OUTLOOK FOR 2009
Difficult year, but RP will survive
MANILA, Philippines – The impact of the United States recession and the crash of major financial markets around the world will be felt by the country in 2009, business and political leaders in Northern and Central Luzon agree.
However, they believe that the Philippines would survive the crisis by relying on its domestic market and the strength of micro, small and medium enterprises (MSMEs).
In Central Luzon, the slowdown in the volume of orders to the region’s exporters may persist until the first half of 2009, said Blesila Lantayona, regional director of the Department of Trade and Industry.
“But such also offers a good time for our [MSMEs] and exporters to do housekeeping and focus on exploring opportunities in the domestic market and other nontraditional export markets,” she said.
“The pump-priming mode of government is a wise move to help the economy brave the transition,” she added.
The Diosdado Macapagal International Airport at the Clark Freeport will continue to be a productive economic engine in the midst of the global recession, said Victor Jose Luciano, president of the state-owned Clark International Airport Corp.
Optimistic but cautious
“We remain optimistic, albeit cautious,” he said.
Business leader Levy Laus does not think that the Philippines will experience an economic crisis. “The first half of 2009 may slow down but the rest of the year will be better and business pace will accelerate going (towards) 2010,” he said.
Armand Arreza, administrator of the Subic Bay Metropolitan Authority, considers 2009 a tough year for foreign investments and tourism.
“A prolonged global downturn will certainly affect investment prospects in Subic. Nonetheless, every crisis contains the seed of opportunity,” he said.
“The SBMA will need to focus on investing in its human resources and physical infrastructure as well as streamlining its internal processes to position itself well for investments when the global economy rebounds,” he said.
Danny Piano, who will assume the presidency of the Subic Bay Freeport Chamber of Commerce in January, said while the influx of investors would be reduced as a result of the crisis, the economic outlook for Subic in the coming year would still be bright.
Piano, however, said local and foreign companies seeking to raise capital through credit would be hard pressed to get one as global financial crisis would force banks, in an effort to improve liquidity, to limit credit availability.
Harder times
Bulacan Gov. Joselito Mendoza sees Bulacan in 2009 as the “commodity and food basket in Luzon.” This will happen as the provincial government starts the full construction of the North Food Exchange (NFEx).
Pampanga Gov. Eddie Panlilio expects harder times for the Kapampangans in 2009. He said the provincial government plans to protect the poor and ensure food availability by guarding against high prices of basic commodities while providing more agricultural support to the farming sector.
Rene Romero, president of the Pampanga Chamber of Commerce and Industry, said “despite the perceived challenges facing the economy in 2009, the local economy is still resilient and has capability to overcome the global crisis.”
“Businessmen must prepare for it but must never let pessimistic speculation influence their better judgment. Business now more than ever should pursue opportunities for development in order to counteract the negative effect of global crisis in our economy,” Romero said.
Tarlac Gov. Victor Yap anticipates manufacturing output, particularly in exports, to shrink.
“More particularly, one of our bigger export employers, IWS in Luisita Industrial Park, which makes car harnesses, is very much affected,” he said.
But he said agriculture would improve as a result. “What we need to do is continually look on how to produce cheaper food. Our country must struggle to be low in basics like power, water and infrastructure materials,” he said.
More spiritual
Bataan Bishop Socrates Villegas said the financial crisis will “teach us lasting lessons about real wealth.”
“People will be more spiritual. People will be more compassionate with the poor. You will see an upsurge of people helping people. That’s 2009 for me,” Villegas said.
Antonio Chua, president of the Federation of Filipino-Chinese Chambers of Commerce and Industry in Tarlac, said while people are hoping that the gloomy economic forecasts will not happen, “2009 will be the worst in terms of the economy.”
“Everything – the dollar rate, the price of fuel, the US economy, etc. – is volatile. And since we are dependent on each of these, we stand to be greatly affected,” he said.
In Nueva Ecija, the increasing number of people who pawned their jewelry and other valuables, including cars, told of the bleak economic situation in the province this year.
There are indications that this will continue next year as the economic crisis grips the big economies of the world.
“We noted a rise of 30 to 40 percent of the number of our customers,” said Kenny Bansale, president of the 700-member Nueva Ecija Pawnbrokers Association.
Small businesses
Bansale, who is also president of the Nueva Ecija Chamber of Commerce, said they observed that returning overseas Filipino workers (OFWs) and their families were pawning their valuables.
“It looked that the OFWs were hit hard by the global economic crisis. They were not able to send home their usual [remittances] that’s why many of their families here had to look for means to support [themselves],” he said.
Juan Ngalob, Cordillera director of the National Economic and Development Authority, said the return of migrant workers and the anticipated retrenchments by local industries would not mean people would just give up. “They will start small businesses. That’s what we expect next year,” he said.
The 400 workers, who were laid off or who retired from semiconductor firm Texas Instruments Philippines Inc., are but the first in a series of retrenchments expected next year from firms operating at the Baguio City Economic Zone, he said.
But he said none of these workers are coming out empty handed. They would be pursuing small businesses to tide them over.
This may be echoed in other parts of the Cordillera when migrant workers return, according to the Department of Labor and Employment.
Anna Dione, DOLE regional director, said the Cordillera could tap the skills and resources of these returning OFWs to help shore up the local economy.
Ngalob said the impact of a recession would be felt first by Baguio, which relies on the export sector for its growth.
In Benguet, local business leaders said that for as long as Benguet would live up to its billing as the country’s “vegetable bowl,” next year’s feared recession would hardly dent the local economy.
Shrinking peso
What they feared most was the shrinking peso. They said it would affect much of the farmer’s purchasing power since the local agriculture economy is still largely dependent on imported farm inputs.
The pessimism was also shared by the mining sector as the global reduction of metal prices was expected to impact on mining companies hosted by the province.
Eulalio Austin, vice president for operation and resident manager of Philex Mines, said the company’s remaining years of operation would be further affected by the decrease in copper prices.
“The gold that we are mining now, which is just a byproduct, however, will help us cushion the impact of global recession,” he said.
Lomino Kaniteng, Benguet Federation of Small Scale Miners president, said small-scale miners are undaunted despite projections of recession next year.
He said more gold would be produced since the industry would be a source of employment.
Benguet officials are hoping that ecotourism, agricultural production and the availability of credit would keep the provincial economy stable.
Carmelita Usman, DTI Cordillera director, said the challenges for Benguet’s economy next year would be overproduction and a bearish attitude that might prevent local entrepreneurs from tapping resources made available to MSMEs.
Over production
“The fear of over production for local vegetables would always be there. That’s why farmers and their business partners must learn to go full blast in food packaging and product branding of processed goods,” she said.
The New Benguet Chamber of Commerce said 2009 would be a chance for MSMEs to strengthen their competitive advantage by becoming aggressive in pushing local products.
“The province, being largely agricultural, would not be affected by recession because we are not an industrial hub supposedly fighting for attention in the global market,” said Christine Abellon, the chamber’s president.
Jose Andiso, president of the Benguet Federation of Farmers Inc., said the increasing cost of farm inputs might still be a cause of worry for farmers next year.
Businessman Jack Dulnuan said domestic capital must be tapped for farmers’ marketing centers, commercial fertilizer businesses, gasoline retail shops and auto repair shops.
In Cagayan Valley, NEDA officials said while they expect the national economy to slow down in 2009, this would not be in a similar scale as the recession felt in the US.
“The region’s economy is primarily agriculture so it will not be as adversely affected,” said Mila Rimando, NEDA regional director.
Even if the cost of farm inputs were to increase, the region would still be spared because the bulk of its needs for agriculture is locally produced, she said.
Filipino-Chinese businessmen in Nueva Vizcaya said they have already felt the initial impact of the financial crisis this year, but they remain optimistic that the local economy will help traders survive the meltdown.
“This year was really a tough year for business. While we are alarmed what will happen next year, we still hope that things will get better,” said Michael Dy, who runs a chain of merchandise stores in the region.
In Pangasinan, officials see 2009 as a “difficult year” for Pangasinenses.
From best to good
Cezar Quiambao, a businessman from Bayambang town who runs several companies in Metro Manila and Pangasinan, described the economic transition in 2009 as “from best to good.”
“I think that could be because, as expected, there will be lesser remittances from our OFWs, especially those in the US, which has been very much affected by the crisis. As a matter of fact, remittances come biggest from the US,” he said.
Dagupan Mayor Alipio Fernandez Jr. said despite the tight cash flow, consumer items in the city moved as good as in 2007.
“But we are now positioning in providing contingencies on possible shortfalls. As a trade and commercial center, we have to provide a strong support not only in terms of policies, but very importantly, in the business environment,” he said.
“A serious crisis”
Pangasinan Rep. Jose de Venecia Jr. said the country would be facing a “serious crisis” in the first and second quarters of 2009.
De Venecia said dollar remittances, tourism, foreign investments and exports have been adversely affected by the “financial explosion” that had swept major world economies.
Filipino-Chinese businessmen in eastern Pangasinan have adopted a wait-and-see attitude on the economic situation in the country.
Board Member Danilo Uy, president of the Eastern Pangasinan Filipino-Chinese Chamber of Commerce, said the country would feel the crunch since the economy is dependent on labor export.
Tourism potentials
“We can see now the effect of other countries’ recession on our country. Many factory workers [abroad] are being sent home. The government should reexamine its economic policies in such a way that we will not be dependent on labor export,” he said.
But Alaminos City Mayor Hernani Braganza said tourism would spur economic activities in the country because “tourism touches all economic sectors, even small vendors.”
“The province has a lot of potentials in tourism. We still have to tap that potential,” he said.
He said some Alaminos natives living in the US and other countries hit by recession are planning to take their money home and invest in the city. Some are planning to invest in hotels and restaurants, he said.
Back to basics
In Ilocos Sur, Gov. Deogracias Victor Savellano, chair of the Regional Development Council in the Ilocos, said people should go back to basics and return to traditional industries, like agriculture and organic farming, to weather the economic storm in 2009.
Ilocos Sur is hoping to go into business partnerships with Taiwan in 2009, particularly in the development of the Salomague and Narvacan ports and tourism. Reports from Russell Arador, Robert Gonzaga, Ansbert Joaquin, Tonette Orejas, Carmela Reyes and Anselmo Roque, Inquirer Central Luzon, and Leoncio Balbin Jr., Vincent Cabreza, Gabriel Cardinoza, Delmar Cariño, Frank Cimatu, Melvin Gascon, Yolanda Sotelo and Villamor Visaya Jr., Inquirer Northern Luzon