THE liberalization of the sugar industry will boost the country’s food and beverage manufacturing industry, according to the National Economic and Development Authority (Neda).
This developed as the Philippine Statistics Authority (PSA) reported on Tuesday that the manufacturing sector’s Volume of Production Index contracted 10.1 percent, the first time the VoPI declined in 2018.
In a news statement, Socioeconomic Planning Secretary Ernesto M. Pernia said efforts to liberalize would benefit the food manufacturing. PSA data showed food-manufacturing production slowed to 6 percent in 2018, from a growth of 11 percent in 2017.
“We see the need for a more liberalized regulatory environment in the sugar industry in order to bring down the domestic price of sugar, and in turn, benefit food and beverage manufacturers, as well as ordinary households,” Pernia said.
Based on the latest Monthly Integrated Survey of Selected Industries , full-year VoPI grew 7.2 percent in 2018, from a contraction of 0.5 percent in 2017.
The VoPI in December was lower than the 6.1-percent contraction posted in December 2017 and was the lowest since November 2017, when the VoPI also contracted 10.1 percent.
Pernia said that while the government expected the decline due to the holidays, there is a need to boost manufacturing output. He added the government may look into the concerns raised by exporters and importers.
These concerns include the management of empty containers, the need for an alert status on chemical importations and the processes involving x-ray cargo inspection (particularly outside the Mindanao Container Terminal), which hamper the flow of goods in the country’s international ports.
“If found to warrant government action, the early resolution to these concerns can ease trade facilitation and would benefit the country’s manufacturing sector, particularly micro, small and medium enterprises,” Pernia said.
Pernia assured that the country’s manufacturing output will see a better performance this year on the back of the exemption of key infrastructure projects from the 2019 election spending ban.
He said the exemption would ensure continuous implementation of national infrastructure projects under the “Build, Build, Build” program and mitigate any slowdown in economic growth.
This will also have an impact on other major manufacturing items, which dragged total manufacturing output. These were food, chemical products, tobacco, basic and fabricated metals, and machinery (except electrical).
Further, Pernia said a decline in rice prices, downward adjustment of electricity rates, and the slight appreciation of the peso may help improve consumer outlook and prop-up demand.
“Moreover, election-related spending is projected to benefit manufacturing subsectors, such as food, beverage, tobacco and printing and paper products,” Pernia said.
“However, domestic oil-price hikes and the upcoming El Niño could translate to price pass-through in manufacturing,” he warned.
The PSA data showed Value of Production Index for manufacturing further showed an annual drop of 9.3 percent in December 2018. In the same month of the previous year, VaPI also went down by 7.1 percent.
Average capacity utilization rate in December 2018 for total manufacturing was recorded at 84.3 percent. Fifty-five percent, or 11 of the 20 major industries, operated at least 80-percent capacity utilization rates.
The proportion of establishments that operated at full capacity was more than one-fourth, or 28.3 percent, of the total number of establishments in December 2018.
About 53.5 percent of the total establishments operated at 70-percent to 89-percent capacity, while almost one-fifth, or 18.2 percent, operated below 70 percent capacity.