CHAPTER 16  TRADE AND INDUSTRY

Introduction

 

   The Trade and Industry sector is expected to steer the region’s economy towards sustained growth and creation of employment opportunities that will contribute to the reduction of poverty through increased income of marginalized groups.

 

   The plan for trade and industry for the next three years shall focus on the needs of the trade and industry sector to enhance global competitiveness and set the pace towards transforming the region from predominantly agriculture-based economy to agribusiness-cum-industrial mix economy. This economic transformation calls for a shift from producing low value added products to high value added and diversified products that would result to higher income and higher productivity which would eventually contribute to a higher growth in the region’s gross domestic product (GDP).

 

Situational Analysis

 

   The trade and industry sector did not perform well during the period 2004 to 2006. This was manifested by a decreasing trend in export sales that recorded an average growth of 11 percent. Comparing the performance against the Plan targets in 2005 and 2006, exports fell short by 6 percent and 27 percent, respectively. The poor performance of the region was also manifested by its meager contribution to the national export performance. This indicates that the region is not producing more high value-added products that could help boost regional economic growth and productivity. For years, it has been producing non-competitive products like home furnishings, giftware and holiday decors, fashion accessories, furniture, and marine products, which other regions of the country and even other Asian nations can produce better.

 

   Domestic sales, on the other hand, exhibited fluctuating growth at an average of 11 percent. The gross value added (GVA) of wholesale and retail trade marked a declining trend from 2004 to 2006 and averaged only about 5.4 percent growth rate.

 

   The GVA of the industry sector grew by only 6.5 percent over the three-year period and contributed 22.4 percent to GRDP, the lowest among the economic sectors. Although a large source of growth for the regional economy was contributed by electricity, gas and water under the industry sector, the growth was not strong enough to push the performance of the sector as other industry sub-sectors (mining and quarrying, manufacturing and construction) exhibited erratic growths.

 

   The number of workers generated by the industry sector also decreased and averaged a negative 1.7 percent.

 

   The objectives laid down in the plan to increase exports and the number of jobs to be created under the trade and industry sector were not attained. The strategies, programs and projects to develop the region’s export and industries were not adequate to effectively address the needs of the sector.The necessary logistics and infrastructure facilities were found wanting and have resulted to high cost of doing business in the region. The poor condition of major highways resulted not only to high transportation cost but also affected the quality of products being transported to and from the region. As a result, prices of commodities in the region became comparably higher than in other areas because local businessmen have to offset the additional transport cost incurred.

 

   The railway, which could be an alternate means to transport Bicol products at a lower cost, did not meet the requirements of the exporters and local producers to efficiently transport their products to Metro Manila. The present railways have narrow gauge and locomotives that could not accommodate large container vans while the terminals have no facilities like warehouses to handle products for transport. Although the region has one international port of entry and eight national ports, they do not have warehouses and other equipment to handle container vans of export products nor do they have adequate parking areas, berthing facilities and other facilities to accommodate more and larger vessels that could ship export products directly to their destinations. These require the upgrading of the railways and seaports to suit the needs of trade and commerce.

 

   Other problems besetting local industries are the high cost of power and constant power outages that disrupt business operations and put at risk the conditions of the industries’ equipment and machineries. This calls for a strong power sector policy to address these problems.

 

   The liberalization of telecommunication industry was a big boost to the operation of the business sector in the region. However, the full implementation of the policy on interconnection is yet to be imposed by the National Telecommunications Commission (NTC). The region needs efficient internet service providers (ISPs) to support the E-Commerce Law.

 

   The already poor condition of infrastructure facilities was further aggravated by the destruction caused by the series of calamities that hit the region in 2006. Several business establishments were adversely affected because drainage and flood control structures, particularly in the urban areas, were no longer efficient and effective to serve their purpose. This suggests an urgent need to improve flood management.

 

   Exporters and local producers were also faced with a problem on the scarcity of critical raw materials that add up to their production cost as they have to procure these from other regions. The unstable supply of abaca fiber, abaca pulp, coconut by-products due to calamities and plant diseases have affected the production of abaca and coconut-based export products. This indicates the need for a strong market research to identify new products where the region could establish a niche in the world market.

 

   The absence of developers/investors to locate their industries in the identified special economic zones and agri-industrial centers deprives the region to provide employment opportunities and additional income. Among others, the high cost of doing business and the poor infrastructure facilities discourage potential investors to locate their businesses in the region. This indicates a need for strong and aggressive investment promotion strategies to attract investors to develop and locate in these economic zones and agri-industrial centers.

 

   Micro, small and medium enterprises (MSMEs) have significant roles in the economic and social development of Bicol Region. More than 99 percent of the total establishments in the region were classified as MSMEs and employed 91 percent of the total employment of establishments in the region. However, the productivity of MSMEs has lagged behind in comparison with the performance of few large establishments in the region and even of the country or of SMEs in nearby Asian countries. This calls for well-crafted strategies and programs that will help MSMEs grow and compete in the global market.

 

   Limited access to financing is also a problem facing the sector. Lack of capital hinders exporters and local producers to acquire technology and improve their R&D that would eventually improve their productivity and be globally competitive. The lack of reliable credit information likewise hampers smooth credit provisioning, especially to the SME sector, thereby increasing intermediation cost.

 

   The industry clustering concept, a strategy that would strengthen domestic base through forward-backward linkages, did not gain enough support from the private sector and this was later on shifted to the promotion of One Town One Product-Philippines (OTOP-Philippines). OTOP is a priority program of the present administration to promote entrepreneurship and create jobs. Local chief executives of every city or municipality take the lead in identifying, developing, and promoting specific product or service which has a competitive advantage, thereby providing more options for RP exports. As a new program to support the export sector, there is still a need to re-focus and synchronize the provision of assistance and services to identified OTOPs by the local government units (LGUs), the national government agencies and the private sector.

 

   Information technology sharing, as a means to reduce transaction cost and help small entrepreneurs increase their productivity, is yet to be institutionalized. The role of the private sector is critical in this undertaking.

 

   The entry of smuggled goods that are relatively cheap and of substandard quality has posed unfair competition to the domestically produced goods of better quality. This is an area where stricter sanctions should be imposed to promote quality products and fair competition.

 

   The performance of the export sector was also affected by external forces such as the unstable dollar and peso exchange rates that have resulted to weak pricing of our export products. The strengthening of the peso against the dollar made our produrom exporters indicate that many of them were forced to reduce or lower their prices only to get a substantial slice of the market.

 

Objectives

1. To increase GRDP share of trade and industry sector; and

2. To increase employment.

Strategies

 

   Within the plan period, the local government units, national government agencies and the private sector will put in place all support facilities to prepare the region for industrialization.

 

   The strategies are:

1. Modernizing and upgrading infrastructure facilities.

1. Rehabilitation and improvement of Quirino and Maharlika Highways and other major road networks linking to airports and seaports.

2. Rehabilitation and upgrading of PNR Mainline South.

3. Upgrading of major ports to handle exports.

4. Inter-connection of telephone lines and other utilities.

5. Construction of efficient drainage and flood control structures.

6. Provision of reliable power supply at a lower cost.

2. Make products more competitive.

1. Shift to the production of high-value added and diversified products.

2. Enhance product development and establish strategic processing, packaging and marketing facilities.

3. Application of appropriate technologies that would improve production of raw materials, lower cost and increase productivity.

4. Conduct of market research to identify new products that would create market niches while strengthening the foothold of old markets.

5. Help exporters and local producers gain access to credit and financing.

6. Establish trade houses, common raw material procurement centers and common service facilities.

3. Strengthen collaboration among the government, private sector and academe.

1. Conduct of regular dialogues and consultations with the private sector and academe to formulate mechanisms to increase investments in priority development areas and needed research studies.

2. Streamline government business procedures in the issuance of permits, licenses, certificates through transparency/ clear and consistent policies/guidelines.

3. Make the educational system more flexible in responding to the evolving industry requirements on manpower competencies.

4. Strengthen institutional linkages of DTI, LGUs, Exporters’ Association, GFIs and local/regional chambers of commerce and industry.

5. Improve access to assistance to consumers regarding complaints on unfair trade practices, i.e. substandard quality products.

4. Convergence of government and private sector services to develop MSMEs and OTOPs.

1. Provision of support through micro-finance/credit, technology improvement and marketing assistance.

2. Provision of skills trainings and productivity enhancement program.

3. Provision of technical assistance to conform with standards required by regulatory agencies and other certifying agencies (e.g., BFAD for food sector).

4. Provision of common service facilities.

5. Involve the academe, other agencies in the government and research consortia in R&D requirements of MSMEs and OTOPs.

6. More aggressive promotion of OTOPs in domestic and foreign markets through media exposures.

5. Development of a comprehensive investment portal in Bicol Region and intensify investments promotion in identified growth corridors (LINDGC).

Programs and Projects

1. One Town One Product (OTOP) Program (Table 1)

2. Feasibility Study for the Establishment of SME Parks

3. Establishment of special economic zones projects (Table 2)

Table 1 One TOP Program List of Projects Per Municipality

Province/District	Projects / Industry Sector
Albay: 1st District
Tiwi	Ceramics & Abaca-based
Malinao	Abaca-based
Tabaco City	Furniture, Food processing, Abaca-based and Cutlery
Malilipot	Twine and   Abaca-based
Bacacay	Marble and Abaca-based
Sto. Domingo	Abaca-based
Albay: 2nd District
Legazpi City	Service, ICT & Abaca-based
Daraga	Abaca-based & Food processing
Camalig	Food processing, Abaca-based
Rapu-Rapu	Seaweeds
Manito	Marine Products, Lasa production, Pili processing
Albay: 3rd District
Guinobatan	Meat processing, Apiculture
Jovellar	Handloom weaving
Ligao City	Fish processing, Pili processing & Abaca-based
Oas	Food processing (puto), Abaca-based
Polangui	Kalamay production
Libon	Gifts and houseware
Jovellar	Handloom weaving
Pioduran	Fish processing
Camarines Norte
All municipalities	Pineapple production and processing
Daet	Gifts & Housewares
Mercedes	Processed fish
Talisay	Salted egg and balut
Vinzons	Processed food (Pasalubong)
Capalonga	Crab
Sta. Elena	Livestock/Processed Meat
Paracale	Jewelry
Camarines Sur: 1st Dist.
Del Gallego	Bangus Culture
Libmanan	Hogs Production and Processing
Pamplona	Vine-based Handicrafts
Ragay	Raffia-based Handicrafts
San Fernando	Agas Crafts
Camarines Sur: 2nd District
Calabanga	Crab Fattening
Camaligan	Processed Fruits and Nuts
Canaman	Bamboo Houseware, Bamboo Furniture, Processed Nuts
Gainza	Processed Fruits and Nuts
Magarao	Ceramics
Milaor	Agas Crafts
Naga City	Bamboo Houseware, Bakery Products, Chicharon and Native Delicacies, Decorative Items, Hog production, meat processing and ICT
Ocampo	Bamboo poles
Pili	Feeds production and ICT
Camarines Sur: 3rd District
Goa	Ethnic food products
Lagonoy	Coco-based food, Lasa broom and crafts
San Jose	Cocoshells and shell crafts
Tigaon	Lupis and abaca handicrafts
Camarines Sur: 4th District
Baao	Poultry raising
Balatan	Fish processing
Buhi	Tilapia culture
Bula	Bamboo poles, bags, furniture, fashion accessories
Iriga City	Horticulture
Nabua	Poultry raising, Tilapia culture
Catanduanes
Bagamanoc	Cassava Production & Semi-Processing
Baras	Abaca Textile Weaving
Bato	Handmade Papermaking & Conversion
Caramoran	Lasa Production & Processing
Gigmoto	Handmade Papermaking & Conversion
Pandan	Loom Weaving
Panganiban	Crab Culture and Processing
San Andres	Abaca Rugs and Carpets
San Miguel	Vegetable & Rootcrops Production & Processing
Viga	Coffee Production & Semi-Processing
Virac	Home Furnishing
Masbate: 1st Dist.
Batuan	Fresh fish
San Fernando	Dried Fish
San Jacinto	Seaweeds
Monreal	Seaweeds, Giant squid
Claveria	Crabmeat
San Pascual	Fresh fish
Masbate: 2nd District
Aroroy	Livestock, Meat processing, Bamboo furniture
Baleno	Fresh fish
Balud	Dried fish and Bangkuan
Mandaon	Dried fish,Fresh fish, Gemelina
ARC Lantangan, Mandaon	Dried fish
Milagros	Crabmeat and Dried fish/squid
Mobo	Tourism and Dried fish (Dilis)
Masbate City	Smoked fish, Dried fish, Furniture
Masbate: 3rd District
Uson	Candles  and  Herbal soap
Dimasalang	Dried Dilis/Hasahasa/Bagoong, Poultry, Furniture
Palanas	Goat raising, Charcoal, Tourism
Cataingan	Mango processing and Tourism
Placer	Fresh shrimp/crabs/giant squid
Pio V. Corpus	Fresh fish,Livestock, Gemelina
Esperanza	Fresh fish and Limestone
Cawayan	Crabmeat and Scallop
Sorsogon
Sorsogon City	Pilinut products
Barcelona	Buri and abaca-based products
Bulan	Processed marine products
Bulusan	Pilinut products
Casiguran	Processed food products
Castilla	Cassava products
Donsol	Souvenir/Novelty items
Gubat	Abaca-based products
Irosin	Pilinut products
Juban	Processed food products
Magallanes	Processed marine products/smoked and dried fish
Matnog	Bags and accessories
Pilar	Abaca-based products
Prieto Diaz	Processed food products
Sta. Magdalena	Pilinut products

 

Table 16.2 Special Economic Zones, Bicol Region

Province	Special Ecozone
Albay	Legazpi City Special Economic Zone Location: Sitio Caridad, Banquerohan, Legazpi City Total Area: 33.1318 hectares Proponent: Local Government of Legazpi City Status: Presidential Proclamation No. 1249 dated 09 June 1998
	Tiwi Ecozone Location: Barangay Bagumbayan, Tiwi Total Area: 31.3 hectares Proponent: Tiwi Ecozone Corporation Status: PEZA Board Resolution No. 98-040 dated 18 February 1998
	Rapu-Rapu Economic Zone Location: Rapu-rapu, Albay Total Area: 41.39 hectares Proponent: Rapu-rapu  Minerals, Inc. Status: Presidential Proclamation No. 625 dated 06 May 2004
Camarines Norte	Global Industrial Maritime Complex Location: Barangay Larap, Jose Panganiban Total Area:  30 hectares Proponent:  Municipal Government of Jose Panganiban Status: Presidential Proclamation No. 508 dated 02 December 2003
Camarines Sur	Sta. Rita Industrial Park Location: Barangays San Jose & Sagurong, Pili Total Area: 219 hectares Proponent: Marasigan Construction and Development Corp. Status: PEZA Board Resolution No. 97-126  dated 11 April 1997
	Bicol Industrial Ecozone Location: Sitio Banasi, Barangays San Jose, Bula Total Area: 100 hectares Proponent: FPI Industrial Park, Inc. Status: PEZA Board Resolution No. 97-125 dated 11 April 1997
	Naga City Agro-Industrial Estate Location/Total Area: Barangay Pacol, Naga City/105 hectares Proponent: Naga City Agro-Industrial Development Corp. Status: PEZA Board Resolution No. 98-084 dated 27 April 1998
	Isarog Heights Special Ecozone Location/Total Area: Cadlan, Pili/124.32 hectares Proponent: Manubay Agro-Industrial Development Corp., Inc. Status: PEZA Board Resolution No. 98-111 dated 12 May 1998

 

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