Moratorium on development projects in Cebu’s north district stays

Business Mirror, 26 November 2008

ACTING Cebu City Mayor Michael Rama said he would stick to the stand of Mayor-on-leave Tomas Osmeña regarding the city’s imposed moratorium on development projects in its north district.

Rama said there should be security first for an estimated 5,000 households affected by the provincial government’s plan to recover 50 hectares of prime property in the north, now occupied by informal settlers.

“I would stand by the mayor and subscribe to his view that the city should not abandon these people who are part of the constituency of the city,” Rama told the BusinessMirror.

Rama is the sitting mayor of the city as 60-year-old Osmeña went on indefinite leave for the United States to undergo chemotherapy for cancer in his urinary bladder at the MD Anderson Cancer Center in Houston, Texas.

“If the province will take care of these people, that is the only time we can start talking about the lifting of the moratorium,” Rama said. “A responsible developer should always think about striking a balance between development and the environment.”

The city council in February this year imposed a moratorium on all major developments in the north, citing traffic problems and the need for government infrastructure to cope with the fast development in the area.

The moratorium affects construction of malls, schools and other huge developments, and came in the heat of a publicized quarrel between Osmeña and Gov. Gwendolyn Garcia over the Capitol’s land-recovery efforts.

The Capitol’s properties are located in prime properties near the University of the Philippines Cebu in Lahug, the Cebu Business Park in barangay Luz and the Asiatown IT Park in barangay Apas, among others.

Provincial officials said the informal settlers have been given enough time and numerous extensions to pay for the lots they are occupying.

The moratorium affected the P1.2-billion joint-venture Ciudad de Cebu mall project between the province and Fifth Avenue Development Corp., for a 2.8-hectare property in barangay Banilad, which was ready for construction. The province has around 100 hectares of land in the city’s northern district.

Cebu City planners have expressed concern about “overdevelopment” in the city’s northern areas, particularly the Banilad-Talamban corridor which, at present, already serves as a main gateway to major malls, universities and primary schools, as well as major subdivisions.

The corridor already serves as an artery for the Cebu Business Park; the Asiatown IT Park; malls like Banilad Town Center, Ayala Center Cebu and Cebu Country Mall; the University of San Carlos; University of Cebu; University of the Visayas; plush subdivisions like Ma. Luisa; and the thickly populated Talamban area. The provincial government, however, has softened its stand a bit and has even awarded over 500 deeds of sale to informal settlers who have paid for their lots in full.

Being a chartered city, Cebu City residents are not constituents of the provincial government. They do not vote for the governor and other elected provincial officials.

Cebu provincial government considering to challenge Filinvest Land’s proposal

Business Mirror, 25 November 2008


A SPECIAL committee created by the Cebu provincial government is set to come up with its own appraisal of a 10-hectare property in the city-owned reclaimed South Road Properties (SRP) the Capitol would like to bid out of the hands of Filinvest Land Inc (FLI).

Gov. Gwendolyn Garcia’s spokesman, Rory John Sepulveda, told the BusinessMirror that an appraisal committee is set to submit its recommendations any time soon on whether the property is a viable investment for the province.

“The governor herself saw the potential of the area, and the provincial government would like to invest and would like to earn revenues from its investment,” Sepulveda said.

The province said it is interested in challenging FLI over its P80-billion unsolicited proposal for 60 hectares of the SRP, which includes a 10-hectare direct land purchase and 50 hectares of joint development with the city. The deal is subject to a public challenge.

Sepulveda, however, said pending the publication of the details of the proposed joint-venture agreement between the city and FLI, the province can only so far commit to challenge FLI over the 10 hectares.

“We believe there are two separate transactions in the proposal—the direct purchase of land and the joint venture—and the province is very interested in the land purchase as of now,” Sepulveda said.

The spokesman denied the interest to challenge FLI is a strategy by the province to shake the negotiations between the city and the developer, especially with the bitter relationship between the governor and Cebu mayor on-leave Tomas Osmeña.

Sepulveda said the province is only looking for economic opportunities, especially since the city imposed a moratorium on all development in its northern areas, where the Capitol has pending development over 100 hectares of separate properties.

“If this challenge will ultimately bring more scrutiny and more discussion over the Filinvest deal, then this will surely get the city the best deal for the SRP,” Sepulveda said. “The province is looking for projects because we don’t have anything else to do.”

Sepulveda said should the city decide to lift the moratorium, he would personally recommend that the province back out of the FLI challenge so it could concentrate on its own lands, including the suspended P1.2-billion joint-venture development in Banilad, Cebu City. He said the actual bid, however, is subject to the findings of the appraisal committee to determine the cost of the land, how much the province is willing to bid and the development cost that would entail if the Capitol gets the property.

In its original proposal, FLI plans to buy the 10 hectares for P2 billion, or some P20,000 per square meter.

The remaining 50 hectares will be developed through a joint venture with the city, with City Hall getting revenue shares.

City administrator Francisco Fernandez earlier said the two deals are part of one deal, whose terms will be published by December in preparation for the Swiss Challenge.

Sepulveda said the Capitol is looking at partnering with a private developer to develop the SRP land should it win in the bidding.

The governor and the mayor’s quarrel started in 2005 when the province moved to get back 50 hectares of property in the city now occupied by informal settlers. The mayor vowed to protect the more than 20,000 of his constituents affected by the move.

Cebu exporters bullish, buoyed by forex gains

Business Mirror 23 November 2008

CEBU CITY—Despite doomsday forecasts on the economy, exporters in Cebu said they are looking forward to more opportunities in 2009, with stronger players still in the thick of the fight backed by aggressive marketing, efficient production and a more favorable exchange rate.

Philippine Exporters’ Confederation-Cebu president Jay Yuvallos admitted that several companies have closed down this year, but he underscored how the bigger and more established players have strengthened their positions.

“This [slowdown] does not mean the export business is no longer viable; there may be a slowdown in some businesses, but this situation has left industries with more stronger players which can compete globally,” Yuvallos said. “The slowdown has made the remaining companies more confident as they have managed to survive despite all these difficulties.”

Cebu’s export industry, while dominated by multinationals in IT and electronics, are driven by creative industries—export furniture, fashion accessories, as well as gifts, toys and houseware—and indications are that while 2009 will be another challenging year, the Cebu-based exporters are in a better position, especially compared with the regional competition.

According to Philippine Export Development Council member Apolinar Suarez, the “friendlier” exchange rate has greatly helped exporters regain revenues lost when the peso hit the P42 level last year.

He said that successive quality-control setbacks in China’s industries have made buyers look for other better sources like the Philippines.

Vietnam is also starting to have labor problems along with supply-chain difficulties with long monsoons in 2008; while Western manufacturers in Indonesia have started to move out because of security problems.

“We have seen designers who we used to ‘export’ to China coming back. Our buyers who went to China for cheaper products are now coming back,” Suarez said.

Jennifer Cruz, former president of the Cebu Gifts, Toys and Housewares (GTH) Foundation, said Cebu-based exporters “already pushed to the wall” are forced to innovate and create more efficient production lines.

“Now that we are more efficient, our prices can compete with China and Vietnam,” Cruz said.

While overhead-cost cuts are common in most factories, so is sharing of inventories between companies and diversification of products to meet industry demands, says incumbent GTH president Pete Sepulveda.

“Instead of making furniture, Cebu exporters can switch and make lamps instead. That is one of [their] strengths,” he said. “Cebuano exporters are already pushed to the wall, yet we are still here.”

Cruz said not all distributors and retailers in the United States are seeing a bleak 2009. “We actually see that they are preparing for an upward turn,” he said.

Just last week Cruz and his company, 33 Point 3 Exports Inc., received a group of US-based buyers looking for products to buy and distribute to their 1,700 stores.

Cruz has orders from the same company that will last until the middle of 2009.

Eric Casas, the president of the furniture exporters group Cebu Furniture Industries Foundation said his own company and several others are even set to surpass their 2007 sales revenues, aided mainly by the better exchange rate.

“There are still a lot of opportunities in the industry if the companies would only focus on our strength in design and innovation,” Casas said.

Other markets outside the United States also offer exporters another opportunity.

Majority of members of the export fashion accessories group are still experiencing growth because a large chunk of their production goes to Europe.

Janet Chua, president of the Fashion Accessories Manufacturers and Exporters Foundation, said the industry is somehow resilient despite the slowdown because of the fast pace in fashion trends.

“Chinese manufacturers are so quick to flood the markets with their products that they are no longer viable,” Chua said. “Buyers are now moving toward green fashion and Cebu was able to position itself in that market.”

She added, “We are still hoping for growth although at a slower pace.”

Casas said emerging markets like Russia, South Africa and the Middle East and even the domestic market have given furniture exporters some optimism.

“New players have emerged in the United States as the bigger players are having problems,” he said.

Yuvallos said the tougher times have forced companies to innovate and be creative, putting them in a better position to compete when the good times come.

“We believe the resiliency of the industry and its payers should be highlighted,” he said. “When we only talk about the bad things, we will all [give] in to fear, and that has a more crippling effect.”

In a nutshell, Suarez said the export-furniture industry is still viable and, in fact, growing. “While many companies have closed down, new players have come in. That means there is still business in export,” he said.