2012 good year for BPOs

By Katlene O. Cacho

Wednesday, January 2, 2013

THE 56 business inquiries received by the Cebu Investment and Promotions Center (CIPC) in 2012 resulted in 17 companies that have set up shop in Cebu.

At least five companies are still preparing documents and are expected to set up operations early this year.

CIPC managing director Joel Mari Yu said the continued interest of foreign companies to relocate and set up operations in Cebu is a manifestation of their confidence on the city’s economy, talent pool and governance.

Yu said 2012 was “much livelier” compared with 2011 because most of the new entrants are knowledge process outsourcing (KPO) players. But “2013 is projected to be as good or even better,” he said.

Yu anchored his projections on what he described as the country’s sound macro-economic fundamentals, which restored foreign investors’ confidence to do business in the Philippines.

He said the Aquino Government’s policy reforms and the President’s serious fight against graft and corruption along with favorable market conditions like the US election results and decision to defer the anti-outsourcing bill in the US have increased the confidence of investors.

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Jobs

The new investments generated 11,000 more jobs in 2012, adding to the 75,000 generated with the entry of 81 Philippine Economic Zone Authourity (Peza)-registered companies in 2011.This does not include the job opportunities created by companies that are already here.

The five companies set to start operations early this year are expected to generate 4,000 to 5,000 jobs. CIPC only keeps track of Peza-registered companies.

Yu said most of the new entrants are foreign non-voice companies, which strengthens Cebu Cebu’s leadership in Business Process Outsourcing (BPO) and, more importantly, in the high-value KPO industry.

Yu said the entry of non-voice companies in Cebu makes the IT-BPO/KPO industry more stable because it expands Cebu’s market, which was previously limited to the US, into other countries.

The presence of KPO companies in the country also helps slow the migration of skilled Filipino professionals abroad.

“This proves that Cebu is not limited in delivering the usual BPO services but (is also capable) in carrying out high value services,” Yu said.

Various industries like tourism, real estate, food and retail have attributed their growth to the country’s booming IT-BPO/KPO industry.

Businessmen said the strong domestic consumption is driven by young professionals, mostly working in IT-BPO/KPO companies, with high disposable income. They said these young professionals have helped companies achieve sales target.

Exist chief executive officer Jerry Rapes said the IT-BPO ecosystem in Cebu is growing.

“I believe that other markets of the US are starting to see opportunities to outsource IT projects to the Philippines and Cebu is one of the prominent locations that can deliver this service,” Rapes said.

He said the recovery in the US will open more opportunities for IT projects for Filipinos.

Silicon Valley

Exist was among the eight Filipino companies that became part of the US-Philippines Business Support and Information Technology Delivery Council that seeks to explore business opportunities and partnerships in Silicon Valley.

He said they are working to capture a larger chunk of the $1 trillion Silicon Valley business.

The country’s outsourcing industry, however, faced some challenges last year.

In early 2012 the industry was threatened when a bill was filed in the US Congress that sought to bring outsourced jobs back to the US. Industry stakeholders in the country predicted the bill will fail to muster votes, saying outsourcing will stay as this makes companies competitive in. The bill wasn’t passed.

The appreciation of the peso against the US dollar also affected the growth of the industry.

The Business Processing Association of the Philippines (BPAP) said the strengthening peso is “eroding the cost competitiveness” of the country’s IT-BPO industry.

Stronger peso

Citing analysis by Everest Group and Outsource2Philippines, BPAP president and CEO Benedict Hernandez said the combination of an appreciating peso and a depreciating Indian rupee provided India cost advantage.

“With the 30 percent difference in peso and Indian rupee exchange rate with the US dollar, the cost differential has substantially widened,” Hernandez said. “And that is much more difficult to manage.”

BPAP conducted a survey last December on the impact of the strengthening peso. In the survey, 46.7 percent of respondent executives said “it has been difficult for them to hit revenue targets;” 40 percent of the respondents said they have “lost some business to other destinations;” and 40 percent “cancelled expansion plans.”

The peso ended at P41.05 to the dollar on the last trading in 2012, stronger than the P43.92 on the first trading on Jan. 2 last year.

“The foreign exchange has negatively affected gains in volume of business,” said Rapes.

But BPAP is confident of hitting the $13 billion revenue target in 2012 despite the appreciation of the peso.

For 2013, the association hopes to achieve $16 billion in revenues with a target of 926,000 employees. Under the roadmap, the BPO industry is expected to hit $25 billion in revenues and 1.3 million jobs in 2016.

Growth

Rapes is optimistic the industry will continue to grow and “win more strategic deals.”

He said the overall positive outlook of the Philippine economy is being recognized globally and the aversion to Philippines, as an outsourcing destination is reducing.

“The world is starting to believe that the risk of doing business here is going down,” he said.

But aside from exporting services, Rapes believe the Philippines can also do well in exporting products. “It will be a process that is neither easy nor fast but this is something that we need to do,” he said.

Mactan resort workers gain new skills in Russian stint

By Mia E. AbellanaA⁺A

Saturday, January 5, 2013

WHEN 38-year-old Renea Sabarre set foot in Vladivostok City last September, she felt like she had stepped into a dream. “I could no

t believe where I was. I felt like I might never have a chance to return to this place because I was dreaming,” she gushed.

She was there with 71 other employees of the Mövenpick Hotel Mactan to help out in Asia Pacific Economic Cooperation (Apec) Summit in Rusky Island. She left her two children and partner behind for about a month to work at the front desk and call center for delegates.

Though her duties at the Mövenpick are as a masseuse at the spa, she applied for the chance to help out, even if her duties were different from her actual work. “Here, we are trained to multi-task. So even if I work at the spa, I also do reception work when clients come in for treatments,” she explained.

Sabarre has worked at the hotel for nearly seven years, starting out when it was still called the Cebu Hilton. She met many important Filipinos, including members of President Benigno Aquino III’s Cabinet.

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Chance to learn

Mövenpick Hotel Mactan general manager Knuth Kiefer told reporters that after they were offered the chance to help out at the Apec Summit, they allowed all employees who were interested to apply, even those in other departments who were not actually doing front desk duties.

He added that it could not have come at a better time, since the hotel was closed for five months due to renovations.

“We wanted to give them an opportunity to experience another country and travel abroad. That was our main drive because they opportunity is rare. We wanted as many people as possible so they could gain the experience,” Keifer said.

Though the employees required were for front office, telephone operators and bell services, Keifer said employees from all departments were accepted. They were made to undergo two-week trainings before they were sent to Russia.

He feels very proud of his team, saying he has gotten positive feedback about their performance. He cited calls he received from guests at the summit who have heaped praise on his team members for their friendliness and professionalism.

Changing mindset

He was especially glad of the fact that not one of the employees decided to return early because they got sick or changed their minds about serving there.

Sabarre admitted that her initial thoughts about Russians were that they were strict.

But after spending time with many Muscovites flown in from Moscow to serve at the summit, she felt very appreciated and cared for. She also admires them for their discipline in keeping their streets clean and orderly.

She was also glad to learn basic Russian, as they were taught phrases.

Her colleagues Anthony Saberon and Chona Taghoy were just as enthusiastic about their experience. They shared that they have made friends and are still communicating with some of them. Taghoy, who works in the accounting department, said it was her first time to travel abroad.

“To be bringing the name of the Philippines, of Cebu and our hotel made us so proud.

Some people would ask us where we were from,” she said. Another experience she did not expect was to be interviewed live by a Philippine television network. “The newscaster wanted me to talk in Tagalog. I’m not that good in Tagalog.”

Colleagues could not stop teasing Saberon, who works as the hotel’s leisure and activities supervisor. They implied he had met someone, although all he said was that the Russians were very friendly and that he loves that country.

‘Meant to be’

For Honorary Consul to Russia Armi Garcia, getting the 72 delegates to serve in the Apec Summit was “meant to be”, as it coincided with the hotel’s renovations, which led them to suspend operations then.

Pointing out that Cebu and Vladivostok have been sister-cities since 1996, she felt it was only right that Cebuanos helped them in the hosting of the Apec Summit. Garcia and Consul Vadim Zaytsev presented letters and certificates of appreciation to the hotel and the 72 workers signed by the Russian Federation president’s business administrator Valery Soluyanov, who also headed the Apec 2012’s workgroup for summit venues and location. Zaytsev said their service was held “in highest estimation” by the Russian Government.

Banner year for real estate

By Katlene O. Cacho

Saturday, January 5, 2013

IF THERE is one industry that posted a stellar performance in 2012, it is real estate.

Players are optimistic that 2013 will be a banner year for the industry as well.

Cebu Holdings Inc. president Francis Monera said the real estate industry recorded a revenue growth rate of 18.8 percent in the third quarter in 2012, making it the fastest growing of all industries.

Jose Soberano III, chief executive officer of Cebu Landmasters Inc., said the real estate industry experienced “unprecedented growth” in 2012 in terms of new projects being launched and completed, increases in booked sales and rental income due to higher volume turn-over, and upward price movements.

“This actually continued the growth pattern already felt in 2011 but with a more frenzied take-up rate,” he said.

Remittances sent home by Filipinos working abroad and the booming outsourcing industry were major factors behind the growth of the industry. The liquidity in the market propped by available credit and financing support from the banking sector also fueled real estate’s performance in 2012.

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Timely combination

“At no time in our economic history was credit so readily available for medium and long-term housing needs that it opened an influx of buyers from the low to medium strata of our economy,” Soberano said.

In the residential front, Monera said strong and steady influx of remittances, complemented by a healthy investing environment and low interest rates have encouraged more Filipinos to buy property.

Cash remittances in the 10 months to October 2012 reached $17.5 billion, up 5.8 percent from 2011’s $16.5 billion.

“OFWs are a lot smarter now. They look at the future value of their investment and the best place to put money where investment appreciates,” said Cebu Investment and Promotion Center managing director Joel Mari Yu, referring to the growing interest of OFWs who buy condominiums apart from building houses in their hometown.

Moreover, the entry of BPO players buoyed by the country’s strong position as a top outsourcing provider has fueled the growth of commercial buildings in the city.

CBRE Philippines noted that multiple credit rating upgrades, government support and a positive outlook for the Philippine economy encouraged international companies to expand operations here.

Competitive pressure

But the growing list of developers in Cebu has led to a more intense market competition in the residential market.

“From my end, I try to overcome this stifling competition by continuing to scout for exciting locations and partnering with landowners who want to be part of the action rather than selling outright their properties,” said Soberano.

The entry of Megaworld Corp. in Cebu is one of the key highlights in the real estate landscape in Cebu in 2012.

The Tan-led property developer announced that they will be pouring in P10 billion over the next six years to develop a 16-hectare property in Mactan into a mixed-used commercial development called The Mactan Newtown.

The development is patterned after Eastwood City, the country’s first master-planned township development that will house residential buildings, office buildings, boutique hotel, and commercial strips.

Ayala Land Inc. (ALI) brands were also bullish in Cebu in 2012.

High-end brand Ayala Land Premier (ALP) and subsidiary Cebu Holdings Inc. (CHI) announced the construction of a 38-storey residential tower on top of Ayala Center Cebu’s soon-to-be-completed wing. ALP set aside some P2 billion for the construction of Park Point Residences ALP’s second high-end residential tower in Cebu.

Another ALI brand, Avida, also earmarked P4 billion for the five-tower condominium development spread in the next four to five years at the Cebu IT Park. The project is named Avida Riala.

The Gokongwei group also joined Cebu’s progressive real estate industry.

Big players in town

Robinsons Land Corp. (RLC) said it will be building residential condominiums on a 4.6-hectare master-planned development in the North Reclamation Area of Cebu. The firm is currently putting up Robinsons Galleria Cebu, a seven-story mixed-use building, which will have a shopping mall, a 153-room budget hotel and BPO offices.

Unafraid of the entry of big players, homegrown developers remained upbeat about the industry.

Some local firms diversified their businesses and ventured into real estate, seeing its growth potential. Other real estate developers opted to venture into niche-development, catering to specialized markets.

The JEG Development Corp. for instance, built 14 townhouse units in Talamban that solely caters to the Japanese market.

Contempo Holdings Inc., on the other hand, launched Bamboo Bay, a new vertical project. The firm is spending close to P1 billion for the development of three residential buildings.

Known for its chain of retail stores, the Gaisano Grand Group of Companies ventured into real estate with the launching of its first medium-rise condo project, the Grand Residences.

Industry players believe the robust development all around Cebu is a testament of a thriving economy.

“The real estate industry is expected to grow even faster and a positive outlook is seen for 2013,” said Monera. He noted that the BPO sector will continue to be one of the major drivers of the industry this year.

“With the growth of the BPO sector, which brings high disposable income, and coupled with low interest rates, the country will also experience increase real demand across all market segments,” Monera added.

Soberano noted that Cebu makes up five percent of the country’s total housing figures.

He said that if the national housing backlog is 3.2 million households, Cebu must have an estimated backlog of 160,000 houses, mostly from the economic market segment with house prices between P400,000 and P1.25 million.

He added the high-end market, whose houses are P6 million and beyond, also remains an “interesting” market and a “challenging” sector to penetrate for developers, as the market potential continues to be high for those buyers who want multiple homes.

“This year will be another banner year for the industry,” said Soberano.

“More foreign direct investments mean more employment and more affordability to our market, which still has a huge housing backlog,” he said.

While overseas remittances continue to be the main driver of the local economy, real estate players downplayed the effects of the appreciation of peso on buying homes.

The peso has appreciated more than seven percent so far in 2012, making it Asia’s best performing currency.

“Although this (appreciation of peso) may affect the value of remittances OFWs send to their families, we believe that the desire to buy or build a home in their native land remains strong,” said Monera. “We believe that the shift in the value of dollar will not significantly curb the demand enough to deter Filipinos from their desire to own a home.”

Soberano agreed with Monera and added that on the supply side, the strengthening of the peso has lowered the importation cost of construction materials and housing-related supplies.

Soberano foresees that the low market (within the P1.25 million to P3 million price range) will dominate sales this year, but there will be some solid interest for the middle to high-end market as Cebu continues to be an “exciting” location for main or even secondary homes for rich individuals.

Monera said OFW remittances are powering the low-end to mid-range residential property market, while the increasing demand from BPO employees and expats will drive the upper residential market.

Another trend to watch out this year is the development of industrial parks by homegrown developers.

According to Yu, there is a growing interest among local developers who want to build industrial parks to cater to the “reviving” manufacturing sector, particularly for light engineering companies.

He noted that AboitizLand is looking for locations for a new industrial park. Primary Structures, on the other hand, has also expressed interest and is also exploring areas for possible development.

The minimum requirement of an industrial park is five hectares.

Push to attract expat retirees offers ‘bonus’

By Katlene O. CachoA⁺A

Saturday, January 5, 2013

CEBU’s positioning as a retirement destination for foreign individuals may help prevent medical professionals from leaving the country, an official said.

According to Cebu Investment and Promotions Center (CIPC) managing director Joel Mari Yu, aside from selling Cebu as an ideal business destination for foreign-based outsourcing firms, his office is also “aggressively” promoting the city as a retirement destination, specifically for Japanese retirees who need medical attention.

“We are after getting a big chunk of retirees who need permanent medical attention,” said Yu, adding that in Japan alone, some two million of the population retire every year.

By 2060, the older population of Japan could make up as much as 40 percent of its total population.

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Graying population

Yu said the Japanese Government is now looking for possible developments outside their country, given the fact that it’s getting expensive for their government to provide health care and pensions for a huge retiree population.

The Philippines, specifically Cebu, can be a potential destination for retirement and recuperation. Yu noted Cebu still has vacant properties for the development of a retirement village where there are nursing homes and other wellness facilities.

Cebu’s proximity to Japan, abundant attractions like the beaches, sophisticated medical facilities, well-trained medical professionals and Filipino hospitality are among the factors that make Cebu an ideal place for foreign retirement.

The entry of Japanese retirees is also expected to generate economic and job opportunities for Cebu. Yu said this would boost local spending and more importantly, prevent medical professionals from leaving the country.

Infrastructure

He said the Japanese insurance system may spend $2,000 to $4,000 per patient every month. “Let’s say we have some 1,000 patients at a rate of $2,000 each per month. This figure alone would definitely increase spending in Cebu,” Yu said.

But transforming Cebu as a retirement hub in the country entails a lot of hard work from the local government unit and the private stakeholders. Yu said Cebu should prepare the necessary infrastructure.

“We have been going back and forth to Japan for five years now, and we are getting positive feedback from them. This might take a long time but I believe this would happen,” Yu said, anchoring his optimism on how his office was able to help increase the number of BPO locators in Cebu.

"Transformation, not renovation"

ABy Mia A. Aznar⁺A

Sunday, January 6, 2013

EDGY and modern may not be the words used to describe the old Mövenpick Hotel Mactan. But after it reopened its doors last Dec. 15, guests who had been to the hotel before were in for a surprise.

Gone were the pink walls. Even their shuttle buses that resembled jeepneys had a new coat of paint.

General manager Knuth Kiefer said they spent P500 million and closed the hotel for five months to change the look of the hotel.

“Everything is new. It’s more of a transformation, rather than a renovation because it’s not just the paint,” he said.

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He explained that beyond the new bright white paint with bright blue and green accents, they also changed the image of the hotel from being a regular resort to a lifestyle resort.

Kiefer said that Cebu was already filled with resorts and that they wanted to set themselves apart by bringing something unique to the Philippines.

The hotel offers its guests a full package, not just a room with breakfast. Packages include activities for them to enjoy.

To give guests a full range of activities to do, Kiefer said they can go beyond having spa treatments and water sports activities. They also have lessons in dance, cocktail mixing and cooking. He added that if guests change their mind about which activity they would like to participate in, they can do so.

Kiefer also hopes to bring the Ibiza beach club experience to Cebu, hiring a Spanish disc jockey and professional dancers and singers for the entertainment.

He believes guests have taken the changes positively, if guest numbers are any indication. They were fully booked during the New Year while they were at an 85 percent occupancy rate last Thursday. He also revealed getting positive feedback from tour operators, who were willing to promote their hotel to their clients.

Lobby

The lobby has undergone a notable change, giving off a loungy feel with comfortable chairs and a bar in the center. Kiefer said the pool is also 60 percent larger than the old one, with more room for guests to take a dip.

The garden also comes with modern furniture, including chairs and tables that glow at night. He also said the rooms have a similar style as the lobby.

“Since the opening, they (patrons) were surprised. When they came in, they didn’t recognize the lobby because it is bigger and more open. They just said, ‘wow’.”