“CEBU is a victim of its own success.”
Its economy in 2015 grew better than it did in 2014, local business and key economic players believe, even if official government data on the regional gross domestic product (GRDP) for this year will be published in mid-2016 yet.
Growth in 2014 in Central Visayas stood at 8.8 percent. The GRDP this 2015 could be higher, said National Economic and Development Authority 7 Director Efren Carreon. The region’s growth is primarily driven by Cebu, which accounts for two-thirds of the total population in the region, according to economist Perry Fajardo.
The year 2015 is a banner year for certain sectors like tourism, retail, and business process outsourcing. Cebu’s hosting of the Asia Pacific Economic Cooperation (Apec) meetings boosted the local economy.
Tourist arrivals in the first eight months of this year reached 2.8 million in Central Visayas, 43 percent up from the same period in 2014. Of the figure, Cebu welcomed some two million tourists, while the rest were shared by Bohol, Siquijor, and Negros Oriental.
The banking sector, according to the Cebu Bankers’ Club (CBC), also exhibited strong performance, boosted by consumer loans. CBC President Maximo Rey Eleccion said that almost all banks in Cebu exhibited double-digit growth in 2015, hitting the companies’ targets.
Construction, per Neda’s latest data, showed a nine percent decline, although private players in the case of the Subdivision and Housing Developers’ Association (SHDA) Cebu chapter believe that the sector remained vibrant this year.
Meanwhile, foreign trade remained sluggish.
Exports in Central Visayas during the seven-month period, the latest available from Neda, dropped 14 percent. Imports declined 31.6 percent versus the same period in 2014. Carreon said this is due to weakening demand in the global markets.
Agriculture, based on Neda’s regional data, showed signs of recovery in 2015 although total production remained negative. The decline was pulled down by the crop and fisheries subsector, which dropped by 7.6 percent and 2.4 percent, respectively. On the other hand, the livestock and poultry subsectors rose 3.4 percent and 12.6 percent, respectively.
“Generally, it was a good year for Cebu, better than it was last year. Hopefully, we can achieve nine percent growth this year,” the Neda director said. Average inflation in the first three quarters of 2015 stood at two percent, way below the 5.2 percent inflation recorded during the same period in 2014.
Employment generation activities in the region also appeared to have paid off. The region’s average employment rate slightly rose to 94.1 percent in 2015 from 94.0 percent last year.
Underemployment, on the other hand, continues to be a challenge.
Looking for more work
It has not improved at 18.4 percent, same as last year. Carreon said this could mean that the type of work generated in the region remains “largely not of the quality that pays well” since workers keep looking for additional jobs.
The Cebu Chamber of Commerce and Industry (CCCI) echoes assessments of the favorable economic performance of Cebu. Visible indicators include the entry of foreign brands in the retail scene, mall expansions, and a surge in car ownership, which consequently worsened the traffic situation in Metro Cebu.
“Cebu is a victim of its own success,” a CCCI official said. Chi-Kuo Lin, of the Ministry of Transportation and Communications of Chinese Taipei, during the APEC meetings in Cebu described Cebu’s traffic as a “nightmare.”
Mandaue Chamber of Commerce and Industry President Donato Busa said that if Manila is losing P9 billion every day due to traffic, according to reports, Cebu’s losses are estimated to be about P2 to P3 billion every day.
The current state of infrastructure in Cebu is not supportive of Cebu’s growth and its potentials, said Busa. Due to traffic, business suffers an increase in operational costs, less productivity, and even losses in revenues as clients or customers cancel orders, said Carreon in a separate meeting.
The Bus Rapid Transit (BRT) is supposed to ease the worsening traffic in Metro Cebu, but civil works of the project have not been implemented yet. Carreon said this may start next year.
“BRT is supposed to help us, but we don’t have a clear idea of what it’s going to be,” Chan said.
Port congestion is also another problem, CCCI President Maria Teresa Chan remarked, noting the increasing volume of cargos shipped to Cebu. “Nothing substantial has really been achieved,” Chan added.
A new international port may start construction in August 2016 in Tayud, Consolacion, said the Regional Development Council 7.
Power in Cebu remains at a “comfortable” level, said Department of Energy 7 Industry and Management Division Chief Saul Gonzales. Cebu recorded 446 megawatts (mw) as its highest capacity but peak demand reached 885 mw, which prompted the importation of power from Leyte.
Cebu is one “blessed” province this year, said Carreon, without any major catastrophes that took place unlike in 2013. Recovery continues in northern Cebu, in the 15 towns and one city struck by super typhoon Yolanda, he said.
If Cebu, however, wants to maintain this growth, “good” and “quality” infrastructure has to be put in place before existing and future investors change their minds about Cebu.
Bacolod, according to Busa, could grab these opportunities from us. Iloilo is also increasingly attractive.