Why we must keep Cebu globally competitive

With the very long weekend we’ve had for All Saints’ and All Souls’ Day, we look forward to a November without any more holidays, as the Muslim holiday that was supposed to be declared by Pres. Gloria Macapagal Arroyo (GMA) was cancelled. That means our economy can move a little bit faster as it is the engine of our economic growth and development.

Last Thursday, the Cebu Investment Promotion Center (CIPC) celebrated its 15th Anniversary. As our good friend CIPC Managing Director Mr. Joel Yu pointed out to us, today we can no longer count on the manufacturing sector to fuel the growth of Cebu. The dynamics of the Cebu economy has changed, thanks to economic watchdogs like CIPC that have been a on the alert all these years they have been serving Cebu.

Indeed, the CIPC have done more for Cebu than the Department of Trade and Industry (DTI) especially when it came to promoting Cebu as the DTI’s budget entails the promotion of the region. More importantly, CIPC acts as a “radar screen” to look for sunrise industries that we can tap and warn businesses that belong to the sunset industries to shift their focus.

Some ten years ago, when I interviewed Joel on our tv talkshow Straight from the Sky, he told our audience that the furniture industry was “a sunset” industry. At that time, it was hard to believe as our furniture exporters were enjoying brisk business, although a lot of them were hit hard by the Asian Financial crisis of 1997. But that was principally due to either greed or bad investments.

It is a fact that because Asia was badly hit in that financial turmoil, it taught us bitter lessons which was implemented by the banking industry. That undoubtedly helped protect many Filipino businessmen from being hit by the current global financial crisis that affected many highly-industrialized western nations. Asia learned its lessons well and wasn’t as badly hit as the US, Europe or Australia.

It was also ten years ago when CIPC and the Tourism Office under Director Dawnee Roa told us that Cebu lacked hotel rooms. Few businessmen didn’t invest in hotels because they believed that the tourist would only go to the five-star resorts lining up along the shore in Mactan. But apparently, many tourists come to Cebu, not just for the beaches, but also for shopping and as a starting point to visit the other islands. Hence today, you will see new that hotels have began to sprout even in places like Mandaue City, which never had any hotels five years ago.

Right now, the big-ticket investors coming to Cebu are those in the Information Technology (IT) industry or the Business Process Outsourcing (BPO) Industry. I got a report that the 29 largest BPO providers in the Philippines have reported a combined revenue of P94.4 billion for 2008, which is up by 21% or P16.1 billion from the P78.3 billion earned in 2007. CIPC’s Joel Yu pointed out that this revenue is money that was earned from our workers in the IT Industry that gave them their salaries. It is not earned from any domestic business.

What is more important is that BPO investors are still coming to Cebu as the Philippines has become known as one of the major global players in the BPO market. But these BPO investors are not coming in droves because they love Cebu, no sir! They come to Cebu because we have become globally competitive against BPO markets like India or China Our specialty are the Call Centers because of the Cebuano’s ability to speak good English, vis-â-vis the English spoken by Indians, Chinese or Singaporeans. This is why Cebu must maintain this competitive level; otherwise, many of these BPO investors may just pack up and leave.

As Mr. Joel Yu pointed out, Cebu must not be satisfied with the status quo, that what is good for Cebuanos is good enough. I totally agree with him. Cebu is now playing host to many expatriates from Japan, Korea and the US. We must work feverishly to improve our standards. I dare say, “What is good enough, should not be good enough for us!”

Furthermore, the Philippine Export Processing Zone Authority (PEZA) has by law given many incentives to local businesses who will invest in infrastructure that is needed for the IT or BPO Industry. However, I heard that the Bureau of Internal Revenue (BIR) especially in Manila has refused to heed or adopt these incentives because this year, the BIR has fallen short of their revenue targets. Like it or not, it is a chicken or egg scenario, where BPO investors would not come to Cebu unless PEZA convinces local businesses to set up infrastructure for these investors to use. In short, the BIR and PEZA must get their acts together in order to keep Cebu competitive; otherwise we might lose these businesses to other global players.

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