3.10.1 Challenges

Slow Pace of Industry Growth Over Time. The industry sector continued to contribute 62.83 percent to the Cordillera’s GRDP. It was targeted to grow by 5.10 percent from US$ 17,706 million in 2004 to US$19,557 in 2006, however, it grew by a mere 0.84 percent to US$17,804. The low growth rate could be attributed to the declining GVA contribution of mining and quarrying and utilities sub-sectors.

Only the manufacturing subsector performed significantly. The manufacturing output was mainly coming from the operations of PEZA enterprises that produced primarily semi-conductor and machineries.

Perceived Unsustainable Contribution of Private Services to the Regional Economy. The services sector, which accounted for about one-fourth of GRDP, posted a 5.54 percent growth from US$ 6,215 million in 2004 to US$ 6,923 million in 2006. The expansion of BPO firms such as the call centers and medical transcription centers caused the services sector to exceed its targets consistently by 102 percent from 2004 to 2006. While private sector services’ contribution approximated one-third of the services sector’s share to the GRDP for the 3-year period, there is a pending concern to sustain the human capital requirements of BPOs. If not addressed, it may cause the contribution of the sector to go down.

Limited Private Sector Investments in the Region. Investments generated in CAR slumped from P5.913 million in 2004 to P2.744 million in 2005. Although all provinces contributed to the total investments in 2005, their contributions were insufficient to offset the 53.59 percent decline from 2004 to 2005. Baguio City accounted for 70 percent of the investments, followed by 12 percent from Benguet and with the rest of provinces contributing less than 20 percent to the total investments.

Limited Employment Absorption of Regional Exports Industries. CAR exports moved steadily from its 2004 baseline figure of US$ 3,034.03 million to US$ 3,061.51 million in 2005 and up to US$ 3,771.87 million in 2006, posting a phenomenal growth rate of 11.50 percent. Locators in PEZA Baguio were the major contributors in export revenues. Exports coming from the provinces were mainly in the form of subcontracting from Manila-based companies and were not reflected as CAR’s exports. Mining exports made headway over the 3-year period as it significantly contributed 6 percent to CAR exports in year 2006 alone.

While exports in 2004 and 2005 missed the targets, it however exceeded the targets by 2.55 percent in 2006. The 2006 performance could be attributed to the following improvement in PEZA: (a) upgraded power system, (b) completed sewage treatment plant, (c) improved major roads, and (d) simplified ecozone procedures. Notwithstanding the significant contribution of exports to CAR’s economy, it however failed to absorb more employment, indicating that PEZA industries were more capital intensive. PEZA have been employing only about 5,336 since 2005.

Continued Concentration of Economic Activities in the Urban Areas. Baguio City remained the center of major economic activities in the region and Baguio PEZA continued to be the source of bulk exports. Although the inclusion of mining and quarrying and non-PEZA exports was initiated in 2006 that cause exports to be higher, spatial contribution from other provinces remained wanting.

3.10.2 Opportunities

Inclusion of CAR in the NLAQ and the Central East Asia Growth Corridor (CEAGC) Initiatives. Higher demand for CAR’s products may be realized due to CAR’s inclusion in the NLAQ and CEAGC as markets could expand to North Luzon business partners such as Taiwan, Japan and South Korea.

National Government Implementation of the Super Regions Development Strategy. Baguio City was included in the Cyber Corridor Super Region, envisioned to provide a variety of cyber services at par with global standards. The requirement for the cityu2019s participation in the super region calls for programs and projects throughout the region to make it more globally competitive.

Rising Global Demand for Business Processes Activities. As business operations continue to operate in competitive and borderless environments, demands continue to be high for ICT to support not only SMEs but also BPO services.

3.10.3 Goals, Objectives And Targets

CAR shall be an ideal site for knowledge-based industries and agri-industrial activities. By 2010, the CAR shall have attained the following: 1) diversified and increased contribution to the economy of knowledge-based industries, resourced-based and self-reliant enterprises; and 2) improved local manufacturing outputs and are made competitive domestically and globally in terms of product quality and price.

The specific targets include

 

3.10.4 Strategies

  • Promote investment opportunities in the commodities where the region has an advantage and where domestic demand can be fulfilled
  • Intensify the region’s participation in interregional undertakings to fulfill cross border economic cooperation ties between the Northern Luzon regions with the East Asia region and South China provinces
  • Enhance ties with the manpower development sector to increase employability of graduates in BPOs.
  • Strengthen promotional and marketing activities to fulfill the domestic and export demand.
  • Intensify product development activities to ensure the steady flow of designs particularly with those that reflect the Cordillera’s cultural uniqueness through increased market surveillance and research and development activities.
  • Encourage MSMEs to adopt and conform to global quality standards.
  • Tap the Overseas Filipino Workers to build up the capital base for micro enterprises in the local area.

3.10.5 Programs And Projects

Establishment of the National Economic Research and Business Assistance Center (NERBAC). This is a one-stop shop regional center to be located in Baguio City that aims to strengthen industrial base for global competition and generate more investments and employment.

Investment Promotion Programs. These are geared to bring investments into the region. Priority projects are the preparation of regional investment promotion materials and the preparation of regional investment guides.

Micro, Small and Medium Enterprises Development (MSMED) Program. Crucial under this program is the project to establish a Regional Packaging Center in Baguio City but to benefit all MSMEs in CAR.

Industrial Sites Development. This will include establishing other industrial estates to accommodate locators outside PEZA area. Priority centers are: (a) Abra Agro-Industrial Center which will carry a special economic zone status; and (b) Kalinga Agro-Industrial Center which is envisioned to spur industrialization in Kalinga and neighboring areas by providing investors with the infrastructure and business-ready facilities.

ICT-Related Industry and Services Development Program. This aims to promote investments in ICT services and facilities through national and international exposures.

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