PH factory output sinks in full year
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Wed, 05 Feb 2020 16:58:30 +0000
THE country’s manufacturing output last December, both in volume and value, continued to contract from the negative growths posted a month and a year earlier, the Philippine Statistics Authority (PSA) reported on Wednesday.
Results of the PSA’s Monthly Integrated Survey of Selected Industries showed that the country’s volume of production index declined by 10.1 percent in December, faster than the 7.8-percent decrease in November and the 9.3-percent drop a year ago.
The value of production index also eased further by 9.5 percent from November’s 7.4-percent fall and the 9.1-percent contraction a year earlier.
In a statement, the National Economic and Development Authority (NEDA) said both indices remained in the negative territory for the entire 2019, resulting in a full-year decline of 8.6 percent and 7.1 percent, respectively.
“This reversed the positive growth of manufacturing that was recorded in 2018,” it added.
Rizal Commercial Banking Corp. economist Michael Ricafort said the latest figures “may be attributed to the lingering US-China trade war that slowed down global economic growth and global trade in 2019, [which partly resulted in] slower demand on Philippine exports and manufacturing.”
Lower demand, he added, may also still reflect government underspending, especially on infrastructure, for most of the year because of the delay in the approval of the national budget for 2019; and the slowdown in foreign direct investments (FDIs) into the country.
Going forward, Ricafort sees manufacturing activity to improve this year as demand would be spurred by the early approval of the 2020 national budget; the catch-up in state spending, especially on infrastructure; the possible passage of the Corporate Income Tax and Incentive Rationalization Act into law, which could help increase FDIs into the country; relatively low interest rates, which could encourage the financing of more local and foreign investments in the country; and some pickup in global economic growth in 2020.
He warned, however, that concerns over the 2019 novel coronavirus acute respiratory disease could slow down global economic growth and global trade, especially in China, the world’s second biggest-economy and one of the Philippines’ major trading partners.
Meanwhile, the NEDA said the government should continue supporting initiatives toward digital solutions in the private sector to boost manufacturing growth and bounce back from its decline in 2019.
“We encourage industries to capitalize on innovation to reach their growth potential in this era of the Fourth Industrial Revolution. To this end, the government needs to formulate and implement policies and programs to stimulate innovation in the country,” Socioeconomic Planning Secretary Ernesto Pernia said.
Building the capacity of the workforce and embedding innovation in training are also crucial to meet technical and emerging market demands.
“The Philippines also needs to improve its reputation concerning intellectual property protection. This will attract foreign companies to locate sensitive technologies and product operations in the country,” Pernia said.
These will also allow the country to expand from the production of basic products and commodities to higher value intermediate and specialty products for domestic and export purposes.
“To support manufacturing growth, there is a need to strengthen the transport and logistics sectors by building quality and climate-resilient infrastructure. In this regard, a proposed bill to amend the Contractor’s License Law will open up the country’s construction sector to eligible and qualified domestic and foreign contractors,” Pernia said.