About 30 percent of overseas Filipino workers (OFWs) are working in the United States, according to research group Ibon Foundation.
At least 52 percent of OFW remittances come from the US or are sent through US intermediary banks.
OFWs are expected to be affected by the global financial crisis affecting the US and other First World economies like Japan and Europe.
Some experts say the health and education sectors won’t be affected, sparing Filipino nurses and teachers in the US.
But University of San Carlos economics professor Fernando Fajardo thinks otherwise.
“Hospitals in the US which plan to expand or increase labor force may freeze business growth because banks are not willing to loan money because of the credit crunch,” said Fajardo, former assistant regional director of the National Economic and Development Authority in Central Visayas.
The situation may be used to exploit Filipino labor force abroad, warned Ibon Foundation executive director Jazminda Lumang.
“Cheaper OFW employment will lead to slower remittances to dependent families in the Philippines. This will lead to lower consumer spending and slower business,” said Lumang.
ROBUST REAL ESTATE
Real estate, whose growth is fueled by OFW remittances, may also be affected, said Fajardo.
The Bangko Sentral ng Pilipinas reported total OFW remittances was at $12.2 billion from January to September 2008, a 17-percent increase compared to the same period last year.
This is one factor that boosts the confidence of most real estate companies in Cebu to continue their projects.
AboitizLand Inc. is expanding Kishanta Zen Residences in Talisay City while construction is ongoing for a condominium building, Persimmon in barangay Mabolo, Cebu City.
Paramount Property Ventures Inc. (PPVI) recently t launched its multi-million-peso development, Fonte de Versailles, in Minglanilla town, southern Cebu.
“Real estate is still a better investment because it's on a solid ground. Our sales from international Filipino markets come from all over the world such as US, Middle East and Europe,” said Pia Mantecon, AboitizLand vice president for marketing, sales and customer service.
Filipinos working in other countries in Asia and Europe will continue to send money to their families, ensuring the sustained growth of the real estate industry.
“Thirty percent of the money sent by OFWs is invested in real estate. In general, we don't see a material decline,” saidPPVI business development consultant Boler Binamira.
A robust real estate sector is expected next year due to the rising demand for business processing outsourcing (BPO), tourism and OFWs, according to CB Richard Ellis (CBRE), an international commercial property and real estate services adviser.
“While it continues to expand its tourism infrastructure such as airport, hotels, resorts and retail facilities to accommodate the growing visitor arrival, the growing business community in Cebu mainly located in the Asiatown IT Park and Cebu Business Park has added new stimulus to the rapid growth and development of Metro Cebu,” said CBRE chairman Rick Santos.
Santos said opportunities for local and international developers are vast in the country, and Cebu specifically, due to lower operations cost.
“As companies' revenues are under pressure, multinationals look to save costs. They move to the Philippines as it is easier to save a dollar than make dollar,” he said.
Labor is another main driver of BPO expansion as graduates from neighboring provinces such as Bohol, Negros Oriental and Leyte come to Cebu to find work.
Cebu will continue to be a leader in retail, hotel-resort and industrial segments.
But the demand for industrial space in Cebu will be slow because occupancy cost, including high power cost, limits the entry of most multinational companies, said CBRE general manager Trent Frankum.
But this low demand will be compensated by vibrant growth in the office, retail and hotel resort segments.
Frankum said a total of 115,623 square meters of new office space was scheduled for completion across Metro Cebu by the end of 2008.
“Anticipated slower growth in the call center segment will be compensated by high-value services such as back-office offshoring and outsourcing,” he added.
One indication that the real estate business is doing well is the stable transactions of land prices in Cebu and other parts of the country, said Frankum.
This means that there is still a robust medium to long-term growth for the real estate in the country despite worldwide fear of an economic slowdown.
RETAIL SLOWDOWN
CBRE expects a regional expansion of malls in Metro Cebu due to BPO and tourism growth.
On the other hand, Professor Fajardo said retail sales will slow down as people tighten their belts to brace themselves for the worse.
“There may be a lot of promos in malls but that goes to show that business is not good because if it's doing well, they won't hold bargain sales that often,” he said.
Although she admits a slowdown, Melanie Ng, president of Philippine Retailers Association Cebu Chapter, said retailers are still optimistic that people will buy during the holiday season.
“The buying power of Filipinos will still be there. Maybe it will not be that aggressive but Filipinos will still buy because it is part of our custom to buy something for Christmas,” she said.
For Jun Yap, president of Junrex Cellphones and Accessories Inc., sales of low-end mobile phone units have started to pick up again.
“If before we need to sell 1,000 cellphones to earn P1 million, today we need to sell 3,000 cellphones to get P1 million. We sell thrice as much to maintain growth,” said Yap.
TOURISM
STILL PROMOTED
For Cebu's tourism industry to grow, constant innovation from travel agencies and the Department of Tourism (DOT) is needed.
The decrease in the number of Korean, Japanese and US tourists is not yet alarming but players need to be creative and innovative to sustain the market, said Jennifer Franco, chairperson of National Association of Independent Travel Agencies Cebu Chapter (Naitas Cebu).
Franco said she noticed a change in the spending habits of foreign tourists like the Japanese.
“The Japanese market is now looking for middle-priced hotels, an indicator that they are careful with spending in line with the crisis,” she said.
Tourism Secretary Joseph “Ace” Durano, however, still projects industry growth nationwide from five to seven percent by the end of 2008.
Durano said marketing efforts are intensified in Asian countries which are nearer the Philippines. About P200 million out of the DOT’s P1.2 billion for 2009 will be spent on promotional campaigns to encourage inter-regional travel and strengthen the country's position as a destination of choice.
Around P160 million will be spent for the country's participation in the World Exposition in Shanghai, China in May 2010.
The remaining P40 million will be used to intensify market development efforts in the Asia Pacific region to promote medical and wellness tourism and shopping. It will also be used to develop English as a second language and vacation home investments.
Tourism arrivals went up from 3 million in 2007 to 3.4 million this year. The challenge is now how to increase hotel and resort rooms to accommodate more tourists.
According to CBRE, there were 4,585 DOT-accredited hotel rooms in Metro Cebu in 2007. The number went up to 7,384 in 2008. Another 1,930 rooms are expected to be added by 2009, noted CBRE.
Despite grim projections elsewhere, Efren Carreon, Neda-7 assistant regional director, said the global crisis does not have to mean a negative outcome in all sectors of the economy.
For some, it can even be advantageous.
Carreon cited stabilized food prices and a decrease in the cost of consumer goods as positive effects as oil price in the world market continue to fall.
BPO players in Cebu will benefit from the crisis as global companies undergo cost-cutting measures and be inclined to outsource operations, he said.
Bonifacio Belen, executive director of Cebu Educational Development Foundation for Information Technology (Cedf-IT), agreed.
He said there is no objective data which shows that the “protectionist mindset” of US President-elect Barack Obama will result in the decline of available BPO careers.
“The ultimate reason (for companies) to be convinced to locate in a certain city is reduced costs and that points to us,” said Belen.
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