Shipbuilding going strong in Balamban

ALL the world may be waiting with bated breath for a fragile global economic recovery to take hold, but one local industry does not seem to have been affected by the crisis that began more than two years ago with the implosion of the US subprime mortgage sector.

“Shipbuilding in Balamban is still going strong,” said Andoni Aboitiz, president and chief operating officer of Aboitizland, the real estate arm of the Aboitiz group.

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Aboitiz last Monday said Tsuneishi Heavy Industries (Cebu) Inc. (THICI) had a two-year backlog of orders, representing 25 ships.

“What benefited them (Tsuneishi) was the drop in steel prices. From the peak, steel almost halved in price,” he told Sun.Star Cebu.

THICI is a partnership of Tsuneishi Group of Japan and the Aboitiz group.

THICI’s clients are companies specializing in the chartering and leasing of bulk carriers. Most are Japanese and Taiwanese, while some are European.

Despite fears that certain countries in Europe with large budget deficits may derail the global economic recovery currently underway, Aboitiz group officials expressed confidence about the prospects for the local economy.

Aboitiz said companies in the Mactan Economic Zone (MEZ) 2, the industrial zone run by Aboitizland, are hiring again and that power consumption is going up.

Although MEZ 2 is full, he said Aboitizland is not looking to build a new industrial zone because of the shift in priorities of investors.

“The Philippines is out of the radar. Investors usually go to Vietnam or China (now),” he said. Vietnam and China are low-cost manufacturing centers.

For his part, Erramon Aboitiz, president of Aboitiz Equity Ventures, the publicly listed holding and investment management company of the Aboitiz group, dismissed concerns that trouble in the so-called PIGS countries in Europe would have a big impact on the Philippines.

PIGS refers to Portugal, Italy, Greece and Spain, which have high budget deficits and unemployment. Some analysts add Ireland and Great Britain to the group to make it PIIGGS.

“They’re not really a big part of our (Philippine export) market,” said Erramon.

He was optimistic about business prospects in the Philippines this year, saying, “Some of our export industries that have been badly hit, like furniture, are beginning to come back.”

“Our local demand has not been affected really,” he added. “Interest rates are low. Inflation is very much under control. Banks are in good shape. Our budget deficit is not that bad also.”

Inflation fell to 4.3 percent in January from 4.4 percent in December.

The Philippines’ budget deficit of P293.2 billion in 2009 was equivalent to 3.7 percent of the gross domestic product (GDP), the amount of goods and services produced by the country.

According to Bloomberg News, Greece’s budget deficit is 12.7 percent of its GDP. Portugal’s 2009 budget deficit was 9.3 percent of GDP; Ireland’s was 11.7 percent; and Spain’s was 11.4 percent.

The figure for the United States was 9.9 percent of GDP.