Rent

Pinoy Kasi : Rent

First posted 01:30am (Mla time) April 28, 2006
By Michael L. Tan
Inquirer

Editor's Note: Published on Page A15 of the April 28, 2006 issue of the Philippine Daily Inquirer

MY father was a journalist, and my mother a teacher, before they went into business. So I grew up with their constant hectoring: Don't become a journalist, don't become a teacher, you'd starve. Ironically, they were even more dead set against my going into business, and their reason here was that I was "too honest" and "too soft-hearted" to survive in the dog-eat-dog environment of businesses.

As you can see, I wasn't a very obedient son. For years now, I've been teaching, and writing for the Inquirer. I'm not making millions, but I get by comfortably, without subsidies from my parents.

In fact, I get by well enough to now help some people to start small businesses. These are people who used to work with me in an NGO but have decided it's time to move on. Their salaries were actually quite good, with one of them getting P28,000 a month, more than I get at the University of the Philippines with my rank of professor, but I could understand why she felt she had to go into business, since she had two kids in high school and one in grade school.

Venturing into the business world, through these friends, has been traumatizing. Yes it is a jungle out there, but what make it so tough aren't so much businesspeople preying on other businesspeople than the high costs of doing business, mainly the astronomical rents.

Gold mine

I had a vague idea of some of these costs from family reunions, where relatives in business would whine about the high rents in malls. Regular store space running into six figures a month while the small kiosks, like the ones selling nachos and drinks, go for around P50,000 a month. Those “tiangge” [bazaars], where makeshift stalls are put up and dismantled after a few weeks, aren't cheap either, costing around P25,000 a month.

My wise NGO friends had decided from the beginning that the malls and tiangge were not going to be options for them. They thought maybe Farmers' Market in Cubao and the San Juan public market, and came back to me totally dejected. The quoted rents went from P30,000 to P100,000.

So the search continued, and I found myself drawn into it as well, driving slowly and stopping every now and then if I saw a "For Rent" sign. All the places I saw were above P15,000 a month.

One night, I got a call from one of my friends. She had found a place in Sta. Mesa, Manila, and she was worried someone would get the place if she didn't. I went over to find a tiny makeshift shack held together with plywood and corrugated sheets. I could see the commercial potential, not from the nearby motels (which, when you think about it, also earn through short-time rent), but from the large number of jeepney commuters. There were already several stores in the area, serving food and selling trinkets and prepaid cell phone cards.

So how much was this three square meters of space? The landlady wanted P8,500 a month. She wouldn't budge. I felt it was too high and said no. Two days later, driving past the place, I could see someone had taken the place and was fixing it up to become a “carinderia” [eatery].

To make a long story short, my friend eventually got a place in the Kalentong area, in one of the side streets, to set up a sari-sari store. The tiny place, measuring 1.5 by 1.5 meters, costs P6,500 a month.

My other friend has left for Cagayan de Oro City, where I thought the rents would be cheap. I was wrong. She's thinking of putting up a carinderia in a place opposite a school, with a floor area of about 6 sq m. The rent is P10,000 a month.

When you think about it, the richest gold mines in the country are found in our cities.

Feudal

"It's the landlord who earns," said the father of one of my friends in exasperation. But that, precisely, is what Marxists mean when they say our economy is "feudal." The fastest way to make money in this country is through rent.

It used to be rural landlords collecting rent through a share of agricultural harvests. These days, the windfalls come from renting out urban space.

Note I use the word "space" rather than "land." I've been working among urban poor communities and realizing how much rental activity is going on, even among "informal settlers" (the politically incorrect term is "squatters"). They don't own the land, but will still collect rent on every last centimeter of space. I've found people leasing out the street space in front of their shack to someone to sell barbecue, while the interior of their shack will be carved out into tiny cubicles to rent out to entire families. (They also rent out electricity, but that's another story.)

There are, of course, legitimate landlords. Even a small lot can bring in considerable income. I mentioned my friend paying P6,500 a month for sari-sari store space. Well, her landlady also has 12 bed-spacers, students in a nearby college, paying P1,000 a month each. I estimate the landlady's home has a floor area of about 100 sq m, for which rental income comes to P18,500 a month.

I was serious when I said every last centimeter of space counts. I found one man who was "renting" driveway space near a recruitment agency to offer instant ID photos. The agency itself had offered him a corner inside their office, but wanted P400 a day. In the end, he found a building nearby whose owner charges him P250 a day for the use of the driveway.

Capitalism

I could do a whole book on rents and landlords and tenants. Next time you buy pearls or pirated VCDs in Greenhills, look closely and you'll realize that each stall has at least two, sometimes as many as four "tenants" sharing space. You'll find, too, that the distinctions between landlords and tenants are blurred, as tenants sublease (often in violation of a rental contract) spaces.

And yet we're talking here about the more fortunate middle class. For poor Filipinos, the only option is to sell out in the streets or in the sidewalks. And you'll find people buying from them because without rental overheads, their prices are lower.

But what a life that is. The vendors can't have too many goods because they're illegal. So they always have to be ready to pack up and run when the police come by.

With so much of business income going into rent, I'm not surprised capitalism is so stunted in our country. Capital can't grow this way.

And that's not the end of the problem. To survive, businesses jack up the costs of commodities, and pay very low wages to their workers.

We keep hearing the President and other officials talking about how we should support small and medium-scale enterprises. They should start by tackling this problem of high rentals and offering public spaces at affordable rates. It's obscene that even public markets now charge almost as much as private malls.

Since I've learned about how high rents are, I've found myself bargaining much less when dealing with smaller businesses. My parents were right when they said I don't have the heart for business. But I have to ask: Is this the way to economic development?