Document Sample
					                                                                            As of March 14, 2008

                   AND DEVELOPMENT PROSPECTS FOR 2008


Davao Region’s economy fared better in 2007 than in 2006. Overall agricultural
production expanded and total exports grew by 10.5 percent. Annual inflation rate
was kept down at roughly 3 percent, better than government’s target of 4 – 5 percent
and the previous year’s record of almost 6 percent. Employment rate improved to
93.4 percent. The tourism industry remained vibrant as more tourists visited the
region, pushing hotel occupancy rate higher by 6 percent. The minimum daily wages
were increased that somehow cushioned the adverse impact of the increase in
poverty threshold. The region also benefited from remittances of overseas Filipino
workers. All these developments were achieved under an atmosphere of peace and
quiet as threats of terrorism and insurgency were contained effectively and the
incidence of common criminality further reduced.

The region is expected to sustain its growth momentum in 2008 due to its internal
strengths and significant investment promotion initiatives last year, such as the
BIMP Investment Conference held in Davao City, the Davao Trade Expo (DATE)
2007, and the region’s trade and investment mission to Saudi Arabia. The region’s
economy will continue to bank on its rich natural resource base and an expected
good weather condition conducive for agricultural production expansion. More
private sector investments in key sectors, such as agriculture, construction, mining,
business process outsourcing and telecommunications, power market development,
property and housing development, and educational and other personal services are
expected due to the region’s stable peace and order, continuing improvement of basic
infrastructure support, good financial facilities, connectivity to the global markets,
and a comparatively better skilled labor force.

National government support to regional development is expected to increase in
terms of infrastructure support, credit facilities, and extension services, among
others, in view of an improving fiscal position brought about by the strengthening
peso and a projected stable inflation rate. The region’s development oriented local
chief executives are anticipated to provide impetus to local government initiatives
that will help drive the region’s economy. The region’s civil society, with its
established strong networks, offers a reliable support to government in the delivery
of basic services.

All these factors and efforts to sustain the region’s growth momentum will be
undertaken within the framework of the national super region strategy for
Mindanao as an agri-business center, the region’ s industry cluster strategy, and the
10-point agenda of the current national administration.

A higher growth rate of the region’s economy, however, may not be realized this year
as this may be weighed down by the adverse effects of the economic slowdown in the
United States, a major trading partner of the region; the undesirable consequences
of the strengthening of the peso on the region’s agricultural export industry and peso
incomes of OFWs; and the overall negative impact of rising oil prices.



     Most of the region’s major crops, except palay, coffee and cacao, yielded higher
     productions in 2007. Banana, the region’s main crop and export commodity,
     experienced higher production due to the expansion of cultivated areas and
     more bearing hills in Davao del Norte, Compostela Valley and Davao City.
     Other crops, such as abaca, sugarcane, pineapple, and papaya, also bore higher
     yields due to expansion in harvest areas. Other fruits like mango, durian and
     lanzones experienced abundant harvests as a result of more mature fruit
     bearing trees.

     Corn, both the white and yellow varieties, continued to improve its yield as a
     result of improved technology. The contraction in corn harvest areas was
     countered by the increasing use of open pollinated variety (OPV) and hybrid
     corn seeds under the government’s corn program. Rubber production also
     expanded due to more tapped trees in Compostela Valley.

     Coconut recovered in 2007 due to sufficient rains. The increase in coconut
     production was hardly affected by pest infestation that has perennially plagued
     the industry.

     Palay output, however, dropped by 10.3 percent due to the reduction in harvest
     areas as many farmers shifted to the cultivation of bananas, vegetables and
     other crops. The drop in areas planted to rice was observed in all provinces.
     Yield per hectare, however, improved to 4.38 metric tons. Coffee and cacao
     production likewise dropped due to the shifting of some cultivated areas to

                     Production of Major Agricultural Crops
                      Davao Region, 2006-2007 (in metric tons)
           Crop                   2006                  2007       Percent Change
        Banana               2,945,845              3,180,331             8.0
        Coconut              2,497,515              2,569,726             2.9
        Sugarcane              501,087                616,195            23.0
        Palay                  476,411                427,184           (10.3)
        Corn                   343,907                354,247             3.0
        Mango                   33,518                 38,081            13.6
        Pineapple               19,411                 22,452            15.7
        Durian                  28,293                 51,222            81.0
        Coffee                  28,839                 24,466            (15)
        Papaya                  13,496                 18,421            36.5
        Rubber                  16,036                 16,376             2.1
        Pineapple               19,411                 22,452            15.7
        Abaca                    8,901                  9,554             7.3
        Lanzones                 2,345                  6,078           159.2
        Cacao                    3,598                  3,476            (3.3)
     Source: Bureau of Agricultural Statistics XI

 The fisheries sub-sector improved its performance by almost 20 percent over
 the previous year. Production from commercial and municipal fishing got a
 boost from the establishment of more fish shelters (payaos) undertaken with
 the assistance of the Bureau of Fish and Aquatic Resources. Except for
 brackish water and oyster farming, other farming types of aquaculture
 experienced higher production in 2007.

                             Fisheries Output
                   Davao Region, 2006-2007 (in metric tons)
         Item                   2006               2007            Percent
     Fisheries                  57,831             69,307           19.8
     Commercial                 14,516             16,940           16.7
     Municipal                  30,196             34,317           13.7
     Aquaculture                13,119             18,050           37.6
Source: Bureau of Agricultural Statistics XI

 Livestock and Poultry

 The production of carabao, swine and goat improved in response to higher
 consumer demand and availability of livestock for breeding from sources.
 Cattle production, however, declined due to scarce supply from outside sources.

 Production of the poultry industry, however, was adversely affected by the
 closure of some layer farms. There was also a corresponding decline in the
 production of chicken and duck eggs.

                    Poultry and Livestock Production
                   Davao Region, 2006-2007 (in metric tons)

       Item                  2006               2007          Percent Change

   Livestock                 155,509           157,877                  1,5
    Carabao                    9,462            11,099                 17.3
    Cattle                    11,563             9,861               (14.7)
    Swine                    127,233           129,510                  1.8
    Goat                       7,251             7,407                  2.2
   Poultry                    60,034            54,477                (9.2)
    Chicken                   57,877            52,644                (9.0)
    Duck                       2,157             1,833               (15.0)
    Chicken eggs              21,642            20,495                (5.3)
    Duck eggs                  2,642             2,062               (22.0)
Source: Bureau of Agricultural Statistics XI



      The region continued to attract more tourists. In 2007, the number of visitor
      arrivals, as reflected in the region’s hotel occupancy rate, was 5.7 percent
      higher than the previous year. Tourist receipts amounted to P9.8 billion.

                                     Hotel Occupancy
           Province/City                   Total                     Share (%)
          Compostela Valley                  29,846                       3.71

          Davao Del Norte                    26,179                        3.25
          Davao Del Sur                      30,075                        3.74
          Davao Oriental                     31,026                        3.86
          Davao City                      641,161                         79.71
          IGACOS                           46,046                          5.72
          Davao Region                    804,333                           100
                           by Province/City, Davao Region, 2007
      Source: Department of Tourism XI

      About 80 percent of the region’s tourists visited Davao City. The Island Garden
      City of Samal, which boasts of some of the region’s white beaches, cornered 5
      percent of the region’s tourist market. The rest of the tourists took to the
      region’s provinces and other cities.

      Around 44 percent of the tourists came to the region for business purposes.
      Those who attended conventions and conferences comprised 28 percent, while
      those who visited the region for holiday and pleasure accounted for 20 percent.

      Approximately 92 percent of the region’s tourists were domestic travelers, 2
      percent of whom were OFWs and balikbayans. The remaining 8 percent were
      foreigners, majority of whom were nationals of Japan, Korea, United States,
      China and Australia. The number of Korean tourists jumped tremendously,
      hitting almost 320 percent growth, as many of them came to the region to learn
      the English language. Koreans have also started to set-up small business in
      the region, particularly in Davao City. The number of Japanese visitors
      meanwhile declined by roughly 10 percent.

      All these figures affirm the role of the region, particularly Davao City, as one of
      the country’s premier convention centers and a favored tourist destination.


 Air Travel

 Domestic passenger traffic at the Davao International Airport in 2007 totaled
 1,480,408, lower by 1.5 percent compared to the previous year. The number of
 international passengers, however, soared by 60.6 percent from 33,663 in
 2006 to 53,856 in 2007. The increase in international passenger traffic was
 brought about by extensive tourism development and promotion, lower fare
 rates, and the opening of additional international flights plying the region. As
 of December 2007, there were 11 international flights per week bound for
 Inchon (Korea), Manado (Indonesia), Hong Kong and Singapore.

 There was also a 9.6 percent increase in domestic cargo traffic, which reached
 45.5 million tons in 2007. International cargo traffic reached 15,455 tons
 during the year.

 Sea Travel

 The number of ship calls at the region’s seaports declined by 20 percent from
 32,000 in 2006 to 26,000 in 2007. Cargo throughput, however, expanded by
 about 6 percent. Passenger traffic also improved by 2.1 percent reaching
 about 1.6 million during the year. Domestic vessels comprised 93 percent of
 total ship calls.

                Ship Calls and Cargo and Passenger Traffic
                        Davao Region’s Ports, 2006-2007
         Indicator               2006             2007     % Growth
      No. of Ship Calls         31,962           25,559       (20)

  Cargo Throughput(MT)           8,536,094       9,002,299            5.5

     No. of Passengers           1,590,246       1,623,526            2.1

 Source: Philippine Ports Authority


 As of June 2007, the region had 253 bank branches which comprised 137
 universal and commercial banks, 28 thrift banks and 88 rural and
 cooperative banks.

 Total assets of these banks were valued at P77.2 billion. Deposit liabilities
 amounted to over P68 billion, up by 2.5 percent over the December 2006 level.
 Deposits in universal and commercial banks accounted for 87 percent of total
 bank deposits, while the rest were in thrift banks ( 7 percent) and rural and

        cooperative banks (6 percent). The region’s net loan portfolio was P15.1
        billion, which was 17 percent lower than the previous year.

                            Selected Banking Indicators
                         Davao Region, as of Dec 2006 and 2007

                                        As of Dec.         As of June         %
                                          2006                2007         Growth
        No. of Bank Branches                  253             253             -
        Total Assets                       76.702          77.219            6.7
        (PhP billion)
        Total Deposits                       66.503        68.193             2.5
        (PhP billion)
        Net Loan Portfolio                   18.230        15.124            (17.1)
        (PhP billion)
       Source: Bangko Sentral ng Pilipinas



       Export earnings of the region’s merchandise that were channeled through the
       Davao Port rose by almost 11 percent to US$ 720.4 million in 2007 from US$
       651.7 million the previous year. The increase in export earnings was achieved
       even with the decline in export volume to 2,716.5 metric tons in 2007 from
       2,859.3 metric tons in 2006. This clearly indicates that the region was able to
       export more high value commodities that offset the expected lower peso
       incomes in the face of the peso’s appreciation against the US dollar.

       The region’s top exports were raw and by-products of its major crops, namely,
       banana, pineapple, rubber, coconut, wood, tuna, and asparagus. Export
       earnings of products making up the region’s priority industry clusters
       accounted for 72 percent of the region’s total export earnings.

       The fruit industry led the region in export earnings. Fresh bananas, banana
       flour and banana puree continued to dominate the region’s exports accounting
       for a 58 percent share despite a slight decline in their export value by 0.8
       percent. Banana chips, which became part of the region’s top exports in recent
       years, earned US$ 33.2 million, posting a growth rate of 29 percent. Fresh and
       canned pineapple was the region’s second largest dollar earner reaching US$
       120.8 million or 17 percent of the region’s total export earnings. Pineapple
       export earnings grew by 145 percent. Fresh and processed mango, although
       not among the region’s top exports, grossed US$ 2.4 million last year.

       Among industrial crops, rubber and coconut featured prominently among the
       region’s export earnings. Rubber earned US$ 42.2 million, around 2.5 percent
       lower than in its earnings in 2006 but still enough to place the product at third
       in the top ten exports of the region. Coconut by-products, such as activated

carbon, charcoal, dust, and briquettes, raked in US$ 33.2 million, 15 percent
higher than earnings in 2006. Desiccated coconut chip exports likewise enjoyed
a bumper year, earning US$ 13.9 million, 56 percent higher than the previous
year. Coconut acid oil, cake and liquor joined the region’s top export products
in 2007 earning US$ 7 million but coco coir exports dropped to US$ 0.5 million.

For fishery products and vegetables, frozen tuna brought in US$ 7.3 million;
seaweeds, although not among the top exports, earned US$ 1.2 million, and
asparagus fetched US$ 6.1 million.

The wood industry banked on earnings from finished wood products which
generated US$ 9.5 million in 2007, recording a hefty increase of 94 percent.
The mining industry likewise brought in US$ 3.9 million from gold and
chromite exports.

                   Top Ten Merchandise Exports
                Davao Region, 2006-2007 (in million US$)

        Commodity                  2006             2007           % Growth
 Banana/ fresh/puree/flour        420.9            417.7            -0.76
 Pineapple                         49.4            120.8            144.5
 Rubber                            43.3             42.2             -2.5
 Banana Chips                      26.3             33.9             28.9
 Activated Carbon/Charcoal/        28.9             33.2             14.8
 Desiccated/ Chip Coconut          4.9              13.9             56.2
 Finished Wood Products            4.9               9.5             93.8
 Frozen Tuna                       6.9               7.3              5.8
 Coconut/acid/oil/cake/liquor    No data             7.0                -
 Asparagus                         9.2               6.1            -33.7
Source: Department of Trade and Industry/Bureau of Customs

The region’s top export destinations in 2007 were the following:

1) Japan - (banana and its by-products, mango, pineapple, coconut and its by
    products, asparagus, wood products, gold and chromite)
2) China -(banana and its by-products, rubber, coconut and its by products,
    frozen tuna, gold and chromite)
3). United States -(banana chips, desiccated coconut, frozen tuna)
4) Korea – (banana and its by-products, mango, pineapple, coconut and its by
    products, gold and chromite)
5) Germany – (banana and its by-products, frozen tuna)
6) United Kingdom – ( banana and its by-products, desiccated coconut)
7) Canada – (coconut by-products, seaweeds)
8) New Zealand – (banana and its by-products, mango)
9) Russia – (banana and its by-products, seaweeds)

       Other export destinations included Hong Kong, Singapore, Thailand, Georgia,
       Iran, Malaysia, Australia, France, Italy, Brazil, Colombia, Switzerland,
       countries in the Middle East, and other European and African countries.


       The value of the region’s merchandise imports in the first 3 quarters of 2007
       reached US$290.2 million, higher by 10 percent over that of the previous year.
       Among its top import commodities were inputs for the manufacture of
       corrugated boxes and packaging materials for banana exports. Rice was also a
       major import. Other leading imports were major agricultural production
       inputs, such as fertilizers and fungicides. Among the leading sources of the
       region’s imports were USA, China, Vietnam, Thailand, Korea, Malaysia,
       Finland, New Zealand, Indonesia and Japan.

                           Top Ten Merchandise Imports
                        Davao Region, 2006-2007 (in million US$)

                      Commodity                                    Value
        Uncoated, semi-chemical fluting paper                       30.7
        Rice                                                        29.3
        Uncoated Kraft liner                                        28.4
        Other uncoated Kraft liner                                  26.4
        Urea                                                        18.4
        Polyethylene                                                17.8
        Fungicides                                                  13.7
        Other Wheat and Meslin                                       6.9
        Potassium Chloride                                           6.9
        Oil Cake and other Solid Residues                            5.2
       Source: National Statistics Office


      The confidence of investors in the region’s economy was high as the Securities
      and Exchange Commission (SEC) reported P289 million in new investments in
      2007, about 89 percent higher than the level registered in 2006. Paid-up capital
      of newly-registered corporations accounted for 80 percent, while contributions of
      partnerships provided 20 percent.       The SEC-registered number of stock
      corporations and partnerships also rose by almost 7 percent.

      Per records of the Board of Investments (BOI), investors also committed a total
      of P4.9 billion for the region from January to November 2007, approximately 104
      percent higher than that of the previous year. The commitments were for
      projects for mass housing (P81.1M), fruit processing (P52M), activated carbon
      (P10.7M), virgin coconut oil (P7.5M), coco coir peat (P4.7M), wood processing
      (P6M), upland banana plantation (P1B) and hydropower (P3.7B).               The
      hydropower project will be located in Calinan, Davao City and was the largest

     investor commitment during the last 3 years for Davao Region. Investor
     commitment for mass housing meanwhile is 74 percent higher compared to the
     2006 figure.

                     List and Value of Investment Commitments
                           Davao Region, as of November 2007

                            Item                          Project Cost (In P'000)
      Mass Housing                                                 81,091
      Banana Chips                                                 42,634
      Virgin Coconut Oil                                              7,500
      Active Carbon                                                  10,671
      Processed Fruits                                               52,000
      Processed Wood                                                  5,957
      Coco Peat/Coco Fiber                                            4,710
      Dried Mango                                                    12,138
      Hydropower                                                  3,680,000
      Banana                                                      1,000,000
      Davao Region                                                4,896,702
     Source: Board of Investments

     The region likewise received more foreign direct investments (FDIs) in 2007.
     FDIs reached P45.696 million, 143 percent more than the previous year’s level.
     The sharp increase in FDIs was due to the revitalization of the mining and
     quarrying industry in the region. The entire Industry sector, meanwhile,
     received P31.2 million or 68 percent of the FDIs. The Services sector got P14.3
     million or 31.3 percent of the total FDIs, and the Agriculture, Fishery and
     Forestry sector took P215 thousand or 0.47 percent of the total FDIs.

                           Foreign Direct Investment
                by Newly Registered Corporations and Partnerships
                                Davao Region, 2007
           Industry Group                  Number               Amount (in PhP)
      Agriculture, Fishery &
      Forestry                                 5                         215,179
      Industry Sector                         11                      31,194,925
      Service Sector                          66                      14,286,352
      All Industries                          82                      45,696,455
     Source: Securities and Exchange Commission


     As of July 2007, the region had about 1.8 million workers out of its estimated 2.7
     million population aged 15 years old and over of 2.7 million. This translates to a
     labor force participation rate of 66 percent. The region’s employment rate

      improved to 93.4 percent from the 92.9 percent recorded for the same period in

      Almost 90 percent of the region’s workers were employed either by the Services
      sector or the Agriculture, Fishery and Forestry (AFF) sector. Both sectors had an
      almost even share of the region’s total employment with the Services sector
      absorbing 45 percent and the AFF sector taking 44 percent. Industry, on the
      other hand, employed 11 percent.1 Workers in the Services sector were mostly in
      wholesale and retail trade (38%) followed by transportation, communications and
      storage (15%). AFF workers were mostly in agriculture, hunting and forestry
      (95%). Industry workers were mostly engaged in manufacturing activities (45%).

                              Labor and Employment Statistics
                                   Davao Region, July 2007

                       Indicator                               2007
        Total Population 15 years old and over               2,690.000
        Labor Force Participation Rate                           65.9%
        No. of Persons in the Labor Force                    1,773,000
        Employment Rate                                          93.4%
        No. of Employed Persons                              1,656,000
        Unemployment Rate                                         6.6%
        No. of Unemployed Persons                              117,000
      Source: NSO Labor Force Survey

      Top occupation groups were laborers and skilled workers (39%), farmers,
      foresters and fishermen (20%) and officials of government and special interest
      organizations (10%). Half of the employed were wage and salary workers in both
      government and private institutions, while the other half were own account and
      unpaid family workers.

      The Department of Labor and Employment (DOLE) XI reported that during the
      first semester, 331 workers were adversely affected by the closure of 8
      establishments in the region due to economic reasons. Moreover, about 1,548
      workers were laid off during the period. The number of laid-off workers was 65
      percent higher than the figure in 2006.

      Nonetheless, government continued to pursue its commitment to provide
      employment. Through DOLE XI assistance, about 34,000 job seekers in 2007
      found employment. Government did not only assist in the placement of workers
      but also provided career guidance and pre-employment seminars.

      The region’s latest minimum daily wage increased by P10 in 2007. In the cities,
      agricultural plantation workers now receive P240.00, while non-agricultural
      workers employing more than 10 workers take P250.00. Workers in the
      provinces receive P2.00 less than their counterparts in the cities.

    Based on April 2007 Survey.

                             Daily Minimum Wage Rates
                            Davao Region, (Effective July 2007)
                      Cities of Davao, Tagum,           Provinces of Davao del Sur,
                        IGACOS, Digos and               Davao Or, Davao del Norte
           Sector              Panabo                          and ComVal
                      Basic COLA       Total            Basic   COLA        Total
      Non-Agriculture 224.00 26.00     250.00           222.00   26.00     248.000
      Plantation      214.00 26.00     240.00           212.00    26.00       238.00
      Non-Plantation 193.00 26.00      219.00           191.00    26.00       217.00
      Retail/ Service
      Employing more 224.00 26.00      250.00           222.00    26.00      248.000
      than 10 workers
      Employing not   193.00 26.00     219.00           191.00    26.00       217.00
      more than 10
      Source: National Wages and Productivity Council


      The region’s average inflation rate in 2007 slowed down to 2.9 percent from 5.9
      percent the previous year. This was brought about by slower growths in the
      prices of basic goods and services. The region’s inflation was slightly higher than
      the national average of 2.8 percent but lower than government’s target of 4.0 -
      5.0 percent for the year.

      By commodity group, Food, Beverage and Tobacco posted the highest inflation at
      3.8 percent. Some food items that registered significant price increases were
      chicken, flour and dairy products. Housing and Repairs posted the lowest price
      growth at 1.2 percent. Services posted a low inflation as the cost of education,
      medical and transportation, even under the face of rising oil prices, did not move
      up significantly within the period.

                    Average Inflation Rate by Commodity Group
                                 Davao Region, 2007
                                                   Inflation Rate (in percent)
              Commodity Group
                                                   2006                    2007
       All Items                                    5.9                    2.9
       Food, Beverage and Tobacco                   4.8                    3.8
       Clothing                                     4.1                    3.0
       Housing and Repairs                          2.1                    1.2
       Fuel, light and water                       13.4                    1.5

     Services                                         10.3                           2.0
     Miscellaneous                                     3.1                           1.9
    Source: National Statistics Office
                     Average Monthly Inflation Rate, All Items
                       Davao Region, 2006 and 2007 (in percent)

                   Jan   Feb Mar     Apr May Jun July Aug Sep                  Oct    Nov Dec

            2006   6.7   7.7   7.7       6.6   6.2   6.1      6    6.2   5.7   4.4     3.9   3.7
            2007   3.6   2.9   2.3       2.4   2.7   2.6     2.3   2.1   2.5   2.8     3.8   4.7

    Source: National Statistics Office

    The highest inflation was recorded in December at 4.7 percent, while the lowest
    was in August at 2.1 percent. This was due to increased demand for food items
    during the holiday season and price hikes in liquefied petroleum gas, kerosene
    and charcoal. Davao del Sur and Davao del Norte (including Compostela Valley)
    registered the highest inflation rate at 3.5 percent. Davao City, on the other
    hand, posted the lowest rate of 2.2 percent. Davao Oriental’s inflation rate was
    3.2 percent.

    The slow rise in inflation has also slightly reduced the purchasing power of the
    peso in the region. One peso in year 2000 was worth P0.68 in 2007, down from
    P0.71 in 2006.


    The region continued to enjoy a relatively stable peace and order in 2007.
    Disturbances to the region’s peace and order have been limited to common
    criminality. Terrorism threats have been repelled by the aggressive posture of
    local government units, the national police, and the military. The insurgency
    problem has also been effectively contained as government became more focused
    in its development assistance through the Kapit Bisig Laban sa Kahirapan
    (KALAHI) program, among others, to the remaining communities in the region
    affected by armed conflict.

    Common criminality was likewise reduced to a minor hindrance to regional
    development. The national police reported that total crime volume in the region
    declined by 4.6 percent as the volume of index crimes slid by 16 percent. Non-
    index crimes dropped but not as much at 8 percent. Except Compostela Valley,
    the other provinces of the region and Davao City reported reduced crime volume.
    The incidence of criminality is usually higher among the urban centers as
    almost half of the total number of crimes in the region were committed in Davao

    City. Davao del Norte, which has 3 cities, accounted for the next largest share of
    the region’s crime volume at 20 percent.

                                 Total Crime Volume
                        by Province/City, Davao Region, 2006-2007

                             Index Crimes            Non-index Crimes Crime Volume
                            2006          2007            2006    2007      2006    2007
   Davao City               874            765            875      765      1,699   1,530
   Davao del Sur            276            213            156      162       432     375
   Davao del Norte          380            254            390      402       770     798
   ComVal                   195            209            218      227       413     436
   Davao Oriental           153            133            190      123       244     256
    Davao Region           1,878          1,574           1,829   1,679     3,558   3,395
   Source: Philippine National Police

    The region’s average monthly crime rate in 2007 fell to 7.55 from 7.92 per
    100,000 population in 2006 but Davao City had a higher average monthly crime
    rate at 9.45 per 100,000 population Crime solution efficiency, however, was still
    running at around 86 percent in 2007, almost the same level as the previous

                               Crime Solution Efficiency Rate
                           by Province/City, Davao Region. 2006-2007

                                        Total Crime Solution Efficiency Rate (%)
                                                  2006                    2007
         Davao City                               83.17                   81.11
         Davao del Sur                            92.13                   92.53
         Davao del Norte                          79.09                   77.82
         Comval                                   89.10                   90.37
         Davao Oriental                           88.52                   90.23
         Davao Region                             86.40                   86.41
     Source: Philippine National Police


     The overall better performance of the region’s economy in 2007 was achieved
     with the support of additional public investments that resulted to the
     implementation of key development programs and projects.

     A total of 1,121 nationally-funded infrastructure projects worth 2.3 billion
     pesos were completed in the region in 2007.            Road improvement and
     rehabilitation accounted for the largest share in project investments at P691.8

   million. The rest of completed nationally-funded projects in the region are the

                    Project                         Location            ( PhP M)
     Road Improvement/ Rehabilitation         Regionwide                   691.8
     Ports Rehab/Expansion/Improvement        Davao Oriental               168.5
                                              Davao del Sur
     Housing                                  Davao del Norte                30.6
     Construction of Municipal Water District Davao del Norte                15.1
     Flood Control and Drainage               Davao del Norte                15.0
     Resettlement                             Davao City                     14.9
   Source: Regional Project Monitoring C ommittee

   Aside from the regular programs and projects of national and local
   governments that provided critical support to socio-economic development,
   capital formation and improvement of governance, a total of 114 infrastructure
   projects that were funded by Official Development Assistance or ODA were also
   completed in the region in 2007. These projects cost 2.2 billion pesos. These
   included roads and bridges, irrigation systems, market and transport
   terminals, classrooms and school buildings, among others.

   These projects provided critical support to increasing the region’s agricultural
   production, as well as efforts in poverty alleviation. The biggest was the
   rehabilitation of the Monkayo-Tagum road section, costing about P1.5 billion.

                       Project                              Location     ( PhP M)
     Road Rehabilitation of Monkayo-Tagum           Davao del Norte       1,509
     Section                                        Compostela Valley
     Construction of Communal Irrigation            Compostela Valley      218
     Projects                                       Davao Oriental
     Construction of Mati Public Market             Davao Oriental          80
     Road Rehabilitation Projects                   IGACOS, ComVal,         56
                                                    Davao Oriental
     Upland Development Program                     Regionwide              43
     Construction of Panabo City Transport          Davao del Norte         38
     Construction of a Farm to Market Road          Davao Oriental          13
     Procurement of Heavy Equipment for             Davao del Sur           13
   Source: Regional Project Monitoring Committee


   Davao Region is likely to grow at a moderate rate in 2008 but will be able to
   withstand the adverse effects of a possible recession in the United States, one
   of its major trading partners; the expected further strengthening of the

Philippine peso; and the volatility of oil prices in the world market. Several
positive factors could outweigh the negative factors and sustain the region’s
growth momentum. These factors include an expected good weather condition,
rich natural resource base, stable peace and order, continuing improvement of
basic infrastructure support, good financial facilities, connectivity to the global
markets, high investor confidence, an aggressive private sector, development
oriented local chief executives, established networks of civil society, and a
comparatively better skilled labor force.


Agricultural production will get a boost from good weather conditions
and government support
Expected good weather condition for the rest of the year would likely boost
production of crops, livestock and fisheries. The government can further
sustain its support to the growth of the Agriculture, Fishery and Forestry
sector through infrastructure, technology and extension services, post-harvest
and storage facilities, accessibility to rural credit, market expansion for
agricultural products, area expansion and distribution of high-yielding variety
seeds. Lower import costs of inputs due to the peso appreciation, and the
utilization of better technology could encourage more production. Davao
Region’s crops, such as bananas are well protected from extreme weather
disturbances and should encourage producers to expand.

Rich natural resources shall allow production expansion
The region’s rich agricultural lands, forest resources, fishery grounds, and
mining areas can still allow more production and ultimately provide more than
ample opportunities for income growth. Further, improved utilization of the
region’s rich natural resources, such as land, in the long run is expected to get
a boost from the proactive stance of the region’s local chief executives to adopt a
development strategy marrying development and physical planning.

Investor confidence to remain high
Investors’ confidence in the region’s ability to provide reasonable returns will
remain high. The past year saw investment commitments running 60 percent
higher than the previous year and investors have good reasons to pour their
money in the region: a stable peace and order, good financial facilities with
connectivity to world markets; improving infrastructure facilities for travel in
and out and within the region; increased frequency for air travel, among

More foreign direct investments in the mining industry
The mining industry is expected to grow as more foreign direct investment
inflows for the industry were received and are expected to continue in the
future. The industry will likewise benefit from various on-going government
initiated infrastructure support projects, such as construction and
improvement of road networks leading to and from the mining sites.

Construction industry likely to enjoy a banner year

The construction industry will likely enjoy a banner year with the foreseen
better fiscal resources of government for infrastructure support. Possible
infrastructure investments in the region include those that will be established
to support expansion agricultural areas; those that improve accessibility within
the region and to areas outside the region, and those identified under the
Comprehensive Infrastructure Investment Program for the Super Region
strategy. Davao Region is part of the Mindanao Agribusiness Super Region.
The national government through the Home Mutual Development Fund has
also allocated P30 billion this year for housing and has initiated efforts to fast
track the implementation of housing projects.

Inflation likely to remain manageable
The prices of basic commodities in the region that experienced upward spikes
towards the end of 2007 are expected to settle to a stable level as demand
returns to normal after the frenzied Christmas spending. Oil prices will
eventually taper down as high prices and the onset of spring would slow
demand of world economies highly dependent on foreign oil sources.
Government’s lowering of oil tariffs will also help stabilize oil prices. With the
peso likely to remain strong in the next few months and commodity supply
remaining stable, prices of basic commodities are going to rise slowly.

High employment rates in agribusiness, mining and construction
With expected expansion of agriculture production and processing, mining
activities, and construction, employment in these sectors are likely to remain
high in 2008.


Possibility of investment postponement
While local conditions tend to boost investor confidence, rising agitation in the
national political scene could make them withhold their investments until a
more stable political climate emerges.

Lower export incomes
The export industry of the region would be facing rough times if oil prices will
not drop and the peso continues to appreciate. Export companies with fixed
marketing agreements would be badly hit by this scenario. Local business
process outsourcing companies are expected to continue to feel the heat of the
strong peso as their income in dollar terms would have lower peso values.
Unless local BPOs can strike new marketing agreements at higher prices,
maintaining the current manpower level in the call centers may be difficult to

Region’s promising sectors in 2008

Agribusiness (especially high value commercial crops)
The national government strategy identifying Mindanao as a super region for
agri-business and the comparative advantage of the region in agriculture,

fishery and forestry make agribusiness a sector worth investing in 2008. The
region also continues to possess a large human resource that could support
agribusiness ventures.       Further, government’s thrust to promote
entrepreneurship should be taken advantage by the region. While crop
production and handicraft-making are the staple ventures in rural areas, it is
important that farmers aim for higher value products. The recent popularity of
banana chips in the world market strengthens this strategy. Banana jam is
another segment that has the potential to achieve the same level of popularity.

The United States Department of Agriculture has also assured the Philippines
that it would speed up the process of pest risk analysis for Philippine
bananas—a move that is expected to boost the country’s export earnings. This
can also send a positive signal to small farmers to diversify into high value crop
production. Government is opening up more markets for bananas and other
high-value commercial crops (HVCCs), which contribute significantly to the
country’s agro-fishery export earnings, through selling and trade missions in
major markets like China and Japan and emerging markets in Europe and

Coconut farmers should strive beyond the production of copra, desiccated
coconut, coco coir, briquettes and charcoal. They could diversify to the
production of coconut by-products that can be used as natural health
supplement and as cosmetics, such as soaps, massage ointments and
aromatherapy oils.

Processing of mangoes and other fruits is a venture that needs to be further
promoted given an established and expanding foreign market.

The telecommunications sector continues to be a promising investment area.
Business process outsourcing, such as call centers and medical transcription
services, have become important contributors to the local economy. The
expansion of call centers outside Metro Manila is expected to continue despite
the peso appreciation because of high global demand and availability of skilled
and relatively cheaper human resources. The number of subscriptions to
cellular phone and internet services is also growing and would continue to be so
this year and the years beyond.

Information and communication technology (ICT) has now permeated business
and government operations in the rural areas. As the regional economy is
further drawn into the global economy, the demand for ICT is likely to expand.
As part of its nationwide reach, the Cyber Corridor Super Region Strategy
likewise covers Davao City, which now carries the monicker Silicon Gulf.

Tourism development
The increase in flight frequencies to and from the region, the offers of
discounted air fares of competing airlines, and the non-increase in land and sea
fares, together with improving transportation and other support facilities make
the tourism industry in the region a bright prospect for investment. The

continuing rise in visitor arrivals and hotel occupancy rates despite the peso
appreciation provides proof to the potential of investing in the industry.

Property and housing development
Property development, particularly through mass housing, is likely to be
intensified this year particularly with the huge fund allocation for housing by
government and its efforts to fast track the processing of business permits and
licenses of qualified developers. Despite their expected lower peso incomes due
to the peso appreciation, the OFW families as a property and housing market
remain a good prospect.

Unless their supply remains stable, construction materials will not likely
experience huge price increases this year. In addition, more government
construction projects, especially those under the Super Region strategy, regular
national and local infrastructure programs have been lined up for
implementation this year. Hence, the construction industry is in for another
profitable year.

Mining and Wood
The value of the region’s gold mineral deposits is estimated to run to billions of
US dollars and as such the mining industry will always be a rewarding
prospect. Products of the region’s wood industry, particularly furniture, are
likewise getting favorable demand from the global market.

Medical and English language education
The high enrolment in nursing education in the region is likely to continue this
year despite fears of a US recession. The demand for educational supplies and
equipment for such courses would also be expected to run high.

The demand for English language training from non-English speaking foreign
nationals like the Koreans is likely to continue. The growing need for call
center agents in the region likewise has created a substantial demand for
services offering English proficiency lessons.

Power market development
The growing power consumption demand in the region indicates a pressing
need for power supply investments this year. A hydropower supply project is
being completed in Davao del Sur and another one is expected to be established
this year in Davao City. Additional investments for such projects are needed,
particulary to serve the power needs of the urban centers and rural
communities of the provinces of Davao del Norte, Compostela Valley and Davao


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