Monday, October 20, 2008

According to worldwide survey: Cebu is number 1 BPO destination

By Ehda M. Dagooc
Tuesday, October 21, 2008
Here’s good news for Cebu.

Cebu City is now the world’s number one emerging global outsourcing destination based on the latest survey made by Global Services-Tholons Study, a reputable magazine in the Information Technology or “IT” world.

Cebu bested other 50 emerging outsourcing cities in the world, that include Shanghai and Beijing in China; Ho Chi Minh City in Vietnam; Krakow in Poland; Kolkata, India; and Cairo, Egypt.

“The world’s biggest outsourcing companies are now looking at Cebu. Now, we are a legitimate outsourcing destination. The world is now looking at Cebu,” said Cebu Investments and Promotions Center (CIPC) managing director Joel Mari S. Yu, in a press conference late yesterday afternoon.

In the study, Tholons considered six general categories, which include scale and quality of workforce (including education), business catalyst, cost, infrastructure, risk profile, and quality of life.

With the fast growing outsourcing and off-shoring industry in Cebu, Yu said there is no doubt the city could graduate from an emerging outsourcing destination to a fully-developed outsourcing hub as early as next year.

According to Tholons, top notch global service providers such as Accenture, ACS, Cognizant, HP, IBM, Infosys, Wipro, among others are continually increasing their global presence. In a way, the choice of the right city has become more important than the choice of the country.

It is rather the city [than the country], which represents a more accurate package of attributes that service providers seek.

“Thus Cebu City and Monterrey matter more than the Philippines and Mexico from a decision stand point,” said the Tholon survey result.

After seven years of working hard to put Cebu in the global spotlight as the most preferred outsourcing site, Yu said the work has “paid off.”

“Now, we want to aim for the best and be a fully developed outsourcing destination in the world,” he added.

While the outsourcing giants in the world are now focusing their eyes on Cebu, this will bring good news not only in terms of the economic performance of the City, but significantly to Cebuanos as this will mean more employment opportunities.

Cebu produces at least 23,000 fresh (college) graduates a year. Majority of these graduates are employable in any outsourcing company may it be voice (call center) or non-voice operation such as software development, medical transcription, accounting and legal outsourcing among others.

When Cebu City decided to shift into an IT destination back in 2001 instead of focusing on being a manufacturing investment destination, the IT industry here has continuously provided jobs. It now hires over 20,000 people.

Cebu is now the home of big IT firms and outsourcing giants in the world like Wipro, IBM, Accenture. Soon other industry giants like Tata Group of India, Hewlett Packard (HP), and Flour Daniels will make their presence here.

Last year, Cebu was ranked number three as in the world’s top emerging outsourcing destinations.

With this, Yu said Cebu easily attracted new outsourcing investors, not just call center companies, but outsourcing firms that require highly skilled professionals like in animation, software programmers, accountants, lawyers, medical transcribers, human resource experts, content providers, and others.

To date, there are a total of 36 foreign direct investors (FDIs) in IT and Business Process Outsourcing (BPO) operations, excluding the 23 call center firms. Combined, these companies employ over 20 thousand workers already.

According to Yu, with the continuous building of Cebuano developers to invest on Cyber Park and IT Building facilities, Cebu is on the best position to accommodate the world’s outsourcing companies that will locate here.

Sunday, October 12, 2008

Megaworld raises ante in BPO dev’t

Friday, October 10, 2008

Always a step ahead of competition, #1 business process outsourcing (BPO) office buildings developer Megaworld Corp. is introducing new dimensions to the 15-storey McKinley Hill Commerce & Industry Plaza to make it the perfect location for outsourcing and offshoring (O&O) firms.

“Megaworld’s team of architects and planners have raised the ante anew in BPO building developments by integrating in the Commerce & Industry Plaza the elements and features that they found to be very essential in the operation of BPO firms but were overlooked by other developers,” Megaworld FVP for business development Jericho Go declared.

First, the Commerce & Industry Plaza offers wide uninterrupted office spaces of up to 1,800 square meters. The building was designed in such a way that the posts and columns will not be found inside the units to make sure that the BPO locators will not waste precious space. This also makes the setting up of the working areas, facilities and equipment more efficient and easier for BPO tenants.

BPO firms may inquire about leasing prime office space at the Commerce & Industry Plaza by calling 912-0708 or visiting www.megaworldcorp.com.

Global slowdown to create ‘unique opportunity’ for RP

By Ma. Elisa P. Osorio
Monday, October 13, 2008

Local business leaders said the slowdown in the US economy will create a unique opportunity for the country because the Philippines is an attractive investment destination.

Philippine Chamber of Commerce and Industry (PCCI) chairman Sergio Ortiz-Luis said most multinational companies are now looking for alternative business locations as labor and operating costs in the United States soar.

He said there are multi-national companies that are now pulling out their investments in developed nations and are looking at setting up businesses in other countries in order to reduce cost.

“Because of risk aversion, there is a big possibility that these companies will go to us,” he explained.

Ortiz-Luis said people need not panic over the global economic turmoil because developing countries like the Philippines are somewhat insulated. He said those that will really feel the impact are developed nations. In fact, he said the country is expected to continue to grow until next year.

“Of course we have to be concerned but we can get out of this crisis better than other nations,” he noted.

He said the country is doing alright this year. In terms of exports, however, he stressed that there is a need to re-asses the expectations for next year because even countries like Singapore which was not expected to be affected are already experiencing the effects of the global slowdown.

Ortiz-Luis said it is important that people like some politicians should avoid making pronouncements regarding the economy which may cause undue panic.

“This is a perception game. I call on the politicians, if they have nothing good to say then they should keep it to themselves,” he said.

For him, perception will dictate how the country will be affected by the economic crisis happening in the United States and other countries in Europe. He said the government and the private sector are already doing their part to manage the situation.

PCCI president Edgardo Lacson agreed with Ortiz-Luis, saying it is important for people not to panic. “Panic can lead to total collapse.”

“If we panic and we do things that are hurtful to our economy then it is a self-fulfilling prophecy,” Lacson noted.

An example is withdrawing money from banks even if there is no cause for alarm. Mass withdrawals can cause the collapse of even strong banks. “Yes we are concerned about what is happening around us but we are solving it,” he said.

Are we really safe?

BIZLINKS By Rey Gamboa
Monday, October 13, 2008

Even as US President George W. Bush signed two weeks ago an economic bailout package worth $700 billion, world markets continued their downward slide as panicked investors rushed to move out their money from banks and financial markets.

Estimates as to how much money has been pumped into the world’s financial system to stave off a meltdown already runs to $5 trillion. And it seems that more funds will be needed in the next weeks.

In fact, American Insurance Group, which received $85 billion from the US central bank in September to stave off its collapse due to liquidity problems, has just recently asked for more, bringing government exposure to the world’s biggest insurance company to $122.5 billion.

People are already asking how much more will AIG need. The insurance firm’s rush to sell its assets, including shares in Philippine American Life and General Insurance Co. or Philamlife, has so far been overtaken by even more mayhem in global markets.

The $700-billion mother of all bailouts seems to be ineffective, judging from the succeeding effort of central banks across continents to release more money, and even to reduce interest rates. Even the show of force of the Group of Seven major industrialized nations seems to fall on deaf ears.

Investors continue to panic, and are trying to make sure that they wouldn’t get caught in this escalating financial storm. Perhaps the market’s reaction is just knee-jerk reflex that should correct itself within the next few weeks or months. But what if it doesn’t?

Reassurances, or lack of it

So, is the Philippine banking system insulated from all that is happening in the world? Is your and my money safe?

We would like to think that Gov. Amando Tetangco and his team at the Bangko Sentral ng Pilipinas know what they are saying when they guarantee us that we can all sleep tight without fear, and that we can wake up tomorrow assured that our savings or investment in Philippine banks are safe and sound.

But these are extraordinary times and even the collective understanding and knowledge of the world’s biggest central bank leaders led by US Federal Reserve chairman Ben Bernanke is not soothing the swelling panic that is rippling throughout Europe, and now even Asia.

Japan and Singapore, the two strongest economies on our side of the world, are dizzy trying to decipher what hit them. Despite all the billions of dollars that the Japanese central bank has been releasing to the market, Japan is now on the verge of a recession. Singapore has just recently admitted its economy is.

Disturbing lapses

We have been hearing almost daily reassurances from GMA and her government finance officials and those from the private sector that the Philippine banking system is rock-solid, having adhered to prudent banking practices and generally compliant with the BSP’s conservative policies. And that sufficient controls and monitoring systems are in place to protect the general public.

And yet, there have been lapses – perhaps small in scale if compared to what is happening in the US Nevertheless, these are still lapses that cost its victims their lifelong earnings.

We have had in the last 12 months seen the bailout of a couple of banks. Bankwise, Inc. went bankrupt and was put under the receivership of the Philippine Deposit Insurance Corp. The same happened to a rural bank in Camarines Sur.

Financial scams, i.e., pyramiding and investment schemes that promise extraordinary returns, continue to victimize our countrymen. The total amount involved, according to one diligent blogger that I came across, has already reached hundreds of billions of pesos.

Remembering the pre-need nightmares

And with Philamlife in the limelight these days, we are again haunted by the painful experience of millions of housewives who had diligently set aside monthly amortizations for the future education of their children in pre-need plans, now just worthless pieces of paper.

Philamlife, of course, is not one of those that belonged to this rogue circle of companies which peddled dreams that turned into nightmares. But the nervousness that quite a number of Philamlife plan holders feel is real. It really did not help when Philamlife president and chief executive Jose Cuisia, perhaps forced to hold a press conference to assuage its clients’ fears, had nothing much to say except that 10 companies want to buy it and the Yuchengco group is one of them. How reassuring!!

On the other hand, if one looks at it objectively, no one, not even Bush nor the heads of Group 7 will ever be able to give adequate assurances as this global storm brews and seemingly continues to gather strength. The global financial crisis continues to unfold and more seems to be hidden in the plot than what we have seen so far.

How bad can this get and for how long?

DEMAND AND SUPPLY By Boo Chanco
Monday, October 13, 2008

The quick and honest answer is, no one knows. Just when you think things should brighten with governments acting in concert to inject not just money but try to put confidence in the system, something else crops up to spook the market. Only one thing seems sure… according to some 52 economists in the latest Wall Street Journal forecasting survey, they now expect US gross domestic product to contract in the third and fourth quarters of this year, as well as the first quarter of 2009. In other words, the “r” word is upon us!

But if you want to read something really scary, here are a few paragraphs from the latest outlook of Nouriel Roubini, Professor of Economics at the NYU Stern School of Business.

“The U.S. and advanced economies’ financial systems are now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof…

“At this point the risk of an imminent stock market crash – like the one-day collapse of 20 percent plus in US stock prices in 1987 – cannot be ruled out as the financial system is breaking down, panic and lack of confidence in any counterparty is sharply rising and the investors have totally lost faith in the ability of policy authorities to control this meltdown.

“At this point the recession train has left the station; the financial and banking crisis train has left the station. The delusion that the U.S. and advanced economies contraction would be short and shallow – a V-shaped six month recession – has been replaced by the certainty that this will be a long and protracted U-shaped recession that may last at least two years in the U.S. and close to two years in most of the rest of the world… the probability that the outcome could become a decade long L-shaped recession – like the one experienced by Japan after the bursting of its real estate and equity bubble – cannot be ruled out.”

Today’s flat world threatens to flat line most economies. Even the petro dollar rich countries of the Middle East are also feeling the bite. Thus the jobs of our OFWs are at risk. I just read at the Financial Times that the construction boom in Dubai has started to slow down. Apparently, they also need the flow of foreign capital to finance their building industry.

No wonder our Secretary of Labor looked troubled when he was interviewed on a television newscast last week. I would be, too, if I were in his shoes. I am afraid the mitigation measures he enumerated to cushion the impact of job losses in the Middle East and elsewhere, will be hardly adequate. We cannot expect our OFWs to morph instantaneously into small entrepreneurs as soon as they land in NAIA.

Unfortunately, nothing that I have heard from other cabinet members sounds adequate to meet the crisis already at our doorsteps. The most promising I have heard comes from Albay Governor Joey Salceda who proposed to Ate Glue a number of emergency measures to prevent panic and despair when the full impact of the financial crisis hits our shores.

Among the crisis countermeasures proposed by Joey are:

1. An economic stimulus package up to P75 billion a year is central. Banks are only as strong as the real economy. This shields the poor through direct income transfer, increases food production through DA intervention and expands productive capacity through infrastructure acceleration.

My only misgiving is my lack of trust that this administration will use this large sum of money properly. Ate Glue will more likely play politics… specially after the House Speaker has announced that cha cha is on the agenda by January next year.

2. Increase capitalization of BSP by P40 billion and PDIC by P10 billion through a National Government Multi Year Obligation Authority. It makes sense to now give government institutions the ammunition they can use in an emergency to stabilize a situation.

3. Integrate financial oversight in supervision to close regulatory gaps vs current Banks under BSP, stocks under SEC, insurance under IC. There is probably a need to put them all under one roof, an independent financial authority. What the present crisis teaches us is the need for effective regulation and this is one way we can approach the problem.

4. Coordinated regional stabilization fund under Asean for forex facility. This had been talked about a lot in the aftermath of the last Asian financial crisis. Time to bring this beyond talk.

5. Depositor confidence is key so deposit insurance coverage must be increased to P500,000 from P250,000. The rest of the world, including the US, is doing this as a confidence building measure that would keep people from instigating bank runs out of panic from rumors or other such things. Ireland has virtually covered entire deposits. While 95 percent of accounts are under P250,000 they account for only 13.7 percent of amount. Let us protect depositors and not bailout bankers or borrowers.

6. Give PDIC independent examiner power and bridge bank authority. There is a need to enable PDIC to become more proactive to prevent bank failures. And PDIC must also be made more viable through the bridge bank authority to sell assets at market rather than fire sale prices.

Over all, Joey’s proposals are directed towards increasing investor confidence in the country by enhancing investor protection. Our current low level of investor protection is a main reason why we scored very low in the last rating of countries for investor confidence.

Strengthening regulatory systems is probably the best lesson the world should learn from our current grief. Look at what’s happening in Iceland. The free for all regulatory environment enabled the country’s banks to lend heavily at home and abroad, their assets swelling to 10 times the economic output of the nation. With the credit crunch, Iceland’s financial system collapsed Thursday last week. The government took over the banks and was expected to turn to the International Monetary Fund for help.

Iceland in Chapter 11 made sovereign risk seem more risky than it is normally seen. Now, investors see the financial disease moving from banks and companies to countries. Thus, even if Iceland is geographically far from us in Asia, its bankruptcy could trigger, the WSJ warns, an exodus of investors from other small, debt-laden countries, pushing down their currencies and making it impossible for them to pay their foreign debt. That makes us vulnerable.

Confidence building is the most important strategy that any government can do at this point. The ordinary depositor and investor now want to have the assurance and guarantee of government. Otherwise, he will likely panic and destabilize the financial system further.

Gov Joey also observed that some chaos is necessary for the stability and resilience of systems. “Bottom line is… when dealing with complex systems we should act with a certain humble dubiousness not with unblinking rashness. Most clueless players (like some government economic managers?) are the most confident.”

In other words… continually expressing confidence in the resilience of our financial system is meaningless and even dangerous. We must act now because we aren’t going to be immune from the global disease much longer. It is better to be prepared. As Gov Joey so aptly puts it, even if you are healthy, it is not bad to get anti flu shots when there is an epidemic in your neighborhood.

Economic managers nix P3.5-B bailout plan for Quedancor

By Iris C. Gonzales
Monday, October 13, 2008

Government economic managers have shot down a proposal to bail out the state-run Quedan and Rural Credit Guarantee Corp. (Quedancor), arguing that the agency has not been a significant factor in pump-priming the economy.

Sources at the Finance Department said economic managers want Quedancor to be deactivated and not be bailed out by P3.5 billion as what the agency is seeking.

A source said it would not be practical for the government to continue the operations of Quedancor because it has been losing money for several years now due to mismanagement.

“Why would we bail out an agency that is losing money?” the source pointed out.

In 2007, Quedancor had a net loss of P286 million and in 2006, a net loss of P23 million.

Quedancor, which is mandated to facilitate credit to the countryside, is opposed to the proposed deactivation. Instead, the agency wants a P3.5-billion bailout package which officials said would make Quedancor sustainable.

The government has yet to finalize the phase-out plan for Quedancor but the Department of Finance favors a bailout of P475 million instead of the proposed P3.5 billion.

The P475 million would be used to pay the obligations of Quedancor to its creditors. After which, the government would phase out or deactivate the agency.

Earlier, Finance Undersecretary Jeremias Paul Jr. explained that the P475 million, which will be in the form of equity infusion, will help Quedancor pay its past due obligations to various creditor banks.

“We need to pay off the creditors. We need to negotiate with our creditors. We don’t have the legal basis to pay off the obligations so it will be in the form of equity infusion,” Paul said.

The country’s economic managers believe that it would be better for the government to put the money in another agency that would have the same mandate but be more prudent with its funds.

Quedancor employees appealed to President Arroyo to retain the agency.

“Most of us, after serving the government for more than two decades are faced with the eventuality of unemployment should our beloved corporation collapse,” the 1,200-strong Quedancor Employees Association Inc. said in a letter to Mrs. Arroyo.

BSP sees no urgency in adjusting rates


By Des Ferriols
Monday, October 13, 2008

The Bangko Sentral ng Pilipinas (BSP) won’t review its monetary policy settings out of the normal six-week cycle despite the globally-coordinated rate cuts last week.

BSP officer in charge Nestor Espenilla said over the weekend that the Monetary Board decided it was not necessary to review its policy settings when it held its executive meeting on Thursday after the policy meeting on Monday last week.

“But we saw no need to review the stance since we just looked at the situation last Monday,” Espenilla said.“But the MB is aware, of course, that these are extraordinary times so we are looking at the developments.”

Last week, central banks across the globe cut their interest rates by 50 to 100 basis points in an attempt to unfreeze the market where banks have stopped lending to each other.

But Espenilla said the Philippine situation was significantly different since banks here were still lending to each other and there was no liquidity squeeze seen in other markets.

“Right now I see no move to review these policy settings, other than looking at them in the next cycle,” Espenilla said.

The Monetary Board regularly reviews its policy settings on a six-week cycle and before the coordinated rate cut was done late last week, the BSP had already decided it would keep all its policy settings unchanged.

“What the MB is looking at and reviewing is primarily the inflation target,” Espenilla said.

Monetary authorities kept all monetary policy settings unchanged last week, ending weeks of speculation that the central bank has finally ended its tightening cycle amid slowing economic growth and easing oil prices.

Emerging from its policy meeting that was called three days ahead of the usual Thursday schedule, the Monetary Board announced that its key policy rates would remain at six percent for the overnight borrowing or reverse repurchase rate and eight percent for the overnight lending or repurchase rate.

Monetary tightening normally had the impact of slowing economic growth by reducing liquidity in the system and raising the cost of borrowing which would discourage production expansion.


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