Do we need an investment promotion center?

Many people would rank Cebu, particularly Metro Cebu, as the second most prosperous and dynamic growth center in the country after Metro Manila. This may not be true anymore if we look at the many fast-growing centers in Calabarzon and Central Luzon today.

To really make Cebu more prosperous and dynamic and maintain its standing in the country’s quest for development, it must work hard to get more investments. More investment is necessary because that is what would allow a place to provide jobs and income to its people. Cebu’s labor force is now growing around 40,000 a month. Do we open as many jobs every year?

The question then is how to get more investments, especially foreign investments that come with new technology and wide global market connection. The World Bank’s annual report on Ease of Doing Business would tell us that one way of attracting more investments is to make doing business easy. In its report it means transacting with the government in a much faster and less costly way such as in getting a business permit, for example.

The World Economic Forum (WEF) has another idea. In its annual Global Competitiveness Report, the WEF would tell us that higher productivity is essential for rapid economic growth but that this would mean having more investments. To get more investments, however, the World Bank prescribes to a less developed or developing country, like the Philippines, to meet the following requirements first: (a) the need to put in order its institutions, (b) build the infrastructure, (c) improve basic education and health and (4) maintain macroeconomic stability.

Assuming that all of these are being done, however, it is still one thing for Cebu to desire more investments and another thing to actually get them, hence the need for a concerted action to promote and market Cebu not just nationally but also globally. Are we doing this? The Cebu Investment Promotion Center says it is doing this job and proudly points out the number of business process outsourcing (BPOs) firms that locate in Cebu annually. That is true but we also need more investments in other fields which presently is still very much lacking. For example, we still have to fill up all our approved economic zones many of which are still empty including the almost 20-year-old Cebu City South Reclamation Project.

So it was with sadness, therefore, when I heard of the trouble plaguing CIPC recently. If Cebu City will not give its annual financial assistance, how can CIPC operate effectively? But then why must the assistance come only from Cebu City? What about Lapu-Lapu City, Mandaue City and the provincial government? What have they given to the CIPC to help promote Cebu? Not satisfied with CIPC’s job?

Whatever, I just want to point out here that for Cebu to attract investments, it will never make it if there is no agency assigned to promote Cebu professionally to investors and facilitate their entry. That agency may be the CIPC or it can just be an investment promotion office within a local government unit. All that I want is that the CIPC or whatever agency is used by the province and its three highly-urbanized cities to drum up investment. Now, the big question is: Do they really know what investment promotion and facilitation is all about?

What is investment promotion and facilitation and what is required to make it work?

Here I would just like to present a few things (for lack of space) about this that is contained in the OECD Policy Framework for Investment User’s Toolkit for Investment Promotion and Facilitation. It says: “Within an overarching strategy for improving the investment environment, investment promotion and facilitation can help to increase both domestic and foreign investment and to enhance their contribution to national economic development. Success in promoting investment requires a careful calculation of how to employ resources most effectively and how to organize investment promotion activities within the government so that the overriding goal of economic development through improvements in the investment climate remains at the forefront of policymaking.”

First, the toolkit asks this question: “Does the government have a strategy for developing a sound, broad-based business environment and within this strategy, what role is given to investment promotion and facilitation measures?”

The rationale for the question is that a sound, broad-based business environment is a process as much as an outcome and that countries that have sound climates maintain them through formalized processes to evaluate business conditions and adapt continuously to competition and to changing economic conditions. Accordingly such evaluations also require institutions for setting and monitoring a business environment strategy.

Going further, the toolkit says that as part of this process, investment promotion and facilitation can help attract new investors and retain existing ones, especially in smaller, more remote markets or in those countries with a recent history of macroeconomic and political instability, adding that effective investment promotion highlights profitable investment opportunities, by identifying local partners and by providing a positive image of the economy.

Other related questions that need asking according to the toolkit include matters on laws and regulations concerning investment, on streamlining administrative procedures, on administrative barriers to trade and on regulatory barriers.

Now how many local government units in Cebu have an investment law or code to guide investors? Is there anyone in each local government who is looking at ways to streamline administrative procedures affecting business operation? Does each unit know what their profitable investment opportunities are? What are they doing to project a good image of their locality?