Outsourcing, real estate, tourism still drive economy
The year 2012 was a year of growth in many industries in Cebu.
Business outsourcing, construction, real estate and tourism industries did well while the export industry lagged, said Prudencio Gesta, president of the Cebu Chamber of Commerce and Indusry (CCCI).
It was a phenomenal year not only for Cebu but for the whole country as well, said Gesta and leaders of two other business organizations in Cebu—the Mandaue Chamber of Commerce and Industry (MCCI), and Cebu Business Club (CBC).
They pointed to the 7.1 percent 3rd quarter Gross Domestic Product of the country.
In separate interviews, they said they were expecting 2013 to be a more robust year for the economy.
CBC president Gordon Alan Joseph said the retail industry should be added to the list of winner industries with agriculture as one of the low performing sectors this year.
“The construction industry was the biggest winner this year fueled by the still growing overseas Filipino workers remittances which then trickled down to many other industries like retail, real estate, and tourism,” said MCCI president Philip N. Tan.
At least 17 new BPO locators opened in Cebu this year, including Asian Global Creation Philippines Inc., a Japanese-Filipino company; Quest Rightshoring Services Pte. Ltd. Philippines, a Singaporean company; and Clicklabs, a Canadian-Brazilian company, according to the Cebu Educational Development Foundation for Information Technology (CEDF-IT).
The real estate industry is also in the upswing with more projects in the works including Megaworld’s P10 billion Mactan Newtown, which started development work middle of this year.
The retail industry got a boost with the opening of a new SM mall in the north—SM Consolacion in the middle of the year.
According to the Department of Tourism, tourists increased by at least 10 percent in the first quarter alone compared to year ago figures or 539,826 tourists arrivals in March in Cebu.
The business leaders said the economic growth, especially in the outsourcing industry was directly influenced by the growing positive image of the country among foreign investors.
“Pnoy (President Benigno Aquino III) was able to focus on the key issues of perception of addressing corruption which resulted in increased investor confidence,” Joseph said.
He said the President was enjoying a high confidence rating from Filipinos which carried a positive impact on the economy.
In Cebu City, however, the city did not see dramatic developments because of the “dysfunctional” relationship between the City Mayor Michael Rama and the City Council, said Jospeh.
“The business sector doesn’t understand the reason for the dysfunctional relationship, the non-cooperation. In our perception, it is purely political in nature and it is holding back the developments of the city,” said Joseph.
Tan agreed. He cited Mandaue City as a similar example during the first term of Mayor Jonas Cortes.
Mayor Cortes and the City Council then had been at odds and had affected the services of the city.
After his first term, Cortes and the Council had worked together to improve the city.
“Now, Mandaue City government is seriously working together to make improvements in the city which includes the creation of the Mandaue City Investment Code. The code is still being polished with the mayor really looking at the future of Mandaue,” said Tan.
Good governance, according to them is indeed a key towards economic growth in any given locality may that be a whole country or a specific barangay, municipality or city.
Other winner industries like tourism, retail, construction and real estate will follow on the growth in investments in the outsourcing and OFW remittances especially that both help create more jobs and increase purchasing power of the general population.
They said that with the continued strengthening of the peso, the export industry’s recovery remains to be seen.
“The export industry is still in the loser industry ctegory this year because despite some increase in volume of orders and a renaissance of sorts in some of our key markets, these are being dragged down by the strengthening of the peso making the business less profitable,” Gesta said.
He said that reports suggesting that the peso would continue to strengthen with the continued economic growth of the country could mean the end of the exporters if the don’t make the necessary adjustments.
“They have valid complaints but they need to have a strategy. They will need help definitely but not to defend a weak peso. It’s a world economy, the weaker the dollar the stronger the peso gets,” said Joseph.
Tan suggested that exporters innovate to remain competitive.
“By innovate I mean product innovation, quality, process innovation by looking for ways to reduce cost at the same time still produce the requirement and innovate on marketing and not rely on the traditional international trade shows abroad,”said Tan.
Joseph said the agriculture industry remained a loser industry because despite the growth in consumption rate, agricultural yield remains marginal.
PROSPECTS FOR 2013
The business leaders gave mixed expectations for next year. With 2013 an election year, this presents presents both challenges and opportunities for businesses. They said they expect the same winner industries to grow especially with the government expected to invest more in e infrastructure like the expansion of the Mactan-Cebu International airport terminal.
“The year 2013 will have a superficial GDP (gross domestic product) growth because of the elections, however, if we continue with the momentum of 2012, we can expect the economy to expand further especially in major growth areas like Manila and Cebu,” said Joseph.
He said he would expect more investments in manufacturing next year.
“Construction will continue to grow especially with the increase in government spending. Real estate will be a sub-primary industry while OFWs will remain to be our heroes,” said Joseph.
Gesta said if the government continues with the high ratings specifically on the reduction of corruption, the country’s economy would continue to grow.
Improved business registration renewal processes like what is being done in Mandaue City will also make it easier for investors to do business here.
According to the chamber leaders, lack of adequate infrastructure remains the biggest limiting factor for Cebu and the rest of the country which should be addressed right away.
Over-concentration in IT (information technology) parks would also pose a challenge with increased population in these areas that could result to inadequate roads leading to traffic, said Joseph.