Gov’t pushes development to countryside


July 20th, 2016

IF INVESTORS and businesses were to take their cue from the new administration’s planned economic agenda, then the logical move is to invest outside Metro Manila and the bustling business centers of Cebu and Davao.

Based on the recent pronouncements by President Rodrigo Duterte and his Cabinet, there will be an aggressive thrust to ramp up economic activities in the rural areas, with special focus on calamity-stricken communities.

In doing so, the new administration believes it will be able to target the marginalized and achieve the elusive dream of an economic growth that will be felt by those who need it most.

In his 10-point economic agenda, Duterte cites as among his priorities: “Promoting rural and value chain development toward increasing agricultural and rural enterprise productivity and rural tourism.”

This further opens a myriad of opportunities for fresh investments in new industries in these rural areas, which have traditionally relied on the likes of agriculture, fisheries, furniture and handicraft for their livelihood.

Outsourcing, offshoring

As it is, industries like information technology and business processing outsourcing (IT-BPO) and tourism have long been present in the provinces. The IT-BPO industry, for one, has been at the forefront of stimulating growth in the countryside.

Earlier this year, the Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO), the IT and Business Process Association of the Philippines (IBPAP), and Leechiu Property Consultants (LPC) released its new list of Next Wave Cities.

These 10 cities have been identified as prime, prospective hubs that will not only provide alternative locations for IT-business process management companies seeking to expand outside Metro Manila, but will also support the stellar growth of the industry.

A scorecard was used to rate a location’s ability to enable and support the entry and growth of IT-BPM companies.

These so-called Next Wave Cities (NWCs) were identified as Baguio, Cagayan De Oro, Dagupan, Dasmariñas, Dumaguete, Lipa, Malolos, Naga, Sta. Rosa and Taytay.

Also identified were 10 Emerging Cities, which have the potential to attract IT-BPM locators and soon become next wave cities.

These were Balanga, Batangas, Iriga, Laoag, Legazpi, Puerto Princesa, Roxas, Tarlac, Tuguegarao and Zamboanga.

In identifying these locations, the industry is able to spread its economic benefits to provinces where capable talent is available.

At the same time, this will stimulate the growth of other industries and sectors as the presence of outsourcing and offshoring companies will likely spur the development of more residential and commercial projects, retail, dining and entertainment complexes, among others.

More opportunities

For the Department of Trade and Industry, there are unquestionable investment opportunities in rural areas.

Trade Secretary Ramon Lopez said there were bright prospects in the agriculture sector, for example.

The plan is not just develop the production side but also strengthen the processing of high value added products, including coconut oil and coffee.

The DTI also wants to lure more manufacturing activities to the countryside.

It wants to amend the Investment Priorities Plan (IPP) to include a provision on investing in least-developed and calamity-devastated areas.

This means that companies that will choose to locate in identified areas will be given incentives such as income tax holiday, duty free importation of capital equipment, and extra tax deductions for research and development activities.

It is believed that should the agro-business and manufacturing industries take off, these will naturally stimulate the growth of other industries such as logistics, trucking and freight services, design-based services, and utilities—all of which are envisioned to generate quality jobs for the countryside.

Similarly, the development of these industries will fuel the growth of residential, commercial and industrial projects, as well as spike the demand for consumer goods, on the back of rising per capita income in provinces.

Consequently, the increased demand will prompt businesses to set up more retail, dining and entertainment establishments or mall complexes, all of which could generate even more jobs for the host province and surrounding communities.

Other promising industries are shipbuilding and mineral ore processing, Lopez added.

The DTI also wanted to highlight the inclusive business (IB) model in the IPP, which means that large companies will engage the poor and low income communities as partners, customers, suppliers and employees in their operations not out of charity but because good business sense.

This means, for example, that a micro, small and medium sized enterprise (MSME) will be tapped to supply a particular product such as onions for a large fast food company, or it can provide the chairs and tables for corporate offices.

Government investments

A wide array of opportunities for trade and investment in the rural areas has always been available and can potentially be highly lucrative given the right support from both the private sector and the government.

But for companies to start tapping into these prospects, the government will have to make it more economically feasible for them to make that leap from the city to the countryside.

On the part of the DTI, Lopez said the agency would prioritize the needs of MSMEs, given the Duterte administration’s commitment to promote inclusive growth.

The DTI also has its own projects aimed at pushing growth outside traditional business centers.

For instance, the Board of Investments had bared plans to set up an “ecological industrial zone” in Leyte to help boost economic activity in the province, and ensure sustainable employment in the region, which was devastated by Supertyphoon “Yolanda” almost three years ago.

The proposed zone will promote the integrated development and competitiveness of the copper and related industries, given rehabilitation efforts in the region.

There are other concerns, however, that need to be addressed to fulfill the dream of decentralized growth.

The government, for example, must ramp up infrastructure projects such as roads, seaports and airports; boost science, technology, research and development to ensure the availability of skilled and talented labor pool; secure continued good governance; further ease the process of starting  and doing business in the country, and ensure connectivity, safety and security.

Once these are in place, there is reason to be optimistic that the provinces will finally see the economic growth they have long been waiting for. – Amy R. Remo, Philippine Daily Inquirer