CEBU’S business community is looking forward to a more promising 2024, after going through rough challenges last year.
Businesses experienced high inflation, elevated interest rates, challenges in the ease of doing business, geopolitical tensions, and a global economic slowdown — all of which collectively impacted investor confidence.
For 2024, officials of the Cebu Chamber of Commerce and Industry (CCCI) outlined five key wishlists for the Wood Dragon Year, which they believe would further propel Cebu’s economy to greater heights.
These are the cost and power supply problem in Cebu, private-public partnership for a dam project to address Cebu’s water crisis, realization of a mass transit system, provision of an e-visa to boost tourist arrivals and the realization of the Metro Cebu Expressway, a 74-kilometer expressway that will connect the cities of Danao and Naga.
“I think we’ve seen the worst of it. The year 2024 should be better,” said CCCI president Charles Kenneth Co.
He highlighted high inflation as the most significant challenge faced by Filipinos last year, which hampered economic activities. However, with inflation cooling to 4.1 percent in November, Co said the public can anticipate a surge in economic activity in 2024.
“Our economists are forecasting a slight pickup in growth... Factors that will contribute to this are the lower inflation, and also lower interest rates,” said Co, adding that the US decision to lower its interest rates will also positively impact global market sentiments.
The Philippines has revised its growth target for 2024, to 6.5-7.5 percent from the 6.5-eight percent range, due to high inflation and looming drought because of the weather phenomenon El Niño.
Kelie Ko, president of the Mandaue Chamber of Commerce and Industry (MCCI), saw 2023 as a challenging year as companies’ bottom lines remained subdued due to higher input costs. But, he is also expecting better prospects ahead.
“Economists see a better year ahead. For sure tourism numbers will continue to grow,” said Ko, although the slowing down of China’s economy “might prolong the recovery a bit.”
The Department of Tourism seeks to bring in 7.7 million international tourist arrivals in the country in 2024.
Unlike tourism, some industries have also struggled, including the construction sector.
“The construction materials supply industry has seen one of their worst years (even slower than 2022) due to tempered demand from building construction,” Ko said.
CCCI’s Co said they saw fewer new projects last year.
He said there was less government spending in the Visayas and Mindanao areas. Increased government spending, especially on infrastructure projects, can stimulate economic growth by creating jobs and boosting demand for goods and services.
Meanwhile, MCCI’s past president Steven Yu said they view 2024 with optimism but “on a highly cautious note.”
Yu said while the government’s spending helped pump prime the economy in the second half of last year, there was “a general slowdown in the overall consumption as felt by most sectors in the business community.”
“We project and see an ‘exhaustion’ of surplus household savings after a year-long of revenge spending. We also saw a shift in spending habits towards value-for-money offerings and ‘essential’ products,” he said.
He pointed out high interest rates, fragile geopolitical situation and uncertainties, and a weaker Chinese economy that will continue to cast a “heavy” shadow over the Philippine economy in 2024.
Moreover, building construction will not be in full swing in 2024. Ko explained that traditionally, construction is a laggard when it comes to reacting to economic conditions.
Interest rates, he added, will remain critical to reaching the economy’s turning point.
The Bangko Sentral ng Pilipinas (BSP) is expected to keep interest rates at elevated levels, at least up to the early part of 2024 to keep inflation at bay.
Ko said high interest rates dampen borrowing for expansion and home buying. The BSP keeps the interest rate at 6.5 percent.
“Many believe that we have reached the bottom in 2022 and 2023, so there is no way but up going forward. What remains to be seen is whether we will go up an escalator or tread up the stairs slowly,” he said.
Amid the challenges that lie ahead, Co said the Philippines continues to attract investors’ attention as evidenced by numerous visits from ambassadors and trade councils to Cebu. These dignitaries have expressed their interest in doing business with Cebuanos.
“We saw a lot of interest from foreign countries from India, Singapore, Malaysia, and China, among others. We still have young demographics working in our favor. We may not realize it but other countries already have stagnant population growth. The countries that have money are looking at developing countries like the Philippines to invest in because this is where the growth areas are,” the CCCI official explained.
Co said they eagerly anticipate the influx of fresh investments into the country, stemming from President Ferdinand Marcos Jr.’s overseas trips aimed at promoting the Philippines and enticing new investors.
“Investment wise, there’s interest and what we need to do is convert these interests into actual investments,” said Co. “We’ve seen our President himself going around the world to entice investors to come in.”
The presidential and state visits of Marcos in 2023 resulted in US$5.28 billion, or P294 billion, worth of actualized investments, according to the Department of Trade and Industry (DTI).
DTI-Board of Investments Undersecretary Ceferino Rodolfo said Marcos’ foreign trips actualized $4.089 billion (P227.72 billion) in investments for eight projects; $790.58 million (P44.02 billion) for 11 projects; and, $398.17 million (P22.17 billion) for nine projects, as of Dec. 21.
Although the business community welcomes these new investments, Co said there is a need for the government to address concerns regarding the cost and ease of doing business to foster an environment that encourages more investors to enter the Philippine market.
“We hope our partners in the government will see these challenges and not make it difficult or costly to the investors to come in because we need these investments to create more jobs. Having more jobs is a sign of economic progress,” he said.
Yu added the country also has to prepare itself for these new investments by harnessing technology and upskilling the workforce.
He added that there is a continuous challenge of removing roadblocks to progress like improving infrastructure and access, managing traffic issues, easing ownership rules to attract foreign direct investments, and a generally favorable business and investment climate for domestic and international investors.