JITTERS ALL AROUND

 

The victory of Republican candidate Donald Trump in the US presidential elections is making business stakeholders and local officials in Cebu nervous, as it might knock the wind out of surging industries like the business process outsourcing (BPO).

Ma. Teresa Chan, Cebu Chamber of Commerce and Industry (CCCI) past president, said Trump’s protectionist and anti-immigrant policies might affect future expansion plans, if not the current or existing size and investments of BPO locators and other US businesses, as well as future remittances of immigrants.

In Cebu, there are at least 82 registered companies that are either partly or wholly owned by American entities or investors, including at least 10 leading call centers, according to a list from the Philippine Economic Zone Authority as of May 2016, a copy of which was furnished to Cebu Daily News last night.

On Tuesday evening (Wednesday, Philippine time), 70-year-old Trump was elected as the 45th president of the United States of America, beating Hillary Clinton of the Democratic Party, with 276 (58,173,271) electoral votes against 218 (57,708,523).

The businessman-turned-reality TV star and political newbie is set to take his oath of office on Jan. 20 next year.

Trump, while on the campaign trail, promised to reassess America’s trade deals and impose fines on imports from China and Mexico in a bid to bring jobs to the country, channeling the belief that work in the country is being robbed by foreign competition.

This pronouncement was seen to threaten the BPO industry, considered to be one of the major driving forces of the nation’s economy.

Cebu City is home to more than 20 contact centers, 10 of which are big US-based firms including Teletech, 24/7, Convergys, Alorica, Xerox, JPMC, NCR, IBM and United Health Group.

Data from the Cebu Economic and Business Unit, a newly established unit under the office of Mayor Tomas Osmeña, showed that the industry today employs around 160,000 workers in Cebu City alone.

According to latest figures from the National Economic and Development Authority in Central Visayas (Neda-7), the BPO industry in the region generates P2 billion every month. Nationwide, the industry generated $22 billion in revenues in 2015.

Worrisome

Osmeña yesterday admitted that Trump’s victory worried him.

“It worries me. In Cebu City alone, we have 160,000 call center agents averaging P45,000 a month for a monthly payroll of P7.5 billion,” he said in a text message.

Osmeña said he will be having a meeting with BPO leaders on Friday where this concern will also be raised.

The meeting, titled maximizing employment potential of the BPO industry, will be at the Sinulog Hall of the Rizal Library at 1:30 p.m.

Asked what he will be telling the BPO leaders during the discussion, he said he will give “reassurance that Cebu will emerge as the best host for call centers.”

For his part, Cebu City Councilor Eduardo Rama Jr. said that even before yesterday’s US elections, a lot of players in the local BPO industry have already been expressing their concerns on the campaign pronouncements of Trump.

Rama, who heads the City Council’s Committee on Information and Communication Technology, said he personally hoped that Trump’s plans won’t push through.

“But for me, we should now focus more on knowledge process outsourcing, which is focused more on skills. It doesn’t just have the US as its market,” he said.

Unpredictable

A supervisor from one of Cebu’s top BPO companies told Cebu Daily News that he feared for their business following the announcement of Trump’s victory.

“Maybe he’ll discourage new clients from outsourcing. He can also impose tax penalties on companies who continue to outsource. In short, (he’ll) make it more expensive to outsource,” he said.

While his company originated from Europe, most of their clients are based in the US, according to the supervisor who asked not to be named.

Chan, however, said there have been no reports of BPOs postponing plans to expand or prospective investors changing their minds.

“Trump is unpredictable and a bit impulsive, and there might be initial uncertainty all over the world,” Chan told CDN.

True enough, global stock markets and US stock futures plunged as Trump took the lead in the presidential race, something economists said reflected investor concerns over what his presidency would mean for trade and the economy.

Wilfredo “Jun” Sa-a Jr., executive director of the Cebu Educational Development Foundation for Information Technology (CEDF-IT), meanwhile, is maintaining a “wait-and-see” attitude towards the effect of Trump’s victory on the BPO industry here.

“At the end of the day, it is still a business decision of what is best for their operations,” he said.

Upbeat

Cebu City’s investment czar Joel Mari Yu said he remains upbeat on the future of the BPO industry here despite the possible negative implications of Trump’s ascension to the White House.

“We are very Gung-ho on Cebu as an IT destination. We are already on the list of places to locate in the last seven years,” said Yu, referring to the Tholons Top 100 Outsourcing Destinations survey where Cebu City ranked 7th this year.

Nonetheless, he said the city government will remain on its feet and do what it can to protect their plans to grow Cebu’s BPO industry.

He added that he is hopeful Trump will soon find out that there are limitations to his power and that American businesses are outsourcing not because they just want to drive jobs out of the country but to remain globally competitive.

“If Trump says he wants to stop outsourcing, he is telling American companies that he is inhibiting their right to be competitive,” Yu explained.

Since wages are high in America, businesses are compelled to put up operations in countries where labor is cheaper to remain at par with competition.

Mandaue Chamber of Commerce and Industry (MCCI) President Glenn Soco, on the other hand, said he believes that Trump, as an astute businessman, has an understanding of global business and likewise the importance of US-Philippine trade relations.

Don’t panic

Philip Tan, past president of MCCI, said people should not panic since everyone gets a chance to adjust during Trump’s first 100 days in office.

“Whether his policies will be positive or negative, we need to adjust to it,” said Tan.

Tan admitted that Trump’s anti-immigrant stance would be bad for overseas Filipino workers in America and remittances coming from abroad, which are among one of the biggest drivers of the Philippine economy.

Remittances from OFWs amounted to $28 billion in 2015, 43 percent of which came from OFWs in the US. America currently hosts at least six million Filipinos.

On immigration, Trump earlier said that he would establish new immigration controls to boost wages and ensure that open jobs are offered to American workers first.

Nonetheless, Tan said that foreign policy does not rest on presidents alone but on their respective legislative counterparts.

But because majority of both the US House and Senate seats were won by the Republican party, Tan said Filipinos should just pray Trump wouldn’t push through with his earlier pronouncements.

On the other hand, Arron Pedrosa, the secretary general of Sanlakas-Cebu, saw Trump’s victory as something that will “definitely shape world politics.”

“It will definitely be challenging times ahead for the United States especially for immigrants, workers, indigenous groups, women’s and rights groups with (Donald) Trump at the helm,” he said. “We cannot say that democracy is dead with Trump’s win. Rather, we see how the anti-establishment sentiment of electorates can sweep the most unlikely contenders into power, a story akin to Duterte being catapulted into power.”

TAGS: BPO, Cebu, Cebu City, Donald Trump, Elections, Hilary Clinton, Philippines, US