The Board of Investments (BOI) said Philippine factories will have more work in 2017, as the manufacturing sector’s share in investment pledges this year would rise to 20 percent from 11 percent last year.
With major manufacturing projects already in the pipeline for the year, BOI Managing Head and Trade Undersecretary Ceferino S. Rodolfo said the government is targeting to double the manufacturing sector’s share of investment pledges this year.
Government data in 2016 showed the manufacturing sector accounted for 11 percent, or P49 billion, of the P441.8-billion haul last year. Assuming the BOI will reach its target of P500 billion in investment pledges by year-end, the share of manufacturing should be at 22 percent, or P110 billion.
The BOI made the pronouncement after five Chinese companies announced they will invest some $10 billion in aviation, oil downstream, renewable energy, iron and steel, and shipbuilding/ship-repair industries.
Trade Secretary Ramon M. Lopez said he also secured $14.5 billion in pledges, for expansion and new projects from Japanese companies, during an investment-promotion visit last week.
The government’s renewed confidence in the manufacturing sector can also be attributed to the improvement of ties between the Philippines and China.
Rodolfo, in a meeting with top Chinese businessmen last week, expressed confidence that China’s “Going Global Policy”—a government directive meant to spur outbound investments of China-based businesses—will be in sync with Manila’s Manufacturing Resurgence Program.
“If our relationship with China before has been characterized by resource-generating sectors, like in mining and extractive industries, in terms of trade just export-import, now there’s really been a deepening of relations through investments in manufacturing,” he said.
The five Chinese companies and their possible projects are:
Aviation Industry Corp. of China (Avic) International Aero-development Corp., which intends to explore opportunities in industrial cooperation toward aerospace-parts manufacturing, aviation maintenace and also capacity-building;
Liaoning Bora Enterprise Group Co. Ltd., which will invest some $3 billion in construction and operation of a retail network and oil-storage terminal, refinery projects and allied industries;
Huili Investment Fund Management Co. Ltd., which will partner with a Philippine company for an integrated steel mill with initial investments pegged at $3 billion;
Dalian Wanyang Heavy Industries Co. Ltd., which is targeting to invest $2.8 billion and is doing feasibility studies for a 4,000- to 5,000-metric-ton waste-to-energy gasification project using solid waste collected from homes and businesses using state-of-the-art technology; and
YiDingTai (YDT) International, which would invest $1.5 billion in the development of ship-building and ship-repair facilities for regional-sized vessels with 15,000 dead-weight tons and below.
These five major projects are expected to fill the gaps in the country’s manufacturing sector.
With the influx of cheaper imports of China, especially in the higher-valued flat-steel products, companies have been discouraged to invest locally in steel-making.
The vice president of Huili Investment Fund Management Co. Ltd. said they are looking into producing both long and flat products.
“These [projects] are coming at an opportunite time because the Philippines is spending 7 percent of GDP on infrastcuture. With that goal, we have investments in construction-related industries,” Rodolfo noted.
Data from the country’s investment-promotion agencies indicated that Chinese investments reached only P1.52 billion last year.