It is high time for us to push through with industrialization, particularly manufacturing, if we are to sustain fast-paced growth for the economy, which is needed to create a significant impact on poverty alleviation.
Industries, as well as the services sector, drive our economy, which needs to grow to create employment and other livelihood opportunities. Economists and other experts have identified manufacturing industries as a prolific generator of good-paying and long-lasting jobs.
The industry sector, according to the Labor Force Survey (LFS) of the Philippine Statistics Authority (PSA), accounted for 17.2 percent of total employment in October 2016, or 7.17 million out of the 41.66 million employed members of the labor force.
The largest group of workers in the industry sector was in the construction subsector, which made up 47.5 percent of total employment in the industry sector. Second was the manufacturing sector, which accounted for 47.4 percent.
Many years ago, our manufacturing sector’s growth was stunted, and our country’s march toward industrialization was virtually halted when our policymakers decided to follow the western prescription of liberalization without putting in place adequate safety nets to protect domestic industries. We lost whatever competitive advantages we had, and we became dependent on foreign-made goods.
I have been advocating, even during my 21 years as member and leader of both houses of Congress, the revival of the manufacturing sector, and I still do so today, as a private businessman.
I believe that recent developments in the global economy are improving the chances for a successful resurgence of Philippine manufacturing industries.
One particular development is the rising wages in China. We all know that low wages, among other factors, enabled China to out-price and beat most countries in the global markets, catapulting the once-sleeping giant to become the world’s second largest economy.
We can now compete with China because Chinese labor is no longer as cheap as when it started penetrating the global markets.
The New York Times recently headlined a report as: “Chinese labor, cheap no more.” Another story on Bloomberg online was titled: “Made in China not as cheap as you think.”
CNBC, in a report headlined “’Made in China’ isn’t so cheap anymore..,” noted the rapid rise in labor costs in China’s manufacturing sector. The report cited a research by Euromonitor, which found that hourly wages in China had increased by 64 percent since 2011, or more than five times the current hourly wages in India.
The high labor costs are driving foreign investors in China to relocate their manufacturing facilities to other developing countries where wages are low.
Bangko Sentral Governor Amando M. Tetangco Jr., in a statement last January, expressed optimism that the country would be able to sustain its growth momentum. Among other factors, he cited the resurgence in manufacturing, which is making the economy’s growth drivers “more diversified.
Asian Development Bank President Takehiko Nakao shared the same optimism. In a speech during the ADB’s 50th anniversary last month, Nakao said the 6.8-percent GDP (Gross Domestic Product) growth posted in 2016 reflected, in part, gains from a manufacturing resurgence.
During the fourth quarter of 2016, when GDP grew by 6.6 percent, the industry sector posted the highest growth rate among the three major sectors at 7.6 percent. In particular, the PSA identified manufacturing among the main growth drivers in the same quarter.
Under President Rodrigo Duterte’s independent foreign policy, huge investments are expected to come to the Philippines, particularly from China and Japan. Local media reported last week that Japan’s seven major trading houses – Marubeni, Sumitomo, Toyota Tsusho, Sojitz, Mitsubishi and Mitsui – have expressed interest in investing up to P198.5 billion in various projects in the Philippines.
The ball is now in our park, and it is up to us to grab this opportunity to propel the country into the industrial arena, and make up for the many years of delay in our economic development.
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