WEF: Cebu economy still fragile

Rosy prospects bloom for the province of Cebu, but its economy could only grow further if the local government were to come up with a plan to address corruption, criminality and lack of infrastructure, according to the World Economic Forum (WEF).

In a report published last August titled “The Competitiveness of Cities,” WEF said Cebu still has “fragile institutions that can endanger existing gains as well as future competitiveness.”

Citing a case study written by Janamitra Devan, a member of Global Agenda Council on Competitiveness, WEF pointed out that Cebu was one of the fastest growing regions in the country, owing to its strategic location in Central Visayas.

Also, the capital of Cebu, which has a population of around four million, is the country’s second biggest city.

“The Central Visayas area, where Cebu is the leading city, boasts industry and services sectors that [account for] 36.4 percent and 55.8 percent, respectively, of the region’s economy. Agriculture accounts for only 7.8 percent,” WEF noted. In recent years, Metro Cebu has turned “from being a predominantly agrarian economy to one that is mostly driven by business process outsourcing (BPO), tourism and real estate.”

In Cebu’s BPO industry, for instance, about 140 companies generated almost 100,000 jobs last year. The province’s tourism sector, meanwhile, attracts some two million visitors a year, with foreign tourists becoming “the fastest growing contributors” to the local economy.

“Cebu is now getting more attention as a gateway to the south. More businesses are locating there, and it has begun to focus on hosting national and international conferences, building ships and making furniture,” WEF said.

But the economic gains made so far are still outweighed by the same old problems that stunt growth.

“Cebu could easily reverse course…. The ability of institutions to deal with corruption, as well as government delivery program, is still weak by global standards. Cebu has already begun to experience symptomatic issues … such as traffic, crime, congestion, pollution and rapid migration,” WEF said.

“All of these issues occur when economic development takes place in an unbridled way, without commensurate development of infrastructure supported by institutions—and Cebu is not yet on that path. The virtuous cycle of business growth and increasing consumer income, fueling higher tax revenues and wise investment infrastructure, and resulting in more investments and improved human services, has yet to be established,” it added.

WEF said Cebu could only tap its maximum potentials if these institutional challenges are addressed.

“Taking a leaf out of the experiences of its Asian neighbors, perhaps Cebu needs to come up with a proper master plan to manage its growth sustainably and protect the momentum that it has strived hard to attain,” WEF said.