Cagayan de Oro: Still the hottest prospect for business in Mindanao

Mike Banos
April 5, 2006

Northern Mindanao (Region 10) continues to accelerate as the island?s biggest and fastest growing regional economy. From 5.06% in 2003, it grew 6.04% in 2004, contributing 27.17% to Mindanao?s total production with the highest share of the island?s gross domestic product. Besides having the highest GRDP in Mindanao, its per capita GRDP is the third highest in the country, indicating a growing middle class and a general improvement in the standard of living regionwide.

Cagayan de Oro continues to be the fulcrum and center of economic activity in Northern Mindanao,? said Ruben Vegafria, president of the Cagayan de Oro chamber of commerce and industry (Orochamber).

Known as the City of Golden Friendship, two of the Philippine?s leading think tanks perceive vast potentials beyond the fabled warmth and hospitality of Cagayan de Oro city and its residents.

Roberto de Vera, author and regional studies director of the University of Asia and the Pacific (UA&P), cites Cagayan de Oro as the best positioned for future growth and investments among 23 leading urban regional cities of the Philippines.

In his 2000 paper ?Investing in Regional Cities: the Next Big Thing,? de Vera describes Cagayan de Oro as the gateway and regional shopping center to the eight cities and five provinces of the booming Northern Mindanao region.

Although it ranked only 16th among the 23 cities in the study in Gross City Domestic Product (GCDP) with P4.93 billion, it led all others in investments with P16.5 billion. It was also the only city in Mindanao among the top five cited by the study in investments posted with the Board of Investments (BOI) in 1999.

Cagayan de Oro is the capital city of Northern Mindanao, which attracted P19.22-billion investments in 2005, 38% higher than the P13.965-billion recorded by the Department of Trade and Industry (DTI) in 2004. A total of 197 firms registered with the Securities and Exchange Commission (SEC) in 2005, 14% more than last year, with paid-up capital increasing 13% to P70.9 million from 2004.

Cagayan de Oro was also cited in a 2000 study by the Washington Sycip Policy Forum -- a think tank of the Asian Institute of Management (AIM) -- because of its "focused vision for its economic future.?

The study said Cagayan de Oro's competitiveness was enhanced by its strong economic ties such as with the Northern and Central Visayas regions, Cagayan de Oro-Iligan Corridor (CIC), and the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).

More recently, AIM Policy Center?s ?Philippine Cities Competitiveness Ranking Project 2003? ranked Cagayan de Oro third overall (1st in Mindanao) in urban competitiveness among 13Mid-Sized Philippines Cities included in the study.

The study covers 50 cities nationwide and uses both ranking and scoring methods that rate Philippines cities vis-?is seven major drivers of competitiveness: cost of doing business, dynamism of local economy, linkages and accessibility, quality of human resources and training, infrastructure, responsiveness of local government to business needs, and quality of life. Scores for each of the seven indicators were converted into a 10-point scale based on national and global benchmarks.

Cagayan de Oro scored high in the following: dynamism of the local economy (3rd, 6.53); human resources and training (3rd, 6.84), responsiveness of local government to business needs (3rd, 6.13), infrastructure (2nd, 6.17). Together with its third place rank for Mid-Sized Philippine Cities (first among five in Mindanao), and overall urban competitiveness score (6.18), its rankings and scores indicate it already enjoys above average competitiveness but still has room for improvement, and hence accommodate new players.

Another unique feature of Cagayan de Oro is how its strong real estate property development is balanced by inter-regional infrastructure development such as the Mindanao Container Port, and widening of its Iligan-Cagayan de Oro-Bukidnon Road (ICBR), the road artery which links it to key regional satellite growth centers.

With over 100 subdivisions containing 80,000 lots covering over 1,000 hectares and counting, the real estate boom in the city has been tempered by recently completed inter-city infrastructure such as the construction of an additional bridge across the Cagayan river, and the East and West coast public utility terminals which have eased the city's traffic gridlock.

Which is just as well, because although Cagayan de Oro city itself ?officially? only has half a million residents, it serves a consumer base of well over three million people covering the five provinces (Bukidnon, Camiguin, Lanao del Norte, Misamis Occidental and Misamis Occidental) and eight cities (Cagayan de Oro, Gingoog, Iligan, Malaybalay. Oroquieta, Ozamiz, Tangub and Valencia) of Region 10 (Northern Mindanao) as its regional shopping center.

Already, SM City and rival Big R Super Center have set up mixed-use shopping malls to rival Limketkai and local titans Ororama and Gaisano which all boast of department stores, concessionaires, national food chains and cinemas equal if not better than similar stores in other regional centers like Cebu, Bacolod and Davao. More recently, specialty stores like CITI Hardware, Robin?s Home Depot and Pilipinas Makro have set up shop for more segmented clientele.

Next online is an ambitious P4.5-billion ?satellite city? of the Ayala Group of Companies in Barangay Indahag, whose groundbreaking is set this December. Plans for the 200-ha. mixed-use business complex include modern and high-end sports and recreational facilities, a full-range of low-cost to high-end residential subdivisions and a shopping mall. Another similar project on the East Coast of the city which was previously placed in the freezer due to legal difficulties is about to be thawed out and fast-tracked to the microwave anytime.

Besides wholesales and retailers, light and medium industries are also finding Cagayan de Oro and its satellite areas an ideal home with its mix of affordable industrial parks, reliable and affordably priced utilities, and central location linked to the rest of the country and the ASEAN region with seamless transportation and communications.

The 3,000-hectare PHIVIDEC Industrial Estate-Misamis Oriental is the country's largest, with the 200-hectare First Cagayan de Oro Business Park and the 80-hectare Alwana Business Park now online. Three others are in the pipeline: Laguindingan Industrial Park, El Salvador Economic Zone, and Gingoog Special Economic Zone.

Already, 19 light and medium industries are operating in Cagayan de Oro, the largest of which are Del Monte Philippines, Inc. and Nestl?hilippines, Inc.'s ASEAN regional manufacturing center for milk powder. Another 30 or so industries are operating in the Phividec Industrial Estate-Misamis Oriental.

In large part due to this mix of industrial infrastructure and locational advantages, exports topped US$541.424-million in 2005, up a hefty 18% over 2004?s US$459.125-million. Downstream industries, taking advantage of the city's proximity to the agriculture powerhouse Bukidnon, churned out an increasingly diverse array of products to complement the region's predominantly coconut-and-pineapple export base. Largely as a result of these, regional employment stood at 94.6%, also higher than the national figure of 92.6%.

Another reason for the continued increase in exports and gross city domestic product are Cagayan de Oro's recent and planned transportation and communications projects through which the lifeblood of this regional dynamo flows. Already served by five telephone local exchange centers (LECs), four mobile phone companies, and ten internet service providers (ISPs), it is riding high on the wave of convergence sweeping the country?s communications industry with voice, text, data and video seamlessly inter-weaving through land lines, mobile phones, the internet, cable TV and wireless.

So far, the city already has three call centers : Link2Support, the city?s first at Pueblo de Oro IT Park, TradeTel Corp. in Carmen and Arriba in Limketkai Center with a total capacity of 469 seats providing medical transcription, software development and tele-servicing and product support services. Another IT park is planned for the Alwana Business Park while another international call center has just signified its intention to operate here.

However, what is expected to bring the erstwhile fastest growing of Philippine cities into the big leagues are projects not yet quite in the pipeline but would inevitably be realized due to the inexorable pressure of market forces.

Once it?s a potential, it?s bound to happen,? says Edward V. Argayoso, president of the city?s oldest appraisal firm. ?It becomes a matter of price.?

Among these are the controversial sale and transfer of the Cagayan de Oro City Hall, the sale and development of the 150-has. Cagayan de Oro airport complex at Lumbia, the proposed sale and transfer of the Misamis Oriental provincial capitol complex to a new location outside Cagayan de Oro, and the sale and transfer of the Cagayan de Oro City Central School complex along Velez and Yacapin streets.

Argayoso notes all these projects are at the disposition of cash-strapped local and national governments. If market forces continue to exert upward pressure on the market prices for these prime properties, it?s inevitable they would soon be up for development in one way or another.

Since the Mindanao Container Terminal (MCT) came online last year, two more flagship infrastructure projects are edging nearer to the pipeline: the P5.8-billion Laguindingan airport in Misamis Oriental and the P2.63-billion Tubod-Tangub bridge in Lanao del Norte-Misamis Occidental.

Though both are viable projects mainly hampered by funding difficulties, national, regional and local leaders are working closely together to find innovative alternatives which can bring them online in the next 5-7 years.

Not the least, the leisure industry appears to be crossing even political and ideological lines as Cagayan de Oro has been relatively spared the violence which has rocked Mindanao's urban centers lately. Although its peace and order situation is by no means impeccable, these are more in the nature of petty crimes that come with progress, and not the wholesale bombings and killings many have come to associate with Mindanao.

The most logical explanation for this is multi-cultural harmony: Despite the diversity of beliefs and ideological convictions, residents share the same admiration and affection for the City of Golden Friendship, the city that has become a home to migrants and ever-increasing number of visitors over the years.
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Andrew
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Sunday, July 29, 2007 6:20:00 PM ×

Hi, I'd like to invite you to join the Mindanao Bloggers Summit to be held in Davao City on October 27, 2007. Please register your blog in our directory too. The URL is http://www.mindanaobloggers.com/ Thanks!

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Rob
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Sunday, July 29, 2007 10:13:00 PM ×

I am not so sure kung makakapunta ako, but kung may time and money why not... I was there sa meeting nyo with Miss Caragos, but unfortunately ang tagal nilang dumating, nainip ako sa kahihintay sa The Site area kaya umuwi nalang ako... umuulan pa naman sa mga oras na yon... anyway, Good luck sa Mindanao Bloggers Summit. (WINKS)

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