CENTRAL VISAYAS REGIONAL ECONOMIC SITUATIONER*

WHOLE YEAR 2011

SUMMARY

Preliminary   indicators   of   the   performance   of   the   regional   economy   in 2011   suggest   that   the   region   was   able   to   sustain   the   growth   momentum realized  in  2010.    Although  the export  sector  experienced  a setback,  most  of  the   major   industr ies   in   Central   Visayas   performed   relat ively   well.     These include   the   tourism   industry,   the   transportat ion   industry,   the   business process   outsourcing   industry,   retai l   trade,   and   construct ion/   real   estate industr ies.    Even   the  agriculture  sector,  which  had  been  performing  dismally  in the past 2 years, recovered in 2011.

The  sustained  growth  of   the   regional  economy made a  posit ive   impact on   the   labor  market.    The  employment   rate  hovered  above   the  93.5  per   cent  level   in   the   f irst   three  quarters  of  2011  and  sett led  at  92.5  per   cent  by  year  end.   In   spite   this   development   in   the   labor   market,   however,   r ising  underemployment  rate remains a challenge for  Central  Visayas.  The 21.4 per  cent  underemployment   rate   recorded  in   the October  2011  round of   the Labor Force   Survey   (LFS)   was   the   highest   underemployment   rate   of   the   region since 2009.

Movement  of  pr ices  also  cont inued to accelerate  in  2011.    However,  at  3.8   per   cent,   the   inf lat ion   rate   of   the   region   in   2011  was   st i l l   below   the  4.4  nat ional  average. 

* The Central Visayas Regional Economic Situationer (RES), also known as QRES, is prepared quarterly by  the   National   Economic   and   Development   Authority   Regional   Office   7   (NEDA   7)   to   provide   preliminary  information on the performance of the regional economy during the quarter in the meantime that the Regional  Income Accounts as prepared by the National Statistical Coordination Board are not yet available.  The RES  report, however, does not intend to replace the Regional Income Account which is the official estimate on the  regional economic performance for a particular period.

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ASSESSMENT OF REGIONAL ECONOMIC PERFORMANCE

I . AGRICULTURAL PRODUCTION

The   Central   Visayas   region   turned   in   a   bet ter   performance   in   terms   of  agr icul tural  output   in  2011  re lat ive  to   the past  2  years   ( i .e.  2009 and 2010).  During the   year,   volume   of   agr icul tural   product ion   in   Central   Visayas   increased   by   31.4 per cent,  mainly due to  improved performance by the crop sector.

Table 1.  Agricultural Production2009­ 2011

Agriculture ProductLevels

Percent Inc/ (Dec)

2009 2010 2011(P) 2009­2010 2010­2011

Crops (MT) 3,506,963 2,928,603 4,009,357 (16.5) 36.9

  Palay 276,818 270,449 322,862 (2.3) 19.4

  Corn 186,479 178,413 177,297 (4.3) (0.6)

  Fruits 1/ 268,806 258,677 270,279 (3.7) 4.5

  Vegetables 2/ 234,026 238,803 235,477 2.0 (1.4)

  Industrial and Commercial 3/ 2,540,834 1,982,261 3,003,442 (22.0) 51.5

Fisheries (MT) 233,765 240,646 240,072 2.9 (0.2)

  Commercial 47,206 44,609 39,837 (5.5) (10.7)

  Municipal 54,727 55,448 53,010 1.3 (4.4)

  Aquaculture 131,832 140,589 147,225 6.6 4.7

Livestock (MT Liveweight) 181,608 187,730 193,551 3.4 3.1

  Carabao 6,146 6,493 6,617 5.6 1.9

  Cattle 24,344 24,350 25,334 0.02 4.0

  Swine 142,606 148,336 152,832 4.0 3.0

  Goat 8,512 8,551 8,768 0.6 2.5

Poultry (MT Liveweight) 113,619 118,233 125,025 4.1 5.7

  Chicken 75,964 78,507 84,258 3.3 7.3

  Duck 211 220 213 4.3 (3.2)

  Chicken Eggs 37,041 39,119 40,155 5.6 2.6

   Duck Eggs 403 387 399 (4.0) 3.1

Total Volume of Agricultural Production

4,035,955 3,475,212 4,568,005 (13.9) 31.4

Note:1/   Excludes fruits not classified as major or priority2/   Excludes vegetables not classified as major or priority3/   Excludes industrial and commercial crops not classified as major or priority. P/   Preliminary figures

Figures may not add up to total due to rounding off.

Source:  Bureau of Agricultural Statistics 7

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Crops.     The   impressive   performance   of   the   crop   sector   in   2011   made   a posi t ive  impact on  the overal l  performance of   the agricul ture sector.    Af ter  incurr ing losses   in   product ion   for   2   consecut ive   years,   the   crop   sector   f inal ly   recovered   to  post  a 36.9 per cent gain  in product ion.    

Palay   was   among   the   br ight   performers   f rom   the   crop   sector,   a long   with f ru i ts  and   industr ia l /commercia l   crops.  Palay   farmers   increased   the  volume  of   their  produce  by  19.4  per  cent   f rom year­ago   levels.  Hefty   increases  in  palay  product ion were   part icular ly   recorded   in   the   second   and   th ird   quarters   of   2011.     In   the   fourth  quarter of   the year,   the weak performances of  palay  farms  in Cebu, Negros Oriental and Siqui jor eroded some of   the gains made  in palay product ion.  

In   the   last   quarter,   palay   farms   in   Pinamungahan,   Cebu   were   adversely af fected   by   the   infestat ion   of   r ice   bugs,   and   some   farms   in   Carcar,   Cebu   were  destroyed   by   Typhoons   Pedring   and   Quiel .     In   addit ion,   about   81   hectares   of  i r r igated palay  in Negros Oriental  were damaged by  the  f lashf lood brought about  by Typhoon   Sendong.   In   Siqui jor,   the   infestat ion   of   sparrow   in   the   farms   of   the Municipal i t ies  of  Maria  and  Larena  damaged crops   result ing   to   the  decl ine   in  palay product ion  in  the province  in  the last  quarter.

Frui ts   and   industr ia l /commercia l   crops   also   turned   in   respectable performances   in   2011.     Frui t   and     industr ia l /   commercia l   crop   product ion   went   up  by   4.5   per   cent   and   51.5   per   cent,   respect ively,   f rom   previous   year 's   levels.   Frui t product ion  benef i ted   f rom better  banana  harvest  whi le   industr ia l /   commercia l   crops owed   their   impressive   performance   from   improved   harvest   of     coconut   and sugarcane.   Coconut   farmers   in   Negros   Oriental   were   encouraged   to   intensi fy product ion   by   the   higher   copra   pr ice.   Sugarcane  producers   in  Negros   Oriental   and Cebu,   on   the   other   hand,   saw   a   bumper   harvest   as   a   result   of   the   appl icat ion   of  fert i l izers  on  the  plantat ions.    Meanwhi le,  product ion  of  mango,  which   is  one  of   the region's   more   important   product,   dropped   as   a   result   of   excessive   ra infa l l   dur ing the  f lowering stage that  affected  the development of   the  f ru i t .

The   corn   sector,   which   appeared   to   have   recovered   in   the   f i rst   hal f   of   the year,   fa l tered  in  the second half   to end  the year with  a  negat ive 0.6 percent  drop  in  product ion.    As  in   the case of  palay  farms,  a  huge area of   the corn  farms  in  Negros Oriental   ( i .e.  32 hectares)  were damaged by Typhoon Sendong that  hi t   the province  in   December.   Corn   farms   in   the   rest   of   the   region   also   suf fered   f rom   excessive ra infa l l   in   the   second   half   of   the   year   that   affected   yie lds.   In   addit ion,   the   local  government  uni ts were able   to d istr ibute only  a  l imited amount  of  hybrid corn seeds to corn  farmers.

As   in   the   case   of   the   corn   farmers,   vegetable   farmers   were   also   unable   to ra ise  further  volume of  product ion  in  2011.    Vegetable  product ion  in   the  region was lower   by   1.4   per   cent   f rom   year­ago   level .   In   part icular,   double­dig i t   decreases   in  product ion were recorded by mongo, eggplant,  kangkong,  nat ive pechay, ampalaya, gourd,  str ingbeans, okra,  and squash. Aside  f rom excessive ra infa l l ,   the decis ion of  some   vegetable   farmers   to   shi f t   to   other   crops   part icular ly   palay   af fected negat ively vegetable product ion  in 2011.   

Fisheries.    Total   f ishery   product ion   decl ined   in   2011   fo l lowing   dismal performances   of   the   commercia l   and   municipal   f ishery   sectors.   Al though   the aquaculture   sector,   which   is   the   biggest   contr ibutor   to   tota l   f ishery   product ion   in  the   region,   cont inued   to  show a   respectable  performance,   i ts  gains  during   the  year was   not   enough   to   make   up   for   the   losses   in   commercia l   and   municipal   f ishery.  Commercia l   f ishery product ion has been decl in ing since 2008.   

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Aquaculture   started   strong   in   2011.   I ts   performance   gradual ly   weakened though as  the months progressed.  From 9.6 per  cent   in   the  f i rst  quarter,   the growth of   aquaculture   product ion   slowed   down   to     8.0   per   cent   in   the   second   quarter,   1.3  per   cent   in   the   th ird   quarter,   and   f inal ly   to   negat ive   terr i tory   in   the   fourth   quarter.  Seaweed product ion,   for  one,  dropped  in   the  last  quarter  by 1.1  per  cent.  Seaweed farmers   were   discouraged   to   p lant   seaweeds   because   of   the   f requent   ra in   and   the scarci ty   of   p lant ing   mater ia ls.   Product ion   of   f ish   in   f reshwater   cages   also   took   a nosedive   by   14.2   per   cent   as   a   result   of   the   temporary   stoppage   of   f ishpond operat ion  in some areas due to  f inancia l  constra ints and  l imited supply  of   f ry.    

Livestock   and   Poultry.     The   l ivestock   and   poult ry   sectors   recorded increases   in   product ion  mainly  because   of   cont inued  demand   for   these  products   in the market.   Increased demand for   l ivestock and poult ry  products were noted among the  local  households,   food manufacturers,   restaurants/   resorts and by other  regions during  the year.

I I . NON­AGRICULTURAL PRODUCTION

Construction and Real Estate

Construct ion   and   real   estate   act iv i t ies   cont inued   to   be   upbeat   in   2011.   The sustained   growth   of   these   sectors   was   dr iven   by   the   strong   demand   for   BPO   and tourism related  faci l i t ies and services,  a growing demand for  resident ia l  uni ts   in  the urban centers,  and expansion act iv i t ies of   the reta i l   t rade  industry.  During  the year,  several   b ig­t icket   projects   were   formal ly   launched,   including   the   PhP   20   bi l l ion  integrated   development   project   of   the   SM   Prime   Holdings.   The   projects   of   SM Prime   Holdings   comprise   of   a   shopping   mal l   and   hotel   and   resident ia l   projects   to  be  located   in  Cebu City.  Other  big   t icket  projects   launched or   implemented   in  2011  included   more   mal ls,   reta i l   t rade   out lets,   and   resident ia l   condominium   and subdivis ion   projects.   Notable   of   the   resident ia l   condominium   projects   launched were   the   Basel ine   Residences,   the   Calyx   Residences,   the   55­story   Horizons   101,  and   the   Lot8   Condominiums,   a l l   located   in   Cebu   City.   Outside   Cebu,   the   entry   of Vista land­Camella   Homes   in   Dumaguete   City   is   expected   to   boost   Negros Oriental ’s construct ion  industry.  

In   mid   2011,     Asian   i ­Off ice   Propert ies   Inc.   (AiO)   led   the   topping   out ceremony   for   the  eBloc  Tower  2  at   the  Asiatown   IT  Park   in  Lahug,  Cebu  City.  This  is   expected   to   at t ract   more   BPO,   IT   and   IT­enabled   services   ( ITES)   investments  into  the region part icular ly Cebu. 

Meanwhi le,   several   hotels   opened   and/or   underwent   major   renovat ions   in 2011   fo l lowing   an   inf lux   of   tour ists   and   corporate   t ransients   into   the   region   as   a  result  of  a   thr iv ing Meet ings,   Incent ives,  Conference  and Exhibi t ion   (MICE)  market.  Among  the newly completed hotels   that  started operat ions during  the year  were  the 72­room   Al lure   Business   Hotel   in   Mandaue   City   and   the   Is lands   Stay   Hotels   in Cebu   City   and   Lapu­lapu   City.   The   newly   renovated   hotels   included   Waterfront  Cebu City Hotel  and Casino,  and the Cebu Midtown Hotel .      

The  strong   interest   shown   for   resident ia l   uni ts  especia l ly   condominium units in   urban   areas   was   part ly   the   result   of   promot ions   outside   the   region   at   making  Cebu a second home. 

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Power

Consumpt ion of  e lectr ic i ty   in   the  region was higher  (by 8.37 percent)   in  2011 than   in  2010.   Industr ia l   users  accounted   for   the  upsurge   in  consumpt ion,  post ing  a 20   per   cent   increase   in   power   consumpt ion.   This   r ise   in   power   demand   from industr ia l  users  indicates an expansion  in business act iv i t ies,  which speaks wel l   for the regional economy.   

Total   power   consumpt ion   of   resident ia l   and   commercia l   users   a lso   rose   in 2011,   a l though   not  as   much   as   in   the   previous   year,   as   the   number   of   consumers,  mainly   f rom   Cebu,   increased.   On   the   average   though,   per   capita   power consumpt ion   of   resident ia l   and   commercia l   users   went   down   as   demand   decl ined. The Cebu consumers  led  in cut t ing back power consumpt ion although their  numbers  increased.  Authori t ies  at t r ibute   the  general  decl ine   in  power   consumpt ion   to   cooler  weather   condit ions   throughout   the   year.   This   enabled   establ ishments   and households   to   cut   down   on   their   usage   of   a ir­condit ioning   and   other   cool ing devices.

Table 2.  Power Consumption By Type of User 2010 and 2011 (in Kwh)

User 1/Province Bohol Cebu 2/ Negros Oriental 3/

Siquijor CENTRAL VISAYAS

Residential

2010 130,562,885 916,183,303 91,280,891 5,339,391 1,143,366,470

2011 134,452,029 908,633,788 96,585,931 6,594,729 1,146,266,477

% Change 2.98 (0.82) 5.81 23.51 0.25

Commercial

2010 89,053,615 485,240,398 50,099,528 3,009,767 627,403,308

2011 91,099,459 482,615,441 51,530,681 2,952,358 628,197,939

% Change 2.30 (0.54) 2.86 (1.91) 0.13

Industrial

2010 18,588,000 1,173,045,318 6,676,493 292,294 1,198,602,105

2011 23,983,944 1,412,856,885 6,342,943 372,228 1,443,556,001

% Change 29.03 20.44 (5.00) 27.35 20.44

PROVINCIAL TOTAL

2010 238,204,500 2,574,469,019 148,056,912 8,641,452 2,969,371,883

2011 249,535,432 2,804,106,114 154,459,555 9,919,316 3,218,020,417

% Change 4.76 8.92 4.32 14.79 8.37

Note:  1/ Classification of users is based on load requirement and not on type of economic activities i.e. big retailers/ malls with  higher load requirements are classified as industries even if nature of business is commercial2/  MECO figure for commercial user includes public buildings and streetlights3/  Excludes data from NORECO I

Source :    BOHECO  I&I I ,  Boho l  L igh t ,  CEBECO  I , I I& I I I ,  MECO,VECO,BANELCO,CELCO,NOR ECO        I& I I ,PROSIELCO

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Among   the   4   provinces,   Siqui jor   registered   the   highest   increase   in   power consumpt ion   in   2011   at  14.79  percent.    This   was   fo l lowed   by  Cebu  at  8.9  per   cent  and Bohol and Negros Oriental  at  about 4 per cent each.   

In   terms  of   share   to   the   tota l   power   consumpt ion  of   the   region,   the  Province of   Cebu   accounted   for   87   per   cent   of   tota l   power   used.   The   Province   of   Siqui jor,  which  registered   the  highest   rate  of   increase   in  power consumpt ion,  had   the  lowest  share  to tota l  power used  in 2011. 

IT and IT­enabled Services

IT   and   IT­enabled   services,   including   Business   Process   Outsourcing   (BPO) act iv i t ies,   cont inued   to   expand   in   the   region   at   an   average   annual   rate   of   20 percent.     In   Cebu,   which   is   the   IT/BPO   hub   of   Centra l   Visayas,   the   number   of  IT/BPO   service   providers   grew   by   240   per   cent   for   the   past   11   years,   or   f rom   4  companies  in 2000  to  more  than a hundred companies  in  2011.   With   the escalat ion in   the   number   of   providers,   Tholons   has   ranked   Cebu   as   the   9 t h   emerged outsourcing dest inat ion  in  the world.

In   2011,   the   IT/BPO   industry   saw   the   entry   of   new   providers   as   wel l   as   the expansion   of   the   physical   and   manpower   resources   of   exist ing   providers. Outsourcing   companies   such   as   Aegis   People   Support   and   Convergys   added   new faci l i t ies   to   accommodate   their   increasing   number   of   t ransact ions.   Other   IT/BPO companies   such   as   HP,   Fluor   Daniels,   Del l   and   JP   Morgan   Chase   also   expanded during   the   year   with   an   addit ion   in   manpower.   By   end   of   2011,   the   tota l   workforce  of   IT/BPO   companies   in   the   region   was   est imated   at   more   than   65,000.   This  number   cont inues   to   expand   as   IT/BPO   companies   account   for   40   per   cent   of posi t ions posted  in a  jobs  l is t ing website  in 2011.  

Whi le   the   IT/BPO   industry   has   been   recognized   as   a   major   source   of   local employment,   i t   has   also   become   a   major   p layer   in   the   export   sector.   In   2011,   the  value   of   export   sales   made   by   IT/BPO   companies   located   in   the   region   tota led US$1.25 bi l l ion.

Tourism

The   tourism   industry   remained   upbeat   as   the   region   cont inued   to   draw   in  more   foreign  and   local   tour ists.   In   2011,   Central   Visayas   recorded   an  8.1   per   cent  growth   in   v is i tor   arr ivals,   with   foreign   vis i tors   account ing   for   the   bulk   of   the  increase.   

Centra l  Visayas benef i ted  f rom  the sustained growth of   internat ional   tour ism. Whi le   domest ic   tour ism   experienced   a   setback   in   the   last   quarter   of   2011, internat ional  tour ism steadi ly expanded throughout  the year.    

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Table 4.    V is i tor  Arr iva ls  by Or ig in  and by Prov ince,  Centra l  V isayas2009­2011

Orig in /ProvinceNumber  of  V is i tor  Arr iva ls Percent  

Increase/ (Decrease)2009 2010 2011 2009­ 2010 2010­ 2011

 Total  Arr ivals       Domest ic       Fore ign 

 Arr ivals by Province

       Bohol       Cebu       Negros Or ienta l       S iqu i jor

2,201,1381,420,085     781,053

     315,242

1,618,270     246,447       21,179

2,362,6921,492,358     870,334

     333,932

1,768,234     234,919       25,607

2,555,1541,546,591

     1 ,008,563

     338,543

1,925,406     261,625       29,580

7.35.1

11.4

5.99.3

(4.7)20.9

8.13.6

15.9

1.48.9

11.415.5

Source :  DOT 7

The   recovery   of   internat ional   tour ism   started   in   2010   and   cont inued   to  expand  in  2011 with   the Department  of  Tourism recording a  15.9  per  cent  growth  in  foreign   vis i tor   arr ivals.     The   number   of   foreign   vis i tor   arr ivals   in   Central   Visayas breached the 1 mi l l ion mark during  the year.  

The   domest ic   tour ism   market   a lso   expanded   but   not   as   fast   as   in   2010.   In 2011,   domest ic   v is i tor   arr ivals   increased   by   only   3.6   percent,   lower   than   the   5.1 per   cent   increase   registered   in   2010.   Records   show   that   the   number   of   local t ravelers  dropped  in  the months of  September,  November,  and December.

Although   Cebu   cont inued   to   dominate   over   other   Central   Visayas   provinces in   terms   of   v is i tor   arr ivals,   there   are   indicat ions   of   increasing   interest   on   Siqui jor.  The   province   had   the   fastest   growth   in   v is i tor   arr ivals   among   the   provinces   in   the  region since 2008.     

Transportation

Escalat ing   fuel   pr ices   fa i led   to   dampen   the   overal l   performance   of   the region’s   t ransportat ion   industry   in   2011.   The   aviat ion   sector   registered   a   higher  growth   in   2011   compared   to   that   in   2010.     The   shipping   sector   a lso   managed   to grow although at  a s lower pace.   

Aviation.    Air l ine companies  in Central  Visayas expanded  their  operat ions  in 2011   to   cater   to   the   growing   demand   of   domest ic   and   internat ional   passengers. More   f l ights   were   added   to   exist ing   dest inat ions   and   new   routes   were   opened   to  commercia l  operat ion.    Cebu­based   local  carr ier  Mid­Sea Express,   for  one,  opened f l ights   to   Tagbi laran   City   (Bohol) ,   Bantayan   Is land   (Cebu),   Davao  and   Cagayan   de Oro during  the year.  

On  the  internat ional   f ront ,  Singapore­based Tiger  Airways started operat ions in Cebu  in  the second half  of   the year,   f ly ing dai ly  f rom Cebu to Singapore.  

The   expansion   in   the   number   of   f l ights   t ranslated   to   a   r ise   in   the   number   of passengers.     Domest ic   passengers   went   up   by   13.9   per   cent   whi le   internat ional  passengers rose by a hef ty 31.7 per cent.    

Aside   f rom   the   strong   recovery   of   internat ional   tour ism,   the   year­round promo  fares  of fered   by   air l ine  companies  were  a  major  boost   factor   to   the  posi t ive  performance of   the aviat ion  industry.

7

Table 5.    Av iat ion Stat is t ics ,  Centra l  V isayas2010 and 2011

Indicator 2010 2011Percent 

Increase/(Decrease)

Flights    Domestic    International

Passengers    Domestic    International

Cargo (KG)    Domestic    International

55,15447,8427,312

6,314,5315,200,4211,114,110

61,241,12843,160,61518,080,513

64,06554,5569,509

7,391,2285,923,6151,467,613

60,267,66144,996,01015,271,651

16.214.030.0

17.013.931.7

(1.6)4.2

(15.5)

Source : Air Transportation Office­ Dumaguete &Tagbilaran and Mactan­Cebu International Airport Authority                 

Shipping.      Shipping   companies   also   benef i ted   f rom   increasing   passenger t raf f ic.     To   meet   the   increasing   demand   from   travelers,   shipping   operators expanded  operat ions.     For   instance,  Cokal iong  opened  shipping  services  along   the Cebu­Ozamis­ I l igan   route   and   increased   tr ip   f requency   on   the   fo l lowing   routes: Cebu­Palompon   (Leyte)­Cebu,   Cebu­Baybay   (Leyte)­Cebu,   Cebu­Sindangan,   and Cebu­Dapitan (Zamboanga del Norte).    

Table 6.    Shipp ing Stat is t ics ,  Centra l  V isayas2010and 2011

Indicator 2010 2011Percent

Increase/(Decrease)

Shipcalls   Domestic   Foreign

Passengers   Disembarking   Embarking

Cargo Throughput (MT)   Domestic   Foreign

Container Traffic (TEU)   Domestic    Foreign

131,836130,826

1,010

21,939,36111,168,75810,770,603

29,295,02422,410,3826,884,642

524,384322,171202,213

137,495136,524

971

23,275,36211,803,44011,471,922

22,503,62417,391,2255,112,399

576,925368,837208,088

4.34.4

(3.9)

6.15.76.5

(23.2)(22.4)(25.7)

10.014.52.9

Source   :    PPA­V isayas  and  CPA

An   expansion   in   domest ic   ship   cal ls   were   part icular ly   noted   in   the   ports   of  Tal ibon,  Catagbacan,  Getafe  and  Ubay  in  Bohol;  Tandayag  in  Negros  Oriental ;  and  in   var ious   ports   in   Cebu.     The   opening   of   the   pr ivate   port   of   Mat iao   in   the Municipal i ty   of   Sibulan,   Negros   Oriental   a lso   contr ibuted   to   the   r ise   in   domest ic  ship cal ls.

8

The   posi t ive   impact   on   the   shipping   industry   of   a   br isk   tour ism   industry   was  tempered   by   a   poor   performance   of   the   internat ional   shipping   sector .   In   2011, foreign cargo  t raf f ic   took a  nose dive,   register ing   a negat ive growth of  25.7  percent af ter  post ing  an  11.0  per  cent  growth   in  2010.    Container   t raf f ic  also  slowed down, register ing a mere 2.9 per cent growth  in 2011 from a high of  18.1 per cent  in 2010.  The   depressed   performance   of   the   internat ional   shipping   sector   was   seen   as   the  result   of   the   slackening   of   internat ional   t rade   act iv i t ies   due   to   the   economic   cr is is  in Europe and the slow recovery of   the US economy.   

Retail  Trade

The   reta i l   industry   of   Centra l   Visayas   expanded   further   in   2011   despite   a projected   slowdown   in   the   af termath   of   the   nat ional   and   barangay   elect ions   in  2010.   During   the  year   (2011),   the   industry   witnessed   the   entry  of   new   players   and the   expansion   in   act iv i t ies   of   exist ing   ones   including   Gaisano,   SM,   SM   Savemore, Fooda   Savers   Mart   and   Colonade.   Among   the   new   players   in   the   industry   were   J Centre   Mal l ,   Shopwise   of   Rustan's   Supercenters,   Inc. ,   and   Forever   21.     The   J Centre  Mal l   in  Mandaue City  and  Forever  21  at  SM City­Cebu started  operat ions   in the  th ird  and  fourth  quarters  of  2011,   respect ively.    Shopwise  located  in  Cebu City,  meanwhi le,   is due to open  in 2012.   

As  part  of   their  expansion act iv i t ies,   reta i lers  a lready operat ing   in   the  region opened   new   out lets   in   var ious   parts   of   the   region   to   cater   to   a   wider   consumer market.    For  instance, SM Savemore opened 2 new supermarket out lets  in Mandaue City  whi le  Gaisano Metro  opened a mal l   in  Naga  (Cebu).    Other  expansion  projects  which   were   real ized   in   2011   were   the   Gaisano   Grand   in   Mandaue   City,   the Colonade   Mal l   in   Mandaue   City,   and   the   Fooda   Savers   Mart­   Mambal ing   in   Cebu City.    

Renovat ion and expansion work on exist ing stores were also started  in  2011. Some   of   these   projects   included   the   expansion   of   Ayala   Center   Cebu   Phase   2, Paci f ic Mal l ,  Gaisano Is land Mal l ,  and Fooda Mal l  Consolacion.

The   steady   growth   of   the   reta i l   industry   in   the   region   was   dr iven   by   a broader  consumer  market  with  stronger  spending  capacit ies.  The  purchasing  power of   consumers   in   the   region,   part icular ly   the   young   professionals,   has   r isen   due   to  the  presence  of  BPO/   IT  companies.  The  outsourcing   industry  provides  higher   than average salar ies  to  their  workers.    

Local   tour ists   including   students   jo in ing   educat ional   tour   packages   also contr ibuted to  the expansion of   the region's consumer market.    

I I I .  FOREIGN TRADE AND INVESTMENTS

Foreign Trade

The   fu l l   recovery   of   the   export   industry   d id   not   mater ia l ize   in   2011   mainly because   of   the   slow   recovery   of   the   US   economy   and   the   weakening   of   the European economies.  

9

Table 7.    Volume and Value of  Expor ted/   Impor ted Goods 2010 and 2011

Trade Indicator

Value  (FOB in Million US Dollars) Volume (Gross Metric Tons)

2010 2011 PercentInc/(Dec)

2010 2011 PercentInc/(Dec)

TOTAL

ImportExport

Balance of Trade

5,549.30

3,031.982,517.32

(514.66)

4,456.18

2,152.662,303.52

150.86

29.8

(29.0)(8.5)

­

5,471,262.83

3,434,129.112,037,133.72

5,557,265.89

2,960,389.812,596,876.08

1.6

(13.8)27.5

Source :    Nat iona l  S ta t i s t i cs  Of f i ce

Although   the   region’s   earnings   f rom   exported   goods   showed   signs   of recovery   in   July   to   November   af ter   p lummeting   by   18.7   per   cent   in   the   f i rst  semester  of  2011,  the almost 60 per  cent drop  in  exports   in   the month of  December  pul led   down   tota l   export   earnings   of   Centra l   Visayas   for   the   year.   The   value   of exported   goods   of   Centra l   Visayas   in   2011   amounted   to   2.3   b i l l ion   US   dol lars, lower by 8.5 per cent f rom that   in 2010. 

The   decl ine   in   export   earnings   despite   a   27.5   increase   in   the   volume   of exported   goods   suggests   that   the   bulk   of   products   exported   were   not   the expensive,   high­end   type   of   products.   This   was   consistent   with   the   nat ional   t rend,  which   showed   that   manufactured   exports   part icular ly   e lectronics   were   decl in ing whi le   exports   of   agr i­based   and   mineral   products   were   increasing.     Electronics,  which   account   for   the   bulk   of   the   region's   exported   goods,   are   among   the   higher­pr iced export  products of  Centra l  Visayas.

Importat ion  of  goods   l ikewise  decl ined.  This  was  expected  since  most  of   the region's   manufactured   export   products   are   made   from   imported   components.   In 2011,   the  value  and  volume   of   the   imports  of   Centra l   Visayas  dropped  by   29.0  per cent and 13.8 per cent,   respect ively.

Amid   the   chal lenges   confront ing   the   export   industry,   t rade   in   services remained   vibrant.   The   sector   cont inued   to   expand   because   of   the   IT/BPO   sector  whose   contr ibut ion   to   the   tota l   t rade  of   the   region   had   signi f icant ly   increased  over  t ime.   As   of   December   2011,   i t   was   est imated   that   the   IT/BPO   sector   generated   a  tota l  of  1.25 bi l l ion US dol lars  in sales.   Investments

Investors   remained   bul l ish   on   the   IT/   BPO,   real   estate,   tour ism,   and   reta i l  t rade   industr ies.     Evidence   of   th is   could   be   seen   in   the   number   of   projects   that  were   started   and   were   being   implemented   in   2011.   Data   f rom   the   Board   of Investments   (BOI)   a lso   conf i rms   the   sustained   interest   of   investors   in   Central  Visayas.     In  2011,  14  f i rms signi f ied  interest   to   invest   in  the region  for projects  that  would   cost   over   Php   12.1   bi l l ion.     Three   of   these   f i rms   were   planning   to   invest   in  more  than 1 project .

Major i ty   of   the   projects   registered   with   the   BOI   in   2011   were   on   mass housing.     The   other   projects   were   into   tour ism,   manufactur ing,   and   mining.     The  planned  investments  in 2011 are expected  to  generate  employment  of  around 4,291 workers.

10

Ap

r 2

00

9

Jul 2

00

9

Oc

t 2

00

9

Jan

20

10

Ap

r 2

01

0

Jul 2

01

0

Oc

t 2

01

0

Jan

20

11

Ap

r 2

01

1

Jul 2

011

Oc

t 20

11

Jan

20

12

0

5

10

15

20

25

IV. LABOR AND EMPLOYMENT

The sustained growth of   the  regional economy made a posi t ive   impact  on  the labor   market.   Employment   rate   rose   to   hover   above   the   93.5   per   cent   level   in   the  f i rst   three   quarters   of   2011   before   dropping   to   92.5   by   year   end.     The   easing   of  unemployment   in   Central   Visayas   enabled   the   region   to   achieve   i ts   p lan   target   for  the year of  at   least  93.0 per cent average employment rate.

Figure 1.    Employment  RatesCentra l  V isayas:  Apr i l  2009  to  January 2012

   

             Source:    Nat iona l  S ta t i s t i cs  Of f i ce     The   dark   s ide   of   the   employment   s i tuat ion   in   Central   Visayas   was   that 

underemployment   worsened.   This   means   that   an   increasing   percentage   of   workers engaged   in   part   t ime   and   fu l l   t ime   jobs   were   seeking   addit ional   jobs   to   augment  their   income.     The   21.4   per   cent   underemployment   rate   recorded   in   the   October 2011 round of   the Labor Force Survey (LFS) was the highest underemployment rate  of   the region since 2009.

Figure 2.    Underemployment  RatesCentra l  V isayas:  Apr i l  2009  to  January 2012

           Source :    Nat iona l  S ta t i s t i cs  Of f i ce

11

Ap

r 2

009

Jul 2

00

9

Oc

t 2

00

9

Jan

20

10

Ap

r 2

01

0

Jul 2

01

0

Oc

t 2

01

0

Jan

20

11

Ap

r 2

01

1

Jul 2

01

1

Oc

t 20

11

Jan

20

12

9090.5

9191.5

9292.5

9393.5

9494.5

V. PRICES

Prices   in   the   region   cont inued   to   r ise   in   2011.     From   3.6   per   cent   average inf lat ion   rate   in   2010,   the   region’s   rate   s l ight ly   rose   to   3.8   per   cent   in   2011.     The  inf lat ion  rate   in  Central  Visayas   though was st i l l   lower   than   the nat ional  average of  4.4 per cent.    

Figure 3.  Average Inflation Rates2004 ­ 2011

Source:  National Statistics Office

Only   the   fuel / l ight /water   group   posted   a   double­dig i t   in f lat ion   rate   (13.8 percent)   in   2011.   Inf lat ion   rates   of   a l l   other   commodity   groups   such   as food/beverage/tobacco;   c loth ing;   housing   and   repairs;   and   services   remained   at  s ingle­dig i t   level .  

Since 2009,  the average pr ice of   fuel  has been going up. The second quarter  of   2011   saw   pump   pr ice   of   unleaded   gasol ine   reaching   Php   58   per   l i ter   in   Cebu City;  Php  61.50/  per   l i ter   in  Dumaguete;  and  Php 62.50  per   l i ter   in  Tagbi laran  City.  Pump   pr ices   of   d iesel   in   the   region   during   the   period   ranged   between   Php   55   to  Php 58 per  l i ter.  

12

2004 2005 2006 2007 2008 2009 2010 2011

0.0

2.0

4.0

6.0

8.0

10.0

12.0

5.4

6.55.9

2.2

10.8

2.9

3.6 3.8

6.0

7.6

6.2

2.8

8.3

3.43.8

4.4

Central Visayas Philippines

Infla

tion

Rat

e (

%)

Table 8.   Year­on­Year Inflation Rates, by Commodity Group: 2011In Per cent, (2000=100)

CommodityInflation Rates (%)

2011 Average1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Food, Beverages & Tobacco

Clothing

Housing and Repairs

Fuel, Light & Water

Services

 Miscellaneous

ALL ITEMS

3.2

1.3

0.6

23.7

3.3

1.0

4.1

3.7

1.7

1.2

16.1

4.5

1.3

4.2

2.9

2.2

2.1

10.6

5.2

1.3

3.7

2.8

2.3

1.8

4.9

4.9

1.5

3.1

3.1

1.9

1.4

13.8

4.5

1.3

3.8

Source:  National Statistics Office

DEVELOPMENT OUTLOOK

The   regional  economy  is  expected   to  grow  faster   in  2012 as   the  government  increases spending on infrastructure projects.  

The   tour ism,   IT/BPO,   reta i l   t rade,   and   real   estate   industr ies   wi l l   cont inue   to  dr ive   growth   of   the   regional   economy.   On   the   other   hand,   the   export   sector   is foreseen   to   remain   volat i le   as   the   European   economies   struggle   with   a   f inancia l cr is is.  

The   growing   interest   of   t ravelers   on   Siqui jor   and   Negros   Oriental   wi l l   be   a  b ig  boost   to   the   tour ism   industry   in   these   provinces   as   wel l   as   in   Central   Visayas.  This   wi l l   benef i t   the   t ransportat ion   industry,   reta i l   t rade,   and   even   the   banking sector.  

In  the case of   the reta i l   t rade  industry,  growth of   the sector  is expected to be  substant ia l   as   numerous   projects   are   due   to   be   completed   in   2012.     Among   the  reta i l   stores   that   are   expected   to   open   in   2012   are:     SM   Consolacion   in   northern  Cebu;   the   H   Mal l   and   Shang   Town   Center   in   Lapulapu   City;   Shopwise,   Gaisano Grand­Talamban, Gaisano Mal l­Guadalupe, and Ciudad, a l l   located  in Cebu City.

Insofar   as   the   t ransportat ion   industry   is   concerned,   the   air   industry   is  expected  to   remain upbeat  as a number of  a ir l ine companies announced  their  plans to   open   addit ional   f l ights   f rom  the   region   to  other   local  dest inat ions.  Cebu  Pacif ic,  for   one,   announced   i ts   plan   to   add   more   f l ights   f rom/to   Cebu   City   to/ f rom     Mani la (11  weekly   f l ights),  Boracay   (4  weekly   f l ights),  Dipolog   (3  weekly   f l ights),  Kal ibo   (3  weekly   f l ights),  Legazpi   (4  weekly   f l ights),  Pagadian  (2  weekly   f l ights),  and Siargao (1   weekly   f l ight) .     Mid­Sea   Express   wi l l   a lso   be   launching   soon   the   Cebu­Guiuan, Samar   route,   the   f i rst   commercia l   a ircraf t   to   use   the   Guiuan   Airport   in   Eastern Samar   since   i ts   complet ion   2   years   ago.   The   foregoing   developments   are indicat ions   that   the   air   t ransport   industry   is   conf ident   on   the   expansion   prospects  of   the   t ravel   market   in   the   region   despite   an   ant ic ipated   high   fuel   pr ice environment.  

On   the   IT/BPO   industry,   the   region   is   expect ing   the   entry   of   new   players   in  the   industry   in   2012   as   wel l   as   the   expansion   of   exist ing   IT/BPO   companies   in terms   of   physical   and   manpower   resources.   One   of   the   new   players   jo in ing   the 

13

industry   in  2012  is   the Cal i fornia­based outsourcing  company Alor ica,  which  wi l l  be  opening   a   faci l i ty   in   Cebu   during   the   year   with   an   est imated   workforce   of   6,000  employees.  

Expansion   of   exist ing   IT/BPO   companies,   including   the   hir ing   of   addit ional  employees,   is   expected   to   go   on   al l   year   round   part icular ly   for   the     major outsourcing   companies   of   Aegis   People   Support ,   Convergys,   Qualfon,   and   Sykes.  Stream   Global,   which   is   a lso   a   major   outsourcing   company,   has   been   reported   to be  hir ing  60­70  employees  per  week.    The  opening  of  BPO­ready   faci l i t ies   such  as  the     eBlock   2   and   Skyrise   4   in   Cebu   Asiatown   IT   Park   by   2012   is   ant ic ipated   to  boost  further  act iv i t ies  in the sector.

With   the   BPO   voice   services   already   wel l ­establ ished,   the   region   is   looking at   diversi fy ing   and   expanding   the   product   offer ings   of   the   BPO   industry   in   the  region   to   knowledge   process   outsourcing,   informat ion   technology   outsourcing   and non­voice services,  which require a di f ferent   level  of  ski l l .

The   real   estate   industry   is   also   expected   to   cont inue   to   expand   in   2012   on the   back   of   stronger   tour ism   and   IT/BPO   sectors   as   wel l   as   sustained   interest   of  OFWs   to   invest   in   propert ies   in   the   region.     In   Cebu   alone,   i t   is   est imated   that 1,317   resident ia l   condominium   units   would   be   added   in   2012   in   response   to heightened  interest .

DEVELOPMENT ISSUES AND CONCERNS

1. The  cont inued   imposit ion   of   the   3   per   cent   Common   Carr iers  Tax   (CCT)  and 1.5   ­   2.5   per   cent   Phi l ippine   Bi l l ing   Tax   (PBT)   has   prompted   internat ional   carr iers  to   assess   whether   i t   would   st i l l   be   prof i table   to   cont inue   operat ing   in   Central  Visayas.   For   one,   Qatar   Airways     is   p lanning     to   suspend   i ts   Cebu­Doha   f l ights   in 2012   due   to   very   h igh   fuel   pr ices   and   high   operat ing   costs   as   a   result   of   the   CCT  and the PBT.   

The   cancel lat ion   of   operat ions   of   some   internat ional   carr iers   would   have adverse   impact   on   the   tour ism   industry   of   the   region.   Hence,   there   is   an   urgent need to review the pol icy on  the imposit ion of   the CCT and PBT.     

2. The   abi l i ty   of   the   region   to   increase   the   quant i ty   of   avai lable,   ski l led, competent   and   highly   qual i f ied   employees   wi l l   cont inue   to   weigh   heavi ly   on   the sustained   growth   of   the   IT/BPO   industry.     Hence,   the   pr ivate   sector,   academe   and local  governments   in   the  region need  to  strengthen and  enhance  their  col laborat ive ef forts   to   increase   the   manpower   pool   through   prof ic iency   cert i f icat ion,   retra in ing and  job­ski l ls  matching and other programs.   

14