THE country’s manufacturing output continued to plummet as the Volume of Production Index (VoPI) posted its 12th month of consecutive decline in November, according to the Philippine Statistics Authority (PSA).
In the preliminary results of the Monthly Integrated Survey of Selected Industries (Missi), the VoPI posted a contraction of 6.1 percent in November 2019, lower than the 1.9-percent growth it posted in November 2018.
The VoPI has been in decline since December 2018. The deepest contractions posted by the VoPI were in April 2019 with 14 percent, followed by June 2019 at 10.5 percent and December 2018 at 10.1 percent.
“Industries need to be encouraged to innovate and adopt efficient technologies. This is a key strategy to entice more investments, similar to the experiences of the country’s Asean peers, such as Thailand, Malaysia and Vietnam,” Socioeconomic Planning Secretary Ernesto M. Pernia said.
The National Economic and Development Authority (Neda) said an industrial policy propelled by innovation is needed to drive the country’s manufacturing growth amid the bleak near-term outlook of the sector.
Pernia added the passage of the 2020 budget is a welcome move in ensuring the continuity of critical government projects.
“The signing of the 2020 budget into law by the President ensures the continuity of projects aimed [at attracting] local and offshore investments to boost growth and create more and quality employment opportunities for Filipinos,” he said.
Pernia said the passage of the Corporate Income Tax and Incentives Rationalization Act (Citira) and the proposed amendments to the Foreign Investments Act, the Public Service Act, and the Retail Trade Act are critical to eliminate policy uncertainties that affect the country’s business climate.
Pernia explained that the industry sector will benefit from Citira as it will lower the corporate income tax from 30 percent to 20 percent over the medium term.
Meanwhile, the easing of foreign ownership limitations in domestic industries will be crucial to increasing investment.
This will allow for a tighter integration of the value and supply chain across industries and provide opportunities for technology transfer, thus boosting the manufacturing sector.
PSA said the decline in VoPI was mainly influenced by the decreases in the indices of eight major industry groups.
This was led by furniture and fixtures (-41.2 percent), basic metals (-29.5 percent), miscellaneous manufactures (-22.1 percent), petroleum products (-21.8 percent), transport equipment (-16.7 percent) and electrical machinery (-13 percent).
PSA data showed the Value of Production Index (VaPI) posted a contraction of 5.8 percent in November 2019 from a growth of 2.3 percent in November 2018. Among the nine major industry groups that reported decreases in VaPI, five major industry groups had double-digit decreases.
These include basic metals (-36.2 percent), petroleum products (-25.6 percent), miscellaneous manufactures (-20.7 percent), transport equipment (-20.6 percent) and electrical machinery (-16.6 percent).
Missi is a report that monitors the production, net sales, inventories, and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.
Image credits: Nonie Reyes