Selling our lands to Koreans?

“Only Korean tourists are allowed to set foot on the island,” said our informal guide as we were barred from entering Lu-li Island (Lulubog-Lilitaw) during our trip to Palawan last August 2007. Apparently, the island was rented or leased by Koreans and they only allow other Koreans there. 

I distinctly remember that instance, when we met a group of Koreans from the Asian Development Bank. Some of them are nearing retirement and they are exploring their options if they want to stay here permanently. They already know that they cannot buy land and some are keen on buying a condominium. However, they were disappointed that even with condos there is a 40% limit, i.e., only 40% of the total condominium project can be foreign owned. This is in line with the constitutional limits on foreign ownership of land and corporations.

There is huge variety in terms of severity of foreign ownership restrictions set by different countries. Most developed countries have completely lifted foreign ownership restrictions, while some have maintained certain administrative procedures. Understandably, foreign ownership of land is not allowed in certain areas including those near borders and military facilities. In some countries, limited foreign ownership is allowed. In Dubai, for instance, only certain areas are open to foreigners. They even built artificial islands (Palm Islands and World Islands) so they can sell it to foreigners. In Malaysia, foreign ownership is set for properties above a certain threshold. This ensures that foreigners do not compete with locals in the affordable market segment.

There are several reasons for limiting foreign ownership, especially with land. The most common reason is patrimony and national interest. Some groups including nationalists fear that if foreigners control the land and companies then they will be able to control the economy and the country. However, as countries develop foreign ownership limits tend to constrain economic growth.It is interesting to note that former colonies have the strongest anti-foreign ownership laws including the Philippines. 

Should foreigners be allowed to own land in the Philippines? If we are trying to attract retirees to the Philippines then foreign ownership issues will always be raised. People want to retire in a relaxed and beautiful place, near the beach and in the provinces. We only sell condominiums to them and most condos are in Metro Manila. There is a clear mismatch. Retirees are also getting younger and die longer. They want to feel secure over their property; 50-year leasehold is okay but not as secure as freehold. They also want to bequeath their properties with all the investments they poured into it.

"If we allow foreign ownership, we can be aliens in our land???!!!" I always hear these comments every time the issue is raised. Properties in the Philippines are very cheap from a foreigners’ point of few; they can end up buying an entire barangay or town. With unscrupulous real estate agents, insecure property rights, and corruption, rightful owners can be cheated out of their properties. With their money and influence, foreigners can bribe their way into ownership of any piece of land they wanted.

My stand: I am for foreign ownership of land but with certain pre-conditions. Security of property rights and land titling must be fixed first. Right now, both locals and foreigners are violating laws regarding private property. In several beaches, resort owners have encroached public space. Inalienable islands have been bought, sold and developed by rich and influential people. A lot of foreigners “own” private islands and lands through dummies. The problems in land ownership encountered in Boracay should and could be avoided.

We’ve got a long way before secure property rights is achieved in the Philippines. Politicians think that reforming the system of land ownership through the Land Administration Reform Act is elitist. As always, politicians are protecting their own interest. The political and economic elite benefit from the muddled and conflicting land laws and systems. And they would not want foreigners to be able to buy land here, they hate competition...

Interesting articles on the property rights and issues in the Philippines:

March 14, 2004
Reclaiming Land, Tony Leviste-Style
Newsbreak Online
http://www.newsbreak.com.ph/index.php?option=com_content&task=view&id=2215&Itemid=88889064

March 15, 2004
The ‘Fortunes’ of Loren and Tony by Ric R. Puod and Annie Ruth C. Sabangan
Manila Times Online
http://www.manilatimes.net/others/special/2004/mar/15/20040315spe1.html

 

October 16, 2006
Boracay natives fight for their piece of paradise lost by Mynardo Macaraig
Agence France-Presse/ Philippine Daily Inquirer
http://services.inquirer.net/print/print.php?article_id=26949

February 11, 2007
Losing From Land – No Free Lunch by Cielito Habito
Philippine Daily Inquirer
http://opinion.inquirer.net/inquireropinion/columns/view_article.php?article_id=91670

August, 3, 2007
Skirting ownership limits – Corporate Securities Info by Raul J. Palabrica
Philippine Daily Inquirer
http://business.inquirer.net/money/features/view_article.php?article_id=80274

Photo Inset: Luli Island (photo by Carol)