Investment Promo Cebu Experience LCP

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Investment

PromotionThe Cebu Experience

A presentation during theCapability Building on Investment Promotion20 November 2009

Tacloban City

Cebu Investment PromotionsCenter

w w w . c e b u i n v e s t . c o m


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To successfully attractforeign and localinvestments, we have

to tool up for it.

Therefore, the need tocreate an

INVESTMENTPROMOTIONS CENTERwith very focused functions.

Why InvestmentPromotion

Cebu Investment Promotions Center


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The Logic Behind the Creation of

AN INVESTMENT

PROMOTIONS CENTER

The economic future of a place cannot be left toHAPPENSTANCE.

Rather, it must be the result of a studied,deliberate & managed EFFORT.

The principal task of the IPC is the generation ofForeign and Local Direct Investments of the type

& conditions that the IPC predetermines.

Investment Promotions is a field ofmanagement. Ergo, it must be donesystematically, methodically, professionally & in

"ONE VOICE". Cebu Investment Promotions Center


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The Argument forSINGING IN ONE VOICE

N.B. Even before we startto sing in ONE VOICE, we

must be singing theSAME SONG

When we learn to sing the SAMESONG in

ONE VOICE, we will assure ONE

UNIFYINGTHEME in ONE PITCH & eliminate the

discordthat arises from CROSSED SIGNALS,

MIXEDSIGNALS & CONFLICTING SIGNALS.Cebu Investment Promotions Center


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CAPABILITYBEFOREOPPORTUNITY



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Designing an InvestmentPromotion Program can

be likened to baking acake.



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What is the first thingthat you should do in

baking a cake?



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Decide which cake to bake!



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Next Step: Provide the base



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Next Step: Provideingredients and procedure



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Next Step: Put the icing



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Putting It Together



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Putting It Together:Investment Promotion

Icing: Amenities (medical,school, shoppingfacilities)

Cake Ingredients: Hardware:Infrastructure Software:BureaucracyPeopleware: Human

resources

Base: Peace and order,etc.



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MUST ACTIVITIES IN INVESTMENT PROMOTIONS1. Planning to Define Focus

1.1. Agri/Aqua/Forestry Sector1.2. Industry Sector1.3. Services Sector

2. Capability Building

2.1. Hardware - Physical Infrastructure2.2. Software - Government and PrivateSector Bureaucracy

2.3. Peopleware - Labor and Management2.4. Community Amenities

3. Actual Investment Promotions

3.1. Promotional Collateral3.2. Development of Presentation/Spiel3.3. Development of Salesmen3.4. Identification/determination of Target

MarketsCebu Investment Promotions Center


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DEVELOPING THE STRATEGYDOCUMENT Industry Sectors to be targeted by the agencyin the short term (1-2 yrs) and in the mediumterm (3-5 yrs)

Key geographic areas of focus

Promotional approaches to be used to reachthese firms, and reasons for choosing them

Changes, if any, in the organization,functional responsibilities and staffresponsibilities

Cost of implementing the strategy and sourceof funding



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UnderstandingForeign DirectInvestments



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WhyFDIs

Wealth in acountry isgenerated by:

v Entrepreneurial profit

v Purchasing power fromquality employment



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Employment Statistics

PhilippinesNo. OfFilipinos

75M

45% in Labor Force 34M

10% of Labor Force

Unemployed

3.4M

50% of Labor Force

Underemploye

d

17M

Definition of Underemployed :

Cannot work 40 hrs./week, 52 weeks/year



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Total Cebu Population 3.0 M

Labor Force

(45% of total pop.) 1.35 M

Com pletely Unem ployed(10% of Labor Force)130,000

U nderem ployed(50% of Labor Force)670,000

CEBUSCENARIO:



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CAPITAL REQ U IRED TOPR O VID E FU LLEM PLO YM EN T

Phils.: 10.2 M x P500,000 =P5.1 Trillion

Cebu : 400,000 x P500,000 =P200 BConclusion:

Even if all Filipinos w ere to chip intheir last centavo, there w ill not beenough capital to provide fullem ploym ent for even 50% of all ourunem ployed & underem ployed.

Assum ptions:a. O nly 50% of total unem ployed and

underem ployed w ant fullem ploym entb. Capital/Labor Ratio: P500,000


Th i


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The bullishness of such sectors asthe

shopping malls, the shippingcompanies...

Is due to a very significant degree...

To their confidence in CEBU's ability

to attract investments & generatepurchasing power from quality

employment.

Therefore,

We must PERPETUATE our WINNING

Thesis:

Cebu's prosperity today is due to a very large

extent to its ability to attract Foreign DirectInvestments (FDI's), particularly at theMactan Export Processing Zone (MEPZ) andother economic zones.



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O ur Target : 300 FD IsW ill Require : 270 hectares net

space(338 hectares grossspace)

W ill G enerate :

$ 4.5 Billion in annualincrem ental exports.

115,500 additional directem ployees

P 12 Billion in annualpayroll



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Because the priority task of government is to address theproblem of unemployment in the shortest possible time;

Because there is not enough local capital in thePhilippines to provide employment opportunities for allunemployed and underemployed;

Because as a general rule, FDIs not only pay qualitywages but introduce work disciplines necessary to buildthe right labor infrastructure for the attainment of NICstatus;

Because FDIs bring in and continue introducingtechnology in both equipment and process, as well asresearch and development;

Because FDIs secure marketing footholds for thePhilippines in countries and sectors where they sell to;

'

W H Y FO REIG N D IRECT IN VESTM EN TS?



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1. Policies of Host Countries

2. Proactive MeasuresCountries Adopt to Promoteand Facilitate Investment

3. Characteristics of theirEconomies

3 Broad Factors thatDetermine FDI

Investment



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1. Policy Framework for FDI

economic, political and social stability rules regarding entry and operations standards of treatment of foreign affiliates policies on functioning and structure of markets

(especially competition and M&A policies) international agreements on FDI

privatization policy trade policy (tariffs and non-tariff barriers) tax policy

2. Business Facilitation

Investment promotion (including image-building andinvestment-generating and investment-facilitationservices)

Investment incentives Hassle costs (related to corruption, administrative

inefficiency, etc.)

Social amenities (international schools, quality of life,etc.)

HOST COUNTRYDETERMINANTS

Source : 1998 World Investment ReportPublished by UNCTAD Cebu Investment Promotions Center


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1. Resource or Strategic Asset- Seeking

- FDI in natural resources (minerals, rawmaterials, and agricultural products- FDI seeking low cost or specialised labor

- Acquisitions and alliances to promote long-term corporate objectives

2. Efficiency Seeking

- Rationalized or integrated operations(regionally/ globally) leading to cross-borderproduct or process specialization

Types ofFDIs.



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3. Market Seeking

- FDI into markets previously served by exports, orinto closed markets protected by high import orother barriers

- FDI by supplier companies following theircustomers overseas- FDI that aims to adapt products to local tastesand needs, and to use local resources

Types ofFDIs.



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CIPC'sFU N CTIO N S

INVESTMENT PROMOTIONS economic presentations on Cebu as an

investment destination/businesslocation.

establishing linkages with promotionalagencies.

INVESTOR SERVICES economic briefings plant and site visits information & statistics networking



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POLICY ADVOCACY infrastructure support government bureaucracy (systems & procedures) government policy

SUPPORTED BY: Database Management Production of Promotional & InformationCollateral

Internal Financial and Administrative Services Fund Sourcing

CIPC'sFU N CTIO N S



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CIPC / CEBU Foundation

Organizational Chart

Admin. Staff

Promotions InvestorServices

Policy Advocacy/Fund Sourcing

ManagingDirector

Infrastructure

Executive Director

Executive Committee

Board of Directors



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Board ofTrusteesMr. Geronimo Sta. Ana

ChairmanAtty. Agusto Go Vice ChairmanConsul Enrique Benedicto MemberEngr. Rogelio Q. Lim Member

Consul Sabino Dapat MemberDir. Asteria Caberte MemberMr. Joel Mari S. Yu Member/

Managing Director

CEBU INVESTMENT PROMOTIONSCENTER


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History of CIPC

1994 Cebu Economic and BusinessFoundation,

Inc. is registered with SEC;Cebu Investment Promotions Centeris created with the very specificmandate to promote Cebu to foreigndirect investors.

Original Investment Planfocused on Light Manufacturing:Precision Assembly and Electronics.



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CIPC is the primary reason why thereare foreign direct investments inCebu.

CIPC is acknowledged as the pre-

eminent investment promotionsagency in the country. It hastransferred know-how & extendedconsultancy services in investment

promotions to over 50 LGUs and nationalagencies all over the Philippines.



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CIPC is recognized by World Bank /MIGA as a leading Investment

Promotions Agency in Southeast Asia.

CIPC has created the bestpromotional material for Cebu andhas the most extensive database onthe economy of Cebu.



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CIPC is the only local investmentpromotions agency in the country

mentioned in the book MarketingAsian Places by Philip Kottler, et al.



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THANK YOU VERY

MUCH

ALBERTO T. GUMARAO

Deputy Center ManagerCebu Investment Promotions Center (CIPC)

Documents

Investment Promo Cebu Experience LCP