Sleepy Philippine Towns Wake Up to Answer World’s Phones

Photographer: Karl Lester M. Yap/Bloomberg

Cars and Jeepneys sit in traffic at a junction in front of the Iloilo Provincial Capitol building, seat of the provincal government, in Iloilo, Panay Island, Philippines, on Friday, July 18, 2014. Close

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Photographer: Karl Lester M. Yap/Bloomberg

Cars and Jeepneys sit in traffic at a junction in front of the Iloilo Provincial Capitol building, seat of the provincal government, in Iloilo, Panay Island, Philippines, on Friday, July 18, 2014.

Jennifer Ann Palmares-Fong has come home. Fifteen years after leaving Iloilo in the Philippines for the bright lights of Manila, she and her friends have been lured back as her once-quiet hometown is transformed.

“Never in my wildest dreams did I expect there would be these developments mushrooming all over,” Palmares-Fong, 32, said as she prepared to take clients to view a site for new $57,000 condominiums. “It used to be a sleepy place, now at night it’s all lights.”

Iloilo, an hour’s flight south of Manila, is at the center of the country’s biggest provincial transformation since independence in 1945 as President Benigno Aquino tries to reverse decades of migration to Manila and abroad. New airports, roads and ports are drawing property developers, retailers and business processing companies that fueled a decade of growth in the capital, like U.S. call-center operator StarTek Inc. and hotel chain Marriott International Inc. (MAR)

“The government has been working hard to develop secondary cities, recognizing them as critical centers of economic growth,” said Alexandra Vogl, an urban development specialist at the Asian Development Bank in Manila. “Many are rapidly becoming tourist hubs and centers of trade, services and industry.”

Photographer: Marx Ydroy Silva/ Megaworld Corp. via Bloomberg

Construction continues at the site of the 6,400 square-meter Iloilo Convention Center, being built for the APEC meetings in 2015, in Iloilo, Panay Island, Philippines, in this undated handout photograph released to the media on Tuesday, Aug. 19, 2014. It can accommodate 3,700 people and is located inside Megaworld Corp.'s Iloilo Business Park. Close

Construction continues at the site of the 6,400 square-meter Iloilo Convention Center,... Read More

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Photographer: Marx Ydroy Silva/ Megaworld Corp. via Bloomberg

Construction continues at the site of the 6,400 square-meter Iloilo Convention Center, being built for the APEC meetings in 2015, in Iloilo, Panay Island, Philippines, in this undated handout photograph released to the media on Tuesday, Aug. 19, 2014. It can accommodate 3,700 people and is located inside Megaworld Corp.'s Iloilo Business Park.

From Jakarta to London, governments are trying to counter the draw of dominant capital cities that soak up the lion’s share of workers and investment. In the Philippines, that means spreading some of the wealth from Manila, an urban sprawl of about 22 million people that accounts for more than a third of the nation’s economy.

Megaworld Marriott

Iloilo is among those leading the charge. Downtown, it seems like any other provincial city -- with jeepneys, motorbikes and pushcarts weaving through narrow streets of old churches, shops, peddlers and faded low-rise buildings.

On the edge of town, the contrast is stark. The old airport, replaced by a new one in 2007, is a construction site, where developer Megaworld Corp. is building a 35 billion-peso ($800 million) business park with a Marriott hotel and condos sporting names like One Madison Place and Lafayette Park Square.

A mile down the road, the planned hospital, shops, hotel and homes of Ayala Land Inc.’s Atria Park District may create 10,000 jobs on former salt pans. For Ilonggos and Ilonggas, as the city’s residents are known, the growth brings new opportunities.

Working Student

Julius Valderrama, 48, was unemployed for two years and couldn’t afford to send his daughter Jonalyn to college. This year, the father of six got a job as a driver for a property company, while Jonalyn works at McDonald’s Corp.’s fourth outlet in the city, giving them the chance to pay for her studies.

“Now she’s even helping us,” Valderrama said in the restaurant, which opened in June, as 19-year-old Jonalyn serves burgers and fries to customers. “Hopefully, she can be a working student so she can get an education.”

At an investment forum in Manila in March, Iloilo secured about 150 billion pesos of pledges for property, power, infrastructure and retail projects. Megaworld says its Iloilo project will create 30,000 jobs in information technology and business outsourcing, with capacity for more than 3,000 at Colorado-based StarTek’s site.

More than 900,000 people in the Philippines work in call centers and business processing, up from 383,000 in 2008, according to the Manila-based Business Process Association.

“It takes a lot of planning and vision to turn Iloilo into what it is today,” Mayor Jed Patrick Mabilog said in an interview in his office. “We built roads and bridges and the big investments started to come in.”

Airport Highway

This year, Iloilo completed 14 kilometers (9 miles) of new roads and widened the 16-kilometer highway to the airport. A 3,700-person convention center is being built for next year’s Asia-Pacific Economic Cooperation meetings to be held in the city.

“The benefits of economic growth are spilling outside Manila,” said Michael Wan, a Singapore-based economist at Credit Suisse Group AG. “The national government is doing the right thing: taking the first step by investing in infrastructure like roads and airports.”

Iloilo’s new airport, with non-stop flights to Hong Kong and Singapore, is among six provincial gateways that will be auctioned by the government this year as part of a $20 billion Public-Private Partnership program championed by Aquino, whose single term as president ends in June 2016.

“These projects will make travel faster and more convenient, not just for Ilonggos and Ilonggas, but also for tourists visiting and businessmen investing in Iloilo,” said Aquino, 54, during a visit to the city in June.

Swampy Plain

Iloilo, built on a swampy floodplain crossed by four rivers, was the last colonial foothold of the Spanish in Asia, falling to revolutionaries on Christmas Day in 1898. Tourists visit centuries-old buildings like the baroque Miag-ao church, or take a 15-minute boat ride to the white-sand beaches of Guimaras island.

In Smallville, the city’s burgeoning nightlife center, the upscale Amalfi Cucina Italiana restaurant serves manzo alla griglia con funghi, while diners at Bourbon Street tuck into grilled baby back ribs.

It’s a long way from the town Palmares-Fong yearned to escape from as a teenager. “Iloilo was a small, quiet town, everybody knew everybody,” she said. “I felt like I was in an aquarium, I wanted to be out in the ocean.”

When Manila-based Megaworld offered her the chance to become a sales director in Iloilo last year, it was her ticket home.

“I wanted to be able to say someday that I was part of this,” she said. Two of her childhood friends also returned from Manila this year, one to work in a family-run hotel and the other in a call center.

Rural Migrants

Iloilo’s growth is also fed by a tide of migration from surrounding villages. The United Nations estimates the Philippine population will grow 18 percent in the decade through 2020 to 110.4 million.

Other provincial cities in the archipelago of more than 7,000 islands are also benefiting, such as Cauayan in the north and Cagayan de Oro on the southern island of Mindanao. BDO Unibank Inc., the nation’s largest lender by assets, has opened more than half of its new branches outside Manila since 2013.

The regional boom is helping the national economy, which grew an average 7 percent in the past two years. The World Bank forecasts a 6.4 percent expansion this year, and 6.7 percent in 2015.

Easing Poverty

Rising provincial incomes also combat poverty in a nation where the World Bank estimates 42 percent of people live on less than $2 a day. Minimum wages in provinces are as low as 205 pesos a day, less than half the 429 pesos in Manila, according to government data.

In Iloilo Business Park, plumber John Jadulos and his uncle are installing drains and pipes for the Richmonde Hotel. He’s hoping to get a job as kitchen, maintenance or housekeeping staff once the building is completed next year.

“Iloilo’s changing; it’s brimming with job opportunities now,” said Jadulos, 27, taking a break from his nine-hour shift. “Who knows? Next year I could be working in a hotel.”

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

To contact the editors responsible for this story: Stephanie Phang at sphang@bloomberg.net; Adam Majendie at adammajendie@bloomberg.net; Rina Chandran at rchandran12@bloomberg.net

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