Market Assessment

GTZ Philippines SME Development for Sustainable Employment Program, Cebu IT Sector Analysis, 2004

    SMEDSEP (Small and Medium Enterprise Development for Sustainable Employment Program) is a technical cooperation program between the Republic of the Philippines and the Federal Republic of Germany. It is an integrated approach to the development of the private sector in the Philippines with a regional focus on the Visayas. SME stakeholders in the Cebu province selected information technology (IT) as the pilot sector because it seems to offer the greatest potential for income and employment generation. This study represents the next step in the process, namely a sector analysis of the Cebu IT industry. Cebu was declared an IT hub in December 2003. Currently, there are four dominant subsectors: 1.) software, 2.) IT-enabled services, 3.) internet cafes, and 4.) hardware. The total number of Filipino-owned companies in all four subsectors is estimated at around 550, the majority of which (mostly micro-enterprises) are in the internet café subsector. Business categories include: 1.) informal sector/freelancers, 2.) registered Filipino-owned companies (mostly micro and small), and 3.) multinationals, which have little or no transactions with local companies.

    Methods for info gathering
    interviews of key informants, focus groups, secondary data research

    Summary of results
    The main problem in the IT industry is the lack or shrinking pool of qualified manpower. While the number of IT graduates is increasing, many of them do not have the necessary qualifications required by the industry. There are also regulatory issues that affect the ability of local entrepreneurs to establish companies and compete in the IT market as well as the region's ability to attract investors. Respondents in the research felt it was particularly important to review policies related to access to capital, including:
    - improving the listing conditions of the Philippine Stock Exchange (PSE) and extending trading hours.
    - Strict implementation of the Initial Public Offering requirement for Board of Investment registered IT initiatives.
    - Creating a special window for IT companies in government financial institutions.
    Each subsector within IT also has specific constraints which the paper outlines together with proposed BDS interventions to address those constraints.

    Associated Activities and Documents
    Market Assessment
    »GTZ Philippines 2002
    »GTZ Philippines SME Development for Sustainable Employment Program, Tourism Sector Analysis, 2005
    Programme Design
    »GTZ Philippines SME Development for Sustainable Employment Program, 2005
    »SME Development for Sustainable Employment Program (SMEDSEP) Philippines, GTZ 2003-2011
    Impact Assessment
    »Philippines SME Development and Sustainable Employment Promotion - Monitoring Manual, GTZ, GFA 05