IT’S a good thing that European businessmen, specifically the members of the French Chamber of Commerce, are starting to see Cebu as an investment destination, not just as an exotic place to visit. That’s an important development that our leaders in both the public and private sectors should nurture because it’s the best way to address income inequality in the country.
Inequality in terms of income and wealth has always been a major problem in the Philippines. Inequality usually manifests itself in terms of “polarization,” a situation where economic activities are concentrated in the urban areas in few regional centers.
These days, for instance, economic activities are largely concentrated in Metro Manila and its immediate surroundings like Calabarzon, Clark and Subic. Naturally, these areas enjoy low poverty incidence (7 percent to 18 percent) in stark contrast to provinces in the Autonomous Region in Muslim Mindanao and Caraga, where poverty incidence is over 50 percent.
Geography plays a great part. The strategic location of Manila, being the national capital, and its expanding conurbation would naturally attract a lot of economic activities. Experts have been saying, however, that a significant explanation could be traced to misguided policies that favored “imperial Manila” as well and its immediate environments.
If we want to get serious about addressing inequality, therefore, we should put in measures addressing economic polarization.
In fairness, legislators have actually tried to address this problem since the ’90s through measures like devolution and decentralization. Local government executives now have more powers and resources to plan their own communities.
Reforms in aviation, interisland shipping and telecommunications have also started to bring the far-flung regions closer to the mainstream of development. Nevertheless, statistics continue to indicate that polarization persists, apparently due to the momentum of history and the continuing failure of the government to invest in strategic infrastructure that should link the regions with urban centers.
The idea, therefore, that Europeans are looking at Cebu as an alternative investment destination is a positive sign. Cebu, of course, has always been a major recipient of foreign direct investments, specifically Japanese companies that established factories for the assemblies of electronics and semiconductors since the early ’90s.
For long, it has been serving as the gateway to Southern Philippines, economically linking up the Mindanao regions and Metro Manila through its superb seaports and airports. With greater investments from European companies, Cebu’s economic transformation could produce positive ripple effects toward its neighbors, especially Bohol, and some urban centers in Mindanao, including Butuan City and Cagayan de Oro City, thus generating more economic activities and opportunities in the said areas.
What’s happening in Cebu right now is essentially market-driven, assisted only by forward-looking local political leadership. The task right now, therefore, is developing more regional centers in the Visayas and Mindanao that could complement Cebu as an economic center.
The national government, as well as the private sector, could catalyze this process by putting in more policies that encourage greater economic decentralization. Certainly, a well-designed infrastructure network providing economic linkages among production centers in the Visayas and Mindanao should be a priority. Also, programs that channel tourism flows from Manila to the Visayas via Cebu would help a lot. The country’s telecom industry could help by accelerating the rollout of broadband facilities in the Visayas and Mindanao.