South Road Properties Cebu’s fountain of wealth

By Ehda M. Dagooc
The Freeman
Thursday, January 17, 2008

Cebu City is seen to become the richest Local Government Unit (LGU) in the Philippines as soon as the South Road Properties (SRP) will start to accommodate operating locators.

Cebu Investments and Promotions Center (CIPC) managing director Joel Mari S. Yu said the city is not relying on the revenue it will generate from lot sales and lease of the 300 hectare economic zone, but rather it will be making more money out of the percentages it can generate from utility and other service providers.

CIPC, a non-profit, non-stock company, owned by the Cebu City government, but privately run, is commissioned to market and promote the SRP.

For power demand alone, the City government stands to get 22 to 24 centavos in every kilowatt consumed by the locators, as franchise fee. In water consumption, SRP management gets P5 to P10 per cubic meter sold.

SRP is projected to consume 99 megawatt in the next nine years for commercial operation.

In telecommunications, SRP will get six percent of the gross income of all telecom companies providing services at the SRP locators.

SRP also gets about five percent in every gross income generated by other service providers, such as security agencies, or other contractors.

According to Yu, SRP will become Cebu’s “source of wealth”. “We will be making enough money.”

“If we will be able to solve all the problems, and finalize all the deals, I am confident that SRP could start to take off within this year,” Yu said.

The 160-hectares of the ecozone, is already being eyed by three big conglomerates in the country. All these three companies have already identified their respective areas within the 160-hectare site.

Yu said Cebu will have to wait for a little more time, as the Cebu City government led by Mayor Tomas R. Osmeña is still clenching good deals with big companies, which expressed strong interest to locate at SRP.

On the other hand, one of the primary problems that keeping the SRP from taking off, is the establishment of a Special Purpose Corporation (SPC), that supposedly will manage the City government-owned zone.

According to Yu, it is very important for the Cebu City government to establish a SPC, as investors are demanding to deal with a privately-run corporation to make sure that SRP will be insulated by political interference.

“As early as five years ago, I already told the Mayor to establish a separate entity to manage SRP. I still stand by it today hoping that he will do it,” Yu said.

The marketability of SRP is very strong. However, the City government should install SPC, just like any successful economic zones.

In the next three years, Yu is optimistic that SRP could generate an average of 50,000 jobs for Cebu.

SRP will not only become Cebu City’s source of wealth, but it will also become the pride of every Cebuano, as development of the coastline economic zone is spectacular, Yu said.