Rising fuel, production costs stall investments in WV
Rising fuel and production costs have resulted in a slump in business investments in Western Visayas this year.
Investments based on the Business Name Registration (BNR) dropped by 39 percent to P1.153 million in first quarter of this year from the P1.882 million recorded in the same period last year, according to the first quarter regional economic situationer released by the National Economic Development Authority (Neda).
The latest investments figure is also lower than the P1.655 million recorded during the last quarter last year or a 30 percent decline.
Investments increased in Capiz and Guimaras but this could not offset that significant drop in the provinces of Aklan, Iloilo and Negros Occidental.
Aklan had the biggest drop from P370 million in the first quarter of last year to P112 million for the same period this year or a 70 percent decrease. Investments in Iloilo drop from P630 million to P338 million (46 percent drop) and also Negros Occidental from P740 million to P465 million (37 percent drop).
The number of firms increased slightly from 2,897 in the first quarter of last year to 2,919 this year or a one percent increase. New investments usually fall on the early part of the year.
Department of Trade and Industry regional director Dominic Abad said that investors could be shifting from labor-intensive businesses to capital-intensive ones and with more local and smaller investors compared to big ones.
But Iloilo Business Club (IBC) executive director Maria Lea Victoria Lara said the drop in the investment figures showed the general attitude of business owners in the region. IBC is one of the biggest employers groups in the region with 83 members engaged in various industries.
"The higher costs of fuel and other inputs have pushed businesses to put on hold any expansion plans or the putting up of new investments. Some have closed shop. Most have opted to retain the status quo," Lara said in a telephone interview.
She said with no end in sight for the soaring prices of fuel, business owners are now concentrating on cuttings costs of production and staying afloat.
Volatile fuel prices widely affect businesses in Iloilo because majority of the businesses belong to the trading/distribution and wholesale and retail sector, said Lara. The price of diesel increased 18 times by 42 percent since January this year and now ranges between P53 and P54.97 per liter.
The sluggish economic situation has also resulted to more jobless workers in the region, according to the Neda report.
The unemployment rate increased from 5.6 percent to 6.5 percent (16 percent) for the first quarter of this year compared to same period last year.
During the first quarter of this year, the number of firms in the region that shutdown increased from 15 to 20 (33.3 percent) while firms that retrenched workers also increased from 43 to 48 (11.6 percent).
The number of laid off employees rose from 150 recorded in the first quarter of last year to 394 for the same period this year (162 percent).