The Eastern Visayas Economy
As of 2nd Quarter, 19981
Production] [Tourism] [Other Sectors]
[Investments] [Prices] [Practical Indicators] [Concerns]
The synchronized national and local elections, centennial
celebrations, local festivities, the El Niņo and the currency crisis all contributed to
the general weakening of the regional economy.
Production of major crops declined due to the El Niņo. The
airline and banking industries were in difficulty primarily de to the currency crisis.
However, positive performances in the tourism and telecommunications sectors somehow
minimized the adverse impact of these events.
An additional three establishments closed in the last three
months while some 43 establishments resorted to retrenchment. Total job losses for the
last quarter is estimated to be 465, 293 of which were directly attributed to the peso's
depreciation. As of July last year, employment rate was pegged at 91.6%. This is expected
to drastically decline as creation of new jobs by new investments failed to offset lost
Total palay area harvested declined by 21% mainly because of
the lack of rain. Correspondingly, total production dropped by 34%. In irrigated areas,
production dropped by 24% while production in rain-fed areas plummeted by as much as 50%.
The province of Leyte (the region's biggest rice producer
with the highest percentage of irrigated land) experienced a 25% drop in production
compared to the same quarter in 1997. Leyte accounts for more than 50% of total rice
production in the region. Biliran and Southern Leyte, the next largest rice producers,
experienced 22% and 34% drop in production levels respectively. This drop is much more
dramatic in the rain-fed areas.
The farmers had a rough time as prices of farm inputs
climbed, capital became costly and scarce, and production plummeted. The consumers however
were spared of price increases as an adequate stock of rice was maintained by the National
Food Administration (NFA).
Coconut production also fell by 4% as immature nuts fell off
before harvesting due to the El Niņo. Most coconut farmers however shifted their
concentration to abaca, which despite a low production, commanded a high price due to the
dollar appreciation and the significant improvement of fiber quality because of the
shorter drying time. Northern Samar actually increased abaca production and export.
The period was also unfavorable to sugar producers as
production was low and sugar prices remained dampened.
Excluding chicken, livestock production also declined because
of the decreasing available grazing area and lack of water supply. Lack of nutrition of
livestock resulted in lower conception and higher mortality rates. Hog inventory is
expected to continue its decline as feeds become more scarce and expensive due to the
decline in palay and corn production.
Chicken inventory however posted a 35% increase as survival,
growth and fertility rates improved as the El Niņo weather proved beneficial to chickens.
It was also noted that the demand for chicken meat was high bringing up prices. Backyard
poultry producers enjoyed a good share of the market.
National estimates place the entire
agricultural sector of the country shrank by 7% because of the El Niņo.
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The tourism industry continue to live up to expectations by
continuously performing better every quarter. The elections significantly beefed up
domestic tourism as several national candidates and their supporters campaigned all over
the region. The month of May registered the highest number of convention-related events
since the start of the year. Domestic tourist arrival increased by 13.8%.
Foreign tourist arrival however declined largely due to the
Asian crisis. This was compounded by the struggles of the country's flag carrier
Philippine Airlines (PAL) to stay afloat that resulted to irregular and fewer flights.
Among accommodation facilities, tourist inns still enjoy
healthy profits and good market share as they continue to offer low prices with reasonably
good facilities. Average occupancy rate in said establishments was 50% for the last
quarter, up from 40% of the previous quarter. Standard hotels recorded a 19% occupancy
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Power demand of households and businesses were high mainly
due to election-related activities and the numerous fiestas held during the period.
Maximum power demand (or peak-load) was at 130.5 megawatts resulting to an increase in
sales for the National Power Corporation (NPC). Industrial power consumption however was
low as PASAR and PHILPHOS (the two biggest industrial establishments in the region)
scheduled their preventive maintenance during the period. This drop in industrial
consumption pegged the total energy growth sales for the region at only one percent.
The National Power Corporation registered 158 incidents of
power outages throughout the region in the past three months. The electric cooperatives
recorded 484 separate incidents of power failures with LEYECO II (servicing the regional
capital of Tacloban City) recording the highest number of interruptions at 97. Believe it or not, these statistics are actually an improvement
over the same same period last year when 563 incidents of power outages were recorded in
the first quarter of 1997 and a whopping 756 in the 2nd quarter of the same year. NEDA
attributes this "improvement" to the "upgrading" of power lines. What
is not mentioned in this report is that despite this clearly lousy service by the NPC and
the electric cooperatives, the region is still saddled by one of the highest electric
power rates in the country.
Mineral production and mining in the region continues to be
in a standstill as mining companies grapple with the increasing environmental awareness of
the people. Heritage Mining Corporation in Eastern Samar, a producer of metallurgical
chromite and one of several mining companies that have valid mining concessions in Samar
Island is still waiting its Environmental Clearance Certificate (ECC) from the Department
of Environment and Natural Resources (DENR). NEDA
expects the ECC to be released soon. This ECC however, if it is ever released, is expected
to be strongly opposed by the people of Samar Island who have seen and suffered from the
degradation of their natural resource base by several unscrupulous mining and logging
firms in the 1970's and 1980's. Pheschem, a producer of
hydrated lime and limestone, continues to operate in Palompon, Leyte.
The DENR has newly approved three mineral production sharing
agreements: Alberta Resources Development Corporation which will mine gold, copper and
silver in Liloan, Southern Leyte; Alcorn Petroleum and Minerals Corporation to mine
limestone in Isabel, Merida and Palompon, Leyte; and Poreschore and Company, Inc. which
will mine limestone in Matalom, Maasin, Macrohon and Malitbog in Southern Leyte. Said
companies are not expected to start mining operations for the next two years.
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Total value of DTI (Department of Trade and
Industry)-directly impacted investments declined by 26.8% compared to last year. This is
attributed to the high cost of capital and the political uncertainties accompanying the
elections. Limited loans were available to small-scale businesses only a fraction of which
were actually released.
Small and medium-scale businesses were mostly left to fend
for themselves. Despite the worsening economic climate and apparent lack of support from
the government and financial institutions, Southern Leyte managed to put up 57 enterprises
generating some 154 new jobs in the area. In Leyte, six establishments were put up
employing some 20 people.
The construction sector, betting on increased spending by
politicians during the election period, suffered a severe blow as those contracted by the
national government agencies were not paid for completed projects due to budgetary cuts
and the increasing scarcity of funds. Although the
total number of affected construction outfits is not known, NEDA believes that this
non-payment, coupled by the meteoric rise of bank interest rates, have pushed many outfits
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As predicted, prices significantly rose during this period.
General price levels rose by 7.9% compared to the same period last year.
Lack of supply of agricultural products due to the weather
compounded by the artificial demand due to the increase of money in circulation brought
about by the elections jacked up prices of both essential and non-essential commodities in
the region. Fruits and vegetables, the prices of which are already higher compared to
other regions in the country, shot up by 19% in May compared to last year. Here are some
of the more significant price increases recorded for the period (as recorded by NEDA):
||up 10 to 15%
||P67/k to P80/k
||P7.00-8.00/k to P7.43 to 10.42/k
It is interesting to note that most people view
these figures as very conservative. Immediately after elections, housewives doing their
regular marketing were shocked to find out that a kilo of onions, which just the day
before were selling at P35-45 per kilo, were being peddled at more than P100 per kilo -- a
more than 100 percent increase! The bloat in price was not limited to onions however.
Almost all commodities were up with essential commodities registering the highest
increases. The situation improved somewhat over time but current prices have not returned,
or even approximate, that which prevailed before the elections.
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(Service Sector Indicators)
Due to the expansion programs of two of the bigger
telecommunication companies in the country, the number of installed telephone lines in the
whole region more than tripled compared to last year. As of June, some 102,852 lines were
already installed with more waiting in the pipeline.
Commensurate to this, the number of subscribed land lines
more than doubled compared to the same period last year totaling some 55,608 most of which
are in Leyte province. This is reflective of the volume of business transactions and the
economic condition in the area. Lately, there has been a significant increase in the
demand for telephone lines in Samar. From 2,321 lines in the second quarter of last year,
there are now 13,650 subscribed lines in Samar and growing. It is interesting to note
though that the number of subscribers in Northern Samar actually decreased by 22%. NEDA
attributes this to disconnection traced to the "tight budget of families coupled with
poor services by some local exchange carriers." In Biliran, some 2,300 installed
lines have yet to be subscribed.
Demand for cellular phones continued to grow especially in
the city and town centers of Tacloban, Ormoc, Catbalogan and Calbayog. As of June, there
were 15,681 subscribed cellular phone lines in these areas compared to 14,132 in the
By the end of the quarter, there were 59 cable TV operators
regionwide with a combined total of 19,553 subscribers. Leyte topped the subscription list
with 7,529 followed by Samar with 5,415 and Northern Samar with 4,935. NEDA sees this as
an indication of "the amount of disposable income and quality of life of the
It should be noted that the installed lines,
especially by Islacom, were of laudable quality being optic-fiber based lines. The company
painstakingly laid out an optic-fiber line from Catbalogan, Samar to Tacloban City, Leyte.
Furthermore, telephone services by the two biggest providers (Bayantel and Islacom) could
be considered above-average compared to the chaotic jumble of interconnections in Metro
Internet Service Providers continued to enjoy brisk business at least in Leyte. There are
at least three major ISPs in the region (Moscom,
Fapenet and Weblink). Internet cafes have cropped up
like mushrooms in the cities of Tacloban and Ormoc. More and more households are getting
online. Also, awareness of the Web is constantly and dramatically increasing among the
Air Transport Service
As with the rest of the country, the industry remained in
crisis. By the end of June, only Tacloban City remained to have regular flights to and
from Manila. And these flights were further reduced in frequency.
Two regular flights by Asian Spirit to Catarman and Calbayog
from Manila were scrapped. On June 5, PAL stopped flights to Catarman and Calbayog.
Samareņos found a hard time travelling to Luzon as they were left with the choice of
either a land trip via Allen or San Isidro in Northern Samar or catch one of the regular
flights in Tacloban City.
Despite the setback of the airline industry in the region,
passenger volume to and from Tacloban actually increased by 4.8% during the period.
Sea Transport Service
Perhaps for the first time in many months, sea passenger
volume experienced an increase of a conservative two percent. This is attributed to the
troubles experienced by the airline and inter-provincial transport industries (see below).
The Hilongos Port, a transshipment point to Cebu City,
reported a 139% increase in passenger volume. Ormoc City, the region's main link to Cebu,
also posted significant volume increases especially after the regular flights from
Tacloban to Cebu were scrapped. Liloan (a major transshipment point to Mindanao) had a 14%
decrease in volume of passengers. Passenger vessels plying the Manila-Tacloban route,
except for one, continued to shy off citing unprofitability of the route. A pending
pullout of the remaining passenger vessel servicing this route was staved off.
There were no details presented by NEDA regarding sea-borne
cargo volume in the region.
Tacloban continues to lose its popularity as
the port of choice for inter-island shipping in the country. This may be attributed to the
narrow and shallow approach to the Tacloban port (ships have to pass the San Juanico
strait described as one of the narrowest straits in the world). Because of these
limitations, ships visiting the port have been restricted to small tonnage vessels
visiting the port. Although there are no official records available, there is an
increasing perception that the economy of the region (at least in the more
"developed" and industrialized areas of Leyte Island which comprise a large
slice of the regional economy) is more and more linked to Cebu City because of its
accessibility and proximity. If true, this fact could have significant impact on economic
development planning not only in the the region, but moreso in the national level.
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NEDA lists the following as needing immediate attention:
- Fast tracking implementation of projects to improve power
supply reliability; fast tracking of house bills affecting power pricing in Region 8.
- Measures to reduce interest rates of credit
- Oil price regulations
- Review of GATT measures affecting livestock and poultry
- More strict enforcement of laws against graft and corruption
- Preparations for the La Niņa.
- More incentives for the business sector (e.g. tax holidays)
- Resolution of unclear policies in providing electric service
to commercial/industrial users
- Delayed or non-payment by government of completed construction
projects to the private sector.
from the official report of the Regional VIII office of the National Economic and
Development Authority. Lines in Serif (such as
this line) are comments by the author. They are not part of the official report and are
included mainly to serve as points of interest to which the reader is enjoined to further
look into. The author maintains however that these comments are based on FACTS as far as
the limited consciousness of this homo sapien can digest and understand.
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