Manufacturing seen sustaining growth

December 1, 2017 at 14:08

Manufacturing seen sustaining growth

Up to 2022

 

The government is targeting sustained 10-11 percent growth range in the manufacturing sector up to the end of the Duterte administration by putting in extra programs and policies focusing on the high value and technology-based innovation products.

Ramon M. Lopez

Ramon M. Lopez

Trade and Industry Secretary Ramon M. Lopez said at the Manufacturing Summit 2017 of the government’s optimism amid robust growth in the manufacturing sector, which hit a 7-year record growth of 9.4 percent in the third quarter this year.

“The target every year is 8 to 10 percent growth until the end of the Duterte administration,” said Lopez but said that a much higher 10-11 percent growth can be sustained until 2022.

Manufacturing hit a record 9.4 percent growth in the third quarter this year, but it could hopefully end at 10 percent this year, and over 10 percent by next year.  The growth, however, is expected to slowdown as as the base gets higher.

“We are getting there,” Lopez said adding “That is why the DTI is putting extra program and policies to push for higher growth.”

One program that is expected to give a massive impact in the manufacturing sector is the Comprehensive Automotive Resurgence Strategy (CARS) program where two of its participants are already starting to produce two models Vios for Toyota Motor Philippines and Mirage for Mitsubishi Motor Philippines Corp.

Each of the two Japanese car assemblers are going to produce 200,000 units by the end of the six-year CARS program. This will keep local parts manufacturers busy as assemblers are required to source some of the car parts from the local manufacturers.

DTI Assistant Secretary Rafaelita Aldaba, who is in charge of the Manufacturing Resurgence Program of the Board of Investments and in coming up with various industrial roadmaps, said motor vehicle sales in the country will be nearing the 1 million mark by 2025.

However, the implementation of higher excise tax on motor vehicles by next year is expected to dampen growth in vehicle sales next year. As such, the industry expects flat growth in 2018.

Car sales this year are expected to hit 450,000 or 18-20 percent growth from last year.  In addition, Aldaba said that the government’s public utility (PUV) vehicle modernization program will further boost the automotive manufacturing sector with over 200,000 jeepneys going to be replaced with government subsidized new PUVs, which are environment-friendly, safe and modern.

Meantime, Lopez also noted that growth in the manufacturing sector was supported by high value products such as technology-based electronic products.

“We are good in electronics, but we are expanding its usage as an input to an appliance, to a gadget like batteries. If we have the raw materials for lithium ion, for electric vehicles and cellphones,” he said.

With more industrial programs in place, Lopez said the share of the manufacturing sector to the overall economy is also expected to correspondingly improve to 25 percent from the current 23 percent.

Lopez cited how the manufacturing has grown from only 2 percent in the past years that he attributed to the growth in investments by over 30 percent.

The strong growth also made the Philippines Purchasing Managers’Index (PMI) the highest among Asian countries.   PMI is the leading indicator that will lead to sustained manufacturing in next quarters. 
 PMI is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

Other growth contributors such as services grew 7.1 percent from over 6 percent in the second quarter while agriculture posted positive 2.7 percent a negative last year.

Source: https://business.mb.com.ph/2017/11/29/manufacturing-seen-sustaining-growth/




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