Cost of Living in the Philippines

The Philippines is one of the most beautiful and exciting countries in Asia. Its beaches in the 7,107 islands, when combined, make up one of the longest and most stunning shorelines in the world. For most foreigners, the Philippines is a paradise teeming with outdoor adventures, idyllic escapes, wonderful food, rich culture and friendly people. The country attracts millions of tourists from all over the world due to its natural beauty and affordability.

More often than not, tourists who have visited the Philippines fall in love with the islands. Some to the point where they decide to relocate somewhere in the archipelago. It is not only beautiful in the Philippines, it is also cheap to live in its cities, much cheaper in the provinces. The cost of living in the Philippines is staggeringly lower than most major cities in the world and this is mainly the reason why a lot of westerners choose to retire or relocate.

The Philippine Economy at a Glance

Inflation in the Philippines stands at an average of 2.9% for 2012 and the economy is very much alive. Owed mainly to the previous and present administrations' efforts, the country has risen, albeit slowly, from the global economic crisis. The Philippines is considered a newly industrialized country which is transitioning from being largely dependent on agriculture to relying on services and manufacturing. The Philippine Peso has lost much of its value but with an estimated GDP of $216B (2011), the economy holds a lot of promise for both locals, expats and even Filipinos working abroad.

Business Process Outsourcing is one of the most active industries in the country, employing millions of Filipinos in most major cities. Competing mostly with India, BPO companies in the Philippines provide an edge through the Filipino's accommodating nature, making them some of the best customer service providers in the world.

Tourism is also a very promising industry in the country. More and more tourists are coming to the Philippines every year to experience the exotic beauty of its many islands. Visitor arrivals has significantly increased since the Tourism Department has ramped up their efforts to promote the country as a tropical destination. Medical tourism is also something being explored and slowly promoted in the country.

Living in the Philippines

As a general rule, the cost of living in the Philippines is very low; almost everything is cheap anywhere in the country, save for the capital city of Manila. Housing, transportation, food, travel and entertainment are some of the few aspects of living considered significantly cheaper in the Philippines than in other countries.

Take a burger meal at McDonald's as an example; according to the Big Mac Index of Economist.com, the average price of a Big Mac in New York City is $4.20. In Manila and anywhere else in the Philippines, it only costs $2.68. At the current exchange rate of PHP42.17 for a US dollar (based on Central Bank data), that is only PHP113!

Economist.com's burgernomics shows that the Philippine peso is undervalued and while this sounds depressing for most economists, this is good news for people earning dollars living or planning to live in the Philippines. The example also shows that the cost of living in New York City is staggeringly higher compared to that in the Philippines by 132%. London's is a little higher at 147%, Singapore's stands at 138% higher and Seoul, South Korea is 34% more expensive.

Manila vs. the Provinces

Comparison of Makati City Metro Manila with Cebu City

Being the center of government, trade and commerce in the country, Metro Manila is expectedly more expensive than other major cities like Cebu and Davao. More so, the cost of living in Manila is significantly higher than in the lesser-developed provinces in the country. This being the case, more and more expats opt to live outside of Manila, buying or renting properties in cities with enough modern amenities but with lower costs of living.

Take the cities of Cebu and Davao as examples. Based on expatisan.com, Manila is 5% more expensive than Cebuand 77% more than Davao. The small difference between Manila and Cebu is hardly noticeable considering that both cities are highly industrialized. Davao City, however, is significantly cheaper than the two. While Davao is a highly-urbanized city with all the amenities required for comfortable living, it is not as developed as Manila and Cebu.

Rent, Housing and Utilities

When living in the Philippines (or anywhere else for that matter), a huge chunk of your budget will go to rent or mortgage of a house. Manila properties are very expensive due to overpopulation and living in the metro is often not ideal if you are seeking a quiet life. Rent in the city center costs an average of $278 for a one-bedroom apartment and the cost is even higher if you opt for multiple bedrooms. On the other hand, the same property size costs around $163 outside of Metro Manila.

Foreigners are not allowed outright ownership of land in the Philippines. However, they are allowed to purchase condominium units provided that majority of the residents in the building are Filipinos (Republic Act no. 4726). While this sounds unfair, the rule serves to protect the local population. Most foreigners, if married to a Filipino, purchase a property under the spouse's name. Price for an apartment in Metro Manila is at $881 per square meter.

A monthly electricity bill usually reflects about P3000 if air conditioning is used in a residential unit, half of the amount is charged if there's none. Water (tap water) consumption costs between P200-P300 a month. An 11-kilo tank of gas for cooking costs between P750-P800 depending on the global prices of petroleum. If you're subscribed to cable TV, P350-P750 should be added to the monthly budget. A stay-in house help is paid a minimum of P2500-P3000 in Metro Manila and about P1500-P2000 in Davao City.

Food and Beverage

Tulingan fish at the Davao City public market.

Another significant portion of your monthly budget goes to food and beverage. While it is tempting to eat out more often in the Philippines, it may cost a lot of money when it adds up. A combo meal at a local fast food (McDonald's, Jollibee, KFC, etc.) costs about $3 while a liter of Coke cost a little more than half a dollar. These prices are true across the country but if you're going to eat a three-course meal at a mid-range specialty restaurant, prices may significantly differ. Comparing Manila and Davao City, a meal for two in Manila costs $16 while it only costs $13 in Davao City. Furthermore, drinking water takes up a considerable portion of a budget in Manila while it is almost for free in Davao where tap water is potable.

To avoid overspending on food, it is advisable to prepare your own meals and buy raw foodstuffs in a public market instead of supermarkets or grocery stores. Prices in supermarkets are double that of prices in a local public market since the price of your goods will also cover the rent and utilities of the store. Case in point: a kilo of potatoes in a public market costs P40 (about $.95) and P100 ($2.30) in a supermarket. It also helps that haggling of prices in public markets are the norm while prices in supermarkets are fixed.

Transportation

Colorful jeepney on the streets of Metro Manila Philippines.

There are many forms of transportation in the Philippines and it is quite easy to get from point A to B especially in large cities. However, because of the large number of motorized transportation, traffic is extremely heavy; in fact, Manila is known to have one of the busiest, most congested and most frustrating rush hours in the world. Owning a car is pretty expensive in the Philippines; the purchase itself does not requite a huge sum but insurance, maintenance and fuel adds up. It's easier and more convenient to use public transportation. In Manila, there are jeepneys, taxis, city buses, MRT and LRT that make going around easier.

A jeepney ride costs P8 for the first four kilometers with increments of P1 for each succeeding kilometer. Flag down rate for a metered taxi is at P40 ($.95) and increases by about P18 per kilometer. Bus fare is about P15 pesos for the first 5 kilometers. These rates are applicable to Metro Manila and may slightly decrease in other cities. Renting a car is also an option especially for those who want more reign on their daily itineraries. A cheap rental is at P2000 ($47) per day or P1500 ($35) per day if rented for a week.

If you are headed to other places outside of Manila, catching a flight with a domestic airline is easy, convenient and affordable. Domestic carriers often hold seat sales to different destinations all over that Philippines and taking advantage of these deals allows you to save as much as 70% off of the original fare. Philippine airports are modern and clean so it's never hard to travel between the islands. There are also several naval vessels that ply the waters taking passengers and cargo to different parts of the archipelago.

Clothing and Personal Needs

Used jeans for sale at a local flea market in the Philippines.

Clothing and textile are relatively cheap even in Manila. In places like Divisoria and Tutuban, a basic shirt may cost a meager P100 ($2.38) and a decent pair of denim pants around P500 ($11.9). However, if you buy in upscale malls and department stores, these prices may double or even triple as most shopping centers in the country carry international brands.

Prices for clothing may decrease in other parts of the Philippines and foreigners often head south to purchase indigenous fabrics and accessories to get a fairly cheap price. Other necessities like deodorant, bath soap, shampoo, toothpaste and detergents are pretty cheap; each item does not cost more than P100.

Entertainment and Leisure

Being a country visited by millions annually, the Philippines has heavily invested in entertainment and recreation for both locals and tourists. This has resulted to many theme parks, museums, concert areas and other venues for entertainment in major cities. Government-run museums in the Philippines charge little or nothing for entrance fees though donations are accepted. Private museums, however, charge entrance fees which usually cover guided tours and activities.

Almost every major mall in the Philippines have cinemas showing both local and international mainstream movies. IMAX theaters are available in a number of super malls in Manila and Cebu. Regular movie tickets for two in Manila costs around P360 ($8.50) while it costs P205 ($4.8) in Davao City. Concert tickets vary depending on who is performing; if the artist is from abroad (Lady Gaga, Nikki Minaj, Justin Bieber, etc.), premium tickets can cost as much as P15,000 ($357).

There are several theme parks that offer excellent places for bonding with the family at affordable prices. Two that are located close to Manila are Star City and Enchanted Kingdom. Ride-all-you-can passes to these parks range from P400-P500 ($9.50-$11.9) during weekdays. These rates can increase slightly during weekends and special holidays.

Communication

Filipino businessman on cell phone at office.

There are two mobile telecommunications giants in the Philippines, Smart Communications and Globe Telecom which cater to the text-crazy Filipinos all over the country. There are at least four other networks but these are all subsidiaries of the giant companies. In addition to messaging and voice calls, these networks also provide Internet service in most areas of the Philippines.

A text message of 160 characters sent anywhere in the country costs a peso while the standard call rate per minute is P6.50. These rates are made cheaper through unlimited text and call promos that costs. International rates stand at about P15 per text and $.40 per minute for voice calls. Postpaid plans are available and affordable through the major networks and these plans usually come with cell phone units from big manufacturers like Samsung, Apple, HTC, Nokia and Blackberry. The cheapest postpaid plan costs around P300 ($7) a month.

Internet connection in the Philippines is not as fast as in the United States but it is pretty reliable and the speed is quite decent. At an average speed of 2mbps, most Filipinos are able to performInternet tasks such as video streaming, downloading, surfing and online gaming. The most expensive Internet plan costs about P3000 ($71.4). Those who would rather not subscribe to Internet plans may look up WiFi hotspots in the city center or go to an Internet shop. An hour of surfing at an Internet shop costs between P10-P30.

Cell phones, tablets and personal computers can be bought in most shopping centers in the Philippines. Prices of electronics may be higher in the country compared to other industrialized cities because of importation costs.

To sum it up, the cost is living in the Philippines is very low compared to western cities. In fact, most consider it dirt cheap to live in the Philippines. While this may be true, the ultimate costs still depends on one's lifestyle and spending habits. Just like living in your own countries, you still pay for taxes for properties and goods purchased. It may be very tempting to indulge in all of life's pleasures while in the Philippines knowing that everything is cheap but keep in mind that when expenses add up, you might end up spending more than you intend to or worse, more than you can afford.

If you stick to simple living and constantly look for ways to save, you can live comfortably in the Philippines $1000 a month. This amount will already allows you to rent a medium-sized apartment, buy furniture, pay for the utilities, go around, shop some, eat at home or in restaurants every now and then and save for a vacation. Again, living in the Philippines is cheap, that is if you don't overspend.