‘Tough’ times ahead

THE Cebu business community is bracing for “tough” times ahead as many companies expect “deteriorating” conditions affecting their main business activities this year due to the global financial crisis.

Many companies also expect the Philippine economy to worsen.

These are among the results of the Business Pulse Survey conducted by the Cebu Economic Advisory Group (CEAG) that is comprised of 11 organizations representing the local business sector and the academe.

“Between 40 and 50 percent of those surveyed, mostly export-oriented companies, said that it’s going to be a tough year and they are expecting their volume (of products and services) and revenues to go down. (As a result) of this reduction caused by the contraction in the market, there will be a direct effect on the number of manpower (needed for production),”
said Cebu Chamber of Commerce and Industry (CCCI) vice president for external affairs Clarito Fruelda.

The survey was conducted from Jan. 20 to Feb. 13 this year to gather the expectations of the business sector on their operations and on the economy amid the global economic turmoil. The survey was based on questionnaires gathered by the CEAG secretariat—118 from the 717-member Cebu Chamber of Commerce and Industry (CCCI), as well as seven accomplished by the Board of Directors of the Japanese Chamber of Commerce and Industry (JCCCI), which represented the sentiments of its 120 members.

Decrease

The Business Pulse Survey shows that only 28 percent of the respondents expect an improvement in their businesses, 34 percent say there will be no change, while 36 percent expect a “deteriorating” condition in their main business activities this year.

At the same time, 40 percent of the respondents expect a decrease in the overall volume of business activities, 56 percent expect a reduction in the volume of their exports and 48 percent expect a decrease in their imports.

Nearly half of the respondents, or 46 percent, expect the Philippine economy to worsen this year while 41 percent expect prices to increase.

Most of the respondents expect no change in terms of capacity utilization, average selling prices of good or services, workforce, and investment in buildings and equipment.

Peace and order ranks first among the variables perceived to affect the overall business climate in Cebu, followed by traffic, power and water utilities, and wages, among others.

Segregated survey results from JCCCI-Cebu show that the Japanese investors are not optimistic about their prospects for 2009 as most of them expect a decrease in the volume of their business activities, exports, imports, workforce and capital investments.

Resilient Cebu

CEAG chairman Geronimo Sta. Ana said in a statement that while CCCI members expect the Philippine economy to worsen, they expect Cebu to continue to have a relatively resilient economy in 2009 and to be relatively less affected by the global financial crisis.

One group, said Fruelda, expects economic recovery by the end of the third quarter or beginning of the fourth quarter of this year.

“Being an export-driven economy with the US (United States) as our number one market, we can only estimate how fast we can recover depending on the recovery of the American economy,” Fruelda said, adding that if the US will recover in October, the Philippine economy will follow after four to six months.

He told reporters during the CCCI general membership meeting last Friday that the good performance of the tourism and information communications technology sectors serve as “balancing factors” in Cebu’s economy while the industrial and export sectors suffer the effects of the global economic turmoil.

The CCCI is also planning to tap local experts who can teach employees in export-oriented companies new skills so they can be temporarily absorbed in other departments—like administration, accounting and customer services—within their respective companies until the economy recovers.

CEAG, a CCCI initiative, plans to conduct the Business Pulse Survey every quarter with more respondents, better methodology and enhanced survey instruments. (NRC)