Destination: Cebu

While the boom sort of slowed down after 1997, Cebu remains an attractive investment proposition. The clincher – business-friendly economic zones and first-class infrastructure facilities

By Delma L. Peyra

For starters, here’s Cebu’s economic activity by some indicators. Export receipts: nine percent of the Philippines’ total. Exports growth rate in the past five years: close to 20 percent. Monthly production output of cameras (mostly digital) at the Pentax facility inside Mactan Export Processing Zone: 300,000. Number of weekly commercial flights at the Mactan-Cebu International Airport: 525. Daily passenger traffic at the airport: 6,500.

Estimated number of people who attended the 2004 Sinulog festival (see separate article in the Lifestyle section): one million.

Half of Cebu province’s 3.4 million people now live in what is called Metro Cebu – comprised of six cities, namely, Cebu City, Mandaue, Lapu-Lapu, Talisay, Danao, and Toledo. This is the biggest concentration of urban population in the Philippines outside the National Capital Region – a veritable gold mine for the malls, restaurants, and service and leisure establishments that mushroomed after Cebu’s boom – the Ceboom phenomenon – in the late 80s and early 90s. Partly a product of the most aggressive investment promotion blitz in the country – with a private sector group, the Cebu Investment Promotion Center (CIPC), working hand-in-hand with government economic agencies in marketing the island-province as an investment destination. Further, the group is working toward “a better distribution of opportunities outside Metro Manila,” according to its Managing Director, Joel Yu. As a result, Cebu bagged big-name investors, both Filipino (i.e. the Ayalas put up the Ayala Center-Cebu in 1994) and foreign (i.e. American firm Fairchild Semiconductors and Asahi-Optical of Japan among others).

True, investments have not yet matched the pre-1997 levels before the Asian currency crisis struck the country. (In 1994, total investments totaled a high P52.14 billion, but slid to P292 million by 1999.This was up again to P1.5 billion in 2000, but in 2002, Cebu’s registered investments were down to just P289 million). And yet, Cebu continues to up the ante, through its economic zones and air, land, and sea facilities – and is ever ready for the next wave of Ceboom.

Mactan showed the way

Started in 1979, the 150-hectare Mactan Economic Zone (MEZ I) is located near the waterfront of Mactan island and strategically accessible via the seaport and the Mactan International Airport. It currently hosts more than a hundred companies from a wide range of industries – from electronics and computers to metals and precision instruments, from chemicals to garments and furniture.

Factories inside the MEZ I churn out watches (TMX Phils.), cameras (Asahi Pentax), stylish furniture (Maitland Smith), diodes/transistors (Fairchild Semiconductors) that find their way in export markets, mostly in Japan and the United States. Proof of how successful the economic zone program has been the development of the 63-hectare Mactan Economic Zone II (MEZ II), privately developed however (Aboitiz Land), that attracted some 42 locators. Combined employment of MEZ I and MEZ II account for some 43,000 jobs, infusing some P300 million a month to Cebu’s local economy. Directed towards manufacture-for-exports, locators inside MEZ I and II are entitled to income tax holidays and duty-free importation of equipment, among other incentives – as mandated by the Special Economic Zone Act of 1995 (Republic Act 7916).

Today, there are six other economic zones and industrial parks following the success of the Mactan ecozones. What’s more, these industrial parks are spread across the province, according to a masterplan for managing economic development in Cebu. MEZ I and II and the Cebu Light Industrial Park are located in Mactan island, the New Cebu Township in Naga, in the northern part of the province, the West Cebu Industrial Park in Balamban, the western part of Cebu in Balamban, and the Cebu Asia Town IT Park. The Miranila Economic Zone is a 2,800-hectare property being developed in Aloguinsan and Barili, South of Cebu.

The private sector manages and develops all of the above except for the Cebu South Reclamation Project. The Cebu City government is developing the 300-hectare prime property development on reclaimed land just a few meters off the coast of the Cebu central business district. PEZA-registered as a special economic zone, locators at the Cebu South can avail of special incentives. The Japanese investors, who own more than half of Cebu’s top export firms, are funding the project cost of P3 billion, through the Japan Bank International Cooperation (JBIC). They also funded the adjacent Cebu Coastal Road, a four-lane, 12-kilometer highway built to ease traffic in the city. Starting this year, the Cebu South will be ready for occupancy and both manufacturing and service industries are welcome. A great come-on for locators, aside from the guaranteed sound infrastructure done by the Japanese is the proximity of the central business district and the international port (ten minutes away) and the International Airport (30 minutes).

Flying and shipping ‘em

Approximately 600 kilometers south of Manila, Cebu’s location is right at the center of the Philippine archipelago, making it an ideal base and transshipment point for domestic and of course, international trade. In this aspect, consider Cebu’s history as trading outpost even before the 16th century when the Spaniards came. The taipan John Gokongwei Sr., founder of Cebu Pacific Air and Chairman of one of the country’s biggest conglomerates, JG Summit, is a Chinese-Filipino born in Cebu and started his career as a trader by bringing goods by boat to and from Manila. Cebu’s predisposition to trade goes hand in hand with island’s mountainous topography being dominated by mountain – making the island less-than-ideal for agriculture. Today, more than 60 percent of Cebu’s exports are industrial goods, rather than agriculture or resource-based products. Thankfully, as factories inside Cebu’s economic zones hum away with watches, cameras, electronic chips, or classy furniture, these products get instantly whisk away as cargo via sea or air throughout the world.

By sea, cargo from the Cebu International Port reaches Japan from six to 16 days, the United States in 16 days, Singapore in just five days and Hong Kong in nine days. According to the Department of Trade and Industry, Cebu is the country’s busiest port and base to over 80 percent of inter-island shipping capacity – with its numerous ports servicing 44 local shipping lines and 13 international carriers / shipping lines. Aside from the international airport, a general-purpose berth exclusively for domestic cargoes and the roll-on/roll-off (RORO) ships and a domestic terminal for inter-island ferries, containers, break-bulk cargoes and passengers make up the Port of Cebu.

Foreign container traffic for the Port of Cebu averaged 12 percent yearly growth (1996 to 2000), according to the Cebu Port Authority. Ship calls are up six percent a year, while passenger traffic averages almost 13 million annually.

By air, exporters are assured of reliable air freight. All the major international couriers such as DHL, FedEx, UPS and TNT operate in Cebu. In 1998, in recognition of Cebu’s export strength, Federal Express included the province in its AsiaOne network. Five times a week, Airbus A310 aircraft pick up packages and freight from the Mactan International Airport transit to Jakarta, to Singapore, and to the United States. Two bridges join the airport located at Mactan island to the Cebu mainland.

Clean and spiffy, having just completed its P2.6 billion expansion and modernization program, the airport is one of the major reasons to do business in Cebu. Regular direct international flights are available to key Asian cities such as Singapore, Hong Kong, Narita, Kota Kinabalu and Seoul. Domestic flights are available practically to all Philippine cities, from Basco in the north to Tawi-Tawi in the south. International cargo volume grew eight percent in annual average while domestic cargo grew at an average four percent. Proof of how Cebu has attracted foreign businessmen and tourists is the growth of passenger traffic at 23 percent annual average for the past 12 years.

Proactive promotion

Certainly, one of the biggest reasons for Cebu’s economic success was the take-charge attitude of its local government and business community. Cebu’s elite knew that it had to corner a huge chunk of foreign investments to provide jobs — looking at how FDIs transformed the economies of Singapore, Malaysia and now, China. And how it played the game, and still does — by being investor-friendly and yet, being competitive-minded at the same time. CIPC rolls out the red carpet for prospective investors. It will arrange the itinerary of visitors, brief them on useful, organized information from statistics to government policies and incentives and link them to important contacts and partners. “We have the ability to provide timely information, as we have gathered inputs from all concerned, companies, and government agencies alike “ says Yu. And knowing that prospective investors are always on a shopping and comparison mode – CIPC zeroes in on the information that matters, tailor-made to a specific audience. For example, since the Philippines is now facing tough competition from China as a manufacturing destination, CIPC plays the information technology card. Cebu has more than enough of engineers and college graduates to man call centers, software companies and IT-related services. Or consider, how CIPC takes care of its special relationship with Japan, Cebu’s top source of FDIs. CIPC’s website can be alternatively read in the Japanese language while its latest promotional video will also be alternatively dubbed in Nippongo.

A typical briefing by Yu, a Cebu native, is peppered with how Cebu compares with Subic, Clark, or Calabarzon in terms of business costs, wages, infrastructure and the like. For those who view the country as a single patriotic package from Aparri to Jolo, this smacks of provincialism. True, the underlying tone of competitiveness in CIPC’s gameplan underscores how Filipinos splinter – choosing safe and comfortable ties such as family or ethno-regional origins when faced upon limited choices towards progress. But provincialism is what you get with the lack of a united and singular strategy or vision to move the entire country forward – and this one’s the call of national leaders.

And yes, there’s always more than meets the eye – past the gleaming airport, the festive atmosphere, the numerous hotels. Today, certain sections of Cebu palpably echo the run-down side of Metro Manila – where the poor, the less flit footed are relegated to the sidelines. As Yu admits, “Cebu is dirtier now than ten years ago.” But hey, with Cebu’s progress – most of the time anyway – one can’t argue with success.

For more information, visit
http://www.cebuinvest.com and http://www.cebucity.gov.ph