2018 WAS ‘A ROLLER COASTER RIDE’
Inflation, global market volatility and new government policies kept the business sector on its toes throughout the year
As they look back on the country’s performance the past months, business leaders in Cebu only agree on one thing: 2018 was a challenging year.
New rules were introduced at the beginning of the year, prompting business owners to adjust their game plan and reinvent ways of doing business to remain ahead of the competition.
Toward the middle of the year, the country saw a huge spike in inflation, triggered by the high prices of fuel and low supply of rice in the market. Volatility in the global market, likewise, affected the local bourse’s performance and currency exchange.
“It was a roller coaster ride,” said Mandaue Chamber of Commerce and Industry (MCCI) president Stanley Go. “Time moved so fast and there were so many changes in the business landscape.”
The country’s economy started strong in 2018, with a first quarter growth of 6.8 percent despite a slower agricultural output, higher inflation, and wider trade deficit.
When the government’s first tax reform package kicked in, it contributed to the price movement on consumer goods, which were already disturbed by a confluence of external developments, including the US-China trade war, higher global oil prices and elevated interest rates.
“It was really a very challenging year in the sense that this is the year that the government did a drastic change in the way taxes are being paid... at this point in time, it is too early to conclude whether it’s good or bad,” said Cebu Chamber of Commerce and Industry Consul president Consul Antonio Chiu.
“The Train (Tax Reform for Acceleration and Inclusion) really set a major trend, and it really had a major impact in business,” Chiu said.
The country’s economic growth slowed down in the second quarter to six percent, but slightly went up to 6.1 percent in the third quarter. Many have high hopes that the spending this Christmas season will lift the growth figure and end 2018 with a strong mark.
But despite the challenges, opportunities were still available during the year, said Go, which helped Filipinos cope with the rising prices.
“There were complaints about the high inflation, but there were also employment opportunities and high take-home pay,” said Go, noting the employment opportunities generated with the infrastructure projects that commenced this year.
Moreover, the government was able to temper inflation during the third quarter.
Although the government scrambled to prevent further spikes in inflation, Chiu said it was able to address food security, particularly on agricultural products like rice. But he noted that much needs to be done to prevent another shortage of supply in the market.
Business leaders also stressed the need for government to take food security seriously.
“It’s not a shortage issue because there are so many sacks of rice in the warehouses. It’s how they distribute rice to the public,” Chiu said.
Strong base needed
On the manufacturing aspect, Chiu lamented the lack of a strong base of manufacturers, not only in Cebu, but in the whole country.
“One sector that is supposed to be the strength of an advanced country is always manufacturing. But we don’t have strong manufacturing (firms) based in Cebu and in the Philippines,” he said.
“What we have are export processing zones which are extensions of multinationals. They do their manufacturing here but the reality is they are merely assembly plants taking advantage of our labor. Homegrown manufacturing are only few,” he added.
For the outsourcing sector, much of 2018 was wait-and-see. Go said the outsourcing players were cautious in their expansion plans, following the stand of the US in bringing back jobs to their shores and the second package of the tax reform pro- gram currently in Congress.
As for the export industry, Chiu said they observed a decline, as outbound containers dwindled in numbers.
But 2018 was not all bad. Chiu said investments continue to pour into Cebu, with the opening of more international flights through the Mactan-Cebu International Airport (MCIA) Terminal 2.
Business leaders cited T2 as a major breakthrough for Cebu. The continued tourism boom has hyped spending in the province.
“The winners for this year are hotels and restaurants because tourism is booming. Hotels are enjoying high occupancy, along with IT (information technology),” said Chiu.
Lessons learned
Amid the challenges, 2018 also showed how business stayed resilient.
Go said those that were able to quickly innovate in their businesses or reinvent new ways of doing things have weathered the economic volatility.
“Challenges are always there, but if your business was quick to embrace change, you survived,” said Go, emphasizing that innovation remains a key ingredient to stay ahead in competition, no matter the status of the economy.
“It’s different now. That’s why if your company has banked on technology and innovation, you’ll find ways to navigate the rough times,” he said.
Go said the challenges encountered this year should not dampen the high spirits of Filipinos but rather encourage them to level up on their craft, and never settle for what they are comfortable doing in business.
Business owners, he said, need to understand that buying habits have changed, and that market preferences have quickly evolved.
“Year 2018 was more on strategizing on how to weather the inflationary effects on the economy,” said Rey Calooy, president of Filipino-Cebuano Business Club Inc. He said businesses, regardless of size, need to retool and revisit their game plans.
Moving forward, business leaders are excited for what’s ahead but they are also anticipating more adjustments, given the new policies that will be introduced.