ABSTRACT

BELLEZA, AVELINO C., PROSPECTS FOR INVESTMENT IN THE BICOL REGION, (Unpublished Doctoral Dissertation, Aquinas University, Legazpi City, 2001)

Developing countries like Philippines aim for economic development that is geared towards improving the human conditions of the people, through poverty alleviation, unemployment, squalor and diseases, illiteracy and inequality in the distribution of wealth through a balanced development of agriculture and industry. Agriculture provides employment through the production of raw materials, food sufficiency, self-employment, income, access to education and health services, and foreign exchange of some specific agricultural products such as coconut and hemp. Industry, add value to the agricultural products, and contribute to economic development through the generation of greater income, employment and revenues for the government. Services facilitate the movement of goods to and from the producers and consumers.

The role of investment in all three sectors of the economy in the economic development and sustainability of a region, cannot be over-emphasized. Based on GNP standards, the Bicol Region has always been classified as one of the most depressed region in the country. Investment as catalytic agent of change has been explored through the efforts of the regional and provincial offices of the DTI and SEC-Bicolano’s claim that the march to progress in Bicol is caused by the egg-chicken philosophy of high power and lack of investment in industry. It was for the purpose of affirming or disputing these claims that the present study was undertaken.

The study was hypothesized that the Bicol Region, because of its geographical position advantages as proximate to Metro Manila and the CALABARZON expansion phenomenon, will be the investment playing field in the next five years.
The data used to verify this hypotheses were aimed at answering the following problems:
1. What is the status of investment in the Bicol region from 1995 to 1999 at the provincial and regional levels?
2. What are the issues that must be addressed to entice investment in the Bicol Region? And
3. What are the factors to consider in investing in the Bicol Region?

The study used a triangulated eclectic research design which included characteristic of a legitimatory, policy-oriented and futuristic researches. The research data were of the secondary type on file in the DTI-BOI and SEC Region V. These were analyzed using the meta-analysis pr the analysis of analysis – strategy of showing trends and patterns of the investment in the region in the sectors of the economy, i.e. agriculture, industry and service-oriented.

The study used a triangulated eclectic research design which included characteristics of a legitimatory, policy-oriented and futuristic researches. The research data were of the secondary type on file in the DTI-BOI and SEC Region V. These were analyzed using the meta-analysis or the analysis of analysis –strategy of showing trends and patterns of the investment in the region in the three sectors of the economy, i.e. agriculture, industry and service-oriented.

The study had other variables of concern such as the issues that must be addressed, if investments are to be encourages in the region and the factors that must be considered by prospective investors. The data on these issues and factors were gathered from 69 leaders of business and industry in the region, through the use of the Delphi approach to consensus-making and open discussion through the use of the focus group, generally, selected Rotary Clubs in Naga City, Legazpi City and Sorsogon City.

Since the study was highly descriptive and qualitative, simple statistical summaries were used. No hypothesis testing of the data based on probability theories was used, but rather a rational and more initiative gut-feeling based on hermeneutic principles were used by thee researcher. The implications of the findings were used as possibilities in explaining some aspects of the problem.

The study reports the following salient findings on?:
A. Situationaire:
1. The six province have defined geographical boundaries and a total land area of 17,362 Sq. kilometers. It is a peninsula surrounded by waters on the east by Pacific Ocean and on the west by the China Sea, and varied gulfs and passes that provide rich marine products and idyllic spots from tourism.
2. The total population in 1999 was about 5.1 million. The population density-parameter defines the congressional Divisions,i.e Camarines Sur (4); Albay (3) Masbate (3) Sorsogon (2) Camarines Norte (1) and Catanduanes (1)
3. While all provinces have amenities that support development ( Infrastructure, road network, transportation and communication services, schools and health facilities, the quality and quantity of these amenities differed. More progressive provinces, the better in quality the qualities.
4. Other demographies are 1.91 percent population growth; 94.58 employment rate; 2063,000 labor force; 8.74 percent inflation rate from 1194-1998; and and 83.32 percent functional literal rate.
5. Economic development support amenities include seven airports,47 sea ports, the PNR, and a road network of 2,007.63 kilometers of national roads for land transportation; and varied telecommunication facilities ( 8 local exchange; 3 cell phone companies with their hundreds of cellphone subscribers;13 internet Services Providers; 16 telegraph statins, and six telephone companies and their service public telephones) facilities and services, and mass media: print media (22 newspaper and local weeklies) and electronic media 9 56 radio,2 TV relays,15 cable TV stations).
6. In Albay and Sorsogon, there are two geothermal plants which generates 650 megawatts of electricity.
7. In each province, there are unique existing and potential industries generally congregating in the more urban areas, i.e. districts or municipalities.

A. the Philippine Medium Team Development plan (MTPDP) had mapped development such as: BRAIC,BIDA, and other agri-industrial estates and ecozone: PEZA Economic Zone and City Light Industrial Park in Legazpi City, Malilipot Econzone,and the provincial Industrial center in Ligao City. the PHIVIDEC Industrial Center in Jose Panganiban. the Catanduanes Provincial Industrial center, Calabanga Agro-Industrial Center, Pamplona Ecozone and Iriga City Mini Industrial park. The private sector has two big projects in Albay: the LANDCO Commercial park in Legazpi City and the St. Expeditious Sanctuary Springs Golf and Country Club in Agus, Polangui, and Albay.

Number of investment Firms as indicator of investment:
1. The distribution of the 6792 investment firms, was: Camarines Sur (2240); Albay (2092); Cam.Norte (694); Catanduanes (380); Masbate (450), and Sorsogon (936).
2. The growth in the number of firms during the last five years was erratic, as consequences of the natural calamities that befell the region in 1998, causing registered firms to fold up. The growth in each province were: Albay (6.47%); Cam Norte (11%); Cam Sur (10.7%); Catanduanes (5.25%) Masbate (2.43%) and Sorsogon (7.10%)
3. Classified by type of ownership, 6223 firms or 92 percent were of the single proprietorship; 95, or 1 percent, partnership and 474 or 7 percent, corporation.
4. Based on the sectors of the economy,1206 firms or 18 percent were in agriculture; 1828 firms or 27 percent were in industry and 3758 firms or 55 percent, were in service oriented investment.

B. Total Investment as of 1999
1. The total investment of about P27-billion in 1999 was distributed, rank wise, Masbate (54%); Albay (17%); Camarines Sur (16%); Camarines Norte (9%); Sorsogon (3%) and Catanduanes (1%).
2. The major investment in each province based on type of ownership were: Albay, (corporations-73%); Camarines Norte, (corporations-72%) Camarines Sur, (single propiertorship-95); Catanduanes, (single propiertorship-99%); Masbate (corporation -94%), and Sorsogon (single proprietorship – 99%); Masbate (corporation-94%), and Sorsogon (single proprietorship -74%).
3. The major investment in each province based on the three sectors of the economy were; Albay, (industry (54%); Camarines Norte, (indudtry-83%) Camarines Sur; (industry 50%) Catanduanes, industry – 45%); Masbate (industry-95%) and Sorsogon (service – 52%).
4. Based on the growth areas of the sectors of the economy investment firms in each province were: Albay, (Second District -84%); Camarines Sur (Second District – 42%); Catanduanes, (Virac – 80%); Masbate (First District – 75%) and Sorsogon (First District – 70%).

C. Investment Status :
1. Of the existing 6792 registered firms in 1999, 92 percent was of the micro, cottage, small-scale type registered in the DTI RO 5. The enterprises have a capitalization of about P0.15-1.5-million pesos employing 3-4 employees who are paid between P165-P175 daily wages.
2. The growth of firms across type of ownership and economic sectors in four provinces (Cam. Norte, Cam.Sur, Catanduanes and Sorsogon) from 1994 to 1999, had an up-down pattern, with the lowest ebb in 1998. However, the percentage in growth in the number of firms in the six province from 1995-1999, was about 8.37 percent. In terms of ownership,6223 firms or 92 percent were of the single proprietorship; 95 or 1 percent of the registered partnership and 474 or 7 percent; 95 or 1 percent of the registered partnership and 474 or 7 percent were of the corporation – types.
3. A total of 3758 or 55 percent was generally engaged in service –oriented activities of the economic sector; 1206 or 18 percent in agriculture and 18128 or27 percent in industry.
4. Most of the investment activities were in the more progressive distinct or municipalities known as growth areas.
5. About P20-billion or 74 percent of the total investment of P27-billion were in the hands of the small group of corporations engaged in industries employing 10-99 employees.
6. In terms of the sector of the economy, 54 percent of the firms was engaged in service-oriented activities.
7. The Bicol region, among the 15 regions in the country ranked 10th in terms of direct investment. However, when the registered direct investments from direct investments. However, when the registered

D. Issues to be addressed if investment is to be more attractive are classified and rated as follows:
a. Economic Issues:
1. Cost of doing business and availability of raw materials ( Very high);
2. Competition ,prospects of expansion, local and domestic market, strengths of the peso, and provincial and municipal development agenda and (High)
3. Price of commodities, investment confidence level, financing and investment incentives ( Moderate);
b. Political Issues:
1. Peace and order situations and municipal leadership; ( very High);
2. Graft and corruption, ( High), and
3. Provincial leadership and political sub-division. (Moderate).
c. Socio-cultural issues:
1. Quality standards and moral values of the workers; and attitudes of labor towards investors ( very High );
2. Attitudes of investors towards the conservation of the environment and the attitudes of management towards labor, ( High), and
3. Consumers’ tastes and preferences and attitude of labor toward strikes (Moderate).

E. Factors to be considered by a perspective investor in the Bicol Region are:
a. Infrastructure support
1. Power facilities and cost of doing business; ( Very High);
2. Road network, ports and airport facilities and ( High);
3. Quality and quantity of water facilities (Moderate).
b. Information technology services:
1. Among the 15 regions in the country, the Bicol ranks 12th in teledensity number of telephone/ 100 persons). ( Very High); and
2. The type and kind of telecommunications facilities are varied, but are comparatively sub-standard in quality and state-of—the art type with countries in the Asia Pacific Rim. Many remote places have no access to telecommunications services ( High)

CONCLUSION.
The conclusion of the study are specified in terms of:
A. Strengths and Opportunities
1. The Bicol Region is a strategically located peninsula of the island of Luzon as a gateway to the Visayas and Mindanao. It is a region rich in history and culture; abundance of land, geothermal resources, agriculture and marine sources, large population and skilled manpower.
2. The Bicol region has a large land area that is naturally rich. The good distribution of rainfall makes the whole scenery green throughout the year. Cost of land is still cheap comparably. Bicol is adjacent to the Quezon, Province, another area with rich land resources.
3. In terms of support facilities, the region has an adequate network of roads and bridges that link barangay, towards and province; good airports that move quick-traveling businessmen and tourist and strategic ports-of-call of local and foreign cargo vessels that move people and goods from manila and major cities of destination.
4. The region’s forest lands are excellent sources of raw materials for cottage industries. It grows the best species of pilinut, a basic ingredients in local candy delicacies known as mazapan de pili, pili- brittle and many product lines. Abaca is a basic material in the manufacture of paper pulp, cottage industry products (bags, placemats, baskets, and other housewares) with competitive positions in foreign markets. The shallow shores of white sand and gentle waters, pristine and teeming with beauty, are excellent venues for development of the tourism industry.
5. The Bicol Region has a strategic geographical position advantage being adjacent to the growing expansion of the Barangays and CALABARZON areas for ecozone development. It is Luzon’s gateway to the Visayas and Mindanao.
6. The power production output of the geothermal plants in Tiwi and Bacon-Manito which supplies 7 percent of the Luzon Grid, is a very potent attraction in terms of power rate differential.
7. There are existing and potential industries that are highly based on raw materials, needed manpower and other services in each province.
8. The booming construction as a major component of infrastructure sector, projects an image of progress- modernized and taller buildings with all the amenities of comfort and leisure, good roads that help reduce travel time and bridges that span areas, are being undertaken by the regional DPWH on one hand, and the private sector, on the other.
9. The influx of telecommunication companies i.e. telephone, cellphones, and telegraph companies in the province have caused the region to shrink in size. Communication via the telephone, cellphones, text, fax, e-mail, SSB private relays, etc. has made business access to suppliers, customers and delivery services at an unprecedented pace.
10. The development plans and agenda such as the BRAIC, LIND, BIDA ecozone plans which are comprehensive and holistic in scope, but implementation is constrained by political leadership and financial constraints.

B. Weaknesses and Threats
1. Weak political will and leadership through the inability of the national and local government to implement the plans, program and projects supportive of development is frustrating to more aggressive action and results-oriented investors.
2. Politicization. Because of the 3-year term of office, elected official; spend more time building their political career and strength rather than implementing development programs.
3. Implemented infrastructure with lesser impact on development, instead of the much needed infrastructure support facilities such as road-to-market roads, irrigation system, water system, drainage, health and educational facilities, etc.
4. The Bicolano are generally oppositionistic in the national political arena, and the region is deprived of the benefits of national government programs vetoed by more punitive than reconciliatory executive.
5. Some member of the labor force have cultural work attitudes and ethics such as: lack commitment to work; the I-don’t-care, bahala na, and maka-isa-attitudes; crab mentality; the when the cat is away, the mouse will play – philosophy; etc.
6. The worsening peace and order situation, increasing crime rate and threats of the rebel elements can scare off security-conscious investors.
7. Since by virtue of law, most large of land in the region had already submitted to the Agrarian Reform program, there is legal difficulties in taking these back for agri-development purposes.
8. The vulnerability of the region to natural calamities – typhoon and floods, volcanic eruptions.
9. There is a high rate of out-mitigation manpower.

At the national level, there are issues that affect the entire country these are:
1. The instability of the peso, is a phenomenon that is beyond the control of Filipinos/Bicolanos. Only a good government economic program acceptable to local and foreign investors can avert down-rating;
2. The instability of the Philippine government gauged by the demonstrations and threats of a possible coup d’etat, the unrest in Mindanao, the kidnapping and killings are indicative of the political uncertainties and declining economic fundamentals are possible reasons for the downgrading of the already negative credit rating of the country;
3. The strong labor unionism that have the tendencies to stage strikes and walk-outs;
4. High cost of power can eat up most of the capital investments.
5. The over-taxing policies of the Philippine government (27 percent vs 7 percent in Thailand and other Tiger countries in Asia) on industries.

At the international level, there are precipitating factors that continue to erode the confidence of the international community on the Philippine economy. These factors are:
1. The unpredictability of the world market. The aggressiveness of the developed countries in America, Europe and Asia in marketing their products through the use of the most modern facilities and strategies, the developing country with poorer quality products are generally at a disadvantage by fail to rise to superior standards. And
2. The globalization and free trade policies of countries is based on the wrong premise that trading partners are of equal development. Developed countries food their abundant goods, inexhaustible capital and specialized services on the underdeveloped economics whose goods are primitive, minimal capital and replaceable services are of no match. The effects of globalization and free trade are detrimental to small farmers, small-time fishermen and micro entrepreneurs.

IMPLICATIONS OF THE RESULTS OF THE STUDY
1. The preponderance of micro, single proprietorship firms on the positive side is developing entrepreneurs. On the negative pole, this means a dissipation of minimal capitalization which does not generate mass employment; opens competitiveness and vulnerability to being eased out by bigger merged corporations, and lacks the discipline of corporate culture and social responsibility values, since profit-making is the primary goal.
2. The exponential growth of investment in the last five years, is a positive indicator of investment influx in the region, more particularly in the industry sector. Sustainability and more investment can be catalyzed if the peace and order situation can be improved; the agrarian reform program can be made beneficial both for landowner and tenants, the development agenda of local executives can be implemented, and the power cost can be reduced.
3. While the service oriented firms generate employment, there is no added value to the products/services. This renders the Bicolanos mere consumers than producers of goods. As such, the money are syphoned out of the region.
4. The development agenda of local executives need balancing between industry and agriculture as this would generate more employment and produce the basic ingredients in industry. Greater food production must be encouraged to feed the growing population of the region. Mass agricultural production can be achieved with corporate farming of the small land areas received by the farmers from the Land Reform program. Aqua –culture production and processing and tourism along the coastal municipalities can be speeded up, if local leadership and district representatives will team up in infrastructure-building such as roads and ports by pooling resources and setting priorities. Since comparatively with the Asia Pacific Rim countries, the Philippine over –taxes by as high as 27 percent both a local and foreign investors, the economist experts of the present administration need to re-study the government’s stand of globalization and free trade; its investment incentive program and decision is on status quo, alternative strategies should be crafted, least the country will be out-raced by equally developing countries like Vietnam.

RECOMMENDATION
The recommendations that the study offers are two types. These are:

A. Action Recommendations
1. The two agencies, DTI-BOI and SEC should established a linkage system of registration of micro (single proprietorship) and macro (partnership and corporation) based on capitalization rather than from ownership. This system or body should have the function of servicing all investors in terms of technical assistance and other services for centralization of records, transactions, etc. and to avoid duplication of functions.
2. DTI should identify the business forte of each province, city or municipality and focus all efforts and support in its sustainable development. This will not only prevent stiff competition among entrepreneurs, but also develop specialization with global competitive quality, and effect maximum utilization of scarce material and manpower resources.
3. The local provincial, city and municipal board/council need an offshoot Development Agenda of Philippine Agenda 21 that can spell the planned investment climate for local sustainable development and an attractive investment incentive packages. This plan need to highlight in its paradigm what investment ventures are best suited in which place and what support incentives are available from both the local and national governments.
4. The national and local governments should improve the peace and order situation of the region so as to attract instead of scare –off possible investors.
5. DTI in coordination with the DOLE should formulate measures that will foster management-labor relations by promulgating policies on strikes, and educating labor in corporate values and culture.
6. The local governments of Bicol, through the 14 congressman, should lobby with the DOE/NAOPOCOR for total energization of the whole region, and the implementation of the preferential power rate. This will be the best investment incentive that the region can offer to potential investors.
7. The provincial police force and civil defense should adopt a mechanism to reduce the identified threats to assuage fears and assure confidence among prospective investors.
8. There is a call for massive support from the government agencies such as: DAR, DA, DENR, and DTI and the Cooperative Authority.
9. While the natural calamities cannot be prevented, they can, through the use of modern equipment and facilities, be anticipated. Stronger buildings to withstand the fury of typhoon winds, choice of elevated area for construction of plans and mills; and disaster preparedness programs can be limited to products less vulnerable to strong winds and heavy rains; establishment of winds breakers, or planning of high valued root crops- camote, I peanuts, ubi, cassava,etc.
10. The local government programs should generate employment of the available manpower to keep them in Bicol to man the growing industries.
11. The Arroyo administration should craft an economic program that will jumpstarts the lethargic economy; an agenda for national reconstruction with strategies that will perk the economy and generate jobs and investments.

B. Research Areas:
1. The annual records/data of the BOU and SEC on investment should be analyzed and interpreted and reported for the information of interest parties.
2. A cohort study on the various investment firms for proper monitoring of establishment that are newly established, continuously operating and folding-up. The cohort study should specify the reasons for the establishment of the firm, re enrollment and for closure.
3. Up-dating of the investment records in the two agencies.
4. An analysis of the causes of firms to renew license to, operate after the expiration of the five or more years of registration with DTI-BOI and SEC
5. An analysis of the inability of the local executives to implement the development programs;
6. An in-depth study on the tourism potential of the Bicol Region.