By Lorie Ann A. Cascaro
The year 2011 has a lot in store for Davao City’s economy as perceived by business leaders. However, a few pertinent issues are yet to be addressed in order to fully maximize the city’s competitiveness.
Aside from having a large labor force pool and abundant natural resources, this center of economic activities in Mindanao is located outside the typhoon belt, is free from foot-and-mouth disease and bird—all of which make the region more attractive to investors, according to Vicente T. Lao, chairperson of the Mindanao Business Council, who added that Davao City “is entering a new and exciting year in 2011 with our new city mayor and the numerous mega-projects that will be completed before year end.”
He said the city will still be strong in the service sector—tourism, conventions, information and communication technology (ICT), business process outsourcing (BPO), and other service related businesses.
“Our weakness is the lack of certain facilities to fully support the tourism industry. We lack a big auditorium, large air-conditioned buses and a Halal restaurant,” he added.
“Davao is typhoon free, a place where rainfall is almost even throughout the year with, a few exceptions. This, obviously, makes Davao fit for agriculture, tourism, a haven for retirement and simply a very good place to live in,” said Robert C. Quinto, president of the Davao City Chamber of Commerce and Industry, Inc. (DCCCII).
Boom industries
The industries expected to continue booming in 2011 are ICT, tourism, and property development, according to Jason C. Magnaye, officer in charge of the city tourism office (CTO), and Davao City Investment Promotion Center (DCIPC).
The most promising industry in Davao City, in the short to medium terms, is the ICT which has bolstered the city’s recognition as the No. 1 Next Wave City in the Philippines for the year 2010, and the Philippines’ emergence as the world’s No. 1 destination for business process outsourcing (BPO), dislodging India, he said.
“Unverified reports indicate that the contact center industry in the city has already employed close to 11,000 individuals as we close the year 2010,” he added. New emerging areas of competency for the city are knowledge process outsourcing, animation, software development and other non-voice areas.
Lao said, “The city is correct in supporting the ICT sector because it’s the sunshine industry.”
Teolulo Pasawa, director of the Department of Trade and Industry—Davao City Field Office, said that Davao City has very positive business prospects for 2011. “With property development on the rise, we foresee good opportunities for the services sector. Other sectors that support the industry will also have brighter prospects in 2011,” he added.
Quinto also shared a similar outlook considering Filipinos who went abroad in the 50’s and 60’s. He said his friend Joey Lim told him that, “They will be coming back to retire here. Not to mention retired foreigners who are married to Filipino women, and OFWs buying homes for their families. This can easily result to more entrepreneurs coming to Davao, and Dabawenyos themselves will have more opportunities to improve their lives.”
Magnaye said property development is expected to sustain its growth with more commercial and residential projects coming in. He added that the DCIPC has noted keen interest of various developers to construct more hotel facilities, commercial buildings, medium-rise and affordable housing projects, an inland resort with a convention center, and a huge mall in Lanang by the SM Group.
“These forthcoming developments bank on Davao City’s continuously expanding economic spheres, with its markets now reaching as far as Tagum City, General Santos City and even Cotabato City,” he said.
The tourism industry is also poised to soae to greater heights as the city, in partnership with the department of tourism and the private sector, vows to embark on a more aggressive tourism promotions program, Magnaye said.
“Emphasis will, likewise, be given to the improvement of the city’s frontline services, particularly in the areas of tour operations and tour-guiding. Tourist arrivals data show a growing trend with an average of 623,659 arrivals for the last three years, validated by the high occupancy rates that Davao hotels are enjoying in the past few years.
“Banning any untoward incident, the city government is optimistic about the city’s landing among the top three spot (currently the city is ranked No. 6) as the country’s most preferred/visited tourist destination,” he said.
Quinto had this to say: “Tourism depends more on the people’s attitude. It has to blend with our natural endowment. The city government has to continue to have the political will to at least maintain, if not improve on, what is commonly referred to as good manners and right conduct.”
“Our economy should be market- or demand- and opportunity-driven. We should always be on the alert to know what our customers want; we should know their level of satisfaction with our products and services.
“And we should always be several steps ahead of our competitors (other cities). Let’s be good in the domestic market as well as in the foreign market. This will lessen the impact of foreign economic shocks and crises,” Quinto said.
Challenged industry
Magnaye said the export market for cavendish bananas is expected to encounter a temporary setback due to the steep reduction in their import volume from the Philippines.
“Prior to the cut, the Davao region shipped out a total of 50 million boxes annually, which translated to about P6.5 billion. Recently, the quota was reduced to only 20 million boxes. Efforts are currently being undertaken both by the DTI and department of agriculture to open new markets where the displaced volumes can be diverted,” he added.
Quinto said agriculture has to be sustainable, and that it is important to learn from the experiences of more developed countries. He added that agriculture is already here, but needs to be protected from those who will exploit the environment in the guise of being environmentalists.
“One of the biggest potentials of Davao City is in the agricultural sector. The city should come up with a comprehensive plan on how to develop the Buda area into an agricultural hub to support not only Mindanao but also the whole country,” Lao said.
Peace and order
Davao City has a large area for development, according to Ma. Lourdes G. Monteverde, vice president for trade and commerce of DCCCII, but issues on peace and order need to be addressed.
“Peace and order is the top agenda of the government,” she said, “however, there should be cohesion, collaboration and transparency in public and private endeavors for a common goal towards becoming a globally competitive city.”
According to Pasawa, one of the bases for such optimism for 2011 is Davao City’s being the center of economic activities in Mindanao, but its weakness is that “people continue to be wary of the negative peace and order image of Mindanao.”
“Our perceived weakness is our being ‘in’ Mindanao. But I say ‘because we are in Mindanao’ and are blessed with natural resources. The weakness really lies with us Mindanaoans who have not really worked together as a team to have a peaceful Mindanao,” Quinto said, adding that Davao could be the leader in starting a genuine peace program and that it has been peaceful even if peopled by mixed races and religions.
Reliable power source
Recognizing the thinning power reserves in the entire Mindanao grid, Magnaye said that the power issue is being addressed by attracting investors for new capacities to locate in Davao City where bulk of the grid’s power is utilized.
Lao, who is also the chairperson of the Mindanao Electric Power Alliance, said that the government should be more aggressive in addressing the issue on power. “By 2014, the city will need a whopping 484 megawatts. We only have 250 to 280 megawatts as of now,” he added.
The Aboitiz’s proposal to install a coal-fired power plant in the city has brought about conflicting views from different sectors. Lao said that he once asked the city mayor, Sara Duterte, who is now the chairperson of the regional development council (RDC) to imagine the city two to three years from now, having more brownouts. When he asked for her take on the proposed coal-fired power plant, she said, “If people really want it, I won’t object.”
Meanwhile, Lao said that the approval of the renewable energy law, whose implementing rules and regulations are yet to be finalized, may provide some relief to the city’s problem on power.
Competitiveness
Recently recognized as business-friendly, Davao City has a more responsive and business-friendly local government unit with its city government heading towards the gradual automation of public transactions in city hall, Magnaye said.
Other strengths of Davao City in attracting investors, he said, include stable peace and order condition; strong partnership between the private sector and the city government; and, the continuous improvements being implemented to facilitate faster and hassle-free processing of various permits and licenses emanating from the various departments and offices of the city government.
The city has an expanding market which now includes the cities of Panabo, Tagum, Island Garden City of Samal, Digos and General Santos, he said.
Meanwhile, Monteverde said that in order to maximize the city’s competitiveness, it needs sound infrastructures with good road maintenance; better farm to market roads; zoning implementation; and reliable energy source.
There should be business incentives, she added, especially on businesses employing innovative strategies such as green technology; and, to have a shorter but comprehensive business processing time.
Magnaye said an amendment of the Davao City Investment Incentive Code will be undertaken this year to make the incentives more attractive, and the investment priority areas more relevant and responsive to the development targets of the city.
Monteverde said, “The city also has to encourage industry clustering to develop their marketability; have small and medium enterprises’ easier access to financial institutions for support and expansion purposes; improve ports and trade; support Davao branding; and open new routes through trade missions.”
Having cited the depleting source of energy in Mindanao, and the perennial perception problem on the city’s peace and order, Magnaye added the limited direct international flights to service foreign investors as the city’s weakness in attracting investors.
However, he added that, “Steps are being undertaken in partnership with the private sector and the department on tourism for the city to have a seat in the air negotiations panel.”
