CEBU, Philippines - Although the economic experts believe that the challenges that are effects of the global recession will linger for the next two years, Cebu’s economy, on the other hand, is expected to rebound in 2010 as positive indicators already started to show in the last quarter of 2009.
“We are poised and prepared for the economic rebound in 2010. Our export sector has showed positive developments towards last quarters of 2009. Even in the midst of global recession Cebu’s economic performance continued to be robust and sound,” said National Economic and Development Authority (NEDA-7) regional director Marlene Rodriguez.
The year 2010 is considered as the gateway to recovery for Cebu. The province’s economy that is primarily driven by tourism, Business Process Outsourcing (BPO) and exports was able to withstand the most threatening fiscal crisis in history brought about by the global recession.
With the sunnier outlook for 2010, Cebu, as well as the Central Visayas region, is seen to outpace other regions in the country in terms of growth, while both government and private sector prime movers had already dished out plans to “stay above water” and push for full economic recovery in the province this year.
Rodriguez said tourism industry in Cebu continued to “breathe” in 2009, although foreign arrivals have dropped by significant numbers.
“Luckily, the domestic market saved the declining number of foreign visitors,” she said, thus tourism in Cebu has not been badly affected. However, it continued to provide revenues.
The continued interest of capitalists to invest in the real estate, retail, and tourism sectors, while the entire world suffered from depressing economic situation in 2009, will push Cebu’s recovery to a full swing in 2010.
Besides, the election this May will also spur the purchasing power of consumers, thus boosting the retail trade in the province, Rodriguez said. And this activity is not seen to discourage investors to pursue investment plans.
Significantly, the declaration of Cebu as the number one Emerging BPO Destination in the world (2008 and 2009) is expected to double or triple the popularity of the province to the international investing community and big ticket investments are expected to come starting 2010.
Although the United States is still on its way to recovery, Cebu has started to gain investors’ inquiries for big-ticket BPO companies, the Cebu Investment and Promotions Center (CIPC) announced.
CIPC managing director Joel Mari S. Yu said that investors’ inquiries for BPO voice and non-voice have started to pick up.
In fact, in the last few months CIPC had hosted several potential investors doing ocular inspections in Cebu.
Yu hopes that this time, Cebu will be able to benefit from its number one “Emerging BPO destination” in the world position for two consecutive years as the province was not able to fully enjoy it last year, because of the global recession.
While the US is still the largest market for BPO investments, Yu said Cebu also is hoping to attract outsourcing companies from other continents like Europe.
The BPO industry in Cebu already employs over 50 thousand workers. This number is expected to grow as BPO giants are starting to locate here, like the large American outsourcing firm JP Morgan Chase & Co. (JPMC) that announced to open a 420-seat call center facility in Cebu at the Asia Town IT Park this March and would need at least 2,520 people in a two-shift cycle.
Department of Trade and Industry (DTI-7) regional director Asteria Caberte also reenforced the positive outlook for Cebu in 2010, saying the BPO industry will make Cebu among the richest economies in the Philippines starting 2010.
In tourism, Cebu had been able to grow in the first three quarters of 2009, saved by the active domestic traveling market.
Record from the DOT-7 regional office here, revealed that the more active domestic market that travels to different destinations in the country, including Cebu pushed the 5.4 percent jump of domestic arrivals to Cebu in the first nine months of 2009.
Cebu continues to be the top destination for foreign tourists with 321,116 in the first semester of 2009.
In 2010 tourism in Cebu is seen to drive economic rebound, said DOT secretary Joseph Ace Durano.
Durano said the expansion in air access from major tourist markets, including the new charter flights from Incheon, Busan, Shanghai, Guangzhou, and Kaohsiung as well as increase in room supply, aggressive promotion, public and private sector partnership to diversify the tourism products greatly contributed to the hike in visitor volume to Cebu.
The badly hit export industry on the other hand, is not losing hope. Instead, players are now preparing to enter the recovery year, armed with full market knowledge, technical expertise to fight the competitive market landscape.
The export sector which lost 33,059 jobs during the historical global recession is now starting to rehire displaced workers.
One of the largest export contributors— the furniture industry is expecting a slight rebound starting 2010.
“The worst had happened this year [2009] in the history of furniture industry. The business climate has changed. We just have to maintain conservative outlook,” said Cebu Furniture Industry Foundation Inc. (CFIF) president Angela Paulin, in a year-end press briefing.
From experiencing an all-time-low performance in the early part of 2009, Paulin said the industry has seen a slight improvement in the last two quarters of this year, although this is not a sure indication of a fully recovered market.
Record from the National Statistics Office indicating the performance from the Port of Cebu revealed that Cebu furniture exports contributed only $12.5 million in the first quarter of 2009, compared to $31.8 million in the same period of 2008.
However, the industry has seen a single digit growth, in the last few months, as bulk orders specifically from big retail chains in the United States have improved.
“While there has been slight activity - with orders coming in during the last quarter of this year - furniture players are taking a conservative stance. We need to see how the industry will perform after the first quarter of next year before we can conclude how well we will do by 2010,” said Paulin.
She said furniture players believe “the worst has happened for the local furniture industry” during the height of the global financial meltdown started in 2008, where the local industry contracted 30 percent in terms of closures of several companies, retrenchment of workers, and reduced work hours.
Likewise, Mandaue Chamber of Commerce and Industry (MCCI) president Eric N. Mendoza said that business players are anticipating a good year in 2010, as there are a lot of opportunities for investments that local and foreign capitalists could take advantage of.
The robust growth in tourism, BPO/ICT, and improving statistics in export sector encouraged some investors to position themselves as early as 2009 to seize a profitable opportunity in 2010.
According to Mendoza, the triple economic drivers of Cebu (tourism, BPO and exports) will provide good performance to other industries like retail, services, transportation, healthcare and wellness, among others.
While Cebu is anticipating a “cheerful” economy in the “Year of the Tiger”, private sector players are urging government executives both national and local government units to fix on basic infrastructure in order to sustain the expected growth.
Businessman and water expert Antonio Tompar said the upcoming election will provide opportunity for Cebuano people to choose leaders that have serious stance in fixing the basic infrastructure to complement the growth for the province.
According to Tompar, power and water problems should be addressed very seriously, otherwise, the sunny economic outlook for the province will be dampened because of poor supply of basic necessities.
“Investors will first look at the basic infrastructure first. Supply of water and power should be immediately fixed,” Tompar said. — /NLQ (THE FREEMAN)