Manufacturing sector seen to post stronger growth figures

With conditions on both the local and regional fronts improving, the Philippine manufacturing sector is poised for an even stronger growth once new measures and policies are put into place.

In a forum titled “The Future of Manufacturing Industry in the Philippines,” Roberto F. Batungbacal, country manager of Dow Chemical Pacific Ltd. Philippines, has put forward a slew of recommendations that the government may undertake to help boost the country’s manufacturing sector.

In his presentation, Batungbacal said that while manufacturing remains the biggest industry in the country today, accounting for about 21 percent of the gross domestic product (GDP), the rate of growth remains stagnant at about 3 percent a year over the last decade.

But the Philippines can change this growth trajectory given recent developments in the country, such as improved governance and macroeconomic stability, and factors in the “external environment that can accommodate our rise,” such as rising costs in Thailand and Vietnam.

As it is, the Philippines remains the 24th biggest manufacturing country. Over the last decade, this industry accounted for 38 percent of total investments in the Philippines, and 86 percent of the country’s total exports.

To further improve these numbers, Batungbacal has recommended the reactivation of the industry council, implementation of an integrated manufacturing roadmap, and tapping foreign technical assistance for industry planning.

He also suggested the creation of a manufacturing institute, development of researchers and subject matter experts, formation of industry association in new and unorganized sectors, and a pilot of special economic zones for domestic production and special labor zones.

Batungbacal admitted there are roadblocks that may hinder a revival of the manufacturing sector which, decades ago, accounted for about 30 to 40 percent of the country’s gross domestic product.

This is why the industry will need “political support from the highest levels,” Batungbacal explained.

A new industry policy, supported by a new trade policy, is likewise critical. To help boost the growth of manufacturing further, the country will need to: have a competitive foreign exchange; mitigate smuggling and tax evasion; and reform restrictive labor policy, he added.