HIGHER consumption and the real-estate boom would allow the Philippine manufacturing sector to create over a million jobs in the next five years, according to a local think tank.
At the sidelines of the First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Midyear Economic and Capital Markets Briefing, local economist Victor A. Abola said the manufacturing sector is experiencing resurgence.
The sector has expanded by 8 percent annually in the past five years and is expected to grow faster at 10 percent annually in the next few years.
“It’s going to accelerate. In the past five years, it created 100,000 jobs per year. But it’s going to accelerate to 120,000 to 150,000 annually.”
“It could double by the end of the Duterte administration. But it’s only the direct effects. It will still have indirect effects,” Abola told the BusinessMirror.
He said the demand for furniture and fixtures, as well as chemicals, in the country is increasing mainly because of new real-estate developments nationwide. The need to furnish these units is boosting the growth of manufacturing sectors, particularly the
production of high-quality furniture and paint, according to Abola.
The failure of Chinese manufacturers to make quality furniture, he said, is also proving to be a boon for local factories. “One of the fastest growing is furniture, [particularly] in the last five years. Why? Residential construction is booming, so many units need to be furnished,” Abola said.
“And then in the high-end furniture market, it is doing very well because earlier, the buyers went to China but they realized that while they can copy [the designs], the quality was not there. So they came back [to the Philippines],” he added.
Apart from furniture and chemicals, Abola said other manufacturing industries, such as shipbuilding and steel, are expected to grow further in the coming years. The UA&P economist said the country has barely scratched the surface when it comes to shipbuilding. The plan of Steel Asia Manufacturing Corp. to build a steel mill in the country would not only create more jobs, but also make construction materials cheaper.
Steel Asia’s operations would be supported by the government’s “Build, Build, Build” infrastructure program, which boasts of over 50 big-ticket transportation projects. This is part of the Duterte administration’s push to boost public spending to P8.44 trillion to address the country’s infrastructure constraints and grow the economy by 7 percent to 8 percent annually.
The increase in spending for infrastructure couldn’t come sooner, so any shortfall on public spending is met with much pessimism. Data from the Department of Budget and Management showed that infrastructure spending in the first quarter of the year fell short of the government’s target. This was the main reason the Capital Markets Development Initiative of FMIC and UA&P had to cut its growth forecast for the country this year. The institution said GDP is now expected to grow by 6.5 percent to 7 percent in 2017, lower than the 7 percent to 7.5 percent forecast it made in January.
Infrastructure spending, the think tank said, is expected to go up by 4.5 percent to 5 percent of GDP. This, however, is lower than the target of 5.3 percent of GDP in 2017. “We expect the Philippine economy to grow at a slower pace, if government spending does not accelerate before the end of the year,” First Metro President Rabboni Francis B. Arjonillo said.
“However, if the ‘Build, Build, Build’ campaign of the Duterte administration, create jobs and strengthen the investment climate would move at a faster pace, we would still be able to reach the earlier forecast of above 7-percent growth,” he added.
Earlier the Asian Development Bank (ADB) said the lack of infrastructure is one of the most significant constraints to the Philippines’s growth prospects.
Also, in the latest Global Competitiveness Index of the World Economic Forum, the Philippines was ranked 95th out of 138 countries in terms of infrastructure quality. This is well below other Southeast Asian countries, such as Malaysia (24th), Thailand (49th) and Indonesia (60th).