Ladies and gentlemen good morning. Our office was requested by the organizers of this activity to make a brief presentation on the investment opportunities in the Province of Cebu as well as the initiatives that have been or are being undertaken by the government to make Cebu one of the most resilient economies in the country.

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Although I am asked to talk about Cebu in particular, I would like to start my presentation with a little information regarding the regional economy.

My presentation this morning would therefore focus on four topics.

I would start with an overview of the Central Visayas economy, just to give you an idea of how the entire region performed in the past two years. The performance of the regional economy should more or less give you an idea of how the economy of Cebu performed because the economy of Central Visayas is dominated by Cebu. If we have to use the share of Cebu to the total power consumption of the region to estimate the contribution of Cebu to the total regional economy , we could surmise that Cebu accounts for around 80 per cent of the Gross Regional Domestic Product (GRDP) of Central Visayas.

From a regional perspective, I would then proceed to my briefing about Cebu province. I will give a brief description on the things that make Cebu an attractive destination for investments. I would be citing some of the advantages that the province could offer to prospective investors.

Then I would discuss the fast-growing sectors of the province where there is huge potential for investments.

Finally, I will discuss some of the economic initiatives of the province, particularly the major programs and projects of the local governments.

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Central Visayas, composed of the Provinces of Cebu, Bohol, Negros Oriental and Siquijor, has one of the fastest growing economies in the country.

The latest estimates of the Gross Regional Domestic Product (GRDP) show that in 2010, Central Visayas posted the highest growth in GRDP at 12.5 per cent. In 2011, the growth rate of the Central Visayas GRDP at 7.5 per cent was the second highest, next only to CARAGA’s 9.6 per cent.

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The growth of the regional economy in the past 2 years was primarily driven by the industry and services sectors.

In particular, construction industry has been consistently posting double-digit growth in 2010 and 2011. The manufacturing industry also posted over 28 per cent growth in gross value added in 2010 but its growth slowed down in 2011 to 7.6 per cent.

In the services sector, real estate, renting and business activities which include the BPO industry were also consistent in posting double-digit increases in gross value added.

Later in my presentation, you will note that the industries that posted high growth in gross value added are also the fast-growing industries or sectors of Cebu province.

Having shown you the overview of the regional economy, I would now proceed to my briefing regarding Cebu province.

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This is just to show you the Gross Value Added of each sector in absolute figures.

Please note that the industry sector is dominated by manufacturing which accounts for about 64 per cent of the industrial sector followed by construction which accounts for about 28 per cent.

For the service sector, it is dominated by trade (27 per cent). Real estate, renting and business activities account for one-fifth of the total output of the service sector.

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There are several factors why Cebu is considered an ideal location for investments. Foremost of this is its proximity to the major markets in Asia.

Access to the regional centers in Asia is made convenient with the presence of the Mactan –Cebu International Airport and an international port.

The Mactan-Cebu International Airport is the country’s second major international gateway and the busiest airport outside Metro Manila. It has direct flights to Narita in Japan; Incheon and Busan in South Korea; Taipei in Taiwan; Hongkong; and Singapore. Recently, Papua New Guinea has also been served with a direct flight to and from Cebu by Air Niugini.

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In terms of cost of living, Cebu has an advantage over Metro Manila which is the biggest metropolitan area in the country.

Minimum wage in Cebu at Php 305.00 or about US$ 7.25 dollars per day is 40 per cent lower than Metro Manila’s Php 446.00 or about US$ 10.60 per day.

Food in supermarket and restaurants as well as rental cost of condominiums and executive houses is 20 to 50 per cent lower than in Metro Manila.

Cost of real estate in Cebu is up to 4 times lower than in Metro Manila.

Cost of power is also about 20 per cent lower. In Cebu, average industrial rate per KWh is only Php 8.25 compared to Metro Manila’s Php 10.18 per KWh.

Note: 1US$ = Php 42.094 (reference exchange rate of BSP for 27 July 2012)

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The Province of Cebu also offers cosmopolitan living and world class amenities. It has the elements of sophisticated cosmopolitan cities such as the presence of modern facilities and institutions like convention centers, international financial institutions, and internationally-accredited medical and educational institutions.

Cebu has 11 universities and over 30 colleges offering various courses to meet the labor demand of the business sector. The province is also host to an international school. The Cebu International School located in Cebu City offers International Baccalaureate Diploma Program which provides preferential entry of their graduates to universities abroad. The presence of these institutions have produced for Cebu its most important asset--- a competent, highly literate, and English speaking workforce.

CHED data would show that for SY 2011-2012 there were about 14,512 enrolees in Cebu schools for IT education and 13,953 enrolees in Engineering courses.

Cebu also has world class medical professionals and facilities that are at par with the best in Manila. At least 3 hospitals are capable of complicated procedures including bypass operations & kidney transplants. In fact, Chong Hua and Cebu Doctors have earned international accreditation (JCI and QHA Trent).

The province likewise has a large presence of financial institutions. International banks have established their presence in the province, making it more convenient for business locators in the province to access their services.

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Cebu’s strength as an investment destination lies on the diversity of products that it could offer because aside from business, the province has a lot to offer in the area of fun and leisure.

Cebu has numerous hotels, casinos, resorts, sports facilities, and entertainment centers.

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Another important advantage of Cebu as an investment destination is the availability of land for industrial use and tourism development. There are 8 operational economic zones in Cebu and at least 2 that are still on the development process. We also have several IT parks and centers located within the Metro Cebu area.

As of December 2011, there were a total of 262 locators in the various economic zones operating in the province employing over 105,000 workers.

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The Tourism Infrastructure and Enterprise Zone Authority (TIEZA) also have properties in Cebu, which could be developed by prospective investors. These include the Argao Beach Property and the adjacent Dalaguete Public Beach. These two properties if developed well have huge potential of becoming premier tourist destinations that could rival other destinations in the country.

The other TIEZA properties for development are the Kang-Irag Golf Course in the mountain barangay of Cebu City and the Moalboal properties in the southern part of the province.

The Kang-Irag Golf Course is 17 kilometres or 15 minutes drive from Cebu City . It was once a par 72, 18-hole course with seven man-made lakes that serve as water hazards, making the course challenging.

Moalboal property is located in an area ideal for residential and resort development. Moalboal is one of the favorite diving sites of scuba divers.

Other areas in the province with potential for tourism development include Malapascua island, San Remegio, Bantayan island, and Camotes island in northern Cebu; Oslob in the southern part of the province, and Toledo City and Balamban in the midwest.

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Another comparative advantage of Cebu would be its accessibility to other parts of the country. It is the most accessible place in the Philippines with more domestic air and sea linkages than Manila. This is expected because Cebu is located at the heart of the Philippine archipelago. It links Luzon to other parts of the Visayas and Mindanao. I would like to point out that 80 per cent of the shipping companies in the country are based in Cebu.

Finally, I would like to highlight another important asset of Cebu which is its vibrant and self-sufficient economy that is largely immune to political upheavals in Manila and neighbouring areas. History have shown that Cebu has been relatively stable and peaceful even at the height of political turmoils in Manila.

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Having presented to you the factors that make Cebu an attractive destination for investments, I would now proceed to present the fast-growing sectors of the province which could provide businessmen opportunities for investments.

I would like to start with tourism. The rapid expansion of the tourism industry is evident in the increasing trend in visitor arrivals in Cebu. From 1.6 mill ion in 2008 the number of visitors in the province has reached 1.9 mill ion in 2011. This translates to about 6.5 per cent annual average increase in visitor arrivals.

Cebu has an advantage over other destinations in the country because it has already established its reputation as premiere tourist destination in the country. In fact, Cebu has been recognized as one of the 3 Cities of Culture along with Vigan and Manila by the ASEAN Ministries of Culture. In 2011, an international travel magazine, Conde Nast also named Cebu as the 8 th best island destination in Asia.

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The outsourcing industry has rapidly grown over the years and is expected to sustain its growth in the next 5 years or so. Since 2006, the growth of the BPO industry in the Philippines has been growing at an average rate of 46 per cent annually. In Cebu, export sales of outsourcing companies have grown from only about US$ 200 mill ion in 2005 to US$ 1.25 bil l ion in 2011.

When the industry started in 2000, there were only 4 outsourcing companies in Cebu. Eleven years after, we have over 100 outsourcing companies in Cebu employing more than 65,000 workers.

With the recent recognition of Cebu City as one of the 10 Emerged Outsourcing Cities in the world by Tholons, the industry is expected grow even more rapidly.

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Another fast-growing sector of the province is the real estate and property development sector.

The growth of this sector could be attributed to the sustained interest of Overseas Fil ipino Workers (OFW) to invest in real estate properties.

OFW remittances have continued to increase and it is estimated that 30 to 40 per cent of these remittances are invested in real estate properties.

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Rapid expansion of the retail trade industry in Cebu has also been noted in the recent years as retail giants take advantage of the expanding consumer base in the province that has higher purchasing power.

The retail trade industry benefitted from the growth of the other industries in Cebu including the outsourcing and tourism industries. Workers from the outsourcing industry who have higher pay are known to be among the big spenders. The demand from residents and workers in the province is reinforced by the steady increase in the number of visit ing tourists who also have their shopping requirements.

Another segment of consumers that signif icantly contributes to the growth of the retail trade industry in Cebu are the OFW families.

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Let me now cite examples of specific products and services where prospective investors of the province could pour in capital.

For tourism, Cebu needs investments that would develop the following tourism products and services: (1) an attractive retirement and second home destination for non-Cebuanos; (2) adventure and sports tourism; (3) medical and wellness tourism; and (3) ecotourism that would also highlight Cebu’s unique historical and cultural offering.

For IT and IT-enabled services, Cebu needs investments in non-voice and Knowledge Process Outsourcing Services which would include animation design and development, among others.

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On real estate and property development, there is opportunity for investments in residential properties, commercial complex, tourism-related property development, and office spaces to support the growing IT and BPO industries.

For retail trade, there is opportunity for investments in retail outlets, hypermarts, and supermarkets. Just recently, Seven-Eleven has joined the retail trade industry of Cebu.

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Although the export industry in Cebu, particularly the manufactured exports sector, have been adversely affected by the volatility of international markets, we still believe that Cebu’s manufacturing sector has huge potential for investments. Furniture and furnishings manufacturers, for instance have lately been looking at the domestic market to sustain their growth.

We therefore, promote the following areas for investments under the manufacturing sector: shipbuilding, agri-processing, light engineering and metal working, and other design-oriented manufacturing industries such garments, furniture and furnishings as well as fashion accessories particularly those that cater to the high-end market.

There is also opportunity for Investments creative/ design services such architecture, graphics design, and filmmaking.

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Other areas for investments in Cebu would be the following:

a) amusement/ theme parks; b) convention and exhibition facilities;c) infrastructure and services in support to tourism such as ferry boats and cruise

terminals; d) educational institutions and training centers for specialized skills such as English as

Second Language (ESL), culinary arts and industrial design; e) medical facilities for areas outside Metro Cebu;f) waste management facilities; and g) power generation facilities, preferably renewable energy.

For medical facilities, I would like to make special mention of Bogo City in northern Cebu as a potential site for this type of investment. The City of Bogo has been wanting to invite investors for a modern medical facility which would cater to the needs of patients not only from northern Cebu but from other provinces in the Visayas as well, such as Leyte and Masbate.

Insofar as power generation facilities is concerned, Cebu which is part of the Visayas grid needs investments in power generation because the capacity in the Visayas grid is expected to be at critical level by 2014. Among the sub-grids in the Visayas, Cebu has the highest demand for electricity. Electricity demand in Cebu is almost equal the combined demands in Panay, Bohol, Leyte-Samar, and Negros districts.

By 2014, it is projected that peak demand in the Visayas grid would reach 1,768 megawatts but dependable capacity would only be 2,015 megawatts.

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Local government units in the province have strived hard to promote Cebu as MICE destination and festival island.

The Sinulog Festival is one of the biggest events in the province, attracting tourists from all over the world. But the province has more to offer than the Sinulog festival, thus the Provincial Government conducts the Pasigarbo sa Sugbu yearly to showcase the different festivals of the towns and cities in the province. Dubbed as the “festival of festivals” the Pasigarbo sa Sugbu is held every August and commences during the founding Anniversary of the Province of Cebu.

Promotional activities have afforded Cebu the opportunity to host international conferences. In August 2011, the Province hosted the second M.I.C.E. conference. It also hosted the 11th General Assembly of the East Asia Tourism Forum (EOTOF) in September 2011.

Another important milestone of Cebu’s promotional efforts is its acceptance to the Inter-Islands Tourism Policy (ITOP) Forum, which is a gathering of island destinations that aims to explore the world tourism market by bringing together island provinces in the world that have cultural sympathy and similar tourism structures and policies. ITOP’s other members are Jeju in South Korea; Hainan in China; Phuket in Thailand; Hawaii in USA; Bali in Indonesia; Okinawa in Japan; Spain; and Zanzibar in Tanzania. Cebu could get more promotional mileage with its membership in ITOP.

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The Suroy Suroy Sugbu is another initiative of the Provincial Government in order to promote the countryside of Cebu and spur economic development in the rural communities. In the Suroy Suroy Sugbu, a caravan of visitors is brought to various towns in the province to explore, view and experience local sceneries, delicacies and cuisine, arts and crafts.

The are five tourism packages in the Suroy, Suroy Sugbu; each package featuring unique attractions of the towns and cities in the province. These are the Northern Escapade, the Southern Heritage Trail, the Urban Adventure, the Enchanting Camotes, and Explore the Midwest.

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Another project of the Provincial Government which has given it promotional mileage both at the local and international arena is the dancing inmates program.

This has become one of the attractions in the Province of Cebu.

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I would also like to mention the Obra-Negosyo-Eskwela Countryside Enterprise Business Upliftment (ONE CEBU) Program, which is a Cebu Province and Mandaue Chamber of Commerce and Industry project in collaboration with Cebu colleges and universities.

The overarching goal of the program is the development of the countryside micro-enterprises. This was to be achieved through the assistance of student teams who are to prepare business plans that would rationalize how the enterprises may optimize the financial grant provided by the Province of Cebu. The winning business plans were extended full amount of the enterprise development grant of the Province of Cebu while the non-winners were extended a portion of the grant.

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Another major initiative of the Province is the Bulk Water Supply Project which is a joint venture between the Provincial Government and the Manila Water Consortium, Inc. This is a Php 256 million project that would involve the construction of water intake facility along the downstream of Luyan-Cantumog river in the northern town of Carmen, Cebu; of a water treatment plant; a water reservoir; booster pumping stations; and necessary pipelines and appurtenances for purposes of drawing, purifying and selling approximately 40 to 60 thousand cubic meters of water to the Metro Cebu Water District or MCWD under a 25 year agreement.

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The government also has other major infrastructure projects to be

implemented in Cebu which are targeted to be realized within the next 2 to 3

years. These are the Mactan Cebu International Airport Passenger Terminal

and the Bus Rapid Transit System.

The BRT which is estimated to cost Php 8.2 billion will run from Bulacao to

Ayala Center.

The new airport terminal which is estimated to cost Php 5.85 billion will serve

the international passengers.

Sometime in 2006, when the call center industry in Cebu was relatively young, the Cebu City government entered into an agreement with one of the Universities in Cebu for a Php 2 million financial aid for the school’s “study now, pay later” program for those interested in a career in call centers. This move was made by the city government in order to address the problem of lack of qualified manpower for the booming call center industry. Nowadays, there are several initiatives that are being undertaken both by the public and private sectors alike to ensure sufficient supply of manpower for the IT and IT-enabled industries.

Another important initiative of the government worth mentioning is the Expanded Greening of Wholesome Environment that Nurtures or E-GWEN. This is a community-based approach program intended to introduce a system of sustainable development at the barangay level expanding the concept of clean and green program. Under the program, tall towns and cities in the province of Cebu are evaluated in terms of their performances in the areas of environment, health, governance, and heritage.

The Provincial Government spearheads the implementation of the program together with the Ramon Aboitiz Foundation Inc. or RAFI, which is a non-government organization.

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Thank you for your kind attention.

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