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High office lease rates hamper IBM's expansion plans in Cebu(Business World (Philippines) Via Thomson Dialog NewsEdge) CEBU CITY - The high lease rates and lack of office space in this city have hampered the expansion plans of IBM Philippines. "We have been looking at expanding in Cebu for the past years now. But the real estate cost here is high, even higher than (the cost) in Makati. Cebu could not also supply the space requirement we needed," said Charis F. Divinagracia, IBM business manager for South Philippines. She said subsidiary IBM Daksh, which has only one delivery center in the Philippines, had been planning to establish a call center in Cebu. There was also a plan to hire more people for IBM's operations in Cebu. "But the expansion goes to Manila instead because the account is ready and the need [to expand] is immediate. In the third quarter, we have another planned expansion," she said. In Cebu, IBM leases space at Asiatown IT Park. Ms. Divinagracia said the company finalized the lease contract even before construction of the building started. When IBM tried to get additional space, the building owners could no longer accommodate the firm. Joel Mari S. Yu, managing director of the Cebu Investment Promotions Center (CIPC), said real estate prices in Cebu are still lower than in Metro Manila, although not by much. "It is still cheaper than in Manila, but only by a few hundred pesos. The problem is that they (IBM) want it to be really very cheap. That can't be because the cost of construction here is higher than in Manila. It's not fair (for them to say that real estate here is expensive)," he said. Mr. Yu said IBM could be accommodated at the South Road Properties (SRP), a 300-hectare reclaimed property in the southern part of the city. "But they want to come in within six months. We can't cope with the timeline. Besides we will stick to our plans of selling a portion of the (SRP) lots first before offering them for lease," he told BusinessWorld. The CIPC, which exclusively markets the SRP, will bid out three lots this year. IBM, however, said it planned to expand operations in the southern regions to capture a portion of the projected $218-million information and communications market (ICT) market in six growing regions in the country. Four of these will be in Central Visayas, Western Visayas, Davao and Northern Mindanao. The two others are Central Luzon and Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon). "We want to grow together with these markets, especially Central Visayas. This is why we are investing for our expansion here," Ms. Divinagracia said. She said the estimated $218 million would come mostly from desktops, servers and software packages and ICT services. IBM is conducting a road show to increase awareness of retailers on the benefits of using IBM retail store solutions in terms of increasing sales and reducing costs. "With more than 30 years in the retail and wholesale industry, as well as its point-of-sale marketing leadership. IBM and its network of IBM business partners provide retailers of all sizes store solutions that can help their businesses," said Territory Marketing Manager Marian Cruz- Hormigos. She said IBM has also partnered with local independent solutions providers to be able to touch base with small and medium entrepreneurs. IBM opened its office at the Asiatown IT Park in Lahug last year. The office serves as the company's hub for its Visayas-Mindanao operations and has a parts center, which enables the company to provide services to their clients here at a faster pace. Copyright 2007 Business World Publishing Corporation, Source: The Financial Times Limited |