High growth seen for Cebu amid uncertainty over polls

Korean tourists take a selfie in this October 2015 photo. Tourism is among the biggest contributors to the regional economy. (CDN FILE PHOTO)

But most businessmen still adopt wait-and-see attitude, stall investments

Economist Fernando Fajardo said he was confident that Cebu and the rest of Central Visayas, given the region’s high growth trajectory, would continue to thrive despite the uncertainty created by the presidential elections in May next year.

“There is no great reason why we have to slow down in Cebu because as I have said, it seems that Cebu is growing with or without Manila’s pacing. The proof is that the economy is growing faster than the national,” Fajardo told reporters.

Central Visayas region, to which Cebu belongs, grew 7.4 percent in 2013 and 8.8 percent last year. These are higher than the national growth rate of 7.1 percent in 2013 and 6.1 percent in 2014. This year, the Philippines is targeted to grow by 6 percent.

Most businessmen, however, are stalling investments in the runup to the 2016 presidential elections five months from now.

“I think the general sentiment of the (business) group with elections coming up is, like everyone else we have a wait and see attitude,” said Gordon Alan Joseph, president of the Cebu Business Club.

Fajardo said it is natural for businessmen to adopt such a mindset.

“There might be some problems if there is a change in administration because that will put some uncertainty in the business climate. New administration, new perspective. Now, there is uncertainty. If there is uncertainty, investors may hold back on investments. Foreigners will also wait and see,” he said.

But he was confident that the outcome of the elections may have very minimal effects on Cebu’s businesses considering that the region has been growing faster than the Philippines.

He said the increase in the number of businesses putting up shop in the region shows confidence in the local economy, which is largely services-based.

Two large malls opened recently in Cebu while more business process outsourcing (BPO) companies have set up operations in Cebu.

The BPO industry currently employs around 120,000 workers and targets to increase this to 150,00 by 2017.

TOURISM

Tourism in the region is also booming, with tourist arrivals growing by 11.1 percent from 2006 to 2013.

In 2014, tourist arrivals increased by 16.4 percent. Foreign arrivals grew by 13.5 percent, which meant more domestic expenditures for Cebu, Fajardo said.

Because of the good growth exhibited in the last six years in both the Philippines and Central Visayas, economists and businessmen alike have voiced their desire for continuity in terms of policies under the next administration.

Under the Aquino administration, the national economy grew at an average of 6.2 to 6.3 percent – the highest recorded growth under a single administration for the country.

“It may be hard to achieve 6 percent overall this year, because that means we must grow beyond 6 percent in the last quarter to cover up for the last three quarters,” Fajardo said, referring to the gross domestic product (GDP) growth recorded in the first three quarters of this year, of 5.3 percent, 5.6 percent and 6.0 percent, respectively.

“But while (it’s) hard to do that is not impossible,” he added.

CONTINUITY

Increased government expenditures in the last two quarters of 2015, may be able to bump up the GDP growth.

“Aquino will leave the Malacanang with a good record, at sustaining a growth of 6 percent or higher under his administration. Personally I will favor continuity, or a continued atmosphere,” Fajardo said.

“We already have a very good image outside already. Almost all international bilateral agencies and the most developed economies appreciated what is happening in the Philippines, not only in fighting corruption and improving governance but also in doing better this time in terms of economy,” he added.