Cebu economy in 2012: Business sees brighter picture

CEBU, Philippines - After failing to attain what had been a 'rosy' outlook for 2011, Cebu's business community is hoping to see the turn-around of the economy at the start of 2012.

This is, however, mainly hinged on what would happen to the economies of the United States and the European Union.

"If the government lets go of its spending in 2012, it could push more economic activities. What happened in 2011 was-money of the government intended to pump prime the economy was being held. And yet, Cebu in particular continued to hold its leadership in economic growth in the country," said Cebu Business Club (CBC) president Gordon Alan "Dondi" Joseph.

While the government's expected spending on infrastructure projects is seen to boost the country's economy in 2012, Joseph said Cebu may not be able to fully enjoy this "economic pump-priming" as most of the Private-Public Partnership (PPP) projects are to be implemented in Luzon area.

Although, there is continuous confidence and positive anticipation for 2012's entry to real "economic turn-around" specifically for Cebu, Philippine Retailers Association (PRA-Cebu) chairman Jay P. Aldeguer believes that economic growth is also threatened by calamities and many other factors.

According to Aldeguer, the tourism, real estate, and Business Process Outsourcing (BPO) sectors are still the "bread-winner" industries for Cebu in the "Year of the Dragon."

"We are expecting a better year for 2012, but also we are preparing for volatile growth because of the crises being faced by United States and Europe," said Cebu Chamber of Commerce and Industry (CCCI) president Samuel Chioson.

What is needed to push the gear to economic strength for Cebu in 2012, despite external threats, is to strengthen expertise in achieving "inclusive growth," that will not largely depend on external inflows, but growth derived from local industries such as tourism, Joseph said.

Department of Trade and Industry (DTI-7) regional director Asteria Caberte projected that employment opportunities for Cebu in 2012 will rise to its highest level, not only prompted by the new investments and expansion in the BPO industry, but also because of the anticipated transfer of some manufacturing companies from Thailand to the Philippines.

Caberte said, Cebu in particular has to prepare for the influx of manufacturing related investments by 2012 that would bring in more employment opportunities and additional economic activities.

"Thailand for now, can never be an option, and the Philippines is a better option for investors," said Caberte.

She added that although the Philippines still has to catch up in competing with other attractive investment destinations in manufacturing such as Vietnam, "we still have an edge over other countries."

The good business environment and the streamlining of business processes-which makes it easy for businessmen to transact business in the Philippines, are just among the few advantages that the Philippines has.

Aside from manufacturing investments, Caberte said tourism is also one of the direct beneficiaries of Thailand's problem as more tourists will reconsider their choice of vacation and leisure destination.

The garments, gifts, toys, and houseware as well as other manufacturing related sectors are seen to register good growth in 2012, she said.

Economist Bernardo M. Villegas, of the University of Asia & the Pacific (UA&P) believes that Cebu will gain further economic momentum in 2012 largely fueled by BPO, tourism, manufacturing, agri-business, creative industries, logistics, and others.

"Cebu is very lucky because it has a good mix of sunrise industries," the well known economist said referring to the good positioning of Cebu to thrive economically, amid the country's fragile economic condition.

Likewise, Cebu is seen to leverage on its four "Fs" strength -- food, fashion, furniture and fun -- which is closely linked with tourism and entertainment.

Exports, which used to be one of the region's "bread-winners" is still going to face challenging future-at least in the first few months in 2012.

"Exports will be very difficult, that is why most exporters are now shifting or diversifying into real estate," Villegas said.

Despite this bright outlook for Cebu, Villegas emphasized the threat that the province faces that could hamper its drive to achieve unprecedented growth in 2012. He said that the threat of power shortage should be addressed immediately and given utmost attention.

The reality now, Villegas said is a lot of companies and businesses are going out from Metro Manila, and consider in transferring elsewhere. One of the most attractive sites is Cebu.

Mandaue Chamber of Commerce and Industry (MCCI) president Eric N. Mendoza said the Cebu business community is anticipating for the big projects of the government and hopefully it could trickle help boost economic activities down in the Southern part of the country, Cebu included.

Although, there is a general positive outlook for 2012, with real estate expected to double its dynamism in Cebu, with the increasing flow of investments in BPO, and upbeat tourism figures, Mendoza said Cebu is still cautious of the possible effects of the economic downturn of the European zone, and the under-recovered US economy.

CCCI chairman for Information Communication Technology (ICT) Committee Jerry Rapes said BPO companies operating in Cebu are expected to hire more people in 2012, while new big names in world's BPO/IT and Knowledge Process Outsourcing (KPO) are looking at the province as top pick for an offshore site.

Cebu was declared by Tholons as an "Emerged BPO Destination in the World" 2011, but it needs to immediately address the manpower resource problem.

At present, the BPO/IT sector in Cebu is employing around 60,000 people. This number is seen to double or triple even within a year or two, if quality manpower is available.

CCCI past president Francis O. Monera also said that BPO industry will continue to propel Cebu's economy being one of the province's major economic drivers, and is poised to further improve the coming year/s.

"Demand for BPO services is expected to surge as more companies abroad seek to implement reduction of operational costs while aiming to achieve operational efficiency," said Monera, who is also the president of Cebu Holdings Inc. (CHI), the developer of Cebu Business Park and Asiatown IT Park.    

Monera reported that in the Cebu Business Park and Asiatown IT Park, there are over 35,000 workers.

"This industry has indeed played a key role in employment generation. Plans are underway for us to start construction on a BPO building within Cebu Business Park, as well as the third sequel to the eBloc Tower within the I.T. Park."

With this development, Monera said, the players from the private sector, the academe and the local government have collaborated to improve human capital to increased the manpower pool via proficiency/certification, retraining, and jobs-skills matching programs. There are also intensified programs that support infrastructure and tourism service to strengthen the investment climate in Cebu.

Significantly, as Cebu sees tourism as its "star" economic driver for the province, Aldeguer, who also a tourism capitalist, said players in the sector are expecting that the new leadership of the Department of Tourism (DOT) would set the proper direction for the industry.

The Philippines, in general, according to Aldeguer, needs proper pushing and new DOT secretary Ramon Jimenez seemed to get what needs to be done.

The aggressive push of tourism, however, needs to address the problem of infrastructure in order to be successful, Aldeguer said. — /NLQ (FREEMAN)