Economics Features

The Local Economy

The City's economy largely depends on the tertiary activities, particularly on commercial wholesale and retail services. These economic activities generate substantial income for the city from business taxes as well as employment. There are 9907 legitimate businesses operating in the various parts of the City and are classified into 23 business activities. Majority of economic activities representing 86 percent of the total are the five most dominant including the following: Commercial retailers comprise 49.49 percent, RealEstate Lessor/Boarding House Operators 13.55 percent, Services/Contractors 11.70 percent, Restaurants, Cafes, Cafeteria, Ice Cream & Other Refreshment Parlors 6.21 percent and Wholesalers 4.92 percent.

Table 2C-1. Number of Establishments, 1995-2000

Data Source: Office of the City Treasurer, Baguio City .

Table 2C-2. Investments/New Businesses

Data Source: Office of the City Treasurer, Baguio City .

 The long-term effect of the Asian financial crisis could still be felt in the city as manifested by a slump in new investments. Another factor that hampered investors to invest in the city during the period was due to high fees paid for business permits and licenses. With these, total investments contracted by almost 28 percent. Most of the businesses in the services sector suffered with no additional investments in 2000 for cinema houses/theaters, printing and publication, import/export, computer rentals, and common earlier.

On the other hand, significant increases in investments were recorded in real estate lessor/boarding house (304.63%), amusement (198.89%), real estate broker (100.00%), distributors (87.47%), motels, inns, pension/lodgings, (76.21%).

Table 2C-3 number of Establishments under Business Name Law

Data Source: Department of Trade and Industry, Baguio-Benguet.

 A total of 1,829 establishments secured their business name with the DTI in 2000. This is 6.58 percent more than the number in 1999. Of the total registrants, wholesale and retail trade comprises 42 percent. Other Community Social and Personal Activities, on the other hand, recorded the highest average annual growth rate 44.91 percent.

To further boost the economic development of the City, the local government is pursuing the development of the City Public Market and other major private endeavors like the establishment of the Shoe Mart and Robinson's shopping malls that will continue to provide socio-economic growth of the City. This will not only improve the facility to meet the international standards but will also generate more employment opportunities during all phases of its implementation. It is also expected to generate more income for the City.

The City as a Prime Educational Center  

The City is home to a significant number of students coming from neighboring Cordillera provinces as well as from other North Luzon provinces. The student population in higher educational institutions located in the City totaled 62,231 in 2000 from 61,594 in 1998. Of the 33 public and private HEIs in the region, 14 are located in Baguio City . The continuing influx of students to the City as well as an educational center in North Luzon . (City to grab this opportunity given the immense multiplier effects of educational services and education-allied businesses to the City's economy).

Emerging Role of the City as a Financial Center

 Savings and investments play a very vital role in the City's economy because these are necessary conditions for capital formation, which makes the economic system efficient or productive.

Currently, there are 201 banks other financial institutions located in the City from only 14 such establishments in 1995. This impressive growth of financial establishments in the City presents a challenge for the City to be a financial center, not only in the Cordillera Region but in North Luzon as well. There are 50 banks currently operating in the city. These financial institutions act as intermediaries between the depositors and the borrowers. Loans granted by banks are of several types depending upon the function of the bank.

Aside from banks, there are other lending institutions available to businessman such as credit establishments, credit cooperatives and individual lenders. Some government agencies the seed money and supervising the use of such.

Baguio City hosts a special economic zone under the Philippine Economic Zone Authority. The SEZ is located in Loakan and caters to nine (9) foreign firms. The largest of this is Texas Instruments Philippines, Inc. a leading producer of semi-conductor accounts for the bulk of the Cordillera Region's total exports.

Table 2C-4 Exports (in US$), 1995-2000

Data Source: DTI-Benguet Provincial Office & PEZA.

The City's total exports reached $2,963,163,603.68 in 2000, growing at an average rate of 24.73 percent from the 1995 level of $948,547,000.00. Of this PEZA exports contributed 99.8 percent ($2,857,778,603.68). Electronics and machine parts produced by the Texas Instruments and MOOG companies comprise the lion's share in PEZA exports (98.8% or $2,824,675,726.49), followed by plastic/paper products (18.96%) and textile and wearing apparels (13.70%).

Non-PEZA exports on the other hand grew at an average annual rate of 47.55 percent, totaling $5,385,000.00 in 2000 from only $770,000.00 in 1995. This impressive growth indicates the great potentials of non-PEZA exports. In the business scene, this trend is very encouraging for the local producers and local industries to venture into export trading as a way of expanding their businesses while PEZA industries hope to continue to sustain and further gain an upswing over the next years.

There are also small and medium scale handicraft such as woodcraft, metal craft, garments production, food processing and ceramics production, with added ethnic and personal touch thus adding some cultural color and uniqueness. These cottage industries mostly cater to local tourist demands. However, these local and indigenous industrial enterprises remain undeveloped with their potentials as another major source of economic growth remaining untapped.

In terms of employment by major sector, the service sector continues to absorb most of the employed. In 199 and 2000, service sector employment accounted for more than 70 percent of total employment. Meanwhile, industry employment accounted for only 24 percent.

The employment situation in 2000 showed no signs of improvement. The City's labor force expanded by 19.86 percent reaching 83,000. Of the total labor force, 13,500 persons were unable to find jobs causing the unemployment rate to rise by 2.56 percent. The employment rate during the period under review was 84.03 percent, lower by 2.65 percentage points compared to the previous year.

Table 2C-5. Employment by Major Sector

Data Source: NSO-Provincial Office

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