Manila peddling used palaces, tourism

For sale: Exotic Philippine palace. Constructed mostly of coconuts. Intended for Pope but never used. Seven large bedrooms. Luxury dining for 50 to 60. Nearly Olympic-size pool. $5 million or best offer. Or so the ad might read if Jose Antonio Gonzalez were the broker.

On a whirlwind visit to the United States to promote travel to the Philippines, this businessman-turned-tourism minister can't resist plugging a few choice pieces of property left by the Marcos regime.

``We drew up a list of 500 companies at our last Cabinet meeting,'' Mr. Gonzalez says, comfortably attired in an off-white barong. ``So many of these the government has no business running. We want to privatize all the government assets that make sense.''

That includes the ``Coconut Palace'' above and the ``Palace in the Sky,'' a mountain retreat built for the Reagans but never used by them. ``It would make a great health spa,'' says the affable Gonzalez, only half joking.

But Gonzalez has more than a Philippine white-elephant sale on his mind. The worldwide coverage of a peaceful transition of power in this tropical island nation has put it on the map. Most hotels' occcupancy rates have risen 30 or 40 percent since February, says Gonzalez. Many visitors are businessmen there to check out the prospects for new investment. He intends to keep the momentum.

So the purpose of his US visit is twofold: to sell travel agents on the virtues of the Philippines as a vacation spot and to counter the negative publicity arising from the pro-Marcos demonstrations and reports on the communist insurgency.

``Most of the demonstrators are paid lackeys,'' Gonzalez says. ``They wouldn't be there if they weren't getting paid 200 pesos a day,'' he says, his voice hardening. He advocates arrests, but has not convinced the Aquino administration of the wisdom of such a course.

And safety concerns related to the war with the communists? (Counting both sides, about 1,000 have been killed since President Aquino took office). Gonzalez says that only a few select areas are unsafe. He is disturbed that ``many of the [war] stories are datelined Manila but the insurgency is taking place 400 to 500 kilometers away. Not a single tourist has been hurt.''

After agriculture, tourism is the second-largest industry in the Philippines. It generates 10 to 15 percent of the crucial foreign-exchange earnings needed to service external debt.

Last year, some 775,000 tourists (down from the peak of 1 million in 1980) spent $507 million in the Philippines. Most visitors hail from Japan, Taiwan, and Hong Kong. Gonzalez hopes that by 1988 the nation can lure 2 million tourists to his shores and pocket $1.4 billion in foreign currency.

While the impoverished Philippines needs tourist dollars, it should be noted that the economy is already on the mend. After two years of backsliding almost 10 percent, the gross national product rose (by less than 1 percent) in the first quarter.

``We're seeing the beginning of a recovery,'' says Milan Brahmbhatt, an Asia specialist at Data Resources Inc., a Lexingtion, Mass., consulting firm. In addition to the optimism inspired by a new government, several economic factors are working to the country's benefit.

Lower oil prices, if they stay down, will save the Philippines as much as $500 million annually. The drop in interest rates reduces debt service on external loans. Prices on the major export commodities (wood, sugar, and copper) are firming, and coconut prices may be nearing a bottom.

The Aquino administration has secured new aid from the US and Japanese governments and commercial banks. The International Monetary Fund is expected to grant a new standby credit agreement and allow the Philippine government to step up spending. It would be an unusual step for the IMF.

``It goes against the IMF's traditional fiscal conservatism, but I assume they want to support the new government,'' Mr. Brahmbhatt concludes. He figures the Philippine economy will grow about 2 percent this year and 4 to 5 percent next. The only major economic stumbling block, he says, could be political instability.

Meanwhile, Gonzalez will not find the Philippines an easy sell this summer, since many Americans plan to stay close to home. And competition from overseas destinations ranges from the British Airways $6 million sweepstakes promotions to fare wars on flights to Hawaii. Gonzalez gamely pitches: ``If you want to step over bodies on the beach, go to Florida or the Caribbean or Hawaii. But if you like privacy, come to Manila.''

Gonzalez has another reason for championing travel to his homeland. In April he was appointed chairman of the government-owned Philippine Airlines.

``We're coming out of a financial tailspin,'' he says. Fuel costs and interest rates are down. Traffic is up. The airline has been flying with a healthy 78 percent load factor since April 1, the start of the fiscal year. ``For the first time in eight years we should make a profit.''

Of course, a few changes in the airline's policies also figure prominently in the turnaround. Gonzalez says the former chief executive officer of the airline spent $1 million last fall on lavish promotions to open a two-flight-a-week route out of Chicago. ``He spent $300,000 on the Chicago Symphony Orchestra.''

Gonzalez says the airline will no longer be flying to Hong Kong just to bring Imelda Marcos a special seafood dinner from a favorite restaurant. Nor will he have to worry about the cost of sending ``His'' and ``Her'' DC-8s to Singapore at the same time, which happened on at least one occasion, he says.

Gonzalez, active in Mrs. Aquino's campaign and an early supporter of her late husband, Benigno Aquino, was appointed tourism minister in February. He also runs his own firm, Mondragon International, a wholesale licensee of consumer products in Manila. He will soon open two retail stores in Los Angeles which import handmade household goods from the Philippines.

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