Suzuki stays bullish of the Cebu market

Despite the big losses incurred by the international car players last year, a car dealer here in Cebu remains optimistic that this year will still provide growth opportunities for their company.

Suzuki Auto Cebu remains optimistic that the year 2009 will bring brighter prospect for their company especially that in the light of the global financial crisis, most motorists and car buyers are expected to prefer purchasing compact cars and other affordable units that are fuel efficient rather than luxurious vehicles with higher maintenance cost.

Deborah Sy Chua, Suzuki Auto Cebu general manager said in an interview that although they are expecting continuous down surge of growth and sales this year for the country’s auto sector, their company remains hopeful to achieve their usual sales target for 2009.

“In a previous dealer conference, auto dealers project that the year 2009 will be a slow year and there will be a small or no growth for the sector. But despite the crisis and the negative projection, we will always aim higher and we hope to maintain our average target,” said Chua. Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) on the other hand projects a two percent conservative growth prospect for this year after major foreign auto markets experienced large-scale downturn due to recessions caused by the recent global economic crisis.

Chua said that to address the foreseen negative effects of the looming global crisis, their company will continue to be more aggressive in their marketing campaigns which is also their way of attracting more customers.

To also manage the crisis, Chua said that one way is to explore new markets and currently, they have started to venture into Bohol through opening a showroom in Tagbilaran City.

Chua said that in the light of the glooming fiscal crisis, the industry experienced a so-called “credit crunch” because banks have started to tighten their lending capacities as they have become more careful in taking risks.

“The market are now having a hard time to lend from banks and with this, car sales have been affected and eventually it lead to a slowdown in the sector,” said Chua.

Chua recalled that in the fourth quarter of 2008, interest rates for car loans have started to increase which has become quite harder for customers to borrow loans and thus affecting their sales.

“Our walk-ins have decreased. Now they only inquire but they find it very difficult to decide to purchase because they are holding on to their money,” she added.

Other than the credit crunch, high oil prices have also affected the sales of auto dealers, said Chua.

But she discussed that the crisis has also resulted to an upward trend for compact units or smaller cars which are more affordable.

Chua said that their company has taken advantage of this upward trend because their Swift, Jimny and APV vehicle models with prices that collectively range from P400, 000 to P 1.6 million have been a hit last year and managed to sell many units.

She said that because of the positive take in of their compact units, they still managed to grow eight percent in 2008 despite the effects of the crisis in the second semester of the year.

“Customers have become more cost conscious. Sales for bigger cars have decreased because the market chose to buy smaller vehicles and multi-functional units that are cost efficient,” said Chua.

She revealed that this year, they aim to focus on providing vehicles that will address the needs of the market with a shrinking disposable income.

Provincial tourism execs to promote Cebu as one

Barely two months from its inception, officials of the Cebu Tourism Officers Association (CTOA), finally took their oath of office before Governor Gwen Garcia recently.

CTOA president Gregg M. Rubio, who is at the same time the tourism officer of Daanbantayan, said it is CTOA’s thrust to provide support service to their respective local government units and the provincial government’s promotion of tourism.

The group is currently composed of 33 tourism officers from the different towns and municipalities in Cebu.

Other elected officers include Nonela Villegas of Aloguinsan as vice president, Florinda Ramos from Mandaue City as secretary, Johanna Grace delos Reyes of Carcar City as treasurer, James Gallarde from Tuburan as Auditor, and Board Members Eric Ybas from Alegria, Paterno Muñez from San Remigio, Trinidad Bubuli from Toledo City and Vicente Sepulveda from Borbon.

Rubio said that the creation of the group is meant to boost the tourism promotion of the province by tackling the concerns of the respective localities in every provincial meeting so that issues concerning the tourism activities and initiatives in their area could be well evaluated.

Although he stressed that there will be no competition within them because they will function as a group in promoting Cebu as one world-class tourism destination and in raising relevant issues concerning the tourism industry in the province.

“We organized ourselves to bring our issues and concerns to the higher authorities because it has been difficult to raise our concerns individually,” added Rubio.

He said that they will also provide help to the Department of Tourism in the region in gathering sufficient information and data regarding visitor arrivals and sales generated from tourist-related activities in the province as well as in establishing linkages with resort and hotel operators and dive shop owners in their respective areas.

However, Rubio stressed the need to provide their members the necessary trainings so that they can efficiently perform their roles as tourism officers.

Hence in the first quarter of next year, CTOA will undergo a capability-building program from the Department of Tourism so that they will get to understand the scope of their duties and functions as tourism officers.

Some of the trainings they will undergo are training on the right protocol in entertaining VIPs and tourists as well skills in data gathering in their respective towns and in coordinating with tourism stakeholders in their local areas.

“There is a need for us to know the proper methods of collecting data such as tourist arrivals and how to interpret the factors behind its increase or decrease as will as in classifying the type of room accommodations provided by our resort and hotel operators,” said Rubio.

“Some of our members expected that their function is to act like tour guides but we have a separate role as tourism officers. Those who do not have background in the duties and functions of a tourism officer encountered problems. So we are currently defining the scope of our duties then we will proceed to undergoing tourism programs of the governor,” he added.

Exporters stay resilient despite the global crisis

Highlighting the resiliency of the industry players and the growing efficiency levels of their existing processes, Cebu’s export sector still continues to collectively hold positive prospects in these times of global economic meltdown contrary to negative reports.

“Bad news has been creating fear and provides a crippling effect to the industry but actually there are still a lot of good things to talk about in the face of challenges because we have much stronger players now and it has been our trademark to weather any storm,” Philexport-Cebu president Jay Yuvallos pointed out in a press conference during their general membership meeting.

Yuvallos said that compared to their high times, it could be noted that these past years has been relatively harder for the export sector considering the softening of their major foreign markets but it does not denote that everyone in the industry is suffering.

“In every situation, there are winners and there are also losers. In today’s hard times with the foreign economies at its downturn, it doesn’t mean that the export industry is no longer a viable business venture,” said Yuvallos.

He said that the closures that have happened in the export sector in these trying times do not directly translate to the fact that the industry is no longer lucrative.

Although some exporters closed due to effects of slowdown, but some of them who closed down operations found greener prospects in other industries, explained Yuvallos.

He said that the good things brought by the crisis is that it made their industry stronger and their players better because they learn to come up with efficient processes, streamlined systems and innovative product designs.

“People in the game are so much stronger because the game requires being so. Only strong players who are resilient enough stayed in the game and these are those who practiced prudence, financial discipline, controlled overhead and did efficient processes,” said Yuvallos.

He advised the sector to look at the crisis as a challenge to improve rather than a threat that will put on hold any opportunities for further growth.

“What will happen if everybody starts to be so afraid and starts to put breaks to everything that we do? It’s our choice if we want to be affected with the crises. It’s up to us on how we deal on these economic challenges but it will be our fault if the recession starts hitting us,” he added.

Apolinar Suarez, a trustee in the furniture sector of Philexport stressed that if there were players in the sector who have closed down operations; there are also many new players who came in.

In fact he reported that the export industry in the national level is still positive that this year they will still achieve a three to four percent increase over that of last year.

Jennifer Cruz, past president of the Cebu Gifts, Toys and Housewares Foundation (Cebu GTH) said that their buyers remain confident with our export sector because they have seen the resiliency of the players.

“The chances for our products are still high especially that now we have more efficient processes. All of us have learned from previous crises we encountered and in the end of this recent crisis we surely will be more efficient,” he said.

In fact just recently, a big store chain from the United States operating over 1, 700 stores was in Cebu to look for products in 2009 and Cruz’ company was among the many vendors who was able to generate pending orders from this company.

Cruz said that this big buyer also went around to its other suppliers in China, Vietnam and Thailand but they gave his factory a top rating over them because the buyer saw that they have learned during the hard times.

“The name of the game is resiliency and Filipinos are good at it considering that we have been able to weather previous storms such as the strengthening of the peso and the internal political struggles in the country such as coup attempts which has resulted to far worse impacts in the export industry than the current global crisis,” Cruz added.

Fertilizer prices drop 20%

As a result of the continuous drop in oil prices in the world market, domestic prices of petrochemical fertilizers have likewise dropped by as much as 20 percent starting late October to early this month.

“The significant drop in fertilizer prices augurs well for our farmers, especially at this time when many of them are already planting for the 2009 dry crop,” said Department of Agriculture secretary Arthur Yap in a statement.

He reiterated his directive to the Fertilizer and Pesticide Authority (FPA) to keep tabs on price movements and report to the DA price-gouging suppliers and dealers who continue selling their stocks at the steep rates.

Having checked the price movements of this essential farm inputs in his recent field trips, Yap said that retail prices of inorganic fertilizers have dropped by 20 percent to 30 percent in the provinces owing to last month’s decline in petroleum prices, which touched off a matching drop in the world market rates of petrochemical fertilizers.

Meanwhile, FPA data showed that the import prices of major grades of fertilizer have sharply dropped as of the last week of October.

For instance, the import price of urea plunged down to $330 per metric ton (MT) from its original $702 rate in September, while the cost of 18-46-0 fertilizer fell from $1,270 to $950 and 21-0-0 fell from $390 to $366 over the same period.

Last month, Yap projected that the continued decline in petroleum prices will set off a matching drop in the retail cost of oil-based fertilizers, and had directed the FPA to monitor domestic prices.

He has also ordered the National Food Authority (NFA) to intensify its palay-buying operations this wet or harvest season by doubling the number of its mobile buying stations especially in faraway areas, following the recent Cabinet directive.

As result of the nonstop surge in oil rates in the world market and big demand by other countries during the first three quarters of 2008, fertilizer prices almost doubled this year resulting from a DA-monitored 30 percent decline in fertilizer usage by farmers during the wet crop.

The price increases led to a corresponding drop in per-hectare yields for those who have declined fertilizer usage.

Yap said that over the January-June 2008 period, the average per-ton rate of urea escalated in the world market from $382.20 to $604 while 21-0-0 from $187.25 reached to $345.95, 16-20-0 increased from $208 to $739.48; then 18-46-0 increased from $525 to $1,170 and 0-0-60, increased from $404 to $525.

Meanwhile the cost of 14-14-14 soared four times during the same six-month period from $208 to $880.

As a result of these price increases, the domestic retail prices of these six major fertilizer grades also sky rocketed this year.

FPA data noted that the average retail price of urea in the local market spiraled from P1, 036.95 per 50-kilogram bag to P1, 797.58 during the same January-June 2008 period while that of 14-14-14 increased from P1, 013.04 to P1, 921.21.

The 21-0-0 grade increased from P725.94 to P993.80 while 16-20-0 increased from P956.02 to P1, 874.04; the 18-46-0 grade increased from P1, 645.52 to P3, 138.40 and the 0-0-60 grade increased from P1, 102.85 to P1, 881.68.

Yap said that oil prices reached the $100 per barrel level earlier this year, reaching an all-time peak of $147 last July but world market prices have since retreated following the US-induced global financial collapse, with the per-barrel cost falling to $64.50 last October which later lead to drops in the domestic prices of high grade fertilizers.

Cebu’s fast-paced lifestyle keeps food industry afloat

Amid the current global crisis, Cebu’s fast-paced lifestyle change and flourishing local economy have kept the province’s food industry on a positive note.

“Food is a cash business so a lot of businessmen are investing in it and here in Cebu, Cebuanos love good food that’s why a lot of businessmen from outside the province are taking advantage of the area as a growth market,” said Eric Ng Mendoza, one of the investor of the new franchised Figaro coffee shop branch at the newly opened Ayala Terraces.

Mendoza, who is also the president of the Mandaue Chamber of Commerce and Industry (MCCI) and owns an exporting firm shared that they have invested on a franchised concept after seeing a market and demand for this kind of industry here in Cebu.

Glenn Soco, president of homegrown coffee chain Coffee Dream Company Inc., said that the consumer market in the country is resilient.

“The recent lowered fuel prices and fare is giving Filipinos more spending power so if ever there are effects brought about by the crisis, it is not yet felt. But food will always be a basic need so we are not seeing effect on the consumer market,” he said.

Soco said that the positive growth of the food industry in Cebu is a result of a rapid lifestyle change in the market coupled with the various expansions and developments of more lifestyle and commercial establishments such as malls and mixed-use centers.

Major shopping centers in the city have opened and delegated special areas for food and lifestyle brands to grow such as SM Northwing, which plays host to higher end brands of goods and services.

There is also the recently launched Terraces in the Ayala Center Cebu, which provides a new avenue for lifestyle and dining experience.

Parkmall, a new shopping district in Mandaue has also been recently opened to the public and it promises to deliver new dining and shopping experience to both Cebuanos and its growing tourism base.

The increasing demand for food businesses here in Cebu has paved the way for the entry of Manila-based and international brands such as restaurants and coffee shops.

Soco said that homegrown businesses here in Cebu are facing the challenge to compete head on with local brands in Manila and international brands as well.

Meanwhile, Jill Urbina Viado from Café Laguna, one of the successful homegrown brands in Cebu’s food industry said that the entry of several players has just made Cebu’s food industry more competitive, giving more options for consumers.

She said that they do not feel threatened by the entry of both local and international food brands in Cebu’s market because they have already been able to level the playing field as they have proven that homegrown concepts can be at par with global brands.

She said that businesses like theirs remain bullish with Cebu as a market because the industry has become more challenging.

Outsourcing biz still to prosper

The Cebu Investments and Promotions Center (CIPC) is optimistic that the Business Process Outsourcing industry will remain upbeat despite the victory of Barack Obama, who have been vocal about his anti-outsourcing stance.

"The ideology to protect jobs cannot be bigger than the need to be competitive globally. Globalization has forced America and the world to be competitive in service," said Joel Mari Yu, CIPC managing director.

A source from the BPO sector, who refused to be named, told The Freeman that call centers are now closely monitoring movements in US regulations as President elect Obama takes his seat early next year to lead the economic-troubled country.

She said big call center companies and its thousands of employees are now worried that companies who are getting outsourcing jobs outside their countries, like the Philippines, may pull-out because of Obama's anti-outsourcing bid.

If this will be implemented, BPO stakeholders feared that thousands of jobs will be affected, especially that most call centers are now servicing most if not all companies from the US.

Yu, however, remains optimistic that Cebu will continue to attract BPO companies from the US, amid fears of a slowdown due to Obama's strong views about outsourcing of American jobs overseas.

Yu admitted there were indeed speculations among BPO stakeholders here that Obama's administration might convince American call centers in the country to return to the US for more jobs for its citizens.

CIPC records showed that Cebu currently has 22 call centers with around 20,000 agents, as well as 36 foreign direct IT-related investments.

US Ambassador Kristie Kenney for her part has made assurances that call center companies that have branched out in the Philippines would probably maintain their business here.

"Call centers will continue to be strong. They’re successful because the Philippine work force is so talented," Kenney said earlier.

Even local businessmen have earlier expressed optimism of the Democrats' "protectionist policies" under the presidency of Obama will have little, if not, no effect on the local BPO sector.

Yu said that while 82 percent of the clients of the BPO firms are in the US, the industry also service clients in United Kingdom, Australia, Singapore, and even from outsourcing powerhouse India.

Apart from the US, he said industry stakeholders are also trying to tap potential markets like the European bloc.

The BPO industry is considered as one of the sunshine industries in the Philippines. As of 2007, the industry employed around 300,000 workers and generated $4.9-billion revenue.

By 2010, the industry hopes to provide a million jobs and to generate US$13 billion revenues, or a 10 percent share of the global market.

Moreover, an American BPO practitioner still believes that outsourcing will still continue to flourish.

“In today’s economic crisis, there is all the more need for the Western world to outsource most of its work. So regardless of political issues, outsourced jobs will likely be steady where it is,” said Mike Murphy, an American executive who started the Philippines and India operations of Convergys.

Murphy said that there are far more benefits in offshoring so it will actually make complete sense that companies abroad will continue doing it.

He said that outsourcing jobs provides a company the time advantage to carry out the allotted requirement of its clients.

He said that labor cost is also way cheaper if jobs are outsourced to countries with a lower cost of living.

“When US companies offshore jobs, they could still keep their businesses afloat in the States because they cannot do it back home since operation cost will be more expensive,” said Murphy.

“Bottom line is that it’s actually cheaper to have the business here, there are a lot of benefits such as time differences, holiday differences, skill level differences and when you weight that in there are more advantages than disadvantages,” he said.

Murphy even stressed that with the global economic crisis, there might even be more outsourced jobs in the coming years.

“The good news about the crisis is that there will be more jobs here and even in the States. Outsourcing can boost the economy while creating more jobs, although it may not be the same but there will be a boost in the employment rate. This will be a win-win situation for everybody,” he said.

Murphy said that the Philippines have an edge over other BPO destinations because the nature of Filipinos is more inclined to the Western culture.

3rd OTOP fair highlights the best of Visayas goods

Bringing the bounty and distinctive beauty of Central Philippines, the recently held 3rd Visayas One-Town-One-Product (OTOP) Island Fair in SM City Cebu highlighted the best products and services that Visayas can offer to both domestic and international market.

DTI representatives from Central Visayas (Region VII) and Western Visayas (Region VI) said that the OTOP Fair this year is bigger and better as they have more exhibitors.

The fair which started in November 12 and will end this November 16 have 170 exhibitors selling OTOP products ranging from processed food, gifts, toys, souvenirs, novelty items, furniture, furnishings, natural fiber, and fashion accessories such as bags, shawls, headgears, and footwear as well as tourist destinations.

The exhibitors came from different towns and municipalities in the three regions of Visayas: Region VI (Western Visayas) composed of Aklan, Antique, Capiz, Guimaras, Iloilo and Negros Occidental; Region VII (Central Visayas) composed of Siquijor, Bohol, Negros Oriental and Cebu as well as Region VIII (Eastern Visayas) composed of Biliran, Eastern Samar, Leyte, Northern Samar, Western Samar, and Southern Leyte.

OTOP (One-Town-One-Product) is the priority program of the Arroyo administration to promote entrepreneurship in the countryside, create jobs as well as encourage patronage of native products and even enhance the tourism profile of the country, said Elias Tecson, DTI Region VII Business Development Division Chief.

He said that a town’s OTOP is identified, developed and promoted by the local chief executive of the area but its implementation is comprehensive as its assistance package includes the convergence of services from the LGU, national government agencies such as DTI, DOT, DA, DILG, DOST, TESDA and other GFIs as well as private sectors.

Tecson said that the OTOP program in the Visayas regions is well implemented because around 75 percent of LGUs in the Visayas have already established their OTOP programs and are now aggressively marketing and promoting these products and services.

He said that DTI provides assistance to the beneficiaries of the OTOP program such as business counselling, skills and entrepreneurial training, product design and development, appropriate technologies and marketing.

Right now, Tecson said that they are looking at packaging and labelling strategies that will lengthen the shelf life of food-based OTOP such as native delicacies and goodies.

In terms of economic impact, Tecson said that the OTOP program was able to create a multiplier effect in terms of income and job generation especially in the countryside.

Meanwhile, micro, small and medium enterprises (MSMEs) who participated in the trade fair see the intra-regional exhibit as a good avenue to promote their products and services to the local market and even get contacts for export.

Christina Anggana of Hannah’s Handicraft based in Minglanilla, Cebu shared that she participated in OTOP Visayas Island Fair for three consecutives years now.

She said that last year in Boracay, she was able to generate 65 percent revenue out from the amount of goods show brought and this year she hopes to double her sales.

She said that her positive sales show that there is definitely a huge market for OTOP products even in the domestic market.

A buyer commented that fairs such as the recent 3rd Visayas OTOP Island Fair serves as an eye opener for Filipinos because they are able to realize the vast resources of our country and the beautiful products that can be derived from our own indigenous materials.