Trade and Investment

   Trade 

   Export growth in 2007 was lackluster, falling short by 55 percent of MTRDP target and lower than that recorded in 2006 by 32 percent.  Records from the Department of Trade and Industry (DTI) showed that the region was able to generate export sales of only US$31.19 million, the bulk of which (63%) was contributed by the province of Albay with its export of home furnishing, wearables and gifts and holiday decors. The increase in exports generated by two provinces, Masbate (114%) and Camarines Sur (71%), were not strong enough to make up for the poor performance in export generation manifested by the other four provinces of the region. Masbate’s contribution was a modest 6 percent while Camarines Sur was only 2 percent of the region’s total exports in 2007.

Table 1.1 Exports Performance by Province, Bicol Region, 2006 and 2007

Source: DTI5

Figure 1.1 Export Sales Actual vs Target, Bicol Region, CY 2007

               Source: DTI5

   The shortfall in export sales in 2007 as against the 2007 Plan target and 2006 performance could be attributed to the strong peso that made the prices of our export products uncompetitive in the world market, high production costs brought about by persistent increase in oil prices, dwindling supply of agri-based raw materials and the US economic slowdown that had somehow affected the importation of our products – USA is among the top five countries of destination of our export products. The others are Japan, Italy, Australia and United Kingdom.

 

   Aware of the problems being faced by the export sector, the government is enacting measures to help exporters cope. Together with the private sector, the government has put up a PhP280-million "export promotion fund" aimed at helping exporters become more competitive in an environment marked by a strong peso and an economic slowdown in the United States. This fund is being handled by the Export Development Council and given as grant to the exporters. Sad to note that no Bicolano exporter was able to avail of such funds in 2007. Among others, the projects/activities qualified under this fund are the establishment of common service facilities, participation to trade fairs, preparation of promotions collaterals and other support services to exporters.

 

   With the peso off to a strong start in 2007, the government has also considered other measures aside from the removal of export related fees. These include the facilitation of transport via a shortened truck ban and allowing foreign shipping firms to pick up cargo in the provinces. This is one of the reasons why the government is aggressively pushing for the completion of the Strong Republic Nautical Highway.

   Investments

   In 2007, investments generated by the region dropped by 9.4 percent from last year’s PhP4.408 billion. Among the provinces, only Camarines Norte, Camarines Sur and Masbate recorded an increase in investments from 2006 level.  Camarines Sur contributed 35 percent to the region’s total but recorded a measly growth of 4.5 percent. Camarines Norte and Masbate both shared 16 percent each and grew by 32 percent and 27 percent, respectively (Figure 1.2). The region’s investment was pulled down by a hefty drop in investments in ICT and manufacturing sectors in Albay by 45 percent.

Figure 1.2 Investment Performance by Province, Bicol Region, 2006-2007

                             Source: DTI 5

Figure 1.3 Investment Share by Province, Bicol Region, CY 2007

                         Source: DTI 5

Table 1.2 Investment Performance by Industry Group, Bicol Region, 2006- 2007

Source: DTI 5

   Industry contributed 17 percent but was down by 52 percent from the previous year. The decline in investments in mining and quarrying due to the increasing pressures by some civic organizations to protect the environment had contributed to the poor performance of the industry sector. Manufacturing, which remained affected by the slow down of the US economy as well as the heightened competition from China and volatile oil prices also weakened by almost 70 percent (Table 1.2).  Some SMEs closed shop in 2007 (e.g., GSG Industries) while others laid off some of its workers (e.g., Shelmed Cottage Treasures) due to high overhead expenses brought about by the increase in the average price of Asian Dubai crude from US$58.44 per barrel in 2006 to US$75.80 per barrel in 2007. This was also manifested by the increase in CPI by 3 points index that caused a decline in the purchasing power of peso by 3 percent.

 

   Investments in construction was strong with 96 percent growth over the previous year. This growth was supported by the SEC data where paid up capital from corporations rose by 16 percent due to additional capital infusion of construction companies in anticipation of the rehabilitation of various infrastructure facilities that were damaged by typhoons in 2006.  In Camarines Sur and Albay, construction of hotels, restaurants and commercial centers were at the upswing particularly in the cities of Naga and Legazpi. 

 

   Employment generated from new investments in 2007 totaled to 32,245 jobs mostly coming from AFF, construction, transportation, storage and communication.  This figure however was lower by 0.84 percent from last year’s 32,517.  As against the Plan targets, actual jobs created were way above the 14,878 target for 2007 (Figure 1.4).  Camarines Sur (10,449) remained the biggest generator of jobs followed by Albay (7,925), Masbate (4,590), Sorsogon (4,128), Camarines Norte (3,040) and Catanduanes (2,113).

Figure 1.4 Employment Generated from New Investments, Bicol Region, 2006-2007



                           
                Source: DTI 5

   Business Name Registration with DTI totaled to 9,078 in 2007. This figure exceeded the Plan target of 8,010 but was down by 5 percent compared to last year’s level. Camarines Sur (29%) and Albay (27%) recorded the highest number of registered businesses followed by Camarines Norte (13%), Sorsogon (11%), Masbate (10%) and Catanduanes (9%).

 

   The DTI was more aggressive in the provision of technical assistance to the different local government units in the promotion of their respective One Town One Product (OTOP). The top OTOP of the region in 2007 were gifts and housewares, food products and ICT particularly Business Process Outsourcing (BPO) located in the major cities of the region. As part of their regular yearly activities, the Orgullo Kan Bikol Trade Fair was again conducted in SM MegaMall last October 2007 to provide a venue for Bicolano manufacturers and SMEs to sell and promote their products.  However, more efforts are still needed to address the sluggish flow of investments to the region.

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