THE country’s manufacturing output started the year with a contraction of 1.6 percent, according to the Philippine Statistics Authority (PSA).
Based on the latest results of the Monthly Integrated Survey of Selected Industries, the Volume of Production Index contracted from a growth of 4.2 percent in January 2019.
With the coronavirus disease 2019 (COVID-19) seriously impacting the travel and tourism sectors, the National Economic and Development Authority (Neda) said this could only worsen in the months ahead.
“Concerns over coronavirus disease affecting tourism and travel activities in the country could dampen production of consumer-related manufactures, such as food and beverages,” Neda said.
Apart from COVID-19, Socioeconomic Planning Secretary Ernesto M. Pernia said the recent eruption of Taal Volcano will also have a temporary impact on the manufacturing sector, given that the Calabarzon region accounts for about 31 percent of the country’s industry output.
“Thus, over the immediate term, [the] government will need to fast-track the rehabilitation of public infrastructure to ensure speedy recovery of firms, establishments and households located in the area,” Pernia said.
In January, data showed the Value of Production Index also contracted 6.3 percent in January 2020 from a growth of 0.3 percent in the same period last year.
Despite the decline in manufacturing output and value, average capacity posted a slight increase to 84.4 percent in January 2020 compared to 84.3 percent last year.
In order to help the manufacturing sector, Pernia said there is a need to implement mitigating measures to temper the potential negative impact of COVID-19 on the manufacturing industry.
Pernia added that as the epidemic scare lingers, output of firms that produce intermediate goods to overseas market will also be affected.
The Neda chief also cited a need to map out the entire value chains across primary, secondary and tertiary players in the economy.
This, Pernia said, will allow government to know where critical parts are sourced, identify alternative market sources, and beef up inventory capacity to insulate against vulnerabilities.
“Government needs to work closely with the industry in crafting and implementing strategies to effectively mitigate the possible impacts of COVID-19 on production,” Pernia said.
“To help the manufacturing industry become more competitive and resilient, relevant government agencies need to swiftly implement measures that would streamline processes, facilitate trade and reduce transactions costs,” he added.
Pernia also said there is a need to reinforce business continuity plans. Government support will be needed for facilitating partnerships between micro, small and medium enterprises (MSMEs), and large domestic and/or foreign enterprises.
He said this will help in leveraging advanced manufacturing technologies to enable greater resilience of firms and MSMEs amid the challenges posed by Covid-19.
Image credits: Nonie Reyes