Development Outlook

Leading economic indicators for the national economy continue to improve in the third quarter but at a lower pace, appearing that growth may be slowing compared to the first two quarters of the year. CAR’s economy is likely to follow suit given that the third quarter is also traditionally a slack quarter for regional economic activities.

With continued investors’ and consumers’ confidence in the economy, the projected national growth for this year was upped to 5-6 percent, some even up to 7 percent from an earlier projected 2.6-3.6 percent full-year growth following the country’s strong first and second quarter performance. Despite such optimism, an expected slowdown in world economic growth in the second half of the year should remain a concern that is likely to affect exports, the country’s and the region’s main growth driver.

But optimism remains in the country’s electronics exports despite expectations of a slowdown in global demand in the second half of the year. The Semiconductor and Electronics Industries of the Philippines, Inc. (Seipi) expects exports to grow by more than 20 percent this year up to a high 30 percent, over and above the nationaltarget of 15 percent for 2010.

Industry analysts say that for the Philippine electronics industry to maintain its status to where it is now, $1 billion in investments is needed annually. But to make the industry more globally competitive, analysts also say that the industry should get $5 billion to $10 billion in investments to sustain new technologies. Currently, investments in the national electronics industry pales compared to Vietnam that is getting $10 billion, equivalent to setting up another Texas Instruments or Intel in the country and requiring a national strategy for the industry to encourage investors to locate here.

Barring the occurence of storms experienced in the fourth quarter of 2009, the nation’s agriculture sector is expected to grow by 2.5 percent this year despite the effects of El Niño especially in the first semester of this year. Nationwide damage inflicted by El Niño to crops was placed at P11 billion, with damage to rice lands estimated at P6 billion. But the country’s farm sector is still expected to recover in the second half to produce 17.4 million tons of rice.

In line with the RDC-CAR’s thrust on watershed rehabilitation and management, reports indicate that at least Php1.6 billion will be made available by the Asian Development Bank (ADB) and Japan International Cooperating Agency (JICA) to rehabilitate the rapidly deteriorating watersheds in Mountain Province and Ifugao starting third quarter of the year.

Of the said amount, Php900 million coming from ADB in the form of a loan will be utilized for the rehabilitation of the Chico River watershed basin that covers Mountain Province and Kalinga under the DENR-CAR’s integrated natural resources and environmental management project (INREMP). The project intends to increase water volume of affected river systems to sustain irrigation for farmlands in Kalinga and neighboring Isabela and parts of Cagayan. The Php800 million will come from JICA for the reforestation of Ifugao watersheds for a period of three years that intends to improve operations of the 360-megawatt Magat Dam that generates power for the Luzon Grid and provides irrigation water for vast tracks of agricultural lands in neighboring Cagayan Valley.

In addition, at least Php92 million has been set aside by the national government for the continued implementation of the upland development program (UDP), also of the DENR-CAR, to encourage reforestation of denuded areas through agro-forestry by communities living in the watersheds. The UDP covers all provinces and the City of Baguio. For 2010, DENR-CAR has targeted to reforest 4,000 hectares of denuded areas. Already in 2009, it was able to reforestat 7,000 hectares of forest area with Php150 million.

Meanwhile, the Benguet State University (BSU) has recommended massive propagation of bamboo in CAR as an effective deterrent for landslides and soil erosion. In addition, the propagation of bamboo is also seen to help plans for the region to harness carbon credits under international carbon trading schemes through bamboo production.

Bamboo propagation is also seen to help in the promotion of the local bamboo craft industry in the region through an on-going partnership of the RDC-CAR with the Cordillera Bamboo Development Council (CBDC) that aims to raise awareness on how bamboo propagation can help protect the environment. This move is supported by the issuance of Executive Order No. 879 on May 14, 2010 seeking to prioritize the product development, promotion and market access of bamboo products through the creation of a Philippine Bamboo Industry Development Council (PBIDC). But the potentials of bamboo not only as craft material but also as construction material due to its technical construction qualities is also being eyed and is to be promoted.

Meanwhile, Richard Abello, chairman of the Cordillera Coffee Council (CCC) has disclosed that the country is losing Php3.5 billion annually due to importation of arabica coffee from Vietnam and Indonesia with the inability of local producers to meet the country’s coffee demand due to lack of commercial roasting facility. It is observed that while the country produces enough Arabica coffee, it lacks the roasting equipment forcing it to import 30,000 to 35,0000 metric tons of coffee to meet the current demand of over 65,000 metric tons of coffee every year. Coffee producers in CAR are urging the national government to extend sufficient support to the industry to enable local coffee farmers to meet the country’s demand and compete with world standards.

The Philippine Coffee Board Inc. (PCBI) meanwhile encourages coffee farmers to set up their own coffee business where currently most coffee beans are grown in the backyard. It is asking coffee farmers to pool their resources together and move to producing organic coffee that is the growing market trend not only to be sold locally but internationally as organic coffee is also sold more expensively. In the region, BSU has acquired an international organic certification as producer and processor of organic arabica coffee, currently the first and only in the country.

Still in the works is the crafting of the implementing rules and regulations (IRR) of Republic Act 10068 or the Organic Agriculture Act of 2010, the law that seeks to promote and develop organic agriculture in the country. Consultations with farmers groups are on-going and farmers are being encouraged to play a major role in the crafting of the IRR. The emphasis of the law is on the promotion of a national agriculture strategy that gives emphasis to a low-carbon development path.

An opportunity to save, if not further develop, the regional banana industry comes with the Department of Science and Technology’s Philippine Textile Research Institute’s (DOST-PTRI) recent discovery of three types of bananas that can be regarded as additional or alternative to Cavendish fibers for textile manufacture. Saba, lakatan and bongolan, varieties all grown in the Cordillera, were determined to have the highest potential for high fiber yield among six types tested (pakil, saksik and tordan are the other three).

 While the national government continues to focus on hybrid seeds for rice to attain rice sufficiency, the Cordillera is seen to be reviving production of native or heirloom rice varieties not only to attain rice sufficiency but also as high value export. In Benguet, a compendium identifying 83 native rice varieties cultivated in 12 Benguet towns was recently published by BSU, showing local names, the place of collection, color and shape of grains and other characteristics of native rice varieties. Further study is yet to be conducted to determine an heirloom rice variety for Benguet, in addition to the already established “tinawon” of Ifugao, “unoy” of Kalinga and “korel” of Mountain Province.

Philex Mining Corporation, the country’s largest mining company, meanwhile expects lower production this year due to water intrusion in its Padcal mine in Benguet brought by typhoons in late 2009 that brought in water to the mine making processing difficult. But higher metal prices in the world market is expected to make up for the company’s lower output. Copper prices may yet improve due to increasing demand for metals especially in China where infrastructure projects are on the rise.

For 2010, the national government is targeting $1.428 billion in mining investments on the back of increased demand that has led to rising metal prices. In March, the government granted 17 companies exploration permits to explore their mining tenements, in line with a goal to boost investments in the capital-intensive industry. This includes approved exploration permits of Titan Exploration and Development Corporation, covering two of its mining tenements in Abra. The mines cover 8,767 hectares and 6,767 hectares, respectively said to contain copper and gold.

MGB also announced in June that communities hosting mining companies will get their share of tax royalties earlier than previously established. This is made possible with the issuance of a Memorandum of Agreement (MOA) in June between DOF, DBM, DILG, and DENR to speed up the process and release of tax royalties. The said MOA tries to facilitate the early and accurate release of taxes accrued to the LGUs where there are ongoing mining activities. On top of the 2 percent excise tax, mining companies pay local governments a 5 percent royalty tax derived from the company’s annual budget. And of the 5 percent royalty tax, 60 percent goes to the national government and the local government gets 40 percent where the 40 percent share of LGUs is charged against the current year’s General Appropriations Act (GAA) or national budget.

BENECO also disclosed that over 130,000 residential and commercial consumers will enjoy a 51-centavo per kilowatt reduction in electricity bills starting June because of the lowering in charges on the components for power production. Meanwhile, electric cooperatives are also being encouraged to shift their registration to the Cooperative Development Authority (CDA). The registration shift is said to redound to 0.20-0.40 centavos per kilowatt hour reduction in electricity rates due to the value added tax (VAT) exemptions set under government policy where said VAT exemption is on the distribution components of the rates. In CAR, only the Abra Electric Cooperative is CDA-registered and is one among only 12 in the country, while the rest of the provincial electric cooperatives are still under the National Electrification Administration (NEA). The region must also take advantage of growing efforts towards a more vigorous national pursuit and implementation of renewable energy to address the growing concern on climate change by offering its hydro and geothermal potentials to investors.

Tourism is expected to get a boost with upcoming new attractions. The operation of Camp John Hay’s Tree Top Adventure attractions in the coming months is set to put Baguio in the international tourism map and is hoped to revive the City’s local tourism industry. By promoting ecotourism and its advocacy for protecting the evironment, adventure attractions include the Canopy Ride, Skywalk, Superman Ride, Funicular, Silver Surfer ride and interactive free fall project.

An ambitious development plan for Burnham Park has been completed and submitted to the Baguio City Government by the University of the Cordilleras (UC). Expected to cost over a billion pesos, the comprehensive development plan hopes to make Burnham Park a ready to build site to enhance the local City tourism industry. The project cost in the preparation of the master development plan amounting to Php1.9 million was shouldered by UC as part of its corporate social responsibility to the Baguio community.

The revival of agricultural tours in the region is also being pushed not only to attract tourists but also to promote the high-value crops of the region. And despite the month or two suspension of Sky Pasada flights starting in July to upgrade its aircrafts as directed by the Civil Aviation Authority of the Philippines after its soft launch operations in May, soon-to-be regular flights are expected to boost anew tourism, trade and commerce in Baguio, the rest of the Cordilleras and northern Luzon.

With declining tourist arrivals to Baguio in more recent years, the education sector is increasingly seen as one of the the City’s alternative earning industries with the presence and still increasing number of schools. It is observed that the growth of commercial education has become more profitable drawing college students – both local and international – and producing quality graduates annually. The huge multiplier effects of education include housing needs for students as dormitories and rooms for rent, low-budget eateries, books and school supplies stores, even relaxation establishments as pubs, cafes, specialty restaurants and other R & R-related establishments.

Baguio has already established itself as an education center attracting local and foreign students. As revealed by the Bureau of Immigration in June, there was a 20 percent increase in the number of foreigners issued study visa applications for school year 2010-2011 filed with the bureau’s field offices in key cities including Baguio City. Language schools in the country had the most number of foreign students, followed by the different state universities and colleges mostly in Cebu and Baguio. This is a positive development in the country’s efforts to become an educational hub in the Asia-Pacific region, as well as an opportunity for the region to boost its stature as prime educational center not only in North Luzon but in the whole country as well.

The establishment of NERBACs (National Economic Research and Business Assistance Center) in Apayao and Mountain Province, as well as full operationalization of NERBAC Abra and Kalinga is seen to further boost investments to the region. The regional DTI office is also set to continue intensified advocacy of its programs and conduct of investment promotional activities, aggressive implementation of the RuMEPP (Rural Micro Enterprise Promotions Program) in Abra, Ifugao and Kalinga, and provision of export assistance to SMEs through the Export Pathways Program to increase the region’s locally-based exports.

The BIR-CAR is also set to continue with enforcement of its administrative measures specifically intensifying public awareness campaigns on its regular programs, as well as intensifying linkages with LGUs in the region through coordination meetings with municipal, provincial and city treasurer’s offices for better implementation of its programs.

With the election of the new set of seven Cordillera congressmen, hope looms for the long-time advocacy of the Cordillera to amend existing laws in order to provide incentives from the national government to communities that play host to major watersheds. Congressman-elect Maximo B. Dalog of Mountain Province has disclosed that CAR’s congressional representatives will pursue the redefinition of host communities for watershed sources where host communities should include those in the main headwaters of dams who have been neglected in terms of tax shares or incentives from the national government. He said that host communities within the Mount Data National Park, which is the headwaters of four major rivers namely Chico River, Agno River, Siffu River and Mallig River, including the Abra River should also get royalty and be alloted funds for the protection of the forest. The recognition of indigenous community-based forest management systems that has contributed to the protection and preservation of the watersheds and forests in the uplands will also be strongly advocated to the national government.

We would like to acknowledge the contribution of the following RES Task Force members:

Agency/Entity

Regional Director/Head of Office

TWG Representative(s)

 

 

BAS-CAR

Mr. Juanito Y. Yabes (Regional Agricultural Statistics Officer)

Lucena F. Carreon

Ma. Gina V. De Guzman

BENECO

Mr. Gerardo Z. Verzosa (General Manager)

Engr. Mario L. Esteban

Engr. Garett Gregory O. Waytan

BIR-CAR

Atty. Eduardo T. Bajador (Regional Director)

Ms. Joyce Petten

Mr. Barnabas Akilit

DOLE-CAR

Dir. Ana C. Dione (Regional Director)

Ms. Lucille Gayaman

Ms. Antonette S.M. Ocon

DOT-CAR

Dir. Purificacion S. Molintas (Regional Director)

Ms. Jovy Ganongan

DTI-CAR

Dir. Myrna P. Pablo (Regional Director)

Ms. Vivian B. Bernabe

Ms. Ma. Odette G. Abitan

MGB, DENR-CAR

Dir. Samuel T. Paragas (Regional Technical Director)

Ms. Vivian Romero

NEDA-CAR

Dir. Juan B. Ngalob (Regional Director)

Rodolfo P. Labarinto

Marie Olga S. Difuntorum

NSCB-CAR

Mr. Benjamin Y. Navarro (Regional Unit Head)

Ms. Georgina Saldo

NSO-CAR

Dir. Olivia G. Gulla (Regional Director)

Ms. Camille Carla D. Ubungen

Ms. Jocelyn O. Tayaban

PEZA Baguio Ecozone

Atty. Dante M. Quindoza (Zone Administrator)

Engr. Modesto L. Agyao, Jr.

SEC

Atty. Annie G. Tesoro (Regional Head)

 

With references from leading national, regional and local newspaper dailies and weeklies.

Please send us your views, comments and suggestions.

The Quarterly CAR RES Report is prepared by the:

National Economic and Development Authority
CAR Regional Office
Botanical Garden, Leonard Wood Road
2600 Baguio City

Tel. No. 442-3232; 442-9573

e-mail: nedacar@pldtdsl.net or rescartwg@yahoo.com

 

Click here to download 2010 2nd Quarter QRES Report