CHAPTER 1  MIDTERM PLAN ASSESSMENT

   This chapter presents an assessment of the region's accomplishments in terms of achieving the 10-Point Agenda (summarized in Table 1) and the macroeconomic targets as laid down in the Medium-Term Regional Development Plan (MTRDP) 2004-2010. A discussion on the regional development challenges and opportunities is also provided, based on the following assessment and other sectoral accomplishments that are discussed in individual chapters of this document. 

Table 1. Bicol Region's Contribution to the 10-Point Agenda, 2004-2006

          * The remaining four of the 10-Point Agenda are not within the purview of the region. 

Macroeconomic Assessment

 

   Population and Demography

 

   Bicol’s population is projected to grow by 1.92 percent, or from 4,674,855 in 2000 to 5,711,798 in 2010. This projection, which is higher than the 2000 population census growth rate of 1.68 percent is also higher than the MTRDP target of 1.5 percent.

 

   Although estimates of crude birth and total fertility rates decreased, the region’s population is still expected to double in 41 years.

   Average household size of 5.24 is higher than the national average of 5.0. Population density of 265 persons/sq.km. is also higher than the national average of 255 persons/sq.km., making Bicol one of the more densely populated regions aside from the National Capital Region. About 72 percent of the population is in the rural areas.

   Around 46 percent of Bicolanos are within the dependent age brackets of 0-14 and above 65 years. This results to a ratio of 85 dependents for every 100 persons in the working age bracket of 15-64 years. The high dependency ratio implies a greater burden on the working-age population to satisfy the population’s basic needs, thereby negating the capability for savings and investment. This also means that the bulk of public expenditures need to be focused on the delivery of basic social services.

 

   Human Development Index

   The human development index (HDI) provides a comparison of provinces in terms of component indices on health, education, and income. In the Bicol Region, Camarines Sur ranked highest at 34th place among the 77 provinces in the country. Albay, Catanduanes, Sorsogon, and Camarines Norte have relatively the same HDIs, ranking 44th, 48th, 49th, and 50th, respectively. Masbate ranked near the bottom at 73rd place, only higher than Basilan, Tawi-tawi, Maguindanao, and Sulu. 

   Except for Masbate, Bicol provinces have medium HDIs. Masbate has a low HDI due to a low education index, which is attributed further to a very low percentage of high school graduates. All the six provinces have medium health indices and low income indices.

   Low levels of per capita income despite medium health and education levels indicate one or a combination of the following:

• Low quality of basic education

• Inability to pursue higher education beyond secondary level

• Low level of skills acquired in tertiary education

• Inadequate employment opportunities

• Mismatch between the skills acquired by the labor force and the skills required by the labor market

• Low productivity

   Poverty Situation

   The percentage of poor individuals in the region decreased from 52.6 percent in 2000 to 48.5 percent in 2003, but is a long way from the MTRDP target of 26-27 percent by 2010. A total of 2,332,719 individuals still live below the poverty threshold, with only 207,941 individuals graduating out of poverty from 2000 to 2003.

   In terms of poverty incidence of families and population, Bicol is the poorest region in Luzon and the fourth poorest in the country, next to Region 9, ARMM, and CARAGA.

   Camarines Norte slid from being the 10th poorest province in the country to 11th, with a 6.5 percentage point decrease in poverty incidence of families from 2000 to 2003. Masbate has consistently been in the ten poorest, although poverty incidence in the province has been on a downhill since 1997. In the region, Catanduanes recorded the highest reduction in poverty incidence of families and population from 2000 to 2003. On the other hand, Camarines Sur only managed a slight decrease of 0.7 and 0.1 percentage points in poverty incidence of families and population, respectively.

   A Bicolano needs at least P14,908 a year so as not to be considered poor, based on the 2007 preliminary poverty threshold estimates for the region. With this annual per capita poverty threshold, a family of five in the Bicol Region needs at least P74,540 a year or P6,211.67 a month or P207.06 a day to be able to meet its food and other basic needs. In urban areas, a family of five needs a daily income of P250. In rural areas, the same family needs at least P192 a day. Therefore, a sole breadwinner of a family of five earning a daily minimum wage between P168-P220 (as per Wage Order No. RB 05-11 issued on July 17, 2006) will find it difficult to stay above poverty line. These poverty thresholds should be taken into consideration during the succeeding round of regional wage deliberations.

   Satisfying life’s basic necessities in urban areas is higher by an average of 29.7 percent. The disparity in poverty thresholds between urban and rural areas is highest in Catanduanes where living in urban areas is 65.5 percent higher than in rural areas.

   The successive typhoons (Milenyo, Reming, and Seniang) in 2006 that claimed lives, property and livelihood particularly in Albay, are expected to aggravate the poverty situation. Rehabilitation programs and projects in the economic, social, and infrastructure sectors should be continued and pursued for the rest of the plan period. Likewise, disaster management activities should be initiated and institutionalized.

 Economic Growth

   The total value of goods and services produced by the regional economy, as measured by the Gross Regional Domestic Product (GRDP), reached P147.8 billion in 2006 prices or P35.4 billion in 1985 constant prices. Table 2 summarizes the target and actual growth rates in GRDP and Gross Value Added (GVA) in agriculture, fishery and forestry, industry and services. It also highlights the major economic activities and events in the region that contributed to the increase/decrease in the growth rates of GRDP and GVA.

Table 2 Target and Actual GRDP/GVA Growth Rates

Bicol Region, 2003-2006.

The agriculture and fishery subsector remains the largest contributor to GRDP at an average of 33.5 percent from 2004 to 2006. Another large source of growth for the regional economy is electricity, gas, and water (EGW) under the industry sector, which expanded and contributed an average of 6.6 percent and 10.5 percent, respectively, during the same period. Major contributors to this subsector’s performance are the region’s geothermal power plants in Tiwi, Bacon, and Manito. Despite operating below optimum capacity because of continued rehabilitation, these power plants remain a potent source of growth for the EGW subsector.

   The lifting of the suspension order against the Lafayette mining operations in Rapu-Rapu, Albay is seen as a step towards the full recovery of this subsector, which grew at an average of 15.2 percent and contributed 5.3 percent to GRDP. The other industry subsectors (manufacturing and construction) exhibited erratic growths and altogether contributed a meager 6.9 percent to GRDP.

   Despite a continued slowdown, the services sector contributed an average of 43.9 percent to the regional economy. Time series data proves the resilience of this sector amid negative growths in the agriculture and industry sectors. Wholesale and retail trade, which expanded and contributed an average of 3.9 percent and 12.2 percent, respectively, is a steady source of growth. The same is true with transport and communication, which grew at an average of 6.0 percent and contributed 6.3 percent to GRDP.

   Private services, which include tourism-related services, expanded by an average of 4.6 percent and contributed an average of 8.8percent to GRDP. The recent alignment of Bicol Region to the Central Philippines super region as the country’s prime tourist destination is expected to boost the region’s economy and generate employment. To maximize this opportunity, priority should be given to tourism development and promotion programs, including infrastructure projects in support of tourism.

Bicol’s contribution to the country’s Gross Domestic Product (GDP) remains at about 2.8 percent, ranking 10th among the regions. Per capita GRDP of P6,632 in 2005, growing by only 2.9 percent from the previous year, has been the second lowest in the country since 1993.

   On the expenditure side, the main growth driver was personal consumption spending, which grew by 8.5 percent and 6.3 percent in 2004 and 2005, respectively. Investments in capital formation shrank by 8.2 percent in 2005, a reversal from a 3.4 percent growth in 2004. The drop in capital formation was attributed to a sustained slump in construction (public and private) and a decline in durable equipment investments. Personal expenditures constitute more than 70 percent of Gross Regional Domestic Expenditures (GRDE), whose share has been increasing from 2003 to 2005. Less than 30 percent comprise both capital formation and government expenditures, whose respective shares have been decreasing.

   An economy that is driven primarily by consumer spending, coupled with a decreasing ratio of investments to GRDE, prove to be unsustainable in the long run. Efforts, therefore, to promote and generate more investments in the region need to be aggressively pursued. Government should also implement priority infrastructure projects in order to stimulate construction-related spending and attract similar investments from the private sector.

   Labor and Employment

 

   Bicol’s labor force participation rate has been decreasing from 69.6 percent in 2004 to 65.6 percent in 2006. This means that the number of persons who choose to work and/or look for work has not been increasing in proportion to the increase in the working-age population 15 years old and above. Representing about 43 percent of total population, the labor force provides for the food and other basic needs of more than half of Bicol’s population.

 

   Average employment rate increased from 91.4 percent in 2004 to 94.1percent in 2005 corresponding to an average increase of 55,000 workers, which was below the MTRDP target of 100,000 jobs every year. The increase was not even sustained in 2006, as average employment dropped by 30,000 workers from the agriculture, manufacturing, and construction subsectors, barely increasing the average employment rate to 94.4 percent. Underemployment rate also increased from 34.9 percent in 2005 to 38.1 percent in 2006.

 

   About 73 percent of the labor force is located in the rural areas. The agriculture and services sectors remain to be the major employers in the region, accounting for 46 percent and 42 percent, respectively, of the total number of employed persons. The industry sector absorbs 12 percent of the total employed persons.

   For every 100 employed persons, 41 are earning wages and salaries, 43 are self-employed, and 16 are unpaid family workers.

   The concentration of the population, the poor, and the labor force in the rural areas necessitates the prioritization of these areas in the delivery of basic social services, employment generation, and provision of support facilities.

   Economic Growth, Employment, and Labor Productivity

   The growth in regional economy did not create enough jobs for the labor force. In 2005, a 5 percent GRDP growth was able to generate only a 3.0 percent increase in employed persons, resulting to a meager 2.0 percent increase in labor productivity. Labor productivity, or the ratio of GRDP to average number of employed persons, was estimated to be P17,366 in 2005 at constant 1985 prices. Compared to the national labor productivity of P37,430, the region’s labor productivity was the lowest in Luzon and the fourth lowest in the country, next to Region 8, CARAGA, and ARMM.

   Gross Value Added (GVA) in agriculture, fishery, and forestry (AFF) grew by 7.7 percent, generating a 3.1 percent increase in employment and a 4.4 percent increase in labor productivity. On the other hand, a 4.4 percent GVA growth in the industry sector that generated a 4.3 percent increase in workers resulted to a meager 0.2 percent increase in labor productivity. Similarly, a 3.2 percent GVA growth in the services sector generated a 2.2 percent increase in employment and a 0.9 percent increase in labor productivity.

   Low levels of labor productivity require more effective productivity improvement strategies in all sectors.

   In order to create the needed jobs for the labor force, public and private investments should be promoted, particularly in high growth sectors where the bulk of workers are and where more jobs can be generated, to wit: agribusiness, tourism, trade, transport and communication, real estate, and construction.

   Price Levels

 

   From 2004 to 2006, monthly inflation rates stayed within the MTRDP target of single-digit levels. From an average of 6.7 percent in 2004, inflation rates went on a downtrend, finally settling at an average of 2.7 percent in the third quarter of 2007.

 

   The supply of food and other basic commodities was not severely affected in the aftermath of the successive typhoons in 2006, due to the immediate restoration of vital transport links. Aside from overall price stability, easing global oil prices and foreign exchange rates also contributed to the inflation downtrend.

 

   Maintaining inflation rates at single-digit levels for the rest of the plan period necessitates ensuring adequate and continuous supply of food and other basic commodities and services.

 

   Regional Development Challenges and Opportunities

 

   Based on the foregoing assessment and other sectoral assessments provided in the pertinent chapters, the following are the region's development challenges and opportunities for the remaining plan period:

• Reduce poverty incidence of population to 26-27 percent as part of the region's commitment to the attainment of the Millennium Development Goals (MDGs).

• Recover from the devastation caused by the strong typhoons in 2006 by fasttracking rehabilitation programs/projects in the social, economic and infrastructure sectors.

• Institutionalize disaster risk management initiatives and capacitate institutions at the local levels to avert further losses in social, environment and economic assets.

• Accelerate and sustain economic growth over a long-term period.

• Scale up public and private investments, particularly in high growth sectors where the bulk of workers are and where more jobs can be generated, to wit: agribusiness, tourism, trade, transport and communication, real estate and construction.

• Prioritize tourism development and promotion programs, including infrastructure projects in support of tourism, to capitalize on the recent alignment of Bicol Region to the Central Philippines super region as the country’s prime tourist destination. 

• Intensify investments promotion in the region by providing modern and adequate infrastructure, communication and transport facilities, and reducing power rates.

• Implement priority infrastructure projects in order to stimulate construction-related spending and attract similar investments from the private sector. 

• Improve productivity levels in agriculture, industry and services sectors. 

• Curb population growth rate and allocate the bulk of public expenditures on the provision of basic social services.

• Maintain inflation rates at single-digit levels by ensuring adequate and continuous supply of food and other basic commodities and services.

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