Has ‘Ceboom’ returned?

Whether we like it or not, the continuing squabble at the provincial capitol is now distracting many people working there and the people in the province that they serve. The sooner the issue will be settled the better it is for all of us in Cebu.

This is not to say that business in Cebu is affected by the standoff at the Capitol. Many business people do not deal with the Capitol unless one is a supplier or contractor of the provincial government. I also do not believe that it matters so much to the businessmen in Cebu who runs the provincial capitol in the next six months.

Which brings me to this question – what happened to Cebu last year? Was the local economy doing well in line with the reported hitting of the high end side of the national government’s 5 percent to 6 percent economic growth target for 2012? What was our target for Cebu? What did we achieve?

Unlike the national or regional level, there is no gross domestic product data at the local level that we can use to measure the economic performance of Cebu. There is also no other economic target that I know that I can examine if it has been met or not. This, however, should not stop us from asking what happened to the economy of Cebu last year. Using certain information about the different sectors of the economy we can still have an idea what happened.

Here they are.

Cebu Holdings Inc. president Francis Monera said that the real estate sector in Cebu saw a revenue growth of 18.8 percent in the third quarter alone. That record is supposed to be the fastest among the growth industries in Cebu.

Well and good but what is Cebu Holdings Inc?

Cebu Holdings Inc. is an Ayala-controlled company. It is the developer of the 50-hectare Cebu Business Park which was built out of the golf course previously owned by the province of Cebu. In his time as Cebu governor, Lito Osmeña saw the Cebu provincial government property as only the playground of the rich Cebuanos. A businessman himself, he thought of selling the property to whoever had the means to develop the land into a commercial center. The bidding was done and the Ayala Group won. Now we have the Cebu Business Park – hosts to many different kinds of businesses that employ thousands of workers instead of just the “pulot” boys and few others who worked at the former golf course.

Add the development of the competing project of SM at the north reclamation of Cebu City, the construction of the new airport terminal, the widening of the major roads in Cebu under the Metro Cebu Development Projects I and II, including the Mactan Circumferential Road, the Waterfront Hotels in Lahug and Mactan, and many more private constructions project and the result was “Ceboom” which lasted up to the coming of the 1997 Asian Financial Crisis.

Has Ceboom returned?

Last year, the areas in and around the Cebu Business Park, including the Asiatown IT Park that was also developed out of the former Cebu Domestic Airport, became the site of several new buildings being constructed to meet the growing demand for commercial, office, and residential spaces in the fast growing Metro Cebu.

Cebu Investment Promotion Center Managing Director Joel Mari Yu said that 17 new business process outsourcing (BPO) companies set up shop out of the 56 inquiries the center received. The new BPOs happened also to be mostly of the non-voice Knowledge-Processing kinds (KPOs) that use more talents from their workers and pay more instead of the usual call centers that pay less. More than 10,000 jobs were created by the BPOs that came to Cebu last year.

Data from the Department of Tourism (DOT) office in Cebu also shows that total tourist arrivals in Cebu grew by 13 percent from 972,575 in the first half of 2011 alone to 1,098,634 in the first half of 2012, with foreign tourist arrivals growing much faster at 16.7 percent from 401,592 in the first half of 2011 to 468,529 in the first half of 2012.

The Cebu foreign tourist arrival figures compares well with the reports from the DOT in Manila. It revealed that that the total number of foreign tourist arrivals in the country grew only by 8.6 percent from 3.5 million in the first 11 months of 2011 to 3.8 million in the same month in 2012.

Growth in the real estate, BPO and tourism sectors also means growth in the other sectors of the economy that are closely allied with them like those in the service industry, such as retail trade, for example. Just look at how many new malls opened up or started construction in Cebu last year.

The same three sectors now serve as the main growth drivers in Cebu. That was also true in the past five or 10 years. They will still be Cebu’s growth drivers this year and next year. There is no question about this especially that the other major industry in Cebu, the export sector, is still suffering from the lingering effects of the 2008 to 2009 global recession and the appreciation of the peso which now makes it hard for the local exporters to compete in the shrinking or slowly growing global market.

But more of the same, I do not recommend for Cebu.

Concentrating in few areas in Metro Cebu and requiring higher education and new skills, the three fast growing sectors exclude from work many workers who live elsewhere or do not possess the required qualifications.

This year Cebu has to create 40,000 new jobs just to employ the new entrants to the labor force. Add to this the 400,000 to 500,000 workers or the 20 to 25 percent of the present labor force that are still unemployed or underemployed, then the need to create more jobs in the other industries in Cebu becomes imperative.