A Case Study of Cebu
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A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Zosa, Victorina Working Paper Philippine-Japan Economic Linkages: A Case Study of Cebu PIDS Discussion Paper Series, No. 2004-33 Provided in Cooperation with: Philippine Institute for Development Studies (PIDS), Philippines Suggested Citation: Zosa, Victorina (2004) : Philippine-Japan Economic Linkages: A Case Study of Cebu, PIDS Discussion Paper Series, No. 2004-33, Philippine Institute for Development Studies (PIDS), Makati City This Version is available at: http://hdl.handle.net/10419/127858 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Philippine Institute for Development Studies Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas Philippine-Japan Economic Linkages: A Case Study of Cebu Victorina Zosa DISCUSSION PAPER SERIES NO. 2004-33 The PIDS Discussion Paper Series constitutes studies that are preliminary and subject to further revisions. They are be- ing circulated in a limited number of cop- ies only for purposes of soliciting com- ments and suggestions for further refine- ments. The studies under the Series are unedited and unreviewed. The views and opinions expressed are those of the author(s) and do not neces- sarily reflect those of the Institute. Not for quotation without permission from the author(s) and the Institute. August 2004 For comments, suggestions or further inquiries please contact: The Research Information Staff, Philippine Institute for Development Studies 3rd Floor, NEDA sa Makati Building, 106 Amorsolo Street, Legaspi Village, Makati City, Philippines Tel Nos: 8924059 and 8935705; Fax No: 8939589; E-mail: [email protected] Or visit our website at http://www.pids.gov.ph List of Projects under the Japan-Philippines Economic Partnership Research Project Title of the Project Proponent Impact analysis on the whole economy 1. Situationer on Japan-Philippines Economic Relations Erlinda Medalla 2. Philippine-Japan Bilateral Agreements: Analysis of Possible Caesar Cororaton Effects on Unemployment, Distribution and Poverty in the Philippines Using CGE-Microsimulation Approach Impact analysis on specific sectors/ concerns 3. An Analysis of Industry and Sector- Specific Impacts of a AIM Policy Center Japan-Philippines Economic Partnership (Royce Escolar) 4. Prospects and Problems of Expanding Trade with Japan: A Rosalina Palanca-Tan Survey of Philippine Exporters 5. Towards a Strategy for Manufactured Exports to Japan Peter Lee U and Ferdinand Maquito 6. Small and Medium Enterprise Development Experience and Cielito F. Habito Policy in Japan and the Philippines: Lessons and Policy Implications 7. Developing the Japanese Market for Philippine Tourism and Winston Conrad Padojinog and Retirement Services: Prospects and Impediments Cherry Lyn Rodolfo 8. Prospects of Services Trade Liberalization in Gloria Pasadilla Japan-RP Bilateral Agreement 9. Movement of Natural Persons Between the Philippines and Tereso S. Tullao Jr. Japan: Issues and Prospects 10. Toward a Philippines-Japan Economic Partnership in Amelia Bello and Zenaida Sumalde Agriculture 11. Philippine-Japan Economic Linkage: A Case Study of Cebu Victorina Zosa Special Studies 12. A Comparative Study of the Bilateral FTA Arrangements: John Lawrence Avila Applications to the Philippines 13. Philippines-Japan Economic Partnership: Where is the Lydia N. Yu-Jose Philippines in Japan's Plan? 14. Understanding Japan’s Motives for Pursuing an Economic Ronald Rodriguez Partnership Agreement with the Philippines 15. Exploring Potentials of a Japan-Philippine Economic Jose V. Camacho Jr., Jhoanna Alcalde, Partnership in Human Resource Development Nino Manalo, Rodger Valientes 16. The Dynamics of Philippines-Japan Economic Cooperation: Jose V. Camacho Jr. The Case of Japan’s Official Development Assistance (ODA) Agham C. Cuevas in the Philippines 17. Preferential Rules of Origin for the Japan-Philippine George Manzano Economic Partnership: Issues and Prospects 18. Philippine - Japan Free Trade Agreement: Analyzing the Taeko Yasutake Potential Impact using a Computable General Equilibrium Model Philippine – Japan Economic Linkages: A Case Study of Cebu Victorina Zosa University of San Carlos Paper prepared for the Japan- Philippines Economic Partnership Research Project February 2004 Philippine - Japan Economic Linkages: A Case Study of Cebu TABLE OF CONTENTS Section Title Page 1.0 Introduction 1 1.1 Objectives of the Study 1 1.2 Organization of the Study 2 2.0 Data and Approach 2 3.0 Regional Situationer 3 3.1 Natural Advantage 4 3.2 Population 4 3.3 Economic Characteristics 4 3.4 Development Constraints 5 4.0 Cebu-Japan Economic Relationship 7 4.1 Foreign Trade 7 4.2 Foreign Direct Investments 10 4.3 Tourism 18 4.4 Movement of Natural Persons 20 4.5 Information Technology 24 4.6 Sociocultural and Political Factors 27 5.0 Economic Competitiveness of Cebu 31 5.1 Perceptions of Local Businessmen 33 5.2 Ranking of Japanese Businessmen 33 6.0 Elements of the Cooperation Framework Between Cebu and Japan 35 6.1 Estimates of Japanese Economic Presence in Cebu: An Exercise 35 6.2 Possible Gains and Losses in a Bilateral Arrangement 37 7.0 Summary and Conclusion 43 Philippine - Japan Economic Linkages: A Case Study of Cebu LIST OF TABLES Table No. Title Share of Central Visayas to the Philippine Merchandise Exports : 1 8 2002 FOB Value in US 1,000 Dollars 2 Top Ten Exports and Imports, Philippines and Cebu: 2000 9 3 Distribution of Japanese Firms in PEZA, by Selected Characteristics: 2003 12 Central Visayas and Cebu Ecozone (EZ) Foreign Trade Indicators: 1991 - 2002 (in 4 13 US $ Million) 5 Share of Cebu Economic Zones in Regional Employment and Investments: 1990 - 2002 14 Share of Cebu Economic Zones in PEZA Employment, Exports and Investments: 6 15 1994-2002 7 Nationality of Cebu Economic Zone (CEZ) Locators, by Product: 2003 16 8 Distribution of Japanese Firms in Cebu Economic Zones, by Equity Participation: 2003 17 9 Financial Performance of Top 7000 Corporations in Cebu Economic Zones: 2002 18 10 Foreign Tourist Arrivals in the Philippines and Cebu: 1982 - 2002 19 11 Selected Information on Overseas Contract Workers, October 2001 21 12 Distribution of OCWs in Japan by Occupation: 2001 22 13 Distribution of Association for Overseas Technical Scholarship (AOTS): 1959 - 2001 23 14 Number of Recipients of Japanese Scholarships and Trainings: 2003 23 15 List of Japanese IT-Related Firms in CEZ: 2003 25 16 Enrolment and No. of Graduates of Cebu Higher Education Institutions, by Field of Discipline 26 17 Central Visayas Development Projects: 2003 27 18 List of Japanese Funded Government Projects in Central Visayas: 2003 29 Ranking of Location Factors, by Metro Cebu Businessman: 2003 Philippine Cities 19 32 Competitiveness Ranking Project Competitiveness of Cebu, In terms of Top 5 Ranking in Investment-Related Costs JETRO 20 34 Survey of 26 Asian Cities, 2002 21 Measure of Japanese Economic Presence in Cebu, 2002 36 22 Measure of Economic Openness of Cebu: 1990 - 2002 40 23 Central Visayas Income and Expenditures and Gini Coefficient, by Province: 2000 41 24 Percent of Cebu Barangays with Selected Facilities and Services: 1990 & 2000 42 Percent of Population 20 Years & Older, by Higher Educational Attainment in Cebu Province : 25 43 1990 & 2000 Philippine – Japan Economic Linkages: A Case Study of Cebu Dr. Victorina Zosa University of San Carlos ABSTRACT The impact of the Japan-Philippine Economic Agreement (JPEPA) can be enriched by providing a regional dimension in its macro-analysis. Cebu-Japan cooperation largely hinges on Cebu’s economic competitiveness which manifests itself through its quality human resources, its dynamic export sector and tourism industry, its proximity to international entry and exit points, its infrastructures, its cost of doing business, its quality of life and the responsiveness of LGU to business needs. On the other hand, Cebu, as a destination of Japanese investments, is hampered by the relatively high wages of both unskilled and skilled labor, an unstable wage rate environment and moderately high costs of telecommunication, water, gas, and container transport. With this, the exercise on cost-benefit analysis yielded positive gains for Cebu’s economy. The foreign exchange loss, driven by the balance of trade deficit between Cebu and Japan, and the foregone corporate income taxes were offset by the Japanese direct investments, salaries and mandatory contributions of