Boomers’ commitment to corporate advancement contrasts sharply with the X’ers’ pursuit of “multitasked” experience and family relationships. Ironically, they share similar threats to post-employment security. X’ers are expected to suffer from smaller 401(K) savings, eroded by (among others) 28%-38% college cost increases, and support for surviving parents – themselves Boomers with paltry pensions.

We can allay both generations’ fears: the current US pension, about Php45,000 – Php67,500, will purchase much here, especially in rural areas. The same goes with other foreign retirees: the average Japanese pension amounts to JPY160,000 (Php65,000).

This is the iceberg’s tip. Capitalizing on opportunity, the President, ever the foresighted economist, revamped the Philippine Retirement Authority (PRA), launching in July 2006 the Philippine Retirement Incorporated (PRI), a non-profit corporation safeguarding retirement services and facility standards, networking its member individuals and corporations towards the industry’s overall promotion and growth. The partnership is correct in focusing on providing world-class retirement essentials: housing, healthcare, infrastructure, and other lifestyle services.

But an enterprising solon must back the industry with Legislation specifically supporting what I proposed previously – empowering the PRA to recruit young, dynamic PRA attachés. Targeting Filipinos married to foreigners, they can start with their family circles, friends, and Filipino associations. The program will contribute greatly towards its $44 billion 2015 target, with these attaches supported with a US$4 million annual budget – broken down into a US$10,000 monthly salary per attaché in 12 prime retiree countries, another US$5,000 in monthly living expenses, leaving about US$1.84 million (equivalent to about US$12,800 per country, per month) for marketing (advertising, Road and Trade Show participation and promotions) and incentives (for Agency Tie-ups), certainly much less than the 2007 US$11 million spent by domestic Real Estate companies on OFW advertising.

For every successful “converted” foreign retiree, as certified by the embassy’s commercial attaché, a one-month rebate could be given to the retiree, coming from Private Sector. A commission from the interest income of the retirees’ respective SRRV fee (the entirety invested at a 250-300 basis point spread), say, 50-100 basis points can be given to the PRA attaché as incentive.

Home 'Em In

A five-year trend shows more current and retiring OFWs buying local mid-end residential properties. About US$4.2B was remitted for local Real Estate in 2006; it is estimated that 30% of OFW remittances are spent on Real Estate (about US$4.6 billion of BSP’s projected US$15.4 billion in 2008 OFW remittances). Courting more investments, Real estate projects have sprouted everywhere. Makati and Taguig alone target 61 more condominiums (almost 30,000 residential units) between 2008 and 2013. High-end condo demand - from Php80,000/sqm upwards - also exists.

Entrepreneurs should capitalize on this, offering retirees better alternatives to subprime-diluted, home-country residences in frigid climates. Retiree-skewed Projects could feature small, low maintenance, but luxurious residences – in sunny, scenic locations like Tagaytay, Boracay, Davao, Hundred Islands, Vigan, Dumaguete, Samal, Legaspi, Dipolog; incidentally stimulating local economies.

Boomers Sunset; RP's Sunrise

Be advised, however: for retirees, a scenic location is secondary to essential emergency healthcare.

These “leisure home communities” could be located in PEZA-type medico-tourist zones: cluster areas featuring Tertiary-level Hospital facilities. Developing these tertiary-level Hospitals, low-cost loans parsed from US or European Eximbank jumbo-loans (re-lent at 250 basis points spread instead of the 600 offered by overstaffed government lending institutions) could be obtained. Terms could extend to 20 years, with enterprising doctors providing 10% equity. Located in these “Special Retirement Zones,” investments – from retirement home developers, to medical, therapy, and leisure services, could enjoy incentives like tax holidays.

Our medico-retirement facilities can even tie-up with US (or International) Veteran’s Administrations, providing rehabilitation services to US and coalition veterans from Iraq, Afghanistan or other flashpoints. Centers in balmy environments like Subic or Cubi offer better recuperation, while stimulating tourism and investment.

Foreign development firms have entered into PRA agreements, erecting retirement facilities throughout the country: the US UBEC Development in Bohol, and Japan’s Asiana in the 20-hectare Bayside Hollywood Project, adjacent SM’s Mall of Asia. Let’s take the hint.

The systems are nearly in place. Innovative local airline’s “Zero-plus” airfares offer inexpensive, convenient transportation between here and home countries, perfect perhaps for Japanese, Korean, or Chinese retirees, who can “play” (golf) and “pay” (a visit to Mother during weekends). The Special Residents Retiree’s Visa (SRRV) multiple entry benefit will further encourage more retirees. Even infrastructure is crucial: roads and bridges will provide unprecedented access (and economic growth) to untapped, beautiful areas.

Go For Gold(en)

A proactive retirement industry catalyzed by Government would entice local and foreign investments, contributing not only to the country’s Gross International Reserves, but also providing jobs. The Philippine Retirement Industry and Investment Summit (PRIIS) estimates each retiree generates 4 jobs. Working on the previous article’s 4.7 million retiree example, that’s another 18.8 million jobs, created in areas where they are needed most.

Our skilled labor wouldn’t even need to go abroad (and leave their families), for higher US dollar salaries. In 2006, the PRA, the PRI, and the Technical Education and Skills Development Authority (TESDA), developed a project training Filipinos on various skills needed for foreign retirees.

The Philippines as Asia's retirement haven can generate serious Dollar revenues. Occidental and Oriental Retirees are respected, not rejected here. Our innate values of lambing, and courtesy for elders, positions us as a superior alternative to a retirement of desolation in cold, costly, callous facilities, like those in the US, Australia, or Spain, or even xenophobic Thais or Indonesians. If the world’s retiring Boomers realize that they can have this, for the price of their pension, this flagship industry will become a sunrise business for their twilight years.

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