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Trade and Industry Profile |
General Structure
Davao City, as one of the major cities in
the Republic of the Philippines, adheres to the
principle of free enterprise and recognizes the
indispensable role of the private sector in
economic development.
 Among
the structural reforms initiated in the national
level are liberalization of imports,
deregulation of vital industries, relaxations of
investment rules, and privatization of
government-owned or controlled corporations.
On the other hand, business organizations in the
City are preparing for the onslaught of market
globalization by becoming outward looking and by
adopting cost-effective measures to become
globally competitive.
Trade Policy
 A
comprehensive tariff reform program has reduced
tariff rates from an average nominal tariff of
27.84% i 1990 to 6.49% in 2004, and most
products are now subject to a 0% to 5% tariff
band. The downward trend is set to continue,
although at a more gradual pace than before.
As a protective measure, the Philippines does
retain higher tariff rates (20% to 50%) on
sensitive agricultural products such as grains,
livestock and meat products, sugar, certain
vegetables, and coffee. A few agricultural
commodities are subject to minimum access
volumes, but these represent less than 1% of all
tariff lines.
The Philippines also imposes dumping and
countervailing duties on imports if necessary to
counteract unfair trade practices, and may
impose safeguard measures against increased
imports that may cause serious injury to
domestic industries and producers.
Agriculture
One of the two biggest industries of the City is
agriculture (the other one being the services
sector). Much of Davao’s economic strength is in
agriculture wherein it serves as a major
supplier of agricultural products and raw
materials to the local and export market. It is
very strong in the production of fruits (reason
for it being called the Fruit Basket of the
Philippines) as well as vegetables and other
high value crops (with the exception of rice).
Manufacturing
Davao City promotes investments in light to
medium manufacturing. Being the drop-off point
of agricultural produce and other raw materials
of nearby provinces, the opportunity for value
adding has spurred growth in the food
manufacturing sector as well as in other related
industries.
Based on statistics, the City’s contributions to
the overall growth rate of production value were
in food manufacturing, activated carbon, and
finished wood products. It is recommended for
investors to look into food processing, canning,
cutflower production, and manufacture of
footwear, gifts, toys, and house wares.
Construction
 The
City Government of Davao with the assistance of
the national government has vigorously pursued
construction projects in line with its economic
growth program. It has also made tie-ups as well
as joint venture projects (under BOT) with the
private sector in pursuit of its flagship
projects. Lined-up projects are the following:
23km coastal road, light rail transit system,
farm-to-market roads, and the Davao City Sports
Complex.
Utilities
Davao City relies on hydropower being
commercially distributed in the city by the
Davao Light and Power Company (which buys its
energy source from the National Power
Corporation). In the event of trip-offs, Davao
Light automatically runs its back-up generators
(diesel-based power generation plant) for a
continued supply of electricity.
Although hydropower-based electricity is
relatively cheap, the Department of Energy still
urges investors to look into other sources of
power that are also very available but remains
untapped in the area.
Potable water in Davao City (touted as one of
the best potable waters based on a study by the
American Waterworks Association) is being
supplied by the Davao City Water District. 90%
of total annual production is groundwater and
the remaining is surfaced treated water.
Telecommunications’ breakthroughs in the late
90’s made life in Davao a lot better. With the
availability of very affordable mobile phones
(mostly prepaid all-in digital phone kits which
can go as low as P3, 000 /kit or US$ 60/kit)
backlog in the telephone industry was
substantiated.
Deregulation and the entry of a number of new
players in the telecom industry translated into
a better and affordable service to the
consumers. It is then no wonder why the
Philippines is considered as the texting (short
message service price at 1 peso per message
sent) capital of the world.
Services in General
Davao City (and the Philippines, as a whole) has
a competitive edge in the export of consultancy
services in the field of (1) information
technology, (2) computer software services, (3)
consultancy engineering, and (4) contracting
services.
 Davao
City in particular is the service capital of
Mindanao due mainly to the fact that it is the
island’s center of trade, commerce, education,
and tourism.
In 2004, Davao City will be the first site of an
international call center in the island owing to
the high acceptability of its human resources to
the demands of a call center as well as to the
viability of the location itself for BPO
(business process outsourcing) operations.
The city is also envisioned in the near future
to become the educational and medical center of
the BIMP-EAGA (the
Brunei-Indonesia-Malaysia-Philippines East ASEAN
Growth Area).
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