DCM HIGHLIGHTS US ENGAGEMENT IN PHILIPPINE'S SECOND CITY

1. SUMMARY. DCM Jones highlighted U.S. business, USAID and Peace
Corps involvement in the central Philippine port city of Cebu on
October 27. Together with Commercial Counselor and Cebu Consular
Agent, DCM met with local business, religious, and political leaders
in the Philippines' "second city" which will host the ASEAN and East
Asia Summits on December 10-14. The visit received significant
local media coverage and follows two recent trips by the Ambassador
to the city, underlining the importance of Cebu and the Visayas to
U.S.-Philippines relations. END SUMMARY.



2. The DCM began the visit by touring Fairchild Semiconductor to
highlight the increased investments of U.S. businesses in Cebu.
Fairchild Semiconductor, a Maine-based leading manufacturer of
integrated circuits, became one of the first companies to locate at
Mactan Economic Processing Zone in 1979. Starting with less than
500 employees, the company today employs over 1,600 local staff and
has expanded its operations to include a testing facility. Other
American companies, including Timex and Lexmark, have similarly
expanded their investments in Cebu by opening R&D and distribution
centers. These manufacturers are being joined increasingly by call
centers including Convergys and Sykes Asia, a company that will be
augmenting its 1,500-seat center with a brand new 2,000-seat
facility.



3. After a visit to the U.S. Consular Agency in Cebu to review
operations and meet staff, the DCM hosted a business luncheon.
There he heard from local and American businesspeople who described
the opportunities and challenges of doing business in Cebu. They
stated that misperceptions from abroad about the security situation
in Cebu were constraining foreign investment. Joel Yu, a business
chamber president, noted that Cebu, a traditional trading center, is
not as prone to political extremism and insurgency as
agriculturally-based regions of the country. The business leaders
pointed out that skilled and relatively inexpensive local labor is
the main attraction for foreign investment in Cebu. Yet they noted
that current IT education in Cebu is not adequate to meet the
growing demands of businesses, despite several local colleges and
universities.



4. The DCM also visited two Peace Corps Volunteers who converted an
old provincial jail into a computer classroom where they teach
college students how to deploy inexpensive computer technology in
rural schools. The volunteers showed how partnerships between NGOs,
private businesses, and government can work together to address
Cebu's business and development needs.



5. The DCM toured one of 137 franchised midwife clinics which USAID
helped establish by providing the midwife entrepreneur with
training, basic clinic equipment and marketing support. USAID
channeled its support to these midwives through non-government
organizations that joined to form a private foundation in 2002.
These midwife-owned franchises now employ, on average, two staff
members and earn $400 to $1,200 per month. The midwife owner of the
clinic visited by the DCM noted that these clinic operations are an
attractive alternative to seeking work abroad, as they provide an
opportunity and an incentive to healthcare workers to remain in the
Philippines and meet the health care needs in their communities,
while earning a good living.



6. Cardinal Vidal, the Archbishop of Cebu, welcomed the DCM to his
residence for a courtesy call and described the Catholic Church's
efforts at educating the people about the electoral process. The
Church, through its parishes, conducts programs to inform the people
about how elections are held and what they mean. The DCM encouraged
Vidal to speak out more forcefully against practices that encourage
trafficking in persons, and commended his efforts against
corruption.



7. In television interviews with the two major local networks,
ABS-CBN and GMA-7, the DCM highlighted the above examples of U.S.
engagement in Cebu and clarified the U.S. role in various regional
forums in Asia. He also dispelled persistent rumors about possible
Presidential or Secretary of State attendance at the ASEAN Summit in
December.



8. The DCM amplified the visit's message of engagement and
partnership during a reception he hosted for over 100 local
business, political, and community leaders. Guests, including
Congressman Raul Del Mar, Congresswoman Nerissa Soon Ruiz, and
former Governor Lito Osmena, warmly greeted the U.S. Mission
delegation and mentioned how they looked forward to more visits from
the Embassy.


KENNEY