Cablegate: Growing U.S. Business Role in Northern Mindanao

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UNCLAS SECTION 01 OF 02 MANILA 003501

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: BEXP BTIO ECON EINV PREL RP
SUBJECT: GROWING U.S. BUSINESS ROLE IN NORTHERN MINDANAO

REFS: A) 06 Manila 2570 B) Manila 3307

1. SUMMARY: The Deputy Chief of Mission's October 17 visit to
Cagayan de Oro highlighted the increasing role that American
business plays in the commercial life of Northern Mindanao. DCM
participated in the ribbon cutting ceremony for the first Cagayan de
Oro trade show and exposition, which featured an American Showcase
Pavilion with exhibits by thirteen well-known U.S. firms. The theme
of U.S. business engagement was reinforced by a visit to a
U.S.-owned call center that is rapidly expanding its work force.
Other highlights of the DCM's visit included a luncheon hosted by
the Cagayan de Oro Mayor with local business leaders, a television
interview, and an informal exchange of views with the leadership of
the local Chamber of Commerce. The Ambassador's June 2006 visit to
Cagayan de Oro, and the DCM's September 2007 visit to General Santos
City (reftels) also highlighted the growing presence of American
businesses in Mindanao. With business leaders and the media, the
DCM encouraged progressive (and largely Christian) cities like
Cagayan de Oro to lead and benefit from growing peace and
development in poorer (and largely Muslim) parts of Central and
Western Mindanao. End summary.

A BOOMING REGION

2. Northern Mindanao (Region 10) grew 6.84 percent in 2006, tied
with Metro Manila as the second fastest growing region. Besides
having the highest GDP in Mindanao, its per capita GDP is the third
highest in the country. Region 10 accounted for nearly 5 percent of
2006 Philippine GDP. There is a growing middle class and a general
improvement in the standard of living region-wide.

3. Cagayan de Oro is the gateway and regional shopping center for
the eight cities and five provinces of the region. The city's
economy is largely based on trade, services and tourism. Its
regional orientation is reflected in its large concentration of
service industries, government offices, banks, and the facilities of
some of the most successful local and multinational corporations,
including Del Monte Philippines, Nestle, Coca-Cola and Pepsi-Cola.
In 2005 Cagayan de Oro exported about $540 million, with products
such as canned pineapple, fatty alcohol, sintered ore, crude coconut
oil and desiccated coconut, and milk powder predominating.
Investment opportunities in Cagayan de Oro are in food processing,
infrastructure, industrial facilities, agriculture, and export
trading. The city's competitiveness is enhanced by its strong
economic ties with the nearby Visayan islands and the Philippines'
second city of Cebu, as well as the Cagayan de Oro-Iligan Corridor,
the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN
Growth Area (BIMP-EAGA), the Mindanao Container Port, and the
Iligan-Cagayan de Oro-Bukidnon Road, which links it to key regional
satellite growth centers.

SPOTLIGHT ON AMERICAN BUSINESS

4. The U.S. Pavilion at the first Cagayan de Oro Business
Enterprises, Services and Trade Exposition (Oro BEST Expo) 2007 was
an outstanding opportunity to showcase the prominent role of
American firms in the economic development of the region.
Represented at the three-day trade show were companies with a
longtime presence in the region (Goodyear and Dole) as well as
recent market entrants (Citibank and Cisco). Citibank reported that
the bank is doing well in Cagayan de Oro after a one-year presence.
Cargill is planning a major new investment, an animal feed
production facility scheduled to open in the spring of 2008.
Another American exhibitor, Amway, reported that 40 percent of its
business in the Philippines originates in Cagayan de Oro. In
addition to the on-site firms, U.S. Commercial Service staff manned
an exhibition that featured catalogs and brochures of 58
new-to-market U.S. businesses that are seeking to explore market
opportunities and develop meaningful trade contacts for export
sales.

EXPANDING CALL CENTER INDUSTRY

5. Deputy Chief of Mission toured a large call center facility,
Link2Support (soon to be renamed Concentrix Philippines), acquired
in February 2007 by SYNNEX of Fremont, California, an information
technology supply chain services provider. One of three
Link2Support sites in the Philippines, the Cagayan de Oro location
has 516 seats, employing over 1,200, with a 350 seat expansion
currently underway. Operating on a 24/7 basis, the firm provides
voice, chat and email support. Its main client is Linksys, a
division of Cisco. With a young work force (average age 22), the
firm's main challenge is to find potential employees with sufficient
technical knowledge and the required English language skills. In
that regard, Link2Support is implementing several innovative human
resource strategies. The company has adapted to the recruitment
pool in the region by hiring promising candidates and imparting the
technical knowledge with on-the-job training. Additionally, the
firm partners with area universities, donating equipment and
encouraging the establishment of new curricula, such as Call Center
English 101.

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U.S. BUSINESS GROWING WITH MINDANAO

6. The Deputy Chief of Mission rounded out the day with a media
interview and an informal conversation with the President of the
local Chamber of Commerce and other Cagayan de Oro business leaders.
The taped television interview reached across Christian and Muslim
provinces of Northern Mindanao, airing on ABS-CBN's evening news
program, and replayed on a Sunday features/talk show. In each venue
the Deputy Chief of Mission stressed his admiration for the dynamism
and pro-business climate of the region, and the desire of American
firms to participate in Mindanao's growth. The Deputy Chief of
Mission pointed to the positive role of American businesses as
socially responsible employers that offer meaningful jobs. With the
business leaders, Deputy Chief of Mission encouraged progressive
cities such as Cagayan de Oro to serve as nodes of development that
eventually could spread peace and prosperity to more of Mindanao,
thereby making more effective use of the region's untapped
potential. The mutual benefit of U.S./Philippine trade and
investment was a point reiterated throughout the day.

KENNEY

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