Gross regional domestic product or GRDP measures gross value added of all resident producer units in the region. It includes regional estimates on the three major sectors including their subsectors, namely: agriculture, hunting, forestry and fishing (AHFF) sector; industry sector (mining and quarrying, manufacturing, construction, electricity and water); and services sector (transport, communication and storage, trade, finance, real estate, private and government services).
The recent economic history of Bicol shows that the region managed to grow despite setbacks and uncertainties. In the past four years, Bicol has been considered as one of the fastest growing regions in the country: 8.1 percent in 2013, 4.3 percent in 2014, 8.9 percent in 2015, and 5.5 percent in 2016. In 2017, the GRDP grew at a slightly lower pace of 5.1 percent. The decline in growth between 2016 and 2017 does not translate to a decreased GRDP. Rather, the economy expanded, albeit at a slower pace. The GRDP increased to PhP172.36 billion from PhP164.06 billion in 2016.
The services sector remained as the biggest contributor to the regional economy with 57.6 percent, accounting for 3.7 percentage points of the total 5.1 percent growth. However, it expanded at a slower pace of 6.5 percent from 6.9 percent in 2016. The industry sector, contributing 22.7 percent to the regional economy or 0.8 percentage points of the 5.1 percent growth, also decelerated from 7.4 percent in 2016 to 3.6 percent in 2017. On the other hand, the AHFF sector rebounded from a 0.1 contraction in 2016 to a 2.6 percent growth in 2017, sharing 19.6 percent or 0.5 percentage points of the total 5.1 percent growth.,
The decelerated growth of the services sector could be attributed to the slowdown in most of the sub-industries within the sector. Financial intermediation and public administration and defense/compulsory social security grew at a slower pace from 11.2 percent in 2016 to 7.0 percent. Trade and repair of motor vehicles, motorcycles, personal and household goods, as well as transportation, storage and communication also slowed to 4.2 percent and 4.0 percent, respectively in 2017 from 6.7 percent each in 2016.
The increase in number of banks and pawnshops, the implementation of the second tranche of the Salary Standardization Law, the conditional cash transfers and rice subsidies given to 375,398 poor households under the Pantawid Pamilyang Pilipino Program contributed to the growth of financial intermediation and public administration and defense/compulsory social security. However, the skewed distribution of banks and pawnshops towards highly populous and urbanized areas remained a challenge in improving access to financial services of the farmers and fisherfolks, as well as the micro, small, and medium enterprises (MSMEs). Real estate, renting and business activities grew faster from 1.9 percent in 2016 to 5.4 percent in 2017 because of the expansion of several subdivisions such as Camella Homes, Eco Homes, Lumina Homes, and Imperial Homes, among others.
The decelerated growth of transportation, storage and communication was demonstrated by the 16.3 percent decrease in sea outgoing passengers and the 16.4 percent drop in volume of cargo. The decline in sea traffic was due to the gale warnings issued by the Philippine Atmospheric, Geophysical and Astronomical Services Administration along the eastern seaboard of the region.
Other services accelerated from 9.3 percent in 2016 to 10.4 percent in 2017 with the sustained growth of tourism, education and health and social work subsectors. Gross revenue from tourism grew by 7.9 percent which was demonstrated by the 1.3 percent growth in tourist arrivals. This could be attributed to the new tourism facilities and support services as well as the participation of the region in various tourism activities. In addition, the tourism support infrastructure under the Department of Tourism (DOT)-Department of Public Works and Highways (DPWH) Convergence Program improved access to tourism destinations regionwide.
Growth in other services was also fueled by education, as well as health and social work, which grew by 11.4 percent and 6.2 percent, respectively. The implementation of the K to 12 Program and Expanded Students’ Grants-In-Aid Program for Poverty Alleviation, the 83 percent PhilHealth insurance coverage, and social pension provided to all poor senior citizens identified in the Listahanan or the National Household Targeting System for Poverty Reduction contributed to the growth of these subsectors.
The industry sector grew at a slower rate of 3.6 percent due to decelerated growths in mining and quarrying, manufacturing and construction and the contraction of electricity, gas and water supply by 0.2 percent. Such contraction was attributed to the damaged electric transmission and distribution lines caused by Typhoon Nina. The production of steam for the regions’ geothermal power plants also declined by 6.9 percent which resulted to a 2.2 percent decrease in electricity generation.
Mining and quarrying managed to grow by 5.5 percent, notwithstanding the 60 percent decline in non-metallic mineral products, 1.9 percent decline in gold production, and 10.9 percent decrease in silver production. Stone quarrying increased by 41.9 percent. Gold and silver production in Aroroy, Masbate by Filminera Resources Corporation decreased by 1.86 percent and 10.86 percent, respectively.
Construction slowed down from 5.5 percent in 2016 to 5.1 percent in 2017. Construction by the government increased by 12.4 percent, but construction by the private sector decreased by 14.3 percent. Government spending for infrastructure and other economic and social services included widening of roads and bridges along the Maharlika Highway or the Asian Highway 26, Catanduanes Circumferential Road, Albay-Camarines Sur diversion road, Bacon-Manito Road, Pio Duran-Donsol Road, Guinobatan-Camalig-Daraga-Legazpi Platform road networks in Albay, and Guinobatan-Jovellar-Donsol Road leading to Pilar Port. The construction of the Bicol International Airport lagged at 69 percent completion rate. The Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services or KALAHI-CIDSS implemented cycles 1, 2 and 3. Growth in the industry sector could also be attributed to the activities initiated by both private and government sectors, such as product development, capability building of MSMEs, conduct of trade and business missions and implementation of shared service facilities and Go Negosyo enters of the Department of Trade and Industry, and the Small Enterprise Technology Upgrading Program of the Department of Science and Technology.
The rebound in the AHFF sector was due to the 6.5 percentage points expansion in fishing. It recovered from a negative growth of 5.5 percent in 2016 to a positive growth of 7.4 percent in 2017. The total volume of fishery production went up by 1.9 percent or equivalent to 4,449 metric tons (MT).
Agriculture and forestry accelerated to 2.8 percent from 1.4 percent in 2016. The production of major crops like palay and corn increased by 4.7 percent and 10.65 percent from 0.87 percent and 6.34 percent in 2016, respectively. The total volume of palay produced was 1.33 million MT from 1.27 million MT in 2016. The growth in production of palay increased the productivity level from 3.6 MT per hectare to 3.69 MT per hectare. The increased crop production could be attributed to the favorable weather conditions as no severe weather disturbance significantly affected the region, and the better quality of inputs were provided, such as improved planting materials, utilization of farm machineries and equipment, and the rehabilitation and expansion of irrigation facilities. The adverse impact of Typhoon Nina which affected a total of 86,620 hectares of agricultural lands was quickly mitigated. The Department of Agriculture (DA) Region 5 immediately deployed harvesters to hasten harvesting of palay and immediately rehabilitated the damaged farm areas.
Poultry production grew by 2.4 percent. The production of chicken eggs continued to stumble from negative 3.29 percent in 2016 to negative 4.42 percent in 2017. The sudden changes in temperature affected egg production. The Bird Flu outbreak in San Luis, Pampanga caused alarm to Bicol Region’s poultry raisers. The DA Region 5 immediately conducted massive distribution of antibiotics and other medicinal drugs and quarantine of poultry was strictly imposed in close coordination with other concerned government agencies and LGUs.
Looking ahead, the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law is expected to affect the regional economy. Estimates show that the effect of TRAIN on inflation is about 0.70 percent. Prices of goods will be affected by the increased prices of crude oil in the international market, the drop in exchange rate and the typhoons that hit the country in 2017. To cushion the impact of price increase in goods, the Unconditional Cash Transfer Program will be implemented. Cash grants amounting to PhP2,400 per year will be provided to poor households who will not directly benefit in the lowering of personal income taxes. This will entail a budget requirement of at least PhP1.6 billion in 2018 to cover 684,655 poor households in the Bicol region.
The TRAIN Law is expected to boost consumer and manufacturing demand, but its inflationary pressure will have an impact on the cost of production. Higher take home pay of about 99 percent of income taxpayers provides additional disposable income, thereby increasing household consumption.
The Build, Build, Build Program is expected to increase growth potential in the medium term by modernizing the infrastructure backbone. It is envisioned to increase the productive capacity of the regional economies, create jobs, increase incomes, and strengthen the investment climate leading to sustained inclusive growth.
Access to education services will be improved with the implementation of the Universal Access to Quality Tertiary Education Act. Starting school year 2018 to 2019, the government will shoulder the tuition fees of students enrolled in state universities and colleges, local universities and colleges, and technical-vocation education and training programs registered under the Technical Education and Skills Development Authority.
The AHFF sector is expected to fully recover with public investments on farm-to-market roads, irrigation facilities, post-harvest facilities, and extension support. The improved productivity and quality of agricultural and fishery products will hasten the development and integration of agribusiness in the global value chains. This will expand manufacturing, trade, and transportation and storage.
Tourism will remain as a major economic driver of the region as it provides ancillary impact to the other sectors, particularly on business services, trade, and transportation sectors. The sustained growth in tourism will be fueled by new tourism facilities and support services, aggressive tourism promotion and marketing activities. Tourism access roads and facilities under the DOT-DPWH convergence and Tourism Infrastructure and Enterprise Zone Authority will be prioritized. The disturbance caused by Mayon Volcano’s restiveness will have no significant effect on the economy. Domestic airlines may have been affected by temporary closure of air traffic; but there was increased demand for land travel as more tourists wanted to watch the eruption of the volcano. Immediate interventions were done to mitigate the effects of volcanic ash on agriculture.
Certainly, the economic gains in 2017, the first year of implementation of the Bicol Regional Development Plan 2017-2022 serve as good platform for the succeeding years of plan implementation. The challenge for both the public and private sectors is to effectively work together in laying down the foundation for inclusive growth, a high trust and resilient society, and a globally competitive knowledge economy, notwithstanding unexpected developments and changing conditions. In doing so, we are guided by the long-term vision of the Filipinos, the Ambisyon Natin 2040: matatag, maginhawa at panatag na buhay para sa lahat.