Experts see Cebu as premier growth area in RP - Cebu Circle | Cebu City, Philippines

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Tuesday, August 11, 2009

Experts see Cebu as premier growth area in RP

MANDAUE CITY, Cebu—Cebu’s growth drivers—business-process outsourcing (BPO) and tourism—are poised to recover first and the fastest from the global economic slump and should further entrench the province as one of the fastest-growing in the country, economists and business leaders said.

UP economics professor Cayetano Paderanga Jr., who was guest at the One Cebu Business Summit on Monday, said the two industries continue to post positive though slower growth despite the worst times of the worldwide meltdown. Investments in the two industries should be a good prospect for businessmen, Paderanga said.

Foreign-tourism arrivals posted a close to 9-percent increase in Cebu in the first semester of 2009, while the BPO sector, which employs 50,000 workers, did not report any job losses amid the worst times of the crisis.

The overall theme of the event was surviving the economic crisis and positioning business for the rebound. The Cebu provincial government rolled down big-ticket investment opportunities in the province.

The province offered joint-venture programs for its plan to build the P45-billion Cebu transaxial highway, the new Cebu International Port in Consolacion town, the expansion of the terminal building of the Mactan-Cebu International Airport, as well as the province’s bulk-water supply and solid waste-management initiatives.

Cebu Gov. Gwendolyn Garcia challenged the business sector to unite in order to weather the economic difficulties so all industries will come out intact when the good times come back.

“In difficult times and in future challenges, Cebu never fails to unite and limit our narrower selfish interest and to recognize that our shared destiny is very much larger than ourselves,” Garcia said. It was not all good news. Paderanga warned manufacturers and exporters in Cebu, which in 2008 produced $6 billion worth of products, that it will take a long time for their key markets, the US and Japan, to recover.

“There should be a slow growth in the traditional markets; therefore, a need to shift into new markets,” Paderanga said. He identified China and India as among the key markets of the future.

“They said this is going to be an Asian century, it looks like it is going to be that way,” he said.

Paderanga projects a positive GDP growth for the Philippines in 2009, but said much of it will rely on how the US rebounds in the next few months. He said baseline growth for 2010 could be around 2.01 percent and 2.14 percent in 2014. He said the US would take five to seven years before it goes back to pre-crisis levels, pushing the need for new markets for Cebu’s furniture, fashion accessories and gifts, toys and houseware sectors.

The US and Japan account to close to 30 percent of the country’s total exports.

Paderanga said infrastructure, utilities and the high cost of doing business in Cebu remain its biggest challenges. He highlighted, however, the province’s relatively low rent for space, being still one-third compared with Metro Manila prices and power that is still 30 percent cheaper.

The 3.7 million highly educated work force in the region is also a key factor, along with growth areas like the 300-hectare South Road Properties owned by the Cebu City government.

Paderanga said Cebu needs to add more value to its tourism industry, especially ancilliary services like spa and wellness to tourists, which should be an optimistic growth area.

He said there is also a need to widen the services of the BPO industry from traditional low-cost to value-added services like software engineering, legal services and transcription.

The Philippine Chamber of Commerce and Industry also reported its four main advocacies to help the country bounce back as food security, infrastructure, education and power generation, chairman emeritus Donald Dee said.

“We need to go back to the basics as in the past years. In our effort to be globally competitive, these were the sectors we have neglected,” Dee said.

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