PH manufacturing to sustain momentum

Published May 28, 2021, 7:00 AM

by Bernie Cahiles-Magkilat

The manufacturing sector, which accounts for 20 percent of the country’s GDP, is expected to sustain its growth momentum being the most cost competitive among peers in Asia.

At the Security Bank’s 2021 Economic Forum The Future of the Philippine Manufacturing Industry Both Trade and Industry Secretary Ramon M. Lopez, Japan External Trade Organization (JETRO) Manila Office Investment and EPA Advisor Tomohiro  Ando, and Century Pacific Food Inc. Executive Vice President Gregory H. Banzon were unanimous in their outlook for the sector this year and in the long term period despite some challenges.

In a presentation, Ando showed a table on manufacturing cost comparison from a JETRO survey among Japanese manufacturing firms operating outside of Japan wherein the Philippines consistently ranked highest among neighboring country competitors in the manufacturing sector. 

“Almost every year in the past ten years, the Philippines has been the most competitive among these countries in the table,” said Ando pointing to the table in the survey. 

The Philippines, however, placed second in 2020 after Vietnam after losing 2.2 notches. 

“In short, and we have to pay attention to this fact that, in general, Philippine has been competitive, even in cost competitive in this way,” he said.

In a speech, Lopez noted that the recent positive performance of the Philippine Manufacturing Purchasing Managers’ Index (PMI).

The Philippine PMI indices have been improving ranging from 49.0 to 52.5 this year from a record low of 31.6 in April 2020, Lopez noted.

Trade and Industry Secretary Ramon Lopez. (ALFRED FRIAS/PRESIDENTIAL PHOTO FILE PHOTO)

In addition, Lopez also noted that with the easing of quarantine restrictions, factory operations are resuming and demand is picking up, fueled by increase of domestic and international orders. In addition, improved vaccination rollout and recent decline of cases are easing restrictions, leading to businesses resuming operations.

Foreign direct investments (FDI)  in the January to February period this year amounted to $1.57 billion, posting a 20.6 percent increase year-to-date. 

Also FDI in the manufacturing sector also grew 145.86 percent. Lopez said the growth in manufacturing FDI “points towards more sustainable and long-term growth of the sector.”

With that the DTI has launched the “Make It Happen in the Philippines” international investment promotion campaign to generate investment leads. Under this campaign, the DTI has been focusing on promoting key industries that have the most potential for foreign investment: IT-BPM, electronics, automotive, aerospace, and copper/nickel.  

These are the domestic industries with the most potential to attract FDIs and create jobs for Filipinos.

The improvement in PMI is fueled by the increase in domestic demand, and reinforces the importance of REBUILD or the “Revitalizing Businesses, Investments, Livelihoods, and Domestic Demand” (or REBUILD) PH Strategy since last year so that the country can bounce back.

For his part, Banzon said his company will continue pursuing diversification in food manufacturing. Aside from its traditional food products, the company has also expanded into dairy production. 

Of late, Banzon said they are investing in the plant based food products stating that over the long term plant based food items would be key growth driver for the food industry as consumers shift habits to eating healthier food.