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Cebu today and some of its development challenges

/ 07:35 AM July 05, 2013

Fifty two percent of Cebu’s land has a higher than 18 percent slope. This leaves less than half of its land potentially arable. Less arable land, coupled with great demand for housing, commercial and other non-agriculture uses limits the ability of Cebu to supply its own food requirements. Likewise, the highly sloping nature of Cebu’s terrain makes it highly susceptible to soil erosion, landslides and flash floods which is also aggravated by climate change. This is the first challenge newly elected leaders in Cebu must consider.

Cebu has three highly urbanized cities of Cebu, Lapu-Lapu and Mandaue and the Province of Cebu with its six component cities and 44 municipalities. What we know as Metro Cebu today consists of seven cities and six municipalities in the eastern side of Cebu starting from Danao City in the north to Carcar City in the south, including Lapu-Lapu City and Cordova in Mactan Island. Metro Cebu is not an official political government unit but merely an economic unit delineated for purposes of integrated planning and coordinated implementation of development projects as envisioned under the Mega Cebu concept of the Metro Cebu Development Coordination Board.

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In the 2010 census, Cebu counted a population of 4.167 million or 4.51 percent of the entire nation and 61.28 percent of Central Visayas. From 2000 to 2010, Cebu’s population grew by 2.19 percent annually. At this rate, the population of Cebu will reach 4.64 million in 2015 and 5.18 million in 2020. I ask our newly elected local government officials: Do we have the resources to meet the needs of our fast growing population?

Metro Cebu’s population was counted in the 2010 Census at 2.551 million or 61.2 percent of the entire population of Cebu with an annual growth rate of 2.83 percent. While desirable from the economic point of view because of economies of scale, the rapid growth and high level of concentration of population in Metro Cebu can also create more social problems like lack of housing and the rise of slum areas, pollution, traffic snarls, mounting garbage and so forth. Globally, however, economic growth is seen as coming largely from fast growing metropolitan areas. The second challenge, therefore, is how to plan and make Metro Cebu grow faster without creating or compounding the ills of urbanization. Can our newly elected local government officials in Metro Cebu do this?

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The economy of Cebu is the largest in the south after Metro Manila in the north. Cebu’s economic growth is driven by the rapid increase in investments in business process outsourcing, tourism, and real estate development. As of last year, there were already 139 information technology (IT) and business process outsourcing firms located in Cebu which generated a total of 95,000 jobs. In 2011, foreign and domestic tourist arrivals reached 1.922 million. From 2006 to 2011, foreign tourist arrivals grew faster at 12 percent annually compared to domestic tourist arrivals which grew only by 7.0 percent annually. Six special economic zones (SEZs) operate in Cebu where most of the island’s exports are generated. In 2012, the six operating SEZs hosted 278 locators with a total employment of more than 100 thousand workers and over US$ 3.0 billion in exports.

But are we to depend only in this type of activities for our future? I ask our newly elected local officials: What is our strategy to make Cebu competitive in attracting more and varied types of investments in the next three years and thereafter?

In 2011, the gross regional domestic product (GRDP) of the Central Visayas region was estimated at P601.9 billion at current prices. This was 6.2 percent of the gross domestic product (GDP) of the entire country. There is no government estimate of GDP below the regional level. However, applying its percentage share of the total population to the Central Visayas GRDP would give Cebu P373.2 billion in gross provincial domestic product (GPDP) in 2011. This is equivalent to 3.8 percent of the GDP for the entire country.

Since most of the industrial, export and related service activities in the region are concentrated in Cebu, its GPDP is surely much higher than the above estimate. This, however, is not consoling enough. In 2009, for which latest data is available, Cebu’s average family income was still much lower at P207,0000 than that of Metro Manila’s P356,000 and barely surpassed the P206,000 national average. How can we make Cebu’s GPDP and average family income higher than they are now? This is another challenge to our newly elected officials because more of the same BPO, tourism and real estate development may not be enough.

Beginning in 2000, official government data on employment is broken down to the regional level only. Data from the April 1999 Quarterly Employment Survey, however, showed that Cebu had long ago achieved its transformation from being pre-dominantly agricultural to industrial and service activities when it reported that Cebu’s dependence on agriculture was already down to less than 30 percent of its employed workers. This is good because industrial and service activities give higher income per worker than agriculture.

Given a 4.4 million projected population this year and assuming a working age group equivalent to 65 percent of the population and 65 percent labor force participation rate, Cebu will have a labor force of about 1.859 million this year. If the 7.4 percent unemployment rate of the region in January this year is also true in Cebu, about 137,000 workers are unemployed here, not to mention the underemployed which regionally reached 20 percent. Furthermore if Cebu’s labor force were to grow by 2.19 percent, similar to its population growth, Cebu’s labor force will increase by at least 40,000 annually. This, I am sure, is much greater than what the combined BPO, tourism and real estate development is presently generating.

Lack of employment opportunities and the inability of the employed workers to get higher wages because of the high unemployment rate explains why the nation’s poverty incidence remains high at over a fourth of our population. Creating jobs, therefore, is another big challenge that our newly elected local government officials in Cebu must address.

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