The Philippine manufacturing sector can sustain its strong growth and significant contribution to the local economy should the new administration undertake critical measures aimed at attracting more investments and strengthening local capabilities.
So far, the local manufacturing sector has added P738 billion in gross value added (GVA) over the past five years to reach P2.7 trillion GVA at current prices as of end-2015. GVA is a measure of the value of goods and services produced in an area, industry or a sector of an economy.
The rising contribution of this sector alone reflected an average growth of 7.3 percent a year, which was nearly double the annual growth rate of the previous decade, said Roberto F. Batungbacal, chair of the manufacturing committee at the American Chamber of Commerce and Industry.
Batungbacal also pointed out that manufacturing labor productivity gained a huge 30-percent increase based on GVA current prices from 2010 to 2014, after hitting a plateau in previous decades. Total approved foreign direct investments in manufacturing were also on the rise, hitting P135 billion in 2015 alone, representing 55 percent of all approved FDIs in that year.
“After five years, we’ve established a track record of growth, but the road ahead is still very long. Will we reach a manufacturing share of 30 percent of gross domestic product? Will we increase our manufacturing workforce from 3 million to 7 million workers? Will we gain the needed diversification of our manufacturing sub-sector to have a balanced portfolio of low, medium and high tech sectors? Will we continue to be competitive versus our neighbors? Can we bridge the infrastructure gap? Can we make it a truly inclusive industry and not just for the big boys? It all depends on our next steps,” Batungbacal said.
According to Batungbacal, there was a need for the government to lay down strategic enablers like the infrastructure-manufacturing convergence, including special domestic zones for manufacturing; bring down the barriers to investors so that domestic and foreign investments would continue and accelerate, with new investments integrating with previous ones, or making new paths into new sectors; prioritize the integration of micro-, small- and medium-sized enterprises into the manufacturing sector.