Local and Regional Economic Development in Leyte Province

Project No. 01.2467.7-001.00
Small and Medium Enterprise Development for
Sustainable Employment Program
(SMEDSEP)

COOPERATION
Republic of the Philippines

Federal Republic
of
Germany

Local and Regional Economic Development
in Leyte Province:
Report on the Second Rapid Appraisal Mission
(Baybay, Palompon, Carigara)

March 2005

Prepared/Written by:
Rolf Speit
LRED Consultant
RolfSpeit@web.de

Published by:
The Small and Medium Enterprise Development for
Sustainable Employment Program (SMEDSEP)
A DTI-TESDA-GTZ Program
10th Floor, German Development Center,
PDCP Bank Centre Building, V.A. Rufino cor. L.P. Leviste Streets,
Salcedo Village, Makati City
www.smedsep.ph | smedsep@mozcom.com
Ms. Martina Vahlhaus, Program Manager

Printed on:
April 2005 - Makati City, Philippines

Small and Medium Enterprise Development for Sustainable
Employment Program (SMEDSEP)

German-Philippine Technical Cooperation

Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ)

Local and Regional Economic
Development in Leyte Province:
Report on the Second Rapid Appraisal Mission
(Baybay, Palompon, Carigara)

March 2005

Rolf Speit

TABLE OF CONTENTS

ABBREVIATIONS II

1 EXECUTIVE SUMMARY 3

2 INTRODUCTION 5

3 FINDINGS OF THE FOLLOW-UP VISIT TO ORMOC 7

4 FINDINGS OF THE APPRAISAL TO BAYBAY,
PALOMPON AND CARIGARA 11

5 ACTION PLANS AND COOPERATION AMONG GTZ-
PROGRAMS 15

6 LOGFRAME AND IMPACT MONITORING 18

ANNEXES 21

I

ABBREVIATIONS

BDS Business Development Services

BSO Business Service Organizations

CARP Comprehensive Agrarian Reform Program

CIDA Canadian International Development Agency

DA Department of Agriculture

DAR Department of Agrarian Reform

DENR Department of Natural Resources

DST Department of Science and Technology

DTI Department of Trade and Industry

GTZ Deutsche Gesellschaft für Technische
Zusammenarbeit

LGU Local Government Unit

LRED Local and Regional Economic Development

LSU Leyte State University

MW Mega Watts

NGO Non-governmental Organization

OCCI Ormoc Chamber of Commerce and Industry

PACCI Palompon Community Multi-Purpose Coopera-
tive
PIT Palompon Institute of Technology

SMEDSEP Small and Medium Enterprise Development for
Sustainable Employment Program

TESDA Technical Education and Skills Development
Authority

II

1 EXECUTIVE SUMMARY

This report summarizes the results of a short-term consultancy conducted
on behalf of the Small and Medium Enterprise Development for Sustainable
Employment Program (SMEDSEP) between 22nd January and 16th Febru-
ary 2005. The first purpose of the assignment was to do a brief follow-up on
the implementation of a LRED action plan defined as a result of a preced-
ing mission to Ormoc in October 2004. The second purpose was to conduct
a series of rapid economic appraisals in the municipalities of Baybay,
Palompon and Carigara and to draft economic action plans in each of these
areas. This was part of the extension of the LRED – approach within Leyte
Province.

The findings are primarily based on semi-structured interviews with local
resource persons and companies. The former included the Mayors of each
of the municipalities studied, representatives from the municipal administra-
tions, local legislative (Sangguniang Bayan), business service organiza-
tions and NGOs (co-operatives).

The follow-up in Ormoc demonstrated, that action plan implementation lags
behind expectations. Chapter three explores some of the possible reasons
for this. Nevertheless, some achievements, such as the integration of the
plan drafted in the LRED-workshop into a more comprehensive SMED-
Council plan, the designation of the City Planning and Development Coor-
dinator as point person for the LRED – initiative and the launching of a
website for investment promotion purposes were noted. However, the gen-
eral impression is that the process in Ormoc needs some inspiration from
SMEDSEP-LRED in order to be accelerated.

With regard to the rapid appraisal of the economic potential of the munici-
palities of Baybay, Palompon and Carigara (see chapter four), it can be
concluded that all of them provide potential for a successful application of
the LRED – approach. Baybay is experiencing dynamic growth and Palom-
pon as well as Carigara are recording moderate growth rates. All of them
dispose of dynamic entrepreneurs in different fields of economic activity.
There are still untapped natural resources and the example of Palompon
shows that even coastal marine resources can be restored. The infrastruc-
ture generally allows for an expansion of entrepreneurial activities. The
local administrations were active in creating an environment conducive for
business, with the LGU of Baybay being the most straightforward and pro-
active among the three in this regard. Notwithstanding these efforts, unem-
ployment is on the rise in all municipalities, exerting considerable pressure
towards more pronounced and systematic local economic planning and
implementation. In terms of interaction between LGU, entrepreneurs and
other representatives of the civil society, all of them provide a fertile ground
for application of the LRED – approach.

Based on these conclusions action plans were drafted by local stake-
holders in the three local areas (see chapter five). Their fields of interven-
tion are partly geared towards promoting business and investments directly
(e.g. through developing tourism, diversifying use of coconuts and improv-
ing conservation and packaging of delicacies) and partly towards improving

3

the institutional environment (e.g. systematic investment promotion and
economic planning). The latter is expected to contribute to employment and
income generation too by making institutions work more effectively when
handling economic affairs. These fields of intervention served as point of
departure for defining potentials for cooperation among GTZ – Programs
and Projects with regard to LRED in Leyte. As a debriefing meeting held in
Manila on February 16th demonstrated, there is a lot of common ground
between GTZ-LIP and SMEDSEP-LRED and therefore some broad lines of
joint action were agreed upon.

Finally, the logframe of the sub-component LRED in Leyte was revised (see
chapter 6) taking into consideration the need to “harmonize” logframe and
impact monitoring terminology and to match some indicators with GTZ –
requirements (esp. the use of baseline data).

4

2 INTRODUCTION

This report summarizes the results of a short-term consultancy conducted
on behalf of the Small and Medium Enterprise Development for Sustainable
Employment Program (SMEDSEP), which is jointly implemented by DTI
and TESDA on the Philippine and GTZ and GFA-Management on the Ger-
man side. The program comprises four components, namely enabling envi-
ronment (component one), business development services/BDS (compo-
nent two), financial services (component three) and demand-driven training
(component four). This assignment was conducted under the auspices of
component two and was closely coordinated with component one. The pro-
gram is regionally based in three provinces of the Visayas, namely Negros
Occidental, Cebu and Leyte.

Prior to this assignment, a mission was conducted in October 2004 in order
to inquire into the conduciveness of applying the local and regional eco-
nomic development (LRED) approach in the Province of Leyte. Rapid ap-
praisals including validation workshops with relevant stakeholders were
conducted in the two largest urban centres of the Province, namely Taclo-
ban (the regional capital) and Ormoc. In economic terms, both cities pro-
vided ample economic opportunities to pilot such an approach; in institu-
tional terms, however, it was deemed more appropriate to commence with
Ormoc and put activities in Tacloban on hold. In order to expand spatial
coverage of the approach and not depend exclusively on just a single local
area (Ormoc), it was decided to extend it to other, smaller municipalities in
Leyte.

Taking into account these considerations, the objectives of the assignment
(see terms of reference in annex 1) consisted in follow-up visits to relevant
stakeholders in Ormoc and the conduct of rapid economic appraisal mis-
sions to the municipalities of Baybay, Palompon and Carigara. Their selec-
tion was the result of a ranking done by 11 raters from DTI, NEDA and
TESDA on a number of criteria such as the perceived dynamism of the
LGU and their economic potential. Out of a long list of 20 municipalities DTI
presented a short list of six local areas, proposing the first three of them
(Baybay, Palo, Bato) for inclusion in the appraisal mission. After a series of
consultations with other interested parties (GTZ’s Leyte Island Program and
the author of this report), SMEDSEP finally chose the above mentioned
areas. Their selection represents a compromise between the ranking (all of
them were among the first six) and spatial (all of them represent different
districts) considerations. Apart from this, easy access from Ormoc was
another criterion.

In the week prior to the commencement of the assignment (17th to 21st
January 2005) DTI Provincial Director, Mr. Desidério Belas, and the newly
appointed LRED – Coordinator of SMEDSEP, Ms. Gloria Adapon, con-
ducted a preparation mission in order to brief the LGUs on the upcoming
rapid appraisal, its objectives and methodology. More specifically, they
asked the LGUs for support in scheduling a program for interviews with
resource persons and entrepreneurs of their respective localities.

5

After a briefing with the SMEDSEP – team on the 22nd January, the interna-
tional consultant and the LRED – Coordinator went to Ormoc for follow-up
meetings with stakeholders in the local LRED – process (24th January). On
the same day, they proceeded to Baybay in order to conduct the rapid ap-
praisal. Their field work lasted from 25th to 27th January, followed by a vali-
dation and action planning workshop on the 28th January. Succeeding field
trips were undertaken to Palompon from 31st January to 3rd February and to
Carigara from 4th to 8th February. The author of this report spent the 9th
February in Ormoc to discuss subsequent activities to this assignment with
the LRED – Coordinator and the 10th to 15th February in Cebu for finaliza-
tion of the workshop documentations and report writing. On the 16th Febru-
ary a debriefing at GTZ headquarters in Manila followed focusing primarily
on possibilities of cooperation with other GTZ – program within the LRED –
initiative.

The appraisal results are derived from discussions with the Hon. Mayor of
Baybay, Jose Carlos Cari, the Hon. Mayor of Palompon, Marcelo Oñate
and the Hon. Mayor of Carigara, Anlie G. Apostol, members of the Sang-
guniang Bayan, officers of the LGU and representatives with public educa-
tion institutions such as the LSU and the PIT. On the private side, inter-
views were conducted with owners and managers of micro, small and me-
dium – sized companies, banks, micro-finance providers and multi-purpose
cooperatives (the latter often prioritizing financial intermediation). In Bay-
bay, the team met with a total of 21 respondents, of which 11 represented
the public and 10 the private sector. The respective figures for Palompon
are 22 (11/11) and for Carigara 17 (5/12). The number of participants in the
validation and action planning workshops amounted to 26 in Baybay (14
public/12 private sector), 17 in Palompon (5/12) and 25 in Carigara (11/14).
The consultant would like to express his gratitude to the DTI – Provincial
Office and the LRED – Coordinator for their very good preparation and ac-
companiment, SMEDSEP’s component manager for his institutional guid-
ance and his tireless efforts to turn LRED in Leyte into a success, the re-
spondents for their time and effort spent during our discussions and the
planning officers for their excellent fellowship during the field trips. Many
thanks to all of them!

6

3 FINDINGS OF THE FOLLOW-UP VISIT
TO ORMOC

The principal task of the follow-up visit to Ormoc consisted in an update of
the action plan implementation with major stakeholders of the local LRED –
initiative (LGU, AFFIRE and OCCI). As the following table suggests, only a
few activities have actually been carried out. One of these is the integration
of the LRED action plan into a more comprehensive plan of activities of the
local SMED Council. The LRED action plan is now “legitimized” and has
become official part of the local community’s efforts towards promotion of
the local economy.

The reasons for slow action plan implementation are most probably the
following:

! There was a certain over-optimism on part of the participants and fa-
cilitators of the workshop in October 2004 with regard to the “doability”
of the activities.
! Some stakeholders changed their minds with regard to certain issues.
For instance, AFFIRE does momentarily not prioritize the introduction
of warehousing and cold storage facilities anymore but has ventured
into low-cost pharmacy instead.
! The institutional set-up of the LRED – initiative in Ormoc was not clear
enough. Until recently, there was no one officially designated as “point
person” on part of the LGU and also no permanent liaison person on
SMEDSEP’s side, which resulted in a rather diffuse distribution of re-
sponsibilities.
! The fact that the action planning in October 2004 did not involve any
LGU representative may also have contributed to the relatively slow
start in Ormoc.

In the meantime, some actions were taken to put the LRED – initiative in
Ormoc on more solid ground: In January 2005 SMEDSEP contracted a
local coordinator based in Ormoc and the LGU appointed the City Planning
and Development Coordinator as point person for the LRED – initiative.
Furthermore, some of the activities finally happened to be implemented.
From the point of view of the author of this report, it is necessary to accel-
erate action plan implementation in order to build confidence among local
stakeholders in the LRED - approach. Most likely, in these still early
stages, speeding up the process requires an active involvement of
SMEDSEP. Activities to start with could be the facilitation of a focus group
discussion on the economic viability of the introduction of cold storage fa-
cilities (proposed by AFFIRE), funding capacity building workshops for
OCCI either directly or by linking the chamber to CIDA’s Pearl 2 project
and supporting DTI in the preparation of information material on power
pricing. However, balancing the need for faster implementation with the
low-key and demand oriented nature of the LRED approach continues to
be the major challenge in Ormoc.

7

LRED Action Plan Ormoc
Field of interven- Who? When? Status as per mid Feb-
tion/steps for implemen- ruary 2005
tation
1. Introduction of cold " AFFIRE has put its
storage/ warehousing activities with regard
facilities to warehousing on
hold. One reason
1.1 Project proposal AFFIRE By Nov. 2004
for this is that they
1.2 Presentation of project Ormoc Nov. to Dec. ventured into the
proposal to SMED - council Chamber of 2004 pharmacy business
Commerce, (low cost generica
DTI, drugs), a project
AFFIRE, supported by GTZ
market ven- and KfW.
dors, pro- They are proposing
ducers to conduct a focus
group discussion in
1.3 Business plan prepara- AFFIRE, Dec. to Jan. order to collect in-
tion DTI, CASO 2005 formation on the
1.4 Presentation of busi- AFFIRE, Jan. during economic feasibility
ness plan to SMED – DTI, CASO, council meet- of warehousing/cold
Council, LGU SMEDSEP- ing storage.
LRED
1.5 Project implementation AFFIRE, February 05
DTI, CASO, to Dec. 05
SMEDSEP-
LRED
2. Initiate integrated ef- + The action plan re-
fort to address Ormoc’s sulting from the
economic problems LRED – workshop
conducted on 22nd
2.1 Levelling off- seminar/ Ormoc Nov. 2004
October 2004 got
workshop on Ormoc’s eco- Chamber of
fully integrated into
nomic problems and ef- Commerce, the SMED Council’s
forts. DTI, LGU, more comprehen-
AFFIRE,
sive plan of action.
SMEDSEP-
LRED " According to stake-
holders, the facilita-
2.2 Output presentation to Ormoc Jan. 2005
tion of SMED Coun-
SMED - council Chamber of
cil workshop did not
Commerce,
meet expectations.
DTI, LGU,
AFFIRE,
SMEDSEP-
LRED
3. Strengthen private " No activity in this
sector associations and field carried out so
chambers far.

8

tation
3.1 Identification of stake- Ormoc Nov. 2004
holders (output of the Chamber of
seminar/workshop) Commerce,
DTI, LGU,
AFFIRE,
SMEDSEP-
LRED
3.2 Workshop on SWOT/ Ormoc Dec.
balanced scorecard on the Chamber of 2004/Jan.
above stakeholders Commerce, 2005
DTI, LGU,
AFFIRE,
SMEDSEP-
LRED
3.3 Implementation of ac- Ormoc Feb. 2005
tion plan of the above Chamber of
workshop on Commerce,
SWOT/balanced scorecard DTI, LGU,
AFFIRE,
SMEDSEP-
LRED
4. Gathering of informa- " No activity carried
tion on power price fixa- out so far. OCCI
tion and lobbying for seems less enthusi-
lower power prices astic to address this
issue.
4.1 Access the study of RPOC for Ongoing
RPOC to include royalties Region 8
enjoyed by Ormoc and
Kananga to be extended to
Leyte Province and Region
8
4.2 Telephone survey on DTI - Ormoc Last week
power rates October
4.3 Ask LEYECO to ex- Ormoc Nov. 2004
plain power bills Chamber of
Commerce
and Industry
(OCCI)
4.4 Disseminate informa- OCCI Nov. 2004
tion to OCCI
4.5 If deemed necessary, OCCI From 1st.
lobby for lower power quarter 2005
prices with LGU and onwards
LEYECO
5. Information exchange No activity in this field
on possibilities of pro- carried out so far.
moting high-potential
agro-industries

9

tation
5.1 Designate investment SMED 1st. quarter
promotion officer Council 2005
5.2 Assign the task of or- City LGU 1st. quarter
ganizing an investment 2005
promotion seminar to the
officer
5.3 Conduct investment DTI, LGU 1st. quarter
opportunities seminar to 2005
match investment poten-
tials, resources available
and potential investors.
Several sub-activities fol-
low which are not pre-
sented in this report.
6. Marketing of Ormoc as
a location for business
6.1 Creation and estab- Ormoc LGU 4th. quarter + According to the
lishment of Ormoc website 2004 – 4th. City Development
as a location for business.1 quarter 2005 Planning Coordina-
tor, the website is to
be launched early
February 2005.
6.2 Lobby for the revival of NGO, OCCI 4th. quarter " Steps 6.2 to 6.4 not
the Provincial Industrial and produc- 2004 – 1st. carried out so far.
Center and support from ers quarter 2005
city LGU.
6.3 Join outbound invest- Leyte Prov’l within 2005
ment missions. Gov’t. and
LGU Ormoc.
6.4 Identify the competitive City Tourism 4th. quarter
advantage of Ormoc as Council 2004
tourism destination.

1 During the discussion, other investment promotion tools beside a website came
up, such as a flyer or CD, brochures, video clip.

10

4 FINDINGS OF THE APPRAISAL TO
BAYBAY, PALOMPON AND
CARIGARA

The detailed findings are presented in annexes 3, 4 and 5. They are reflect-
ing the information and impressions obtained during the interviews and
validated in the workshops. They do not claim to be accurate in all details
but rather depict the broad picture of the regional economies of Baybay,
Palompon and Carigara. The summaries of the interviews are presented in
annexes 6, 7 and 8. This chapter is highlighting the findings by fields of
analysis:

Enabling environment

The enabling environment2 is found to be quite positive in all three of the
studied local areas: The visions for economic development appeared to be
quite realistic. The Mayor in Baybay stressed the need to base the evolu-
tion of the local economy on local resources, Palompon is geared towards
preservation natural resources as a prerequisite for LRED and the Mayor of
Carigara emphasized the necessity of sustainable initiatives (“no-flash-in-
the-pan activities”). Respondents from the private sector unanimously said
that they have never experienced any form of “under-the-table” payment
with local administrations. Local taxes were reported to be moderate.
Palompon pioneered in the development of alternative sources of local in-
come (proceeds from the Tabuk Marine Park), thereby increasing the share
of local income of the total budget from 15% in 1995 to 23% in 2003, with-
out stifling business development. In Baybay and Carigara local income
reaches a mere 12% and 8% respectively. In all three cases there is scope
of improvement with regard to the introduction of one-stop-shops for busi-
ness licensing in the literal sense of the word. Local business people still
have to approach up to 10 different desks, though mostly located in the
same building or in the nearby area. According to them, they on average
need two to three days to get their business license renewed. Although this
does not constitute an overly heavy burden on entrepreneurs, streamlining
the process would give a clear indication of the LGUs willingness to provide
fertile ground for business development.

Micro, small and medium enterprises, farmers

There are indications for economic growth in all of the three municipalities
as evidenced by a number of start-up businesses located locally. Baybay
appeared to be the most dynamic among them and even managed to at-
tract medium-sized companies to start operations recently in the baranguay
Hilapnitan. It is the only one where a considerable degree of processing of
agricultural commodities is taking place (coconut oil milling and abaca pulp
manufacturing). Cooperatives are active in all three local areas, with some

2 For the purposes of this appraisal the international consultant defines enabling
environment as activities related to visioning, local taxes and business licens-
ing. Other more service related tasks of the local administration such as invest-
ment promotion and education fall under the category of “support organiza-
tions”.

11

of them, such as the Palompon Community Multi-Purpose Cooperative
(PACCI) and the Kangara Multi-Purpose Cooperative in Carigara, being
considered as “local World Bank”. It is also noteworthy that the fisher folk in
Palompon, with the support of the LGU, developed boneless danggit fishing
and processing into a thriving industry, whereas elsewhere in Leyte fisher-
men are affected negatively by shrinking marine resources.

Notwithstanding these positive trends, there is still a lot to be done in order
to accelerate economic development and generate more employment and
income opportunities. For instance, farmers use coconut nearly exclusively
for copra extraction and very few of them have ventured into alternative
uses such as the production of virgin coconut oil, wine, milk, vinegar,
brooms, activated carbon, charcoal bricks, and the use of coco coir and
shell. In addition to this, only a very small number of coconut planters is
engaged into undercropping and making more effective use of their land.
Apart from this, the potential for local and recreational tourism appears to
be largely untapped. In Carigara, the local rice industry is jeopardized by
low productivity and declining soil quality, especially in the upland areas.
Although businesswomen in Carigara find a ready market for their native
delicacies, some production constraints still impede expansion of their
trade.

Support organizations

Positive and not so positive aspects with regard to support organizations
were identified in all three municipalities. The LGU in Baybay has an out-
standing reputation for its capacity to attract investors from outside its
boundaries. “They rolled out the red carpet for us”, a representative of one
of the investors responded. Local education providers such as the LSU in
Baybay, the Palompon Institute of Technology (PIT) and the Holy Cross
College (HCC) in Carigara provide active support to the local economy in a
number of ways, be it as active partner in containing the spread of abaca
diseases (LSU) or as a provider of good quality and demand driven educa-
tion (PIT: training of seamen/cadets for the international labour market in
cooperation with a Dutch organization; HCC: computer science and tech-
nology as a new course to be offered in Carigara). A striking feature is the
expansion of the supply of micro-credit partly through cooperatives (such
as PACCI and the Kangara Coop.) and partly through micro-banks (such as
the Green Bank in Baybay). Some of them appear to have an excellent
portfolio quality and are geared towards performing at world class stan-
dards. Their existence is an important contribution towards liberating local
business people from the iron grip of loan sharks and enhancing their fi-
nancial assets for productive purposes.

One common feature of the three areas is that they have not yet engaged
in investment promotion in a systematic way through promotion materials
and participation in fairs and outbound missions. This holds true even for
Baybay, the champion in this field among the three. In Palompon, the ap-
praisal team also felt some reservations on part of the local LGU towards
inviting “outsiders” to do business locally. Some scope for improvements
also exists with regard to economic planning: There are either very com-
prehensive and ambitious plans of which only a very small fraction gets
actually implemented (such as the Municipal Enterprise Development Plan

12

Carigara 1999 – 2005) or there are no holistic plans at all. Systematic moni-
toring also appeared to be lacking.

Human and natural resources

The interview partners were, in general, optimistic with regard to the avail-
ability of unskilled labour. Wages are also low since most entrepreneurs are
not adhering to minimum wage legislation. Many were also saying that their
quality in terms of “trainability” and work ethics is good. However, with re-
gard to this aspect, especially respondents representing larger companies
claim that quite some training and education needs to be done in order ad-
just them to the requirements of the job. Whether inadequate preparation of
the work force or a certain type of recruitment practices on part of the em-
ployers (e.g. six-month contracts in order to avoid social costs) is the prin-
cipal reason for these difficulties could not be finally explored. Skilled labour
was also reported to be available locally, although some exceptions were
also noted (e.g. machine operators in Baybay). In Carigara, skilled people
can also be sourced in the regional capital Tacloban, just one hour drive
away from the town. In general, labour appears to be of no major headache
for the business communities. This is partly due to the existence of higher
education institutions within the local area and partly due to the relatively
low level of technology in use.

In terms of natural resources, the three municipalities are gifted with good
water supply, fertile land, forests and some tourist attractions. Land is dis-
tributed quite equally, shielding the areas from the negative aspects of the
Comprehensive Agrarian Reform Program (CARP). Coconut and rice are
the dominant crops. Rice from Carigara is known for its premium quality.
Within Baybay and its neighbouring municipalities abaca is another impor-
tant crop. The major problems are the exclusive use of coconut for copra
extraction, lack of undercropping of coconut plantations as well as soil deg-
radation and erosion.

Coastal marine resources in Baybay and Carigara appear to be jeopardized
by illegal fishing practices, overfishing and pollution. However, the LGU of
Palompon managed to reverse this trend and set up a strict and largely
successful coastal marine management program. Its components are gen-
eration of alternative sources of income for the local fisher folk (livelihood),
information, education and enforcement. The program already produced a
number of tangible economic benefits for the local economy: The fishing
population is thriving on the marketing of dried boneless danggit fish and
the LGU increased local income considerably due to proceeds from educa-
tional tourism it is promoting in the Tabuk Marine Park.

Infrastructure

The results of this second appraisal mission largely confirm those obtained
during the first one: Communication infrastructure is considered almost ex-
cellent, with cell phone coverage nearly reaching even remote baranguays
in the municipalities studied. The only exception to this general rule is the
baranguay Hilapnitan, Baybay’s industrial zone, where investors were
forced to establish their own satellite phone system and operate an office in
Baybay town, as this area is not connected to the communication system.

13

Apart from this, the road system was improved in all three of the municipali-
ties, with the large majority of baranguays getting linked to farm-to-market
roads. In Carigara, a considerable share of feeder roads is even cemented
(one lane). In Baybay and Palompon, the municipalities’ administration up-
graded the towns’ market facilities, an effort not yet fully concluded in Bay-
bay and still awaiting commencement in Carigara. Price of real estate in the
commercial centres of the municipalities went up notably, with Baybay even
matching Cebu prices. Although this may be an indication of a healthy eco-
nomic development, it may be considered a competitive disadvantage by
potential investors. However, prices of real estate outside town proper are
much lower. Our respondents unanimously claimed that prices of electricity
are too high taking proximity to the power sources into account. Most of
them were especially apprehensive of the extra charges billed by LEYECO.
Two industrial consumers of electricity in Baybay, though, enjoy lower
prices due to directly sourcing power from NAPOCOR. Reliability of power
supplies was regarded good in general; however, consumers in Carigara
experienced many brownouts during January and February 2005. Ware-
housing facilities were reported missing in Carigara, a factor contributing to
local rice farmers selling their produce immediately after harvest at a low
price.

Conclusions:

In economic terms, all municipalities provide potential for a successful ap-
plication of the LRED – approach. Baybay is experiencing dynamic growth
and Palompon as well as Carigara are recording moderate growth rates. All
of them dispose of dynamic entrepreneurs in different fields of economic
activity. There are still untapped natural resources and the example of
Palompon shows that even coastal marine resources can be restored. The
infrastructure generally allows for an expansion of entrepreneurial activities.
The local administrations were active in creating an environment conducive
for business, with the LGU of Baybay being the most straightforward and
proactive among the three in this regard. Notwithstanding these efforts,
unemployment is on the rise in all municipalities, exerting considerable
pressure towards more pronounced and systematic local economic plan-
ning and implementation. In terms of interaction between LGU, entrepre-
neurs and other representatives of the civil society, the three municipalities
provide a fertile ground for application of the LRED – approach.

14

5 ACTION PLANS AND COOPERATION
AMONG GTZ-PROGRAMS

Since the economic and political environment is, in general, favouring work-
ing with the LRED – approach in the three appraisal areas, the consultant
recommended to engage into action planning during the validation work-
shops. This recommendation was accepted by LGUs and entrepreneurs
alike. Based on the rapid appraisal, he proposed several lines of interven-
tion for each municipality (see table 1). Their number depended on the per-
ceived capacity of the respective LGU to venture into such an approach
and on the number of participants present in the workshop. The detailed
action plans are found in annexes 9, 10 and 11.

Table 1: Fields of intervention of action plans
Baybay Palompon Carigara
1. Address investment 1. Improve employ- 1. Improving conserva-
promotion more sys- ment/ income gen- tion/ packaging of
tematically eration through tour- delicacies
ism
2. Initiate the develop- 2. Diversify use of co- 2. Exchange of experi-
ment of local tourism conut ences in coastal ma-
rine management
3. Organize the busi- 3. Address investment 3. Negotiate with com-
ness community promotion mercial (universal)
banks to locate in
Carigara
4. Develop comprehen- 4. Promote use of or-
sive economic plan ganic fertilizer in rice
farming
5. Provide information 5. Address investment
on the prospects of promotion
virgin coconut oil
production

As the table reveals, the fields of intervention are partly geared towards
promoting business and investments directly (e.g. through developing tour-
ism, diversifying use of coconuts and improving conservation and packag-
ing of delicacies) and partly towards improving the institutional environment
(e.g. systematic investment promotion and economic planning). The latter
is expected to contribute to employment and income generation too by ma-
king institutions work more effectively when handling economic affairs.

In the debriefing meeting held at GTZ headquarters in Manila on February
16th, potential areas of cooperation were discussed between SMEDSEP
and GTZ-LIP. One of the guiding questions was how GTZ can improve
support to action plan implementation by creating synergies among its dif-
ferent programs and projects. The other question was, what SMEDSEP-
LRED can offer other programs. The discussion was based on a proposal
by the international consultant (see table 2).

15

Table 2: Cooperation Potentials among GTZ regarding LRED in Leyte

Location Field of Intervention Potential input from other GTZ -
Programs/Projects
Ormoc Collect information on power Decentralization project to provide
price fixation information on institutional set-up
of power supply and tariff structure

Baybay Provide information on the Provide information on the techni-
prospects of virgin coconut cal features of virgin coconut oil
oil production production (GTZ-LIP)

Baybay, Diversify use of coconut Provide information on the techni-
Palompon, cal features and economic feasi-
Carigara bility of alternative uses of coconut
(GTZ-LIP)

Carigara Promote use of organic fertil- Provide case studies of successful
izer in rice farming uses of organic fertilizer in rice
farming (GTZ-LIP)

Location Field of Intervention Potential input from SMEDSEP
– LRED
Leyte Prov- Training of LRED-facilitators Offer training in LRED – method-
ince ology to staff of GTZ-projects and
their partner organizations

The following points were finally agreed:

! GTZ-LIP will support SMEDSEP-LRED with information regarding
technical and economic aspects of diversifying the use of coconut.
This includes virgin coconut oil production. However, the way of how
this transfer of information may occur (e.g. provision of studies and/or
active involvement in the conduct of workshops and seminars) will still
have to be sorted out. Mr. Peter Keller, Coordinator of the LIP, will dis-
cuss the topic with his team and feed the results back to SMEDSEP.
! GTZ-LIP is also open to cooperation with regard to the use of organic
fertilizer in rice production (a field of intervention in Carigara). How-
ever, the extent to which GTZ-LIP will be able to provide a substantial
input in this field will still have to be examined in more detail. Mr. Kel-
ler will give feedback on this issue after consulting his team.
! Whether and to what extent the Decentralization Project will be in a
position to provide assistance on the issue of power price fixation
could not be explored due to the absence of a representative of this
project in the meeting.
! SMEDSEP will provide opportunities to other programs conducted
with GTZ – involvement to participate in a training course on ap-
proaches of LRED in the second half of this year. It was pointed out
that the training will target at practitioners and will focus on practical
tools such as conducting rapid economic appraisals and using facilita-
tion techniques. GTZ-LIP announced interest in sending either staff of
its partner agencies or own personnel to the training.

16

Concluding this chapter, one may emphasize that the quality of the action
plan improved considerably between phase I (Ormoc) and phase II (Bay-
bay, Palompon and Carigara) of the LRED – appraisal missions. This re-
flects the fact that the mission team placed more emphasis on more de-
tailed and realistic planning. However, at the same time marked differ-
ences between the plans produced in phase II are remaining. In terms of
scope, technical quality and commitment of local stakeholders, the Cari-
gara plan appears to be the most advanced in this respect. The fact that
SMEDSEP and GTZ-LIP agreed upon broad lines of cooperation may fur-
ther the prospects of getting the plans implemented.

17

6 LOGFRAME AND IMPACT
MONITORING

During his preceding mission in October/November 2004, the international
consultant drafted a proposal for a logframe defining the logic of interven-
tion, indicators, means of verification and assumptions of SMEDSEP’s
LRED sub-component. The following pages present a revised form of the
logframe.

Two major changes as compared to the draft version occurred. The first
relates to the intervention logic. There were two kinds of intervention logic
before, one following the logframe and another following the impact as-
sessment terminology. Now, the terminology has become unified. For in-
stance, “purpose” (logframe terminology) is now congruent with “direct
benefit” (impact assessment methodology) and “overall objective” with “indi-
rect benefit I”.

The second modification relates to the indicators. The draft version of the
logframe did not contain any baseline information that could serve as yard-
stick for measuring advances in local economic development. In the pre-
sent version, some of the information gathered during the appraisal mission
is used as baseline. This refers to positive or negative trends in the turn-
over and number of employees of the companies interviewed during the
two missions. It should be noted, that the interviews were not conducted
with the purpose of producing material for a baseline study. The information
is by no means statistically representative. However, dealing with financial
constraints on the one hand, which did not allow for a comprehensive and
expensive baseline study, and facing the necessity to have some point of
departure for performance measurement on the other hand, the consultant
opted for this pragmatic solution.

18

Logframe LRED – Leyte 11/2004 – 08/2006

Impact chain/Intervention Indicators Sources of verification Assumptions
logic
Indirect benefits II/ Overall employment of those com- Survey of those companies that had Macro-economic environments re-
Long-term development goals: panies interviewed during the ap- been interviewed during appraisal in mains relatively business friendly.
Competitiveness of SMEs is in- praisal mission has gone up by 2% Ormoc, Baybay, Palompon and
creased and employment and in- between end 2004/beg. 2005 and Carigara. “Summary company
come generation of SMEs has ac- 2nd quarter of 2006 questionnaires” serve as baseline.
celerated
Indirect benefits I/Overall objec- ! The number of companies in- ! Survey of those companies that There are no major external
tive: terviewed during the appraisal had been interviewed during “shocks” impacting negatively on
The local environment of selected missions stating that their turn- appraisal in Ormoc, Baybay, the local economic environment.
cities and municipalities in Leyte over is increasing, has gone up Palompon and Carigara.
has become more conducive for by 5% between end 2004/beg. “Summary company question-
economic growth 2005 and 2nd quarter of 2006 naires” serve as baseline.
! By 2nd quarter 2006, local ! Focus group discussion in each
stakeholders are able to men- of municipalities participating in
tion at least four specific ar- LRED. No baseline available.
eas/examples where local envi-
ronment was improved as a re-
sult of applying LRED - ap-
proach
Direct benefit/Purpose: ! At least 60% of the activities ! Quarterly monitoring reports of The local political and administrative
The LRED – approach has become defined in the action plans are environment remains receptive to

19

Logframe LRED – Leyte 11/2004 – 08/2006

Impact chain/Intervention Indicators Sources of verification Assumptions
logic
an integral part of the planning and successfully carried out until the LRED – Coordinator. the LRED – approach.
implementation procedures of se- 03/2006
lected cities/municipalities of Leyte
Province ! As a result of successful plan
! New plans and workshop re-
implementation 3 out of 4 mu-
ports.
nicipalities did a replanning in
the 2nd quarter of 2006
Use of service or product/Result LRED action plans defined in at Action plans and workshop docu- There is a critical mass of local
1: least 4 municipalities of Leyte until mentations stakeholders interested in the LRED
LRED action plans jointly developed 3/2005 by private and public sector - approach.
by private and public sector
Use of service or product/Result 20 staff members of provincial and Training report and attendance Decision-makers in local and pro-
2: local administrations, BDS- sheet vincial administrations, BDS-
LRED facilitation capacities are providers and business service providers and business service
locally available organizations from the Province of organizations are receptive to the
Leyte participated in a training idea of training their staff in the
course on LRED and facilitation LRED - approach.
techniques until 12/05

20

ANNEXES

Annex 1: Terms of reference

Annex 2: List of persons met

Annex 3: Findings LRED Baybay

Annex 4: Findings LRED Palompon

Annex 5: Findings LRED Carigara

Annex 6: Summary company interviews Baybay

Annex 7: Summary company interviews Palompon

Annex 8: Summary company interviews Carigara

Annex 9: Action plan Baybay

Annex 10: Action plan Palompon

Annex 11: Action plan Carigara

Annex 12: Report writing format for LRED-Coordinator

Terms of Reference
Short term mission to the Small and Medium Enterprise Development for
Sustainable Employment Programme (SMEDSEP) on Local Economic
Development (LED)

Time: The mission to the Philippines is expected to start end of January 2005 with a duration
of approximately 4 weeks.

Table of Content

1. Background/Rationale
2. Objectives of the Mission
3. Scope of Work
4. Expected Output
5. Budget

1. Background/Rationale

The SMEDSEP Program is an integrated approach for the development of the private sector
in the Philippines with a regional focus on the Visayas. Its over-all objective is: “State-run
and private institutions create general business conditions in the Philippines, particularly in
the Visayas, to harness entrepreneurial potential and encourage competition”. The Program
comprises of four (4) components, namely:

1.) SME Policy/Enabling Environment for SMEs,
2.) Business Development Services (BDS) for SMEs,
3.) Access to Financial Services for SMEs,
4.) Demand-driven training programs for the workforce.

Component 2 and 3 are subcontracted for implementation to GFA-Management. Focus of
the planned mission is component 2 which develops and implements a Local Economic
Development (LED) approach for the Province of Leyte, regarding the scope of services of
the 3 other components.

2. Objectives of the Mission

The objectives of the mission are:
! LRED process in Ormoc (in collaboration with local consultant) is further facilitated.
! The LRED – process with participation of the major stakeholders is initiated in 3 other
municipalities in Leyte.

3. Scope of Work

The consultant shall study all the required documents of the project and the available
economic data and information of Leyte Province. He shall meet related stakeholders (GTZ,
esp. LIP Project, Regional and Local Government, DTI, TESDA, NEDA, Associations,
Entrepreneurs, BDS and HRD providers). More specifically, the consultant shall:

! Assess the progress of LRED process in Ormoc and develop with the local consultant
an activity plan for the local consultant.

1

! Validate the selection of 3 additional municipalities for a rapid economic appraisal.
! Carry out rapid economic appraisal in 3 additional municipalities
! Make recommendations on municipalities to be included in the LRED strategy Leyte
! Prepare an action plan with the stakeholders from recommended municipalities

The consultant shall draw a detailed work plan addressing the steps to be taken and the time
needed to achieve the objectives prior to commencement of the consultancy. Upon
agreement of the work plan by the Senior Adviser BDS, it will become integrative part of the
contract. The work plan will be fined-tuned upon arrival of the consultant.

4. Expected Output

Two weeks after completion of the mission to the Philippines, a draft report will be sent to the
Senior Adviser BDS. The draft report shall comprise the activities as stated under point 3,
and results/ recommendations thereof.

The findings of the appraisal mission shall be documented to be forwarded to the
stakeholders contacted in the mission.

One week after receiving the comments, the final version of the report will be submitted.

5. Budget

The mission is expected to last up to one person month, including preparation and report
writing.

Proposed expert: Rolf Speit, who implemented already the first mission with regard to the
LRED approach in Leyte. His CV was part of the original GFA proposal.

Cebu City, 16th day of December, 2004

Markus Ehmann
Senior Adviser BDS
SMEDSEP

2

List of persons met/interviewed

Persons met/interviewed Institution Function Date

Markus Ehmann SMEDSEP/GFA Senior Advisor 22/01/05
Rita Pilarca SMEDSEP/GFA Advisor 22/01/05
Gloria M. Adapon SMEDSEP/GTZ LRED-Coordinator 22/01/05

Raul Cam LGU Ormoc City Planning&Development 24/01/05
Coordinator

Maylyn Villamor AFFIRE Ormoc Chief Operating Officer 24/01/05
Vivencio Sumaylo AFFIRE Ormoc General Manager

Atty. Roy Fiel Ormoc Chamber of C&I President 24/01/05

Florante Cayunda LGU Baybay Vice-Mayor 25/01/05
Vicente Veloso Sangguniang B. Baybay Head of Committees on Co-
operatives; Labor; Trade and
Investment
Juanito Modina Sangguniang B. Baybay Environmental Committee
Ernesto Butanan Sangguniang B. Baybay Committee Laws & Rules
Deogracias Pertinez Sangguniang B. Baybay Agricultural Committee

Jose Carlos Cari LGU Baybay Local Chief Executive 25/01/05

Cedrick Chan LGU Baybay DILG Officer 25/01/05

Patrick Postero LGU Baybay Municipal Planning & 25/01/05
Development Coordinator
Josie Duterte LGU Baybay Planning Staff

Ivor A. E. Mojado ISBS Pangkor Owner/Manager 25/01/05

Linda Odicta Municipal Employees Coop. Vice-Chairman 26/01/05

Noel Sosmeña CIABU Primary Multi- Chairman of Board of 26/01/05
Purpose Cooperative Directors

Victor B. Parillas Specialty Pulp Manu- Plant Manager 26/01/05
facturing Inc. (SPMI)

Rey Polito Visayan Oil Mill Plant Manager 26/01/05

Dr. Jose Alkuino, Jr. Leyte State University Vice-President Administra- 26/01/05
tion & Finance

Dr. Wolfreda Alesna Leyte State University Research & Extension 26/01/05
Director

Virginia R. Danas Dañas Rice & Corn Trading Owner/Manager 27/01/05

Roel Salasayo Anistar Trading & Brokerage Plant Manager 27/01/05

Gabriel Israel PNB - Bank Operations Officer 27/01/05

Cheryl Bongcaros Green Bank Officer-in-Charge 27/01/05


Eddy Abas EI - Enterprises Owner/Manager 27/01/05

Marcelo C. Oñate LGU Palompon Local Chief Executive 31/01/05
Ledinila A. Bregaudit Sangguniang B. Palompon SB member
Harvey Felpiñon Sangguniang B. Palompon SB member
Jesus L. Sanchez Sangguniang B. Palompon SB member
Laureto Nuñez Sangguniang B. Palompon SB member
Manuel Bertulfo Sangguniang B. Palompon SB member
Francisco Janico Jr. LGU Palompon Municipal Agriculturalist
Raoul T. Bacalla LGU Palompon Tourism & Environment
Officer
Romy Cartalla LGU Palompon Municipal Planning &
Jerlito Letrondo LGU Palompon Municipal Administrator

Gilbert Manongsong Northern Leyte College Director 31/01/05

José Pajaron Multi Circuit Electronics Owner/manager 31/01/05

César Acis Jolita Farm Owner/manager 01/02/05

Doroteo Yap Doroteo L. Yap Stores Owner/manager 01/02/05

Ramon Oñate Lourd Agrivet Supply Owner/manager 01/02/05

Elisabeth Ragas Liberty Farmers Multi- Chairman 01/02/05
Purpose Cooperative

Pedro Omega Palompon Institute of Vice-President 01/02/05
Technology

Maria-Teresa R. Fisherfolk Community Owner/manager 02/02/05
Contenidas Baranguay Plaridel

Roy Domael Rosh Cellphone Owner/manager 02/02/05

Loy Acido Philippine National Bank Sales & Services 02/02/05
Manager

Eulogio Tupa PACCI Manager 02/02/05

Dorothy L. Roble DLR Enterprises Owner/manager 02/02/05

Gil Lloren Sangguniang B. Carigara Trade & Industry Committee 04/02/05

Nick Javines LGU Carigara Municipal Planning & 04/02/05

Ms. Anlie G. Apostol LGU Carigara Local Chief Executive 04/02/05

Lilian D. Estorninos Eastern Visayas State Campus Director 04/02/05
University

Sarah Caballes Kangara Multi-Purpose Chairman 04/02/05


Cooperative

Blani Macayan Taytay sa Kauswagan Coop Manager 04/02/05

Olímpia Arminal Rice Retailers Association President 05/02/05

Arnulfo Alberca Fish Vendor's Association President 05/02/05

Felicisimo Sotomayor Carigara Tricycle Drivers' President 05/02/05
Association

Roque 'Bimboy' Aguilar RAQ - Farms Sales Manager 05/02/05

Corazon T. Lauron CTI Enterprises Owner/manager 07/02/05

Sis. Anthony Kuizon Holy Cross College College Directress 07/02/05

Samuel Tabada Blacksmith SG Liwanag President 07/02/05

Romeo Esmiro LGU Carigara Municipal Agricultural 07/02/05
Officer

Manuel Camposano Jr. Camposano Rice Mill Owner/manager 07/02/05

Vivencio Lim Shopper's Budget Owner/manager 07/02/05

Felomina G. Enero Lomen's Pastillas Owner/manager 07/02/05

LRED: Results of the Rapid Appraisal of the Municipality of Baybay

Strengths Weaknesses/Points for improvement
Enabling ! The Mayor is having a realistic vision of local and regional ! LGU is still heavily dependent on the IRA
environment economic development (local resource based)
! The business licensing process seems to be largely ! For business start-ups, the one-stop-shop is not yet fully
corruption free implemented (no permanent local office of national
agencies like Phil Health, SSS etc. – mostly situated in
Ormoc City)
! Moderate local taxes
! For business renewals, the one-stop-shop is practically
implemented
! LGU is providing incentives to investors
Small and medium ! Entrepreneurial-spirited local environment ! No existing local business yet engaged in producing virgin
enterprises, farmers coconut oil
! New companies were established and existing companies ! The expansion of rice production appears to be hampered
expanded or diversified (abaca pulp mill, coconut oil mill, by a variety of factors largely determined on national level
restaurant) indicating a dynamic local/regional economy. (e.g. agrarian reform, trade policy)
! There are negotiations underway to attract foreign ! Lack of low cost irrigation system for rice cultivation
companies to Baybay (e.g. Shenyang Furniture Corp.)
! There are ongoing initiatives on producing virgin cocnut oil ! There are cooperatives with management problems esp. in
(LSU and GTZ-LIP) the field of micro-finance
! Micro-finance institution(s) providing professional services ! Some economic activities appear government-driven and
to the poorer sections of society may not be sustainable (micro-finance coop. + tourism
initiative)


! There are ideas of developing local tourism ! Lack of technical assistance on making project proposals
and fund sourcing
! Reportedly, there is a considerable number of active ! Lack of knowledge on technology for commercial food
cooperatives in the local area processing and packaging
! Initiatives to promote backyard aquaculture (tilapia)
Support ! The LGU has successfully facilitated the attraction of ! There is no comprehensive plan of addressing the local
organizations investors from outside Leyte economic problems systematically
! Considerable number of training/education providers (LSU, ! The local business chamber does not play an active role in
FCIC, Baybay Institute of Technology) advocacy and entrepreneurship building.
! LGU, LSU, FIDA and Provincial Gvt. are cooperating well ! Investment promotion needs improvement (e.g. updating of
in fighting the bunchy top disease which is badly affecting promo materials, participation in outbound missions)
abaca industry
! Since other LGUs are less active in fighting the bunchy top
disease, the whole abaca industry remains vulnerable
! Stronger cooperation between LGU and LSU needed in
other areas (e.g. undercropping of coconut plantations)
Human resources/ ! Unskilled human resources are in abundance and ! Some companies report inadequate attitudes of unskilled
natural resources relatively cheap people
! For a town like Baybay, the local supply of skilled labour is ! Some skills (e.g. machine operators) are not available
quite good locally
! Good endowment with natural resources (water, fertile ! So far, the potential of coconut as raw material for textiles,
land, forests) furniture has not yet been fully utilized


! Potential for agricultural production (e.g. undercropping of
coconut plantations) is not fully utilized
! Fishing resources are becoming depleted by inadequate
fishing practices and population pressures

Infrastructure ! Generally good road network and nearly all Brgys. have ! No communication coverage in Brgy. Hilapnitan (location of
access to farm-to-market roads. industrial activity)

! Communication (cellphone, fixed lines, internet) is ! Lack of air transport Ormoc – Manila causes extra
generally considered good. costs/time for companies based in Manila

! The city administration has upgraded the town’s ! Real estate in Baybay commercial center is reported to be
infrastructure (public market, bus terminal). quite expensive.

! Port facilities in Baybay proper and Brgy. Hilapnitan ! Power prices are generally considered high
existing and being improved
! There are still, though few, brownouts
! Major industrial users of power are supplied directly by ! No regular bus transport at night
NAPOCOR and avail of the electricity at a lower price
! Real estate outside commercial center quite cheap ! Better services of the regular ferry service to Cebu needed
! Shallow port in Baybay poses limits to the kinds of vessels
that can come in

LRED: Results of the Rapid Appraisal of the Municipality of Palompon

Enabling ! The municipality is dedicated towards developing a ! There is a need to adjust vision and mission statement in
environment sustainable eco-system (vision and mission statement) order to make it clear that the LGU is not exclusively
focusing on trade
! The business licensing process seems to be largely ! Queueing for business permits renewal is allegedly a
corruption free hassle
! The LGU has increased the share of local income of the
total municipal budget from 15% in 1995 to 23% in 2004
without overburdening local business people
! One-stop-shop is practically implemented in Palompon
Small and medium ! There are positive indications of a moderate economic ! There are very few industrial/processing activities going on
enterprises, farmers growth in the area in the area
! There are active and dynamic business people in the area ! The potential for recreational tourism is not yet fully
utilized/developed
! Several fishing communities have successfully ventured ! The potential of OFWs investing in business ventures
into boneless danggit production and marketing locally is largely untapped
! There is a thriving eco- and educational tourism in the
Tabuk Marine Park generating some income for the LGU;
high demand for tourism packages
! Reportedly, there is a considerable number of active
cooperatives in the local area (20+) specifically serving
women; well organized umbrella organization (PACCI)
! The LGU has assisted in the development of aquaculture


in the local area
Support ! Considerable number of training/education providers ! There is no comprehensive plan of addressing the local
organizations (Northern Leyte College, Palompon Institute of economic problems systematically
Technology)
! The PIT is successfully training seamen for the ! No systematic way of investment promotion (e.g. through
international labour market (in cooperation with Dutch promo materials, participation in outbound missions)
partner organization)
! There are initiatives to promote local self-employment (Pot- ! There is no active business chamber to voice the concerns
Pot drivers, trainings provided by PIT) of the business community
! Strong partnership between PACCI and LGU re: economic ! Existing veterinary services do not always cope with the
development demands of the local animal farmers
! Garbage collection in the market area has reportedly ! Some businesspeople report lack of access to finance !
improved collateral is a problem
Human resources/ ! Unskilled human resources are in abundance and ! Some companies report inadequate attitudes of unskilled
natural resources relatively cheap people
! For a town like Palompon, the local supply of skilled labour ! So far, the potential of coconut as raw material for textiles,
is quite good furniture has not yet been fully utilized
! Remittances of OFW have improved the local economy ! Know-how of improved post-harvest techniques is lacking
(e.g. drying of copra)
! Local people are peace and order - loving ! Potential for undercropping of coconut trees is by far not
utilized


! Good endowment with natural resources (water, fertile
land, marine resources)
! Relatively equal distribution of land – few hacienderos
! Variety and volume of fish appears to have improved as a
result of strict coastal marine management
Infrastructure ! Road network in the municipality improved (connection of ! Some farm-to-market roads are not of good quality and
baranguays to road network) maintenance appears not to be adequate (e.g. after
landslides)
! Availability of agricultural land near town proper, at a lower ! Cost of real estate in Palompon town is reported to be
cost rising
! Power connections from two different power lines ! Power: There are still, though few, brownouts
! Regular bus services to Tacloban and Ormoc ! Power prices are generally considered high, esp. regarding
the extra charges demanded by LEYECO
! Communication (cellphone, fixed lines, internet) is
generally considered good.
! The city administration has upgraded the town’s
infrastructure (public market, shop stalls, cementation of
roads within town proper).
! Existence of deep water and newly upgraded port
! Regular ferry service to Cebu

LRED: Results of the Rapid Appraisal of the Municipality of Carigara

Enabling ! The mayor’s vision is towards developing sustainable ! Local budget depends heavily on IRA (around 92% IRA)
environment income-generating activities, no “flash-in-the-pan” ventures
! The business licensing process seems to be largely ! So far, no LGU-initiative to develop alternative sources of
corruption free income apart from increasing taxes
! Local taxes are considered affordable by business ! One-stop-shop is not fully implemented in Carigara
community
Small and medium ! There are positive indications of a moderate economic ! There are few industrial/processing activities going on in
enterprises, farmers growth in the area (bakeshop, pawnshops, hardware and the area
drug store, RAQ-farms, rice-mill)
! Local farmers produce high-quality commercial rice ! There are very few initiatives to develop the tourism
industry (exception: RAQ – farm restaurant)
! Most of the rice farms are irrigated ! Reportedly, productivity in rice farming is quite low
! Carigara is well known for its delicacies outside its ! Reportedly, some of the irrigation schemes are in need of
boundaries improvement and repair
! The price of copra has gone up considerably during the ! Many micro – business people still resort to private money
last years lenders (easy access) instead of using the micro-finance
coops.
! There is some event-driven tourism ! Some locally produced commodities face marketing
problems (e.g. vegetables, pastries products)
! Blacksmithing appears to be a sunset industry
Support ! The LGU has a very comprehensive Municipal Enterprise ! Only few of the activities suggested in the MEDP were
organizations Development Plan (MEDP) actually implemented


! There are several business associations (fish vendors, rice ! No systematic way of investment promotion (e.g. through
retailers, tricycle drivers, farmers) promo materials, participation in outbound missions)
! There are active and dynamic community leaders in the ! Problems of Eastern Visayas State University: Scarcity of
area engaged in improving the local economy funds, training facilities and offer of courses not conducive
to demand of labour market, not sufficiently skills-oriented
! The Holy Cross College is offering high-quality education ! There is no commercial bank in the area
to locals and is adjusting its course structure to market
demands
! TESDA is reported to be quite responsive regarding the
delivery of short technical courses in the area
! There are several micro-finance providers (cooperatives)
which broadened the supply of capital at lower cost esp.
for farmers and micro and women-headed businesses (e.g.
Kangara Multi-Purpose Coop., Taytay sa Kauswagan,
OCCI)
! Strong presence and participation of Kangara Multipurpose
Coop. in improving the local economy
! There is an LGU-driven initiative to promote seaweed
cultivation
! There is an initiative to promote improved techniques of
vegetable production (plastic mulching)
Human resources/ ! Unskilled human resources are in abundance and ! So far, the potential of coconut as raw material for textiles,
natural resources relatively cheap furniture has not yet been fully utilized


! Skilled labour can be sourced regionally ! Potential for undercropping of coconut trees is by far not
fully utilized
! Good endowment with natural resources (water, fertile ! Illegal fishing is rampant reducing the marine resources
land) and potential tourist attractions and undermining the survival of the fishing communities
! Relatively equal distribution of land – few quarrels between ! Soil quality is reported to have declined due to erosion and
landowners and tenants use of inorganic fertilizer esp. in uphill areas
! Illegal logging activities are harming local rice industry by
reducing the capacity of the forest to store water
Infrastructure ! Road network in the municipality improved (connection of ! Port is shallow and upgrading works were interrupted
baranguays to road network); most roads are cemented although funds had been secured (DPWH)
! Regular bus services to Tacloban and Ormoc ! Lately (2005), there were many power brownouts
! Communication (cellphone, fixed lines, internet) is ! Power prices are generally considered high, esp. regarding
generally considered good; cellphone coverage up to the the extra charges demanded by LEYECO
remotest baranguay
! The city administration has established a new ! Cost of real estate in Carigara town is reported to be rising
slaughterhouse
! Cost of real estate in Baranguays of Carigara Municipality ! There are no adequate accommodation facilities in the local
is low area
! The local market is in need of improvement
! Few local warehousing and cold storage facilities available

Summary Company Questionnaires : Baybay, Leyte

Part 1: Basic information on the companies interviewed

1.1 – 1.6 Basic information on companies

Sector/Sub-sector Tendency Investments Future in- Purchase Purchase Target markets
turn over during last vestments raw mate- pre-
five years rial fabricated
inputs
Abaca Pulp Increasing (new plant) local interna- International:
tional Europe
Crude Coconut Increasing Expansion of Increase ca- local local International:
Oil/Refine Coconut capacity in- pacity Europe, US
Oil stalled
Micro fi- stagnating Ventured to local Local
nance/lending (multi other eco-
purpose coopera- nomic activi-
tive) ties
Agri: Rice and corn Increasing Replacement Local +
milling, retailing, of machinery
Other region -
wholesaling; poultry
Cebu
feed distribution
Commercial banking Increasing Upgrading of Local
facilities
Rural banking/Micro Increasing Local
finance
Charcoal production Increasing Local,
Cebu
Construction (sub- Increasing Upgrad- Additional PCs Local
contract- ing/expansion
ing)/franchising- of premises
gaming business
Restaurant Increasing Upgrad- Venture into local
ing/expansion internet cafe
of premises
Copra buying/trading Increasing Expansion of Venture into local Local, Reg 8,
capacity in- franchising other regions in
stalled (fast food Visaya
industry)
Fishing industry falling Venture into local
backyard
fishpond busi-
ness:

Summary Company Questionnaires Baybay 1

1.7 Number of permanently employed staff1
Six years ago Three years ago Actual number
95
16 14
3
9 9 9
5 14
7 12
10 20
45
Total 9 47 212
Growth rate

Part 2: Information on business environment and major constraints

2.1 How do you assess the following items with regard to your company?
Item Average assessment by interviewees;
5 = excellent, 4 = good, 3 = fair, 2 = not so
good, 1 = negative
(Average Assessment/no. of interview-
ees/percentage)
2.1.1 Access to supplies 4.1 66% - good
10%- excellent
10%- fair
SMEs

2.1.2 Consumer demand 5.0 60%- excellent
40%- good
2.1.3 Quality of products 4.5 63%- excellent
25%-good
12%-fair

1 Only those companies which had already existed in 1998 are included here.


good, 1 = negative
ees/percentage)
Comments on supply situation:

! Abaca pulp: supply sometimes not possible to cater big volume of demand; de-
pends on the consumer demand as well (there are many different grades in
abaca), supply is versatile in nature; Good supply of water is a big consideration
in setting up a plant in Baybay
! Abaca: (LSU) production is good; able to address the problem on the disease af-
fecting the supply of abaca
! Equipment use in the plant are mostly from other countries
! Coconut oil/refine oil producer: supply is good; the location of the plant in Baybay
is an advantage (Leyte-being one of the biggest producer of coconut)
! Copra trading : supply is very good in Leyte but competition among buyers has
increased
! Good supply of water (for plants operating in Baybay)
! Charcoal production: supply is good, competition among buyers is increasing
! Micro-finance: increasing number of micro finance players in Baybay
! Agri/Rice retailing: Importation of rice in the country has affected the price of lo-
cal price; over supply resulted to low prices of rice; also rice supply from
neighbouring towns; Importation of rice in the Phils is not the solution to over-
come rice shortage in the Phils
! Irrigation is the no.1 problem for farmers in Baybay
! Fishing industry: fish is getting scarce in Baybay; few banca for operations is
also affecting the supply of fish
! Restaurant/Catering: access to supply is good

Comments on demand situation:

! Rice retailing: not as profitable as before due to importation of rice from Thailand
! Presence of many micro finance players (rural banks in particular) in Baybay af-
fected the demand for services of multi purpose cooperatives
! Increasing demand for charcoal in Baybay
! Gaming business: demand is increasing
! Charcoal: there is a growing demand in Baybay
! Copra trading: demand is okay but there is a growing competition; sales price of
copra is quite low though due to pal oil competition
! Virgin coconut oil has a big potential
! Crude/Refine oil: demand is excellent, big potential for international market
! Rice retailing: buyers are from neighbouring towns, Cebu- is the biggest market;
low price of rice from Iloilo with good quality is also affecting the demand for local
rice
! Abaca: demand is good, but developing the market/customer is time consuming;
end product depends on the consumer demand as there are many grades of
abaca; abaca’s demand is high as it is being used for tea bags in UK
! Demand for abaca-fibre is high in Europe; replacement for fibre glass (automak-
ing industry- Europe
! Commercial Bank: there is an increasing number of commercial banks in Baybay
but the number of customer is likewise increasing
! Rural bank (micro finance) : demand for micro finance in Baybay is excellent


good, 1 = negative
ees/percentage)
Comments on quality of products:

! Multi purpose cooperative: services are affected by the high rate of delinquency,
weak financial management; “loan shopping” – overburdened with loans
! Rice retailing: good quality but prices of competitors from outside Baybay is af-
fecting the demand; imported rice from Thailand with the same good quality of
rice produce in Baybay is affecting the sale
! Commercial bank: old equipment being used in the operations is affecting the
quality of service provided to clients; upgrading of equipment is needed for better
quality of service
! Rural bank: extended services to clients helps increase the demand for micro fi-
nance
! Abaca Pulp: difficult to assess quality because the company has started only re-
cently.
! Copra/Crude/Refine Oil: quality is excellent; quality is meeting its standards
! Gaming business: installation of “up to date” equipment is essential to meet
standards

2.1.4 Transport infrastructure 4.3 62%- good
38%- excellent
2.1.5 Cost and reliability of power 4.0 62%- good
Infrastructure

supplies 10%- excellent
25%- fair
2.1.6 Availability and cost of real es- 3.3 30%- good
tate 20%- fair
10%-not so good
2.1.7 Cost and reliability of communi- 4.4 62%- good
cation 38%- excellent
Comments on transport infrastructure:
! Transport infrastructure has improved since the last 2-3 years: roads are
generally good; Baybay-Ormoc-improved 6 years ago
! Port is okay but can be improved for bigger vessels to enter the port; only
one boat going to Cebu; Port is shallow and can be improved
! Limited number of trucks available for transferring goods
! Transport in Baybay meets standards, however transport to Tacloban needs
repair
! Land travel to other LGUs after 7pm is difficult (no more public transport after
5 or 6 pm)
! It will be excellent to have an airport in Ormoc (which is close to Baybay), so
people don’t have to go to Cebu via Supercat to fly to Manila or elsewhere
! Having own ship to transfer goods/products is an advantage, but having a
better port will be excellent
! Port of Baybay is generally good because it is not congested
! Farm to market roads are generally good; only 2-3 barangays need to be
completely cemented and be connected
! Market facilities have improved but resulted to higher rental fees


Local and Regional Economic Development in Leyte Province

Local and Regional Economic Development in Leyte Province

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